Magdalena Moll Head of IR - BASF · Water and oilfield & mining activities merged into new global...

We add value as one company

Oil & Gas

Agricultural Solutions

Functional Materials

& Solutions

Performance Products

Chemicals

Value

Magdalena Moll Head of IR Deutsche Bank German, Swiss & Austrian Conference Frankfurt May 15, 2013

BASF Capital Market Story Mayl 2013

Cautionary note regarding forward-looking statements

2

This presentation may contain forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. Forward-looking statements may include, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand. BASF has based these forward-looking statements on its views and assumptions with respect to future events and financial performance. Actual financial performance could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. The information contained in this presentation is subject to change without notice and BASF does not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations.


Chemistry as an enabler BASF has superior growth

opportunities: - sustainable innovations - investments - emerging markets

Ambitious financial targets

The #1 chemical company €72.1 billion sales, €6.6

billion EBIT bSI in 2012* #1-3 in >75% of

businesses, present in >200 countries

6 integrated Verbund sites, production in 41 countries

10 years of strong sales and earnings growth

18% average annual total shareholder return**

16% average annual dividend increase, >3% yield in every single year***

Performance

We create chemistry for a sustainable future

Perspective

** May 2003 – April 2013 *** for 2003-2012

Ludwigshafen, Germany

Antwerp, Belgium

Nanjing, China

Kuantan, Malaysia Geismar,

USA Freeport, USA

Verbund site

Positioning

3

* restated numbers, reflecting IFRS 10/11 changes


BASF today – a well-balanced portfolio Total sales 2012: €72.1 billion*

Percentage of sales 2012**

** Not depicted here: ~5% of Group sales reported as ‘Other‘ * Restated numbers, reflecting IFRS 10/11 changes, new segment structure effective Jan. 1, 2013

4


Business review BASF Today Trends Purpose and strategic principles Targets Strategic levers BASF Tomorrow – Board priorities

BASF Strategy: We create chemistry__November 2011

Business review

BASF strategy & growth targets

Strategic levers


BASF with a solid start to 2013

Business performance Q1’13 Q1’12 vs. Q1’12 Sales €19.7 billion €18.8 billion +5% EBITDA €2.9 billion €3.3 billion (14%) EBIT before special items €2.2 billion €2.0 billion +10% EBIT €2.2 billion €2.6 billion (17%) Net income €1.4 billion €1.7 billion (15%) Reported EPS €1.57 €1.85 (15%) Adjusted EPS €1.67 €1.54 +8% Operating cash flow €2.0 billion €1.5 billion +33%

Sales development Period Volumes Prices Portfolio Currencies

Q1’13 vs. Q1’12 5% 1% 0% (1%)

6

BASF Capital Market Story Mayl 2013 7

Integration activities on track Key work packages (e.g. IT, finance, human resources) proceed smoothly Integration expected to be completed by end of 2013

Integration of Becker Underwood and Pronova BioPharma

Water and oilfield & mining activities merged into new global business unit on April 1, 2013 Leather & textile chemicals: concentration of R&D activities at Shanghai Innovation Campus Plastic additives and pigments businesses: downsizing of Swiss operations and R&D activities Total net headcount reduction: about 500 positions by the end of 2015

Restructuring measures to strengthen competitiveness of Performance Products segment

Portfolio optimization

Joint $500 million investment to build integrated aroma ingredient complex Investment to meet globally growing demand in flavor and fragrance industry, especially in Asia

Expansion of the existing joint venture with PETRONAS in Kuantan, Malaysia


2.8 2,6

3.3 3.53.2

2.5

3.2

2.6

1.2

2003 2004 2005 2006 2007 2008 2009** 2010 2011 2012 Q12013

Strong free cash flow generation

8

* Cash provided by operating activities less capex (in 2005 before CTA) ** 2009 adjusted for re-classification of settlement payments for currency derivatives

Free cash flow* in billion €

3.9 3.7


Delivering attractive shareholder returns

Dividend of €2.60 per share for 2012 (+4%)

2003-2012: Average annual dividend increase of 16%

Attractive dividend yield of 3.7% in 2012**

Dividend yield above 3% in any given year since 2002, total payout almost €17 billion

* Dividend yield based on share price at year-end

Dividend payments

3.7% 3.2% 3.1% 4.1% 3.8% 7.0% 3.9%

Dividend yield* 4.6% 3.1%

2.50

0.70 0.85 1.00

1.50

1.95 1.951.70

2.20

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

9

2.60

Dividend per share in €

3.7%

** Based on BASF share price of €71.15 on Dec. 28, 2012


Delivering consistent, long-term value

Average annual performance with dividends reinvested

0 3 6 9 12 15 18 21

Euro Stoxx 50

DAX 30

MSCI World Chemicals

+10.4%

Last 5 years May 2008 – April 2013

+14.0%

-3.3%

+2.6%

+3.4%

Last 10 years May 2003 – April 2013

BASF

+11.8%

+4.6%

+17.9%

10


Excluding the effects of acquisitions and divestitures, we strive to increase our sales volumes in 2013

We aim to exceed the 2012 restated levels in sales and EBIT before special items

The expected increase in demand, together with our measures to improve operational excellence and raise efficiency, will contribute to this

We aim to earn a high premium on cost of capital once again in 2013

Outlook 2013

GDP: +2.4%

Industrial production: +3.4%

Chemical production: +3.6%

US$ / Euro: 1.30

Oil price (US$ / bbl): 110

Assumptions 2013

Outlook 2013 confirmed




Business review


Strategic levers


Demographic challenges … set the stage for the future of the chemical industry

Nine billion people in 2050 but only one earth

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Resources, Environment & Climate Food & Nutrition Quality of Life

Chemistry as enabler


Key financial targets 2015 / 2020

Grow at least 2 percentage points above chemical production

Earn a premium on cost of capital of at least €2.0 billion on average p.a.

Profitability targets Growth targets

2015

2020

Sales ~€80 billion

Sales ~€110 billion

EBITDA ~€14 billion EPS ~€7.50

EBITDA ~€22 billion

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Business review


Strategic levers – Portfolio development

– Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence


Portfolio development We expand from chemicals to chemistry

Chemistry as key enabler for functionalized materials & solutions

Deep understanding of customer value chains required

New molecules

Improved applications

Functionalized materials & solutions

1960 1970 1980 1990 2000 2010 2020

Batteries, membranes ...

16


Portfolio development Moving downstream towards customer industries

* Agriculture, Construction, Consumer Goods, Health & Nutrition, Electronics, Energy & Resources, Transportation ** Sales excluding Oil & Gas. Targets were published on November 29, 2011.

Functionalized Materials & Solutions Customized Products Classical Chemicals

2020 in % of sales**

Chemical Industry First customer industries*


~ 40%

~ 30% ~ 70%


~ 50%

~ 60%

~ 50%

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Engineering plastics Electronic chemicals Catalysts Construction chemicals Water-based resins Pigments Plastic additives Oil & Gas Personal care & food Battery materials Functional crop care Omega-3 fatty acids

BASF core business

Strong partnerships

Gazprom Monsanto Petronas Shell Sinopec Total

Selected transactions 2001 − today*

Acquisitions

~ €15bn sales ~ €10bn sales**

Divestitures

Pharma Fibers Printing systems Polyolefins Polystyrene Americas Agro generics Vitamins premix Fertilizers Styrenics (transferred into

Styrolution JV on Oct. 1, 2011)

** without Styrenics

Portfolio development Towards more market driven and innovative businesses

18 * only closed deals have been considered


Ongoing portfolio development

Acquisition of Pronova BioPharma

Restructuring in Performance Products Aroma Ingredients Investment, Kuantan

Transactions with Statoil and Gazprom


BASF sales by first customer industry*

Bubble Size: BASF divisional sales by first customer industry (2010)**

> 15 %

< 10 %

< 10 %

> 15 %

Inorganics Petro- chemicals

Construction Chemicals

Dispersions & Pigments

Catalysts Intermediates Coatings Care Chemicals

Performance Polymers

Poly- urethanes

Performance Chemicals

Paper Chemicals

Consumer goods

Transportation

Construction

Energy & Resources

Market approach Cross-divisional customer industry approach

* Excluding Oil & Gas and Other ** Excluding Agricultural Solutions, Health & Nutrition, Oil & Gas and Other

20


E-textiles

Solar roof with transparent organic solar panels and OLED modules

Multifunctional seat

Infrared-reflective coating

Infrared-reflective film

High performance foams

Lightweight tridion cell

All-plastic wheel

Cross-divisional approach: ‘Smartforvision’ Technology competencies combined with customer know-how

Daimler & BASF concept car ‘Smartforvison’

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1.4 1.4 1.5

1.6 1.7

0,0

0,5

1,0

1,5

2,0

2008 2009 2010 2011 2012

22

€1.7 billion R&D expenditures in 2012

Increase of R&D spending planned for 2013

~10,500 employees in R&D

~3,000 projects

Research Verbund: About 1,950 partnerships with universities, start-ups and industry partners

Target 2015 and 2020: - €10 billion in sales from innovations younger 5 years; - €30 billion in sales from innovations younger 10 years

Strong commitment to R&D Innovations for a sustainable future

Key facts R&D expenditures (billion €)

Chemicals 10%

Performance Products 20%

Functional Mat. & Sol. 20%

Agricultural Solutions 25%

Oil & Gas 2%

Corporate Research 23%


Sustainability in customer industries will drive our innovative growth fields

* Including growth fields still under evaluation

Health & Nutrition

Consumer Goods Construction Transportation Electronics Energy &

Resources Agriculture

Customer industries

Energy management

Water solutions

Wind energy

Rare earth metals

recycling

Heat management

Enzymes Plant biotechnology

Batteries for mobility

Lightweight composites

Heat management

Functional crop care

Medical Organic electronics

Growth Fields*

Ongoing inflow of new growth fields

Chemistry as an enabler: Growth Fields Innovations for a sustainable future

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Joint development with adidas, illustrating our customer focus

New energy BOOST™ cushioning material, provides highest energy return in the running industry

Solid granular material* is ‘blown up’, turned into 1000’s of small energy capsules

With their unique cell structure, these energy capsules store and unleash energy more efficiently in every stride

New shoe is available in stores since February, 2013

Innovation with adidas: BOOST™ Technology competencies combined with customer know-how

Key facts

Photo: adidas * TPU (Thermoplastic polyurethane)


Future investments in € billlion

Thereof investments in emerging markets

Total investments

35-45%

15-20

30-40%

~15

2006 – 2010 2011 – 2015 2016 – 2020

10.9

~20%

Investments … will boost future organic growth

25


Expansion Verbund site Nanjing, China*

MDI plant Chongqing, China

* Memorandum of Understanding signed

TDI plant Ludwigshafen, Germany

Investments Major projects

26

Expansion oil & gas activities

Aroma Ingredients Kuantan, Malaysia

Acrylic acid complex Camacari, Brazil


Acquisitions … will contribute to profitable growth in the future

Provide a minimum return on investment of 8% after tax

Are EPS accretive by year three at the latest

Financial acquisition criteria

Generate profitable growth above the industry average

Are innovation-driven

Offer a special value proposition to customers

Reduce earnings cyclicality

Strategic acquisition criteria

We want to acquire businesses which …

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Operational excellence STEP program on track: ~€1 billion earnings contribution by 2015

Annual earnings contribution (€ million)

0

1,000

2,000

3,000

2012 2015

Former cost saving programs NEXT STEP

Targeted annual earnings contribution of ~€1 billion by end of 2015

Project timeline: 2012–2015 Program is on track Measures to optimize processes and

structures in all regions, e.g. − manufacturing, maintenance − supply chain − engineering, best-cost country sourcing

One-time costs & investments: ~€1 billion

NEXT Program

STrategic Excellence Program ‘STEP’

NEXT program successfully completed Annual earnings contribution of

~€1 billion achieved in 2012

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Appendix

Business development Q1 2013


Chemicals Earnings increase due to higher margins

Intermediates 700 +4%

Monomers 1,680 +4%

Petrochemicals 2,016 (9%)

€4,396 -3%

556 601 569445

650

0

200

400

600

800

Q1 Q2 Q3 Q4 Q1

EBIT before special items (million €)

2013 2012

Q1’13 segment sales (million €) vs. Q1’12


Q1’13 vs. Q1’12 (2%) 1% (1%) (1%)


Performance Products Stable volumes but lower earnings

Performance Chemicals

891 0%

Care Chemicals 1,275 0%

€3,880-2%

Paper Chemicals 362 (8%)


Nutrition & Health 493 +4% Dispersions

& Pigments 859

(7%)

452 442

344

183

379

0

200

400

600

Q1 Q2 Q3 Q4 Q1


2013 2012


Q1’13 vs. Q1’12 0% (2%) 1% (1%)


Functional Materials & Solutions Increased demand in Performance Materials

Catalysts 1,453 (1%)

Construction Chemicals

458 (9%)

Coatings 698

(2%)

€4,181+0%


257216 231 228 239

0

50

100

150

200

250

300

Q1 Q2 Q3 Q4 Q1


2013 2012


Q1’13 vs. Q1’12 2% 0% 0% (2%)

Performance Materials 1,572 +6%


Agricultural Solutions Excellent start into the year, record sales and earnings

Q1’13 segment sales (million €) vs. Q1’12 EBIT before special items (million €)

2013 2012

0

200

400

Q1 Q1

2013 2012

0

500

1.000

1.500

Q1 Q1

1,556 498 419 1,327


Q1’13 vs. Q1’12 13% 1% 4% (1%)


Oil & Gas Sales growth due to higher production

Exploration & Production

789 +14%

Natural Gas Trading 3,871 +21%

€4,660 +20%

Q1’13 segment sales (million €) vs. Q1’12 EBIT bSI/Net income (million €)

201415

162397

0

200

400

600

800

Q1/2012 Net Income Q1/2013 Net Income

Natural Gas Trading

Exploration & Production

Net income

640

Sales development Period Volumes Prices/Currencies Portfolio

Q1’13 vs. Q1’12 19% 1% 0%

439 468

630


Review of “Other”

Million € Q1’13 Q1’12 Sales 1,065 976 EBIT before special items (182) (314) thereof Corporate research Group corporate costs Currency results, hedges and other valuation effects Styrenics, fertilizers, other businesses

(97) (56)

56

59

(97) (58)

(206)

145

Special items (28) 578

EBIT (210) 264


Balance sheet remains strong Balance sheet March 31, 2013 vs. Dec. 31, 2012 (billion €)

Liquid funds

Accounts receivable

Long-term assets

27.7

13.3

23.2

35.3

9.5

1.6

Other liabilities

Financial debt

Stockholders’ equity

Dec 31 2012

Dec 31 2012

March 31 2013

March 31 2013

62.7

25.6

12.8

22.3

Inventories

Other assets

9.6

3.4

62.7

Highlights March 31, 2013 Long term assets increased

mainly due to consolidation of former Pronova BioPharma business

Short term assets up due to increase in accounts receivable

Increase in financial debt due to issuance of long-term bonds

Net debt: €10.9 billion Equity ratio: 41%

36.5

11.1

2.4

9.9

3.7

66.7

3.1

66.7

Disposal group

2.5

Disposal group

36

3.3 2.0


Appendix

Additional information


Outlook 2013 Expectations for the global economy

2012

GDP 2.2%

Chemicals (excl. pharma) 2.6%

Industrial production 2.4%

US$ / Euro 1.28

Oil price: Brent (US$ / bbl) 112

Forecast 2013

2.4%

3.6%

3.4%

1.30

110


Outlook 2013 by region Chemical production (excl. pharma)

EU-27

USA

Asia (excl. Japan)

Japan

South America

3.6%

0.3%

1.9%

8.1%

-0.6%

3.7%

World 2.6%

-1.4%

2.5%

7.7%

-4.5%

1.9%

2012 Forecast 2013


“We create chemistry” strategy Adjusted key financial targets for 2015 and 2020

Sales Billion €

* communicated during ‚We Create Chemistry‘ Investor Day on November 29, 2011

∆ = IFRS 10/11 impact

EBITDA Billion €

~79 ~85

~115

~72 ~80

~110

0

20

40

60

80

100

120

∆ -7 ∆ -5

∆ -5

2012 2012 restated

2015* 2015 adjusted

2020* 2020 adjusted

~12.5

~15

~23

~10

~14

~22

0

5

10

15

20

25

2012 2012 restated

2015* 2015 adjusted

2020* 2020 adjusted

∆ -2.5

∆ -1

∆ -1 ∆ = IFRS 10/11 impact


“We create chemistry” strategy Earnings per share target for 2015

Earnings per share €

Business growth 1.30

4.96

2002 2010

0.5

0.9

0.8

1.5 Margin

Tax rate

Share buy-back

Target 2015*

~7.5

„STEP“

Share buy-back

Growth

* First published on November 29, 2011

Magdalena Moll Head of IR - BASF · Water and oilfield & mining activities merged into new global...

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