Ulf Loleit Senior Vice President Treasury - BASF · Ulf Loleit. Senior Vice President. Treasury ....

We create chemistry for a sustainable future

Ulf LoleitSenior Vice PresidentTreasury

Roadshow AsiaNovember 2017

BASF Creditor Story, November 2017 2

Cautionary note regarding forward-looking statements

This presentation contains forward-looking statements. These forward-looking statements are basedon current estimates and projections of the Board of Executive Directors and on currently availableinformation. These forward-looking statements are not guarantees of the future developments andresults outlined therein. Rather, they depend on a number of factors, involve various risks anduncertainties, and are based on assumptions that may not prove to be accurate. Such risk factorsparticularly include those discussed on pages 111 to 118 of the BASF Report 2016. The BASFReport is available online at basf.com/report. BASF does not assume any obligation to update theforward-looking statements contained in this presentation.


Agenda

At a glance1

Strategic levers2

Financing highlights3

Segments4


Growth above chemical industry average – driven by innovative and sustainable products and solutions

Unique Verbund concept – competitive advantage based on integrated sites, operational excellence and best-in-class technologies

Broad and resilient portfolio – with global market access and strong customer relationships

Earnings growth and strong cash flow generation – based on operational and financial strength

Long-term value creation with progressive dividend policy – grow or at least maintain dividend at the previous year’s level

BASF shares – an attractive investment


Chemicals – a growth industryGlobal annual growth rate of ~3.6%*

…more food needed by 2050

…more primary energy consumption by 2050

…of the world population will live in cities by 2050

Agriculture Health & Nutrition

Energy & Resources

TransportationConstruction &Housing

Consumer Goods

…people by 2050

Electrical & Electronics

Chemistry as enabler to meet current and future needs70% 50%~10 bn 30%

* Forecast average annual real change 2017 – 2019; BASF Report 2016, p. 121


Broad and resilient portfolio2016: Sales of €57.6 billion; EBITDA of €10.5 billion

Percentage of sales 2016*

* Not depicted here: ‘Other’ 3% of Group sales and EBITDA €(1.0) billion


Global market access through regional presence

Kuantan

Hong KongNanjing

Freeport

Florham Park

Geismar

LudwigshafenAntwerp

São Paulo

Regional centersSelected sitesVerbund sitesSelected research and development sites

Asia Pacific

Europe

South America, Africa, Middle East

North AmericaSales €14,042 millionEBIT €1,113 millionEmployees 17,583

Sales €26,039 millionEBIT €3,632 millionEmployees 70,784

Sales €12,165 millionEBIT €1,098 millionEmployees 18,156

Sales €5,304 millionEBIT €432 millionEmployees 7,307

2016: Sales by location of customer; EBIT by location of company


Verbund – unique competitive advantageActively managed in line with market requirements

Annual cost savings of more than €1 billion through integrated production Verbund concept supports sustainability, reduces waste and avoids CO2 emissions of 6 million tons p.a.

Energy savings >€300 million p.a.

People, Customers, Technology, Production


BASF Group Q3 2017Considerably higher sales and earnings

Financial figures Q3 2017 Q3 2016 Change

Sales €15.3 billion €14.0 billion 9%

EBITDA before special items €2.8 billion €2.5 billion 12%

EBITDA €3.0 billion €2.4 billion 23%

EBIT before special items €1.8 billion €1.5 billion 16%

EBIT €2.0 billion €1.5 billion 34%

Net income €1.3 billion €0.9 billion 50%

Reported EPS €1.45 €0.97 49%

Adjusted EPS €1.40 €1.10 27%

Operating cash flow €3.8 billion €2.5 billion 52%

Sales development Volumes Prices Portfolio CurrenciesQ3 2017 vs. Q3 2016 4% 7% 1% (3%)


Stepwise increase of earnings levelEBIT and EBITDA*billion €, 2001–2016

3.7

4.7 4.6

7.0 7.28.4

8.9

7.76.5

9.9

11.2

10.010.4

11.0 10.6 10.59.7

0

2

4

6

8

10

12

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1-Q32017

EBIT EBITDA

0.7

2.2 2.2

4.5 4.85.5

6.0

4.6

2.8

6.7

8.06.7 7.2

7.6

6.2 6.3 6.6

CAGREBITDA

7%CAGREBIT16%

* 2010, 2011 indicative, adjusted for IFRS 10 & 11; 2001–2009 as reported, without non-compensable foreign income taxes on oil production

Avg. EBITDA level in depicted years

9.7


billion €, 2001–2016

2.3 2.3

4.9 4.65.3

5.9 5.85.0

5.76.5

7.16.6

8.1

7.0

9.4

7.7 7.6

0123456789

10

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1-Q32017

Free cash flowOperating cash flow

-0.5 -0.1

2.8 2.63.3 3.5 3.2

2.53.2

3.9 3.7

2.63.2

1.7

3.6 3.6

5.0

6.3%

Strong cash flow development


Sales growth – slightly faster than global chemical production

Deliver attractive returns – earn a significant premium on cost of capital

EBITDA growth – well above global chemical production

Remain a strong cash provider – continuously generate high levels of free cash flow

Progressive dividend policy – grow or at least maintain dividend at previous year’s level

Financial targets for the coming years


Innovations for a sustainable future

Investments in organic growth

M&A opportunities and portfolio pruning measures

Our priorities

Operational excellence and cost discipline

We aim to grow sales and earnings faster than global chemical productionin the coming years, driven by


Outlook 2017 for BASF Group

Assumptions 2017 Now PreviousGDP growth +2.8% +2.5%

Growth in industrial production +3.1% +2.5%

Growth in chemical production* +3.4% +3.4%

Exchange rate US$1.10 per euro US$1.10 per euro

Oil price (Brent) US$50 per barrel US$50 per barrel

* Excluding pharma

Outlook 2017 Now PreviousSales Considerable increase Considerable increase EBIT before special items and EBIT Considerable increase Considerable increaseEBIT after cost of capital Considerable increase Slight increase


Agenda

At a glance1

Strategic levers► Portfolio development► Investments► Innovation► Sustainability► Operational excellence

2


Segments4


Continuous global portfolio development

target(in % of sales*)~50% ~50%

Maintaining a balanced portfolio

Divestment of businesses,e.g., due to loss of differentiation

Divestment of businesses,

e.g., due to lower market attractiveness

Commoditization leads to restructuring

Growth fields

Innovation pipeline

Acquisitions

Specialties and solutions Differentiated commodities

Attractive markets Differentiation by process

technologies and integration

Attractive markets Differentiation by customer

proximity and innovations

* Excluding Oil & Gas sales


Portfolio development towards more market-driven and innovative businesses

Strong Partnerships Gazprom PETRONAS Sinopec Total

Selected transactions 2010−today

BASFcore business

~€5.5 billion salesin emerging and innovation-driven businesses

Acquisitions Functional crop care Personal care & food Omega-3 fatty acids Enzymes Battery materials Specialty plastics Selected assets in Oil & Gas Refinish coatings Surface treatment

Divestitures

~€21.0 billion salesin businesses with limited fit and differentiation potential

Styrenics Fertilizers Selected assets in Oil & Gas Natural gas trading & storage Custom synthesis business Textile chemicals Polyolefin catalysts Industrial coatings Leather chemicals


Clear acquisition criteria

We want to acquire businesses which …

provide a return on investment above the WACC

are EPS accretive by year three at the latest

We want to acquire businesses which …

generate profitable growth above the industry average

are innovation-driven

offer a special value proposition to customers

reduce earnings cyclicality

Acquisitioncriteria

Strategic acquisition criteria Financial acquisition criteria


Complementary acquisitions to strengthen the portfolio of BASF Group

Solvayʼs integrated global polyamide business

Purchase price: ~€1.6 billion Sales 2016: ~€1.3 billion EBITDA 2016: ~€200 million Market CAGR: >3.5% Closing expected in Q3 2018

Significant parts of Bayerʼs seed and non-selective herbicide businesses

Purchase price: ~€5.9 billion Sales 2016: ~€1.3 billion EBITDA 2016: ~€385 million Sales CAGR: ~15% (2014–2016) Closing expected in Q1 2018

ChemetallSurface treatment business

Purchase price: ~US$3.1 billion Sales 2015: ~US$845 million EBITDA 2015: ~US$200 million Sales CAGR: ~7% (2007–2015) Closed in December 2016


BASF signed agreement to acquire significant parts of Bayer’s seed and non-selective herbicide businesses

Fully enabled seed and trait businesses Attractive and sizeable seed portfolio for canola/oilseed

rape, soybean and cotton in the Americas and Europe

Excellent trait research for canola, soybean and cotton

LibertyLink® technology for herbicide tolerance and related trademarks

Complementary crop protection business Global glufosinate-ammonium-based non-selective herbicide

business

State-of-the-art production facilities in the U.S., Canada and Germany


BASF to acquire Solvay’s global polyamide business

* Application examples

Broader global scope Enhanced presence, especially in Asia and South America

Stronger capabilities to serve global and regional customers

Wider range of engineering plastics Technyl®, Ultramid®, Ultradur®, Ultraform®, Ultracom®

Broadening technical skills and innovation capabilities* Heat-resistant and high-voltage electrical and electronic parts

Tailor-made solutions for components in automotive

Mechanically strong and thermally stable consumer goods

Improved reliability of supply Backward integration into all key raw materials for polyamide 6.6

Fully integrated engineering plastics value chain


Investments in organic growthInvestments of ~€3.9 billion planned for 2017

Performance Products

21%

Oil & Gas23% €19.0 billion

Capex budget 2017–2021 by segment

Other13%

Chemicals24%

Capex budget 2017–2021 by region

Asia Pacific16%

North America22%

Agricultural Solutions4%

Other**3%

Functional Materials& Solutions

15%

€19.0 billion

South America*10%

* Including Africa and Middle East, ** Alternative sites currently being investigated

Europe 49%

Oil & Gas Europe


Investment projects with startup in 2017

Aroma ingredients complex Kuantan, Malaysia

BASF and PETRONAS further expand joint activities in Malaysia Investment: around €500 million

Ammonia plantFreeport, Texas

BASF and Yara are building world-scale ammonia plant in the U.S. 750,000 tons per year;

hydrogen-based process

Engineering plastics Schwarzheide, Germany

Expansion of annual capacity by 70,000 tons Increasing BASFʼs global compounding

capacity to more than 700,000 tons


Oil & Gas2%

Innovation will drive future growth

Agricultural Solutions26%

Chemicals10%

Performance Products20%

Corporate Research21%

Key facts

€1.86 billion R&D expenditures in 2016

R&D expense to sales ratio ~3%

~10,000 employees in R&D

~3,000 projects

~850 new patents in 2016

Research Verbund: Cooperations with more than 600 excellent partners from universities, startups and industry

In 2016, sales of >€10 billion from innovations on the market since 2011

R&D expenditures 2016

€1.86 billion

Functional Materials & Solutions

21%


Polymer Technologies

Biotechnology

Production Processes

Materials

Catalysis

Biodegradable & BiobasedMaterials

Enabling Methods

Corporate Research: BASF’s key technology capabilities are bundled in seven focus areas

Selected key technology capabilities reflect where BASF requires continued effort and resources to safeguard today’s and tomorrow’s excellence in innovation.


Sustainable Solution Steering®Novel methodology to screen and steer our portfolio

4.2% 0.3%

>60,000 product applications analyzed

27.2% Accelerators

– Strong growth in their markets

– deliver margins above the average

– represent majority of BASF’s R&D pipeline

68.3% Performers

<1% Challenged products

Increase the share of Accelerators from 23% in 2014 to 28% by 2020

27.2%

68.3%

Substantial sustainability contribution in the value chain

Meets basic sustainability standards on the market

Specific sustainability issues which are being actively addressed

Significant sustainability concern,action plan developed

SustainableSolutionSteering

Percentage of sales 2016


Innovations for a sustainable futureExamples with significant contributions to sustainability

FWC™ Four-Way Conversion catalyst removes particulates

Acronal® MB – from biomass to dispersions

Trilon M® phosphate alternative for dishwashing detergents

SLENTITE® high-performance insulation material

Green Sense® resource-efficient concrete production

ecovio® biodegradable polymer solution


0

0,.001

Earnings contribution 2016 2017–2018 Total

Operational excellenceDrivE with ~€1 billion targeted earnings contribution

DrivE program

Targeted annual earnings contribution of €1 billion from end of 2018 on

Optimization of processes and structures in all regions, including

– manufacturing

– incremental capacities

– productivity increase

Project timeline: 2016–2018

€350 million

€650 million

Goal €1 billion

Annual earnings contribution DrivEmillion €

1,000


Strong track record in operational excellence

* Excl. companies with major IFRS 10/11 restatements, i.e. BASF YPC Nanjing, Libya onshore, other Oil & Gas and Catalysts companies

50

100

150

200

250

300

350

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

EBITDA

Sales

Fixed Costs

CAGREBITDA

8%

CAGRSales

4%

3%

CAGRFixed Costs

BASF Group* 2001–2016 indexed; CAGR 2001–2016


Digitalization will support BASF’s growth and efficiencyDigital Business Models

Smart Innovation

Smart Supply Chain

Smart Manu-facturing

Growth

Digital business models Customer connectivity Digitalization in R&D

New revenue streams Increased supply share Higher innovation output

Predictive maintenance Augmented reality in production Smart supply chain

Increased capacity Increased work efficiency Reduced working capital

Efficiency


Agenda

At a glance1

Strategic levers2


Segments4


Earnings growth and strong cash flow generation – based on operational and financial strength

Financing highlights

Sound capital structure – with strong commitment to keep a solid A rating

Diversified financing strategy – with well-balanced bond profile in terms of maturity, investor base, and currencies


Financing strategy

Diversified debt financing instrumentsas of September 30, 2017

€20 billion debt issuance program (for long-term debt financing)

US$12.5 billion commercial paper program (for short-term debt financing)

Two broadly syndicated backup lines of €3 billion each (maturing in 2020 and 2022)

Financing strategy highlights

€16.2 billion*

* As of September 30, 2017, no outstanding commercial papers** Last confirmation Moody’s: October 17, 2017, S&P: October 18, 2017, Scope: October 18, 2017.

Our target: Keep a solid A rating (current ratings**: S&P A / Moody’s A1 / Scope A)

Bank loans21%

Other bonds24%

€-denominated bonds55%

BASF Creditor Story, November 2017 34* Nominal values, excluding industrial revenue and pollution control bonds of BASF Corporation.

Profile as of November 15, 2017 billion €*

Well-balanced bond and corporate loan maturity profile

1.10.3

0.9

0.2

0.60.5

0.7

1.3

1.0

1.7

1.0

1.3

0.8

1.8

0.3

0.81.3

0.2

1.0

0.0

0.5

1.0

1.5

2.0

>2032

1.9

20262023 2032

1.2

2029 20302028 20312027202520242019

2.0

2020 2022202120182017Bonds / corporate loans outstanding as of September 30, 2017Bonds issued / corporate loans drawn after September 30, 2017


Overview of bonds (1/3) as of November 15, 2017

Bond Term Issuer Volume ISIN CodeEUR Floating Rate Note 2017/2019 BASF SE EUR1.25 billion XS1718416586

0.875% EUR Bond 2017/2027 BASF SE EUR1.00 billion XS1718418103

1.625% EUR Bond 2017/2037 BASF SE EUR750 million XS1718417717

0.925% USD Bond with Warrant 2017/2023 BASF SE USD850 million

Bond with Warrant (DE000A2BPEU0)

Bond(DE000A2BPEV8)

Warrant(DE000A2BPEW6)

2.5% USD Bond 2017/2022 BASF SE USD500 million XS1551001768

1.75% GBP Bond 2017/2025 BASF SE GBP300 million XS1548422846


2.67% NOK Bond 2017/2029 BASF SE NOK1.60 billion XS1539109790

0.0% EUR Bond 2016/2020 BFE* EUR1.00 billion DE000A188WV3

0.75% EUR Bond 2016/2026 BFE* EUR500 million DE000A188WW1

* BASF Finance Europe N.V.


Bond Term Issuer Volume ISIN Code2.37% HKD Bond 2016/2031 BASF SE HKD1.30 billion XS1539109790


0.875% EUR Bond 2016/2031 BASF SE EUR500 million DE000A2BPA51





3.89% USPP Series A 2013/2025 BASF SE USD250 million N/A

4.09% USPP Series B 2013/2028 BASF SE USD700 million N/A

4.43% USPP Series C 2013/2034 BASF SE USD300 million N/A

3.675% NOK Bond 2013/2025 BASF SE NOK1.45 billion XS0932079717




Bond Term Issuer Volume ISIN CodeEUR Floating Rate Note 2013/2020 BASF SE EUR300 million XS0931272776


EUR Floating Rate Note 2013/2018 BASF SE EUR300 million XS0903325206


3% EUR Bond 2013/2033 BASF SE EUR500 million XS0885399583


2.0% EUR Bond 2012/2022 BASF SE EUR1.25 billion DE000A1R0XG3


4.875% EUR Bond 2003/2018 Ciba Specialty Chemicals Finance Luxembourg S.A. EUR500 million XS0170386998


Balance sheet remains strong

Total assets decreased slightly to €76.0 billion

Provisions for pension obligations decreased by €1.4 billion to €6.8 billion

Net debt at €12.3 billion(December 31, 2016: €14.4 billion)

Equity ratio at 43.9% (December 31, 2016: 42.6%)

Balance sheet September 30, 2017 vs. December 31, 2016billion €

Liquid funds*

Accountsreceivable

Long-termassets

Inventories

Other assets

Otherliabilities

Financialdebt

Equity

27.6 26.5

16.3 16.2

32.6 33.3

Dec 31, 2016 Sep 30, 20171.9 3.93.0 3.911.0

10.6

10.0 10.0

50.6 47.6

Dec 31, 2016 Sep 30, 2017

76.5 76.0

* Including marketable securities

76.5 76.0


BASF Creditor Relations TeamFrank WilhelmiHead of Corporate Finance Group

Dr. Lars BuddeSenior IR ManagerCreditor RelationsContact Details:Email: [email protected]: +49 621 60 91386Websites: www.basf.com/bonds

www.basf.com/anleihenThomas LangguthCorporate Finance Group

Niklas FrieseCorporate Finance Group


Agenda

At a glance1

Strategic levers2


Segments4


Intermediates728+10%

Monomers1,770+41%

Petrochemicals1,525+16%

€4,023+25%

Sales Q3 2017 vs. Q3 2016*million €

EBIT before special items* million €

488629

9581,120 1,102

0

400

800

1,200

Q3 Q4 Q1 Q2 Q3


2017

* Effective January 1, 2017, the Monomers and Dispersions & Pigments divisions’ activities for the electronics industry were combined into the global Electronic Materials business unit and allocated to the Dispersions & Pigments division in the Performance Products segment. The 2016 figures have been adjusted accordingly.

2016

ChemicalsHigher earnings driven by increased margins and higher volumes


Performance ProductsEBIT before special items declined, EBIT increased due to special incomefrom transfer of leather chemicals business

Performance Chemicals980+4%

Nutrition & Health451(11%)

Care Chemicals1,213+3%

€3,983+2%

EBIT before special items* million €

Sales Q3 2017 vs. Q3 2016*million €

Dispersions & Pigments1,339+3%

Sales development Volumes Prices Portfolio CurrenciesQ3 2017 vs. Q3 2016 6% 0% (1%) (3%)

473

237

515405 385

0

200

400

600

800

Q3 Q4 Q1 Q2 Q320172016

* Effective January 1, 2017, the Monomers and Dispersions & Pigments divisions’ activities for the electronics industry were combined into the global Electronic Materials business unit and allocated to the Dispersions & Pigments division in the Performance Products segment. The 2016 figures have been adjusted accordingly.


Functional Materials & Solutions Sales increased on good demand from automotive and construction, earnings declined

Coatings951+20%

Catalysts1,506 (3%)

ConstructionChemicals

618+2%

Performance Materials1,900+11%

€4,975+7%

497 458531

422 397

0

200

400

600

800

Q3 Q4 Q1 Q2 Q3

EBIT before special items million €

Sales Q3 2017 vs. Q3 2016million €


20172016


Agricultural SolutionsEarnings decreased, primarily due to the difficult market situation in Brazil

1,049 987

0

1,000

2,000

Q3 2016 Q3 2017


Sales development Volumes Prices Portfolio CurrenciesQ3 2017 vs. Q3 2016 5% (8%) 0% (3%)

EBIT before special items million €

97

21

0

100

200

300

Q3 2016 Q3 2017

(6%)

(78%)


Oil & GasHigher oil and gas prices and volumes, EBIT before special items lower due to one-time earnings effects in the prior-year quarter


194 180

33

139

0

100

200

300

Q3 2016 Q3 2017

Sales development Volumes Prices/Currencies PortfolioQ3 2017 vs. Q3 2016 9% 11% 0%

EBIT before special items Net income

618739

0

500

1,000

Q3 2016 Q3 2017

EBIT before special items, net income million €

+20%


Review of “Other”

million € Q3 2017 Q3 2016

Sales 548 538

EBIT before special items (325) (233)

Thereof Costs of corporate research (93) (77)

Costs of corporate headquarters (57) (54)

Foreign currency results, hedging and other measurement effects (116) (101)

Other businesses 13 15

Special items (5) (23)

EBIT (330) (256)


Cash flow development Q1 – Q3 2017

million € Q1 – Q3 2017 Q1 – Q3 2016

Cash provided by operating activities 7,597 5,840

Thereof Changes in net working capital 94 (393)

Miscellaneous items (190) (172)

Cash used in investing activities (3,413) (2,776)

Thereof Payments made for tangible / intangible assets (2,606) (2,915)

Acquisitions / divestitures (44) 212

Cash used in financing activities (1,546) (1,898)

Thereof Changes in financial liabilities 1,276 837

Dividends (2,841) (2,753)

Free cash flow 4,991 2,925

BASF Creditor Story, November 2017 48BASF Investor Day 2015 – Keynote speech 48

Ulf Loleit Senior Vice President Treasury - BASF · Ulf Loleit. Senior Vice President. Treasury ....

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