We add value as - BASF€¦ · BASF Capital Market Story September 2014 12 We aim to increase our...

We add value as one company

Michael Heinz Member of the Board of Executive Directors Roadshow Copenhagen September 23, 2014

BASF Capital Market Story September 2014 2

Cautionary note regarding forward-looking statements

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 €74 billion sales, €7.2 billion

EBIT bSI in 2013 #1-3 in >75% of businesses,

present in >200 countries 6 integrated Verbund sites,

production in 60 countries

A track record of strong sales and earnings growth

14% average annual dividend increase, >3% yield in every single year*

> €72 billion market capitalization in Aug. 2014

Performance Perspective

* for 2004-2013

Ludwigshafen, Germany

Antwerp, Belgium

Nanjing, China

Kuantan, Malaysia Geismar,

USA Freeport, USA

Verbund site

Positioning

We create chemistry for a sustainable future


Percentage of sales 2013*

* Not depicted here: ~6% of Group sales reported as ‘Other‘

BASF today – a well-balanced portfolio Total sales 2013: €74 billion


Global reduction in carbon emissions of 6.1 million metric tons/a. and reduction of waste

Example Ludwigshafen: avoidance of 7 million metric tons of freight/a. = 280,000 fewer truckloads

Shared use of on-site facilities: fire department, security, waste water treatment and analytics

Verbund generates >€1 billion p.a. global cost savings*, supports sustainability

* Savings include only tangible synergies. Additional (intangible) benefits and retained profits are not included.


Business review

BASF strategy & growth targets

Strategic levers


BASF outperformed global chemical production by ~3 percentage points p.a. Sales to third parties billion €

33

79

72

74

16.6

20.7 -4.8

13.7 -6.6

3.7 -0.5 -2.0 0.6

20

40

60

80

2001 2012 2012 restated

2013

Volumes

Prices

Currencies M&A

Volumes Prices Currencies M&A

IFRS Impact


Operational excellence Strong track record

BASF Group* 2001–2013 Index

50

100

150

200

250

300

350

2001 2006 2009 2012

CAGR 2001 – 2013

10 %

8 %

3 %

EBITDA

Sales

Fixed costs

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

2013


0

1

2

3

4

2004 2005 2006 2007 2008 2009** 2010 2011 2012 2013 1H2014

Strong free cash flow generation

* 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

2.6

3.3 3.5

3.2

2.5

3.2

3.9 3.7

2.6

3.2

0.5


0.851.00

1.50

1.95 1.951.70

2.202.50

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Attractive dividend yield

Dividend of €2.70 per share for 2013, an increase of 3.8%

2004-2013: Average annual dividend increase of ~14%

Attractive dividend yield of 3.5% in 2013**

Dividend yield above 3% in any given year since 2004

* 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%

2.60 2.70

3.7%

** Based on BASF share price of €77.49 on Dec. 30, 2013

Dividend per share in €

CAGR 14%

3.5%


Average annual performance with dividends reinvested

0 3 6 9 12 15 18 21

Euro Stoxx 50

DAX 30

MSCI World Chemicals

+9.6%

Last 5 years September 2009 – August 2014

+20.8%

+6.1%

+11.6%

+13.9%

Last 10 years September 2004 – August 2014

BASF

+11.0%

+4.9%

+17.8%

Delivering consistent, long-term value


We aim to increase our sales volumes excluding the effects of acquisitions and divestitures.

Nonetheless, sales will decline slightly compared with 2013 due to the divestiture of the gas trading and storage business planned for autumn 2014 and negative currency effects.

We expect a slight increase in EBIT before special items, especially as a result of considerably higher contributions from the Performance Products and Functional Materials & Solutions segments.

We aim to earn a high premium on our cost of capital once again in 2014.

Outlook 2014

GDP: +2.5% (previous: 2.8%)

Industrial production: +3.7%

Chemical production: +4.4%

US$ / Euro: 1.35 (previous: 1.30)

Oil price (US$ / bbl): 110

Assumptions 2014

Outlook 2014 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

Resources, Environment & Climate Food & Nutrition Quality of Life

Chemistry as enabler


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

Key financial targets 2015 / 2020 are ambitious


Business review


Strategic levers – Portfolio development

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


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.


Catalysts Construction chemicals Water-based resins Pigments, plastic additives Oil & Gas Personal care & food Battery materials Functional crop care Omega-3 fatty acids Enzymes …

BASF core business

Strong partnerships

Gazprom Monsanto Petronas Shell Sinopec Statoil Total

Selected transactions 2004 − today

Acquisitions

~ €14 billion sales

Divestitures

Printing systems Agro generics Vitamin premixes Styrenics Fertilizers Construction equipment,

flooring and wall systems Natural gas trading and

storage business …

~ €16 billion sales*

Portfolio development Towards more market driven and innovative businesses

* Without styrenics (transferred into Styrolution JV on Oct. 1, 2011). Natural Gas Trading: Closing expected in autumn 2014


Monomers

Intermediates

Dispersions & Pigments

Performance Chemicals

Care Chemicals

Paper Chemicals

Coatings

Catalysts

Construction Chemicals

BASF sales by first customer industry*

> 15 %

> 10 %

< 10 %

> 15 %

Consumer goods

Transportation

Construction

Energy & Resources

Market approach Cross-divisional customer industry approach

* Excluding Oil & Gas, Crop Protection and Other. 2012 numbers

Petro- chemicals

Performance Materials

Bubble Size: BASF divisional sales by first customer industry*/**

** Nutrition & Health sales predominantly into Health & Nutrition market


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 BASF’s technology Verbund combined with customer know-how

Daimler & BASF concept car ‘Smartforvision’


Customer Verbund - adidas and BASF Working together for disruptive innovation: Infinergy™


Strong commitment to innovation Innovations for a sustainable future

1.4 1.5

1.6 1.7

1.8

0,0

0,5

1,0

1,5

2,0

2009 2010 2011 2012 2013

€1.8 billion R&D expenditure in 2013, further increase of R&D spending planned in 2014

~10,650 employees in R&D

~3,000 projects

Research Verbund: Cooperations with ~600 excellent partners from universities, start-ups and industry

Target 2015 and 2020:

– €10 billion in sales from innovations younger 5 years

– €30 billion in sales from innovations younger 10 years

R&D expenditures in € billion

Chemicals 10%

Performance Products 20%

Functional Mat. & Sol. 20%

Agricultural Solutions 26%

Oil & Gas 3%

Corporate Research 21%

Key facts

2.0

1.5

1.0

0.5

0


Chemistry-based innovations Growth and technology fields

Growth fields

Resources, Environment & Climate

Food & Nutrition

Quality of Life White Biotechnology

Materials, Systems & Nanotechnology

Raw Material Change

Key customer industries

Health & Nutrition

Consumer Goods

Transportation

Energy & Resources

Electronics

Agriculture

Construction

Technology fields Global needs

...

Batteries for Mobility

Enzymes

Heat Management for Construction

Organic Electronics

Functional Crop Care

Plant Biotechnology

E-Power Management

Wind Energy

Lightweight Composites

Water Solutions


Growth field example: Enzymes Innovation-driven specialties for various markets

Become a major player in enzyme technology; sales target of >€400million (2020)

Textile / Leather

Oilfield Water Biofuels

Detergents

Processed food

Beverages

Bakery Feed

Existing business mainly with enzymes for animal nutrition

Acquired Henkel's detergent enzyme technology

Entered into research and license agreement with Dyadic to access C1-host technology

Successfully acquired enzyme biotechnology company Verenium

R&D pipeline is reinforced with several new projects

Enzymes know-how leveraged with chemical ingredients

Pulp & Paper

The fungus Aspergillus niger is a powerful production host for feed enzymes.


Performance Products 15%

Oil & Gas 20%

€20 billion

Functional Materials & Solutions 12%

Capex budget 2014-2018

Other 13%

Chemicals 33%

Capex budget 2014-2018

Asia Pacific 18%

€20 billion

South America 4%

North America 25%

Europe 49%

Agricultural Solutions 7%

Other 4%

by segment by region

Investments Capex budget 2014-2018 by segment and region*

* Source: BASF Report 2013


Expansion oil & gas activities

Aroma Ingredients Kuantan, Malaysia

Investments Major projects

Ammonia and gas-to-propylene in USA*

MDI plant Chongqing, China

Acrylic acid complex Camacari, Brazil

TDI plant Ludwigshafen, Germany

* Under evaluation


Acquisitions … will contribute to profitable growth in the future

Provide a minimum return on investment of 8% p.a. 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 …


0

1,000

2,000

3,000

2013 2015

Former cost saving programs NEXT STEP

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

Annual earnings contribution in € million

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

Optimization of processes and structures in all regions, e.g. manufacturing, maintenance supply chain engineering, best-cost country

sourcing

Project timeline: 2012–2015

Program is on track

Total of ~€600 million achieved by the end of 2013

One-time cost & investments: ~€1 billion

STEP program


Appendix I:

Q2 2014 Reporting


BASF increases earnings considerably due to higher volumes

Business performance Q2’14 Q2’13 vs. Q2’13 Sales €18.5 billion €18.4 billion +1% EBITDA €2.7 billion €2.5 billion +10% EBIT before special items €2.1 billion €1.8 billion +12% EBIT €2.0 billion €1.8 billion +14% Net income €1.3 billion €1.2 billion +12% Reported EPS €1.41 €1.26 +12% Adjusted EPS €1.54 €1.40 +10% Operating cash flow €0.9 billion €2.0 billion (53%)

Sales development Period Volumes Prices Portfolio Currencies

Q2’14 vs. Q2’13 6% (2%) 1% (4%)


Portfolio optimization

Strengthen competitiveness of Performance Products

Sale of 50% share in Styrolution to Ineos

Capacity expansions in Functional Materials and Solutions

Enlarged production footprint in Asia Pacific to support growing demand


Restructuring in Performance Products Announced measures to strengthen competitiveness

Division Measures Leather and textile chemicals (March 18, 2013)

Establishment of global innovation center in China Optimization of various functions and relocation to Asia Pacific

Water, oilfield and mining chemicals (March 27, 2013)

Establishment of global business unit to realize synergies Divestment of industrial water management business

Plastic additives and pigments (April 23, 2013)

Adjustments: sites in the Basel area to adapt to changed market conditions Downsizing of R&D activities

Pigments (October 23, 2013)

Optimization of global production network Closure, restructuring, evaluation of strategic options for production assets

Paper Chemicals (January 23, 2014)

Shutdown of latex production in Europe Ongoing portfolio optimization

Nutrition & Health (April 25, 2014)

Adaption of product portfolio and organizational processes to market realities

Care Chemicals (June 5, 2014)

Measures to adapt to changed customer needs/market conditions: Home Care, Industrial & Institutional Cleaning, Formulation Technologies businesses

Ongoing efficiency projects in various businesses

Site closures and relocations Adaption of organizational setup to market needs

One-time costs in the magnitude of ~€250-300 million

Reduction of >2000 positions until end of 2017

Annual earnings contribution of ~€500 million from 2017 onwards


Chemicals North America drives volume and profit growth

Intermediates 701

(2%)

Monomers 1,578 (2%)

Petrochemicals 2,019 +9%

€4,298 +3%

Q2’14 segment sales (million €) vs. Q2’13


Q2’14 vs. Q2’13 9% (3%) 0% (3%)

EBIT before special items (million €)

495 527 510601 570

0

200

400

600

800

Q2 Q3 Q4 Q1 Q2

2014 2013


Performance Products Restructuring measures increase earnings

Performance Chemicals

824 (3%)

Care Chemicals 1,204 (2%)

€3,924(3%)

Paper Chemicals 342 (8%)


Nutrition & Health 520 (4)% Dispersions

& Pigments 1,034

0%



Q2’14 vs. Q2’13 1% 0% 0% (4%)

2014 2013

394 376

216

427 435

0

200

400

600

Q2 Q3 Q4 Q1 Q2


Functional Materials & Solutions Continued good demand from automotive industry

Catalysts 1,528 +4%

Construction Chemicals

541 (8%)

Coatings 756

+1%

€4,5180%



Q2’14 vs. Q2’13 6% 0% (1%) (5%)

Performance Materials 1,693 (0%)


2014 2013

293 300238

311356

0

200

400

600

Q2 Q3 Q4 Q1 Q2


Agricultural Solutions Exchange rate driven sales and earnings decrease



Q2’14 vs. Q2’13 0% 2% 0% (6%)

0

200

400

600

Q2 Q20

500

1.000

1.500

2.000

Q2 Q2

1,666 433

485 1,727


2014 2013 2014 2013


Oil & Gas Higher production volumes drive earnings

Exploration & Production

807 +54%

Natural Gas Trading 2,387 +3% €3,194

+13%

Q2’14 segment sales (million €) vs. Q2’13 EBIT bSI/Net income (million €)

Natural Gas Trading

Exploration & Production

Net income

Sales development Period Volumes Prices/Currencies Portfolio

Q2’14 vs. Q2’13 24% 16% 5%

382

322

477

587

59

280110

393

0

100

200

300

400

500

600

Q2/2013 Net Income Q2/2014 Net Income

323 477


Review of “Other”

Million € Q2’14 Q2’13 Sales 855 1,072 EBIT before special items (328) (217) thereof Corporate research

Group corporate costs Foreign currency results, hedges and other measurement effects Other businesses

(97) (57)

(117)

37

(97) (58) (63)

37

Special items (12) 3

EBIT (340) (214)


Operating cash flow in H1 2014 Million € H1’14 H1’13 Cash provided by operating activities 2,644 4,030 thereof Changes in net working capital Miscellaneous items

(1,375) (153)

(633) 646

Cash used in investing activities (2,301) (2,582) thereof Payments related to tangible / intangible assets (2,125) (1,884) Acquisitions / divestitures 355 (516) Cash provided by financing activities 189 (823) thereof Changes in financial liabilities Dividends

2781 (2592)

1,762 (2585)


Balance sheet remains strong Balance sheet June 30, 2014 vs. December 31, 2013 (billion €)

Liquid funds

Accounts receivable

Long-term assets

37.1

9.4

1.8

Other liabilities

Financial debt

Stockholders’ equity

Dec 31 2013

June 30 2014

June 30 2014

Dec 31 2013

64.4

Inventories

Other assets

9.6

3.7

Highlights June 30, 2014 Short-term assets increased by

€2.6 billion: - Accounts receivables grew

seasonally by €1.0 billion - Liquid funds up by €0.6 billion

Net debt increased to €14.6

billion Equity ratio: 39%

38.5

10.4

2.4

9.8

3.7

68.4

3.6 Disposal group

Disposal group 2.8

27.8

20.9

64.4

1.3

26.9

22.9

1.6

68.4

17.0 14.4


Appendix II:

Chemicals Day


Balanced portfolio of products for internal supply and merchant market sales

Industrial gases Acetylene Purified ethylene

oxide Formaldehyde Ammonia Cracker products Butanediol Caprolactam PBT** base resin Acrylic acid MDI

Internal supply driven

TDI PolyTHF®

Amines Higher alcohols Polyalcohols and

specialties Formic acid Inorganic salts Glues and resins

Merchant market driven

** Polybutylene terephthalate

captive use only


Sales to other BASF segments

Sales to 3rd parties

Chemicals segment grows by selling into the BASF Verbund and to the market

* IFRS 10 & 11 impact: -€1.3Bn; Impact of new segment structure: +€5.3Bn ** Without Catalysts (now part of Functional Materials & Solutions segment)


0

100

200

300

400

500

2001 2002 2003 2004 2005 2006* 2007* 2008 2009 2010 2011 2012restated

2013

EBITDA margin Chemicals / oil price Index 2001 = 100

Chemicals with stable profitability, little correlation to oil price

EBITDA margin Chemicals (as % of sales)

Oil price

* Without Catalysts (now part of Functional Materials & Solutions segment)


EBIT after cost of capital Chemicals

EBIT after cost of capital* in million €

restated

Chemicals earned a premium on cost of capital even during the 2008 / 2009 recession*** * EBIT after cost of capital concept was introduced in 2004.

*** The former Plastics segment also earned a premium on cost of capital during the 2008 / 2009 recession.

Chemicals is a strong earnings contributor

0

500

1.000

1.500

2.000

2004 2005 2006** 2007** 2008 2009 2010 2011 2012 2013

2,000

1,500

1,000

500

0

** Without Catalysts (now part of Functional Materials & Solutions segment)


2001 2002 2003 2004 2005 2006* 2007* 2008 2009 2010 2011 2012restated

2013

Chemicals generates strong and steady free cash flow

Cash flow Chemicals in million €


Free cash flow (EBITDA – additions to plant, property & equipment)

Since 2001, Chemicals contributed ~€17 billion of free cash flow to BASF Group

Operating cash flow (EBITDA)

2,000

3,000

4,000

1,000

-1,000

0


Increasing usage of alternative feedstock in global chemicals market


.

Europe Ongoing restructuring of olefins and polyolefins industry Focus on innovative chemistry Integrated production setups will remain competitive

North America New capacities based on shale gas Export of NGLs*/ LPG** and base-products

China Strong domestic demand will drive capacity additions Abundant coal reserves drive coal-to-chemicals investments Expected to remain a net importer of many basic chemicals

Middle East Diminishing feedstock advantage due to shale gas

(USA) and coal (China) Export hub for raw materials and base-products

South America Focus on renewable resources Will remain net importer of chemicals from the U.S.

Raw material supply and integration concepts will define competitiveness

* Natural Gas Liquids ** Liquefied Petroleum Gas


Shale gas in the U.S.: Lower energy and feedstock cost

Increased U.S. shale gas production disconnected crude oil prices from natural gas prices in North America

Increased production of natural gas liquids (NGLs): ethane, propane, butane

NGL price drop drives shift to lighter cracker feed slates

– Improved profitability of light feed crackers

– Narrow cracker output

Game changer shale gas

Source: IHS Inc. The use of this content was authorized in advance by IHS. Any further use or redistribution of this content is strictly prohibited without written permission by IHS. All rights reserved. Natural gas price Germany: Statistisches Bundesamt “Grenzübergabepreis” Germany


Natural Gas Liquids Ethane Propane Butane

► Cracker Feed

Shale gas is beneficial for methane and ethane based chemistry

Methane and ethane to retain their advantageous cost position in North America

Low transportability of ethane ► Shift to ethane crackers

Propane and butane easy to transport ► Export with link to global market

Very limited transportability of methane

Methane to remain an abundant product with low pricing in North America (despite LNG projects)

Methane ► Power plants ► Ammonia ► Methanol

Composition of shale gas


Ammonia joint venture* enables low raw materials costs for BASF downstreams

World-scale producer economics plant with focus on captive demand only (BASF)

Site: BASF Verbund site Freeport, Texas

Capacity: 750 kt p.a.

Advantages of hydrogen & nitrogen based technology:

– Lower capital investment

– No greenhouse gas emissions

– Faster execution

Improved cost position for BASF’s downstream products

Caprolactam Isocyanates Amines

Yara

…

Long-term sourcing contracts

Yara-BASF joint venture

BASF Group

Ammonia

Nitrogen** Hydrogen**

merchant market

* Project under evaluation ** Hydrogen and nitrogen are available in the Freeport area


Gas-to-propylene complex* covers internal demand at attractive conditions

U.S. Gulf Coast location

World-scale plant

Start-up: ~2019

Port Arthur cracker and new on-purpose propylene complex to cover entire captive propylene demand

Mid-term no sales to merchant market

Lower cost than alternative PDH technology

Cost leading gas-to-propylene technology covers supply gap

Propylene supply North America

Acrylic acid Oxo-alcohols Polyols …

Propylene Propylene (Port Arthur cracker)

Downstream products

Methanol

Methane (from shale gas)

Flexible feed (NGL’s, Naphtha)

* Project under evaluation


Chemicals supplies key raw materials to BASF downstream segments


Merchant Market

Value chains of the BASF

Verbund

Ethylene Propylene Butadiene

Close to entire cracker output in Ludwigshafen is used within Verbund

<5%

Raffinates Aromatics …

Cracker products Ludwigshafen

>95%

BASF-YPC Nanjing supply for captive demand:

2006: 60% 2014: 75% BASF SE, Ludwigshafen, Germany BASF Investor Day Chemicals segment – Key note speech, May 22, 2014 54


Philosophy of transfer pricing Safe and flexible supply at competitive prices Transfer prices linked to market prices No cross-subsidizing Value driven management in all steps of the

value chain

Additional Verbund benefits Flexible planning along value chains High security of supply, low logistics costs,

no sales and sourcing costs Joint quality management Joint engineering and process development Cross-functional knowledge exchange Additional capacity at Verbund sites dilutes fixed costs

Chemicals is at the heart of the BASF Production Verbund

Additional Verbund benefits

Transfer pricing

Downstream divisions

Chemicals segment


0%

2%

4%

6%

8%

10%

12%

14%

16%

0

50

100

150

200

250

300

350

400

2000 2001 2002 2003 2004 2005 2006* 2007* 2008 2009 2010 2011 2012 2013 2014 2015 2016restated

Consolidated sales indexed (2000 = 100)

Capex as % of sales

Capex focused on organic growth as well as on bottom-line improving projects

Capex as % of sales Chemicals segment

Consolidated sales Chemicals segment

Capex outlook



Chemicals enable growth of downstream businesses

Chemicals benefit from downstream growth

Investment projects mainly improve cost positions

Key success factors Operational and commercial

excellence Process innovation Focused and disciplined

capex plan Further Verbund integration

Chemicals will continue to contribute to BASF profit

Sales Chemicals in billion €

BASF’s Chemicals segment: The success story continues!

EBITDA Chemicals in billion €

0

5

10

15

20

25

30

35

2013 Target 2020

Sales to third parties

Intersegmental transfers EBITDA Chemicals

CAGR 2013-2020 4-5%

0

5

10

15

2013 Target 2020

EBITDA upside range

CAGR 2013-2020 6-7.5%


BASF’s Chemicals segment is a strong cash and earnings contributor We will ► continue to strengthen the Verbund, create synergies and

add value ► maintain our high level of profitability through process

innovations and stringent cost management ► grow externally with the chemicals market

Our strategic focus is to enable and support growth of ► BASF’s downstream segments ► BASF in emerging markets

Shale gas is an opportunity for BASF


Appendix III:

Overview BASF Care Chemicals


Well positioned for future growth Optimization initiatives started in 2012

Successful integration of acquisitions

2012 transfer of businesses to other BASF divisions

2012 negatively impacted by significant decline in laurics oil prices, resumption of normal levels in 2013

Several internal optimization programs initiated

Site consolidation in Europe for alkoxylations (Fino Mornasco, Castellbisbal)

Since 2012: EBITDA margin is back on growth track

Optimization

Sales in billion €

Integration

EBITDA Margin indexed**

Cog

nis*

Cib

a

5.2

Laurics oil price effect Transferred businesses

Care Chemicals sales development

2.1 2.8

5.0 4.9

0,000

1,000

2,000

3,000

4,000

5,000

6,000

2009 2010 2011 2012 2013

6.0

5.0

4.0

3.0

2.0

1.0

0 0

50

100

150

* One time integration costs of € 290 million ** Starting 2011


Historic BASF position Current BASF position

1 Personal care ingredients

Home care ingredients

Hygiene

3

1

1 1

1

Ciba BASF Cognis

Cognis acquisition improves Care Chemicals market positions


Cognis: Delivering topline line growth & bottom line synergies

58

85

2013

Procurement cost savings

Consolidation of administrative structures

Production efficiency

Consolidation of IT landscape

Other

143

Labor

Non-labor

EBIT contribution of €143 million in 2013

217

580

58

145

2013 plan 2015

Sales

EBIT

In 2013 Care Chemicals represents ¾ of the total topline growth synergies

Growth synergies, EBIT effect on BASF in million €

Cost synergies in million €


Development of strategic relevant markets

0

10

20

30

40

50

2012 2020

38.5

51.0 3.6%

* Industrial & Institutional Cleaning

Personal Care: Characterized by low market volatility and high profitability. Combination with standard products offers significant advantages

Home Care: Emerging middle class and sustainable solutions fuel demand growth

Industrial & Institutional Cleaning: Opportunities from increased hygiene awareness and growth of public institutions in emerging markets

Hygiene: Special focus on adult incontinence and emerging market growth

11.2 15.3

17.7

22.3

3.0

4.5 6.6

8.9

Home Care and I&I* Hygiene Personal Care Others

Care Chemicals strategic relevant markets in billion €


Competitive edge through strong customer offers

Combination leads to larger share of customer attention resulting in stronger interaction

Marketing

Concepts

Customer


Broad offering of standard and specialty ingredients

Example: Home Care and Industrial & Institutional Cleaning

Broadest portfolio in industry

Deep understanding of market needs and formulation expertise

Leading innovator for our customers

Focus on continuous development of technology position

Cost benefits and security of supply through Verbund

Strong customer relationships

Low cost provider for

standard products

Innovation driven

business model

Simplification Tailored solutions Concepts Solution driven innovation Customer dialogue


.

Antwerp

Geismar Nanjing

Ludwigshafen

North America: 10 sites Asia Pacific: 9 sites Europe: 14 sites

South America: 3 sites

Focus on Specialties Hubs (Standard and Specialties)

Best of both: Hub and spoke concept Combining efficiency and effectiveness

Kuantan

Düsseldorf

Global footprint of Home Care and Industrial & Institutional Cleaning



Joint business development plan with strategic partners

Global organizational setup Cross divisional coordination within

BASF Best relationship management

in the industry Biggest innovation power for

our strategic partners

Annual plans with major players Localized technical support Production close to customers Market driven innovation Claim support Consumer & trend information

Offering special value proposition to our customers

Differentiated customer approach

Global Key Accounts Brand & Regional Customers



Market empathy + science excellence turn customer wishes into profitable offerings

MARKET EMPATHY Consumer empathy Marketing expertise Customer intimacy Market knowledge Trend know-how Competition understanding

PERFORMANCE

SCIENCE EXCELLENCE Intellectual property Scientific & production technology Formulation expertise Sustainability expertise Claim support (perceivable) Regulatory expertise

MEETS EMOTION



Innovation as major growth driver Many successful product launches in Personal Care

2013 2014

Shadownyl (Biological Active)

Tinosorb® A2B (UV Filter) Timica Terra Color

(Effect Pigments) Lamesoft (Skin Feel)

Skin Care Hair Care Concepts Plantaquat (Conditioner) Luviset One (Styling) Luviskol (Styling)

Cosmetic for real life Everlasting Beauty

Skin Care Hair Care Concepts Cetiol Ultimate (Emollient) Slim-Excess®

(Face & body contour) N N N

Vibracolor Moonlight Blue (Hair Color)

Ultrahold® Power

N N n

Validated conditioners typology system

>400 further innovation projects and concepts in the pipeline



.

Strong global research & development network

Development centers

Research centers

North America

Mexico Ecatepec

U.S.A Charlotte Cincinnati Freeport Long Island Stony Brook Tarrytown Wyandotte San Diego

South America Brazil

Jacarei Guaratingueta

Europe

Spain Barcelona

Italy Cesano Maderno

France Nancy Lyon Levallois-Perret Cedex

Switzerland Basel

Germany Düsseldorf Grenzach Ludwigshafen

Turkey Cayirova-Gebze

Asia Pacific

Japan Tokyo India

Mumbai

Thailand Rayong Bangkok

South Korea Seoul

China Shanghai

R&D intensity clearly above BASF Group average



Opening up new growth fields

Enzymes are key performance ingredients in modern detergent formulations

Size of industrial enzymes market: €3 billion Care Chemicals is entering the detergent enzyme market Expansion into enzyme technology will increase BASF’s

position as innovation leader

Bioacrylics are derived from renewable resources Customers request bio-based products in order to market

their products with credible eco-claim Care Chemicals develops new tailor-made technologies for

superabsorbents from renewable raw materials

Home Care: Enzymes

Hygiene: Bioacrylics



100% sustainable sourcing of oleo chemicals by 2015 Segregated offer already available since 2013 Mass balance system SAP More than 85% of the R&D budget is earmarked for research into

sustainable products and processes

Sustainability: We show the way Dialogue platform with customers for sustainable development

Basic feedstock Supply Retailer Consumer BASF Customer

Sustainable sourcing Offerings Transport

options Needs &

perspectives Initiatives/ strategies

“Green” behavior

Care Chemicals Trigger Point Concept



Care Chemicals: Aims for strong top line growth and margin improvement

Sales in billion €

Growth Optimization

Integration

Cib

a

Care Chemicals sales development

2.1 2.8

5.2 5.0 4.9

0

50

100

150

0,000

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2009 2010 2011 2012 2013 projection2020

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0

* One time integration costs of € 290 million

Cog

nis*

EBITDA Margin

indexed**

** Starting 2011

74

BASF Capital Market Story September 2014

BASF Care Chemicals

Leading supplier to large, attractive consumer markets

Strong technology footprint & formulation know-how

Understanding customer needs and developing customized solutions

Strong profile as sustainability leader

Capitalizing on accelerated growth in emerging markets

Bolt-on acquisitions in new growth fields

► Aim to grow faster than our strategic relevant markets Profitability above BASF average

We add value as - BASF€¦ · BASF Capital Market Story September 2014 12 We aim to increase our...

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