Download - BASF Capital Market Story Capital Market Story November 32013 Chemistry as an enabler BASF has superior growth opportunities: – sustainable innovations – investments

We add value as one company

Oil & Gas

Agricultural Solutions

Functional Materials & Solutions

Performance Products

Chemicals

Value

Magdalena Moll Amber Usman Investor Relations BASF BofA Merrill Lynch China Conference 2013 Beijing November 8, 2013

BASF Capital Market Story November 2013 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 €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 60 countries

10 years of strong sales and earnings growth

19% average annual total shareholder return**

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

Performance Perspective

** October 2003 – September 2013 *** for 2003-2012

Ludwigshafen, Germany

Antwerp, Belgium

Nanjing, China

Kuantan, Malaysia Geismar,

USA Freeport, USA

Verbund site

Positioning

* Restated numbers, reflecting IFRS 10/11 changes

We create chemistry for a sustainable future


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

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


Business review

BASF strategy & growth targets

Strategic levers


Robust 3rd quarter 2013 for BASF

Sales development Period Volumes Prices Portfolio Currencies

Q3’13 vs. Q3’12 6% (1%) 1% (5%)

Business performance Q3’13 vs. Q3’12 Q1-Q3’13 vs. Q1-Q3’12

Sales €17.7 billion +1.5% €55.8 billion +3%

EBITDA €2.5 billion +16% €7.8 billion (1%)

EBIT before special items €1.7 billion +15% €5.7 billion +6%

EBIT €1.7 billion +20% €5.6 billion (1%)

Net income €1.1 billion +18% €3.7 billion (4%)

Reported EPS €1.20 +19% €4.03 (4%)

Adjusted EPS €1.28 +10% €4.35 +1%

Operating cash flow €2.0 billion +21% €6.0 billion +19%


0

1

2

3

4

2003 2004 2005 2006 2007 2008 2009** 2010 2011 2012 Q1-Q32013

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

2.8 2.6

3.3 3.5

3.2

2.5

3.2

3.9 3.7

2.6 2.9


Delivering attractive shareholder returns

Dividend of €2.60 per share for 2012

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

2.60

3.7%

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

Dividend per share in €

CAGR 16%


We do not anticipate an acceleration of global economic growth in the 4th quarter of 2013

For the full year, BASF confirms its outlook: We strive to exceed the record levels in sales and EBIT before special items in a challenging economic environment

Our focus on growth markets and innovation, in combination with our measures to optimize our portfolio and to improve operational excellence, will contribute to this

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

Outlook 2013

GDP: +2.0% (unchanged)

Industrial production: +2.7% (unchanged)

Chemical production: +3.1% (unchanged)

US$ / Euro: 1.30 (unchanged)

Oil price (US$ / bbl): 105 (unchanged)

Assumptions 2013

Outlook 2013


Average annual performance with dividends reinvested

0 3 6 9 12 15 18 21

Euro Stoxx 50

DAX 30

MSCI World Chemicals

+10.2%

Last 5 years October 2008 – September 2013

+21.0%

+2.5%

+8.1%

+9.5%

Last 10 years October 2003 – September 2013

BASF

+11.3%

+5.0%

+18.6%

Delivering consistent, long-term value


Business review


Strategic levers


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


Innovation ~3,500 R&D staff

Market €25 billion sales

Portfolio >€2 billion sales from

new biz and acquisitions

People ~9,000 new jobs

Investment 75% OMP ratio

Excellence €1 billion cost savings

We create chemistry in Asia Pacific: 2020 targets


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.

Functionalized Materials & Solutions Customized Products Classical Chemicals

2020 in % of sales**

Chemical Industry First customer industries*


~ 40%

~ 30% ~ 70%


~ 50%

~ 60%

~ 50%


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 Statoil Monsanto Petronas Shell Sinopec Total

Selected transactions 2001 − today*

Acquisitions

~ €16bn 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)

Construction equipment, flooring systems

** Without Styrenics

Portfolio development Towards more market driven and innovative businesses

* Only closed deals have been considered


Portfolio development Asia Pacific Towards more market driven and innovative businesses

* only closed deals have been considered

~€3 billion sales in Asia Pacific

Acquisitions

Plastic additives, Pigments (Ciba)

Mining Safety Solutions (Hock)

Catalysts (Engelhard) Care Chemicals (Cognis) Construction Chemicals

(Degussa) Electronic Chemicals

(Merck, Novolyte) Health & Nutrition

(Takeda, Pronova) Crop Protection

(Becker Underwood)

BASF Core Business

Strong Partnerships

Petronas Sinopec Shell Hua Yi Heesung Sumitomo Metal Mining Huntsman

Selected Transactions 2001 − Today*

Divestitures

~€0.5 billion sales** in Asia Pacific

Pharma (Knoll) Printing systems Polyamide fibers

(Honeywell) Animal nutrition premix

business Styrenics (transferred into

Styrolution JV on Oct 1, 2011)

Selected transactions with relevant impact in Asia Pacific*

** without Styrenics


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

Petro- chemicals

Performance Materials

Bubble Size: BASF divisional sales by first customer industry (2012)*/**

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


Strong partnership with Hyundai.Kia success of our cross-divisional approach

Suspension: Jounce bumper,

Top mount, Coil Spring isolator

Lubricants, engine coolants

Spoiler, lower bumper stiffener

Headrests Roof module

Carpet, Floor mats

Seats, handrests, armrests

Steering wheel

ABS cable

Door side part

Dashboard

Headliner

Hatrack

Air-filter housing

Window encapsulation

Coatings, Pigments

Fuel additives

Leather and textile chemicals

Brake fluids

Engine encapsulation

Battery materials

Catalysts

Cross beam

Air intake manifold, charge-air lines

Oil pan

Wheel rim


Strong commitment to innovation Innovations for a sustainable future

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

€1.7 billion R&D expenditures in 2012, further increase 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

R&D expenditures in € billion

Chemicals 10%

Performance Products 20%

Functional Mat. & Sol. 20%

Agricultural Solutions 25%

Oil & Gas 2%

Corporate Research 23%

Key facts

2.0

1.5

1.0

0.5

0


Expand research capabilities in Asia Pacific with new R&D centers

R&D Center Korea (2013) Focus: electronics

R&D Center Singapore (2007) Focus: water, membrane, oilfield

R&D Center Australia (2012) Focus: mining

Innovation Campus Asia Pacific, Shanghai (2012) Focus: polymers & materials

Innovation Campus Asia Pacific, India (in planning) Focus: life science, agro

R&D Center Japan (2013) Focus: battery materials


BASF growth fields focus on enabling technologies

Health & Nutrition

Consumer Goods Construction Transportation Electronics Energy &

Resources Agriculture

Customer industries

Water solutions

Heat management

Enzymes Plant biotechnology

Batteries for mobility

Lightweight composites

Functional crop care

Medical Organic electronics

Growth Fields*

E-Power management

Wind energy

Resources, Environment & Climate Food & Nutrition Quality of life

Chemistry as enabler

* Including growth fields still under evaluation

Materials Systems & Nanotechnology

Raw Material Change

White Biotechnology

Techno-logy

fields


Battery materials will play a key role in advancing electromobility of the future Focus Advanced cathodes and electrolytes development for lithium-ion batteries, as well as next-generation battery systems

Business potential 2020 Overall market size: >€20 billion globally (~€16 billion in Asia Pacific) SRM size: >€5 billion globally (~€4 billion in Asia Pacific) BASF sales potential: >€500 million globally (~€350 million in Asia Pacif.)

Activities Acquisition of Novolyte Technologies (April 2012), including production

facility, Application Technology Center in Suzhou, China New electrolytes R&D laboratory and Application Technology Center for

Battery Materials starting up in Amagasaki, Japan, 2013 Ongoing collaboration with leading universities, institutes and industry

partners, as well as battery producers and OEMs

Target Position BASF as a leading global solution provider for battery and cell

manufacturers


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

Future investments in € billion


Major investment projects Asia Pacific MDI plant Location: Chongqing, China Planned start-up: 2014 Investment: ~€860 million

Isononanol (INA) plant Location: Maoming, China Planned start-up: 2015

Aroma ingredients complex Location: Kuantan, Malaysia Planned start-up: 2016 Investment: US$500 million (100%)

Expansion of Verbund site Location: Nanjing, China Feasibility studies ongoing Investment: up to US$1 billion (100%)

Polyurethanes, Surfactants & Dispersions Location: Dahej, India Planned start-up: 2014 Investment: €150 million


Korla

Tibet

Qinghai

Inner Mongolia

Heilongjiang

Shandong

Liaoning

Hebei

Sichuan

Henan

Anhui

Nanjing

Jilin

Gansu

Ningxia

Shaanxi

Shanxi

Hubei

Hunan

Zhejiang

Fujian

Jiangxi

Guangxi Yunnan

Guizhou

Taiwan

Hainan

Beijing Tianjin

Shanghai

Maoming

Current investment projects Since 1992 BASF and partners invested ~€5 billion in China

Until 2020 BASF and partners will invest €4 - 5 billion in China

Major current projects:

– Nanjing: Acrylic acid (BASF-YPC) SAP

– Chongqing: MDI – Korla: Butanediol,

PolyTHF – Shanghai: Coatings – Shanghai: Catalysts – Maoming: Isononanol – Kaohsiung: Catamold® – Rudong: Agrochemicals Production clusters

Selected production sites

Implement €4 - 5 billion investment plan to move closer to the customers

Chongqing

Rudong

Kaohsiung


BASF aims to further increase its sales share from emerging markets

*BASF definition: Developed markets include EU15, Norway, Switzerland, North America, Japan, Australia, New Zealand

** Sales excluding Oil & Gas


2012 in % of sales

(€62bn**)

2001 in % of sales

(€28 bn**)

Emerging markets Developed markets*

~ 65%

~ 55% ~ 45%

~ 78%

~ 35%

~ 22%


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

2012 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 contri-bution 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


€1 billion cost savings by 2020

Shared services (Finance, IS/IT, etc.)

Procurement Supply chain Functional efficiency

initiatives

Functional Excellence

Savings in investment costs and depreciation

Investment Process Excellence

Raw material savings through yield increases

Energy and utilities Production efficiency

gains

Operational Excellence Structural Excellence

BU efficiency targets (e.g. sales efficiency)

Structural Excellence Program

Regional excellence initiative will drive Asia Pacific’s profitable growth


Appendix 1:

Q3 2013 Reporting


Cash offer of 4 US dollars per share

Offer expires on October 31, 2013

Enterprise value ~62 million US dollars

Acquisition will strengthen BASF‘s footprint in the enzyme growth market

Optimization of global production network

Reduction of 650 positions worldwide

Investment of €250 million in production and R&D

Transaction completed July 31, 2013

Increased production from 3,000 to ~40,000 boe per day in Norway

Compensation payment of ~781 million US dollars*

Important corporate developments

Transaction with Statoil completed

Restructuring in Pigments business

Cash offer for Verenium enzyme biotechnology

* Euro/dollar exchange rate July 31, 2013: €1 = $1.3275


Chemicals Pressure on volumes and margins

Intermediates 700 (7%)

Monomers 1,599 (11%)

Petrochemicals 1,925 (6%)

€4,224 (8%)

Q3’13 segment sales (million €) vs. Q3’12


Q3’13 vs. Q3’12 (2%) (3%) 0% (3%)

EBIT before special items (million €)

569445

650

495 527

0

200

400

600

800

Q3 Q4 Q1 Q2 Q3

2013 2012


Performance Products Growth in volumes and earnings

Performance Chemicals

896 (3%)

Care Chemicals 1,209 (1%)

€3,939(1%)

Paper Chemicals 365 (8%)


Nutrition & Health 540 +10% Dispersions

& Pigments 929

(2%)



Q3’13 vs. Q3’12 6% (3%) 1% (5%)

344

183

379 394 376

0

200

400

600

Q3 Q4 Q1 Q2 Q3

2013 2012


Functional Materials & Solutions Sound overall demand, especially in automotive

Catalysts 1,466 +12%

Construction Chemicals

576 (9%)

Coatings 728

(5%)

€4,439+3%



Q3’13 vs. Q3’12 8% 2% (1%) (6%)

Performance Materials 1,669 +5%

231 228 239293 300

0

200

400

600

Q3 Q4 Q1 Q2 Q3


2013 2012


Agricultural Solutions Sales growth despite pronounced currency headwinds



Q3’13 vs. Q3’12 8% 4% 3% (10%)

0

100

200

Q3 Q30

300

600

900

1.200

Q3 Q3

1,054 172 171 1,008


2013 2012 2013 2012


103

318

62

451

0

100

200

300

400

500

Q3/2012 Net Income Q3/2013 Net Income

Oil & Gas Substantially higher net income

Exploration & Production

754 +15%

Natural Gas Trading 2,376 +29%

€3,130 +25%

Q3’13 segment sales (million €) vs. Q3’12 EBIT bSI/Net income (million €)

Natural Gas Trading

Exploration & Production

Net income

Sales development Period Volumes Prices/Currencies Portfolio

Q3’13 vs. Q3’12 22% (2%) 5%

499

396 360

422


Appendix 2:

Asia Pacific Business Review

39

BASF Capital Market Story November 2013

Customers from 17 countries

More than 100 production sites

148 sales offices*

~16,400 employees, thereof 800 R&D staff

Sales in 2012: ~€12.5 billion**

EBITDA in 2012: €1.2 billion***

BASF in Asia Pacific

* Some sites are not shown due to scale. Site and office numbers refer to companies of significant size where BASF holds a stake greater than 50% .

** Sales by location of customer

*** EBIT by location of company

All figures for 2012 have been adjusted to changes in IFRS 10 & 11

Regional headquarters

Verbund site

Production site

R&D/Technical center

Asia Pacific service center

Singapore

Hong Kong

Japan South Korea

Mongolia

China

Pakistan

India

Sri Lanka

Bangladesh

Thailand Vietnam Philippines

Indonesia

Taiwan

Malaysia

Australia

New Zealand

40


EBITDA by location of company € billion

0.6 0.7

0.8

1.2

0.8 0.9

1.7 1.6

1.4 1.2*

0

1

2

2004

2005

2006

2007

2008

2009

2010

2011

2012

2012

r

5.3 6.5

8.1 9.6 9.3 8.7

12.5 14.4 14.9

12.5*

0

10

20

2004

2005

2006

2007

2008

2009

2010

2011

2012

2012

r

Sales by location of customer € billion

* 2012r figures restated according to changes in IFRS 10 & 11

Sales and profitability in Asia Pacific

+14% p.a.

+11% p.a.

41


Functional Materials &

Solutions 30%

Sales by segment

Chemicals 31%

Other 8%

Performance Products 27% Greater

China 42%

Australia, New Zealand (ANZ)

4%

South Asia 11%

Japan 13%

South Korea 8%

ASEAN 22%

€12.5 billion

€12.5 billion

Sales by sub-region

Agricultural Solutions 4%

Figures for 2012 adjusted to changes in IFRS and new segment structure as of January 1, 2013.

Sales Asia Pacific 2012

South Asia: India, Pakistan, Bangladesh, Sri Lanka ASEAN: Singapore, Philippines, Vietnam,

Thailand, Indonesia, Malaysia

Sales to third parties by location of customers

42


0

8

16

0 8 16SRM growth 2010-2020 (%)

BAS

F’s

annu

al s

ales

gro

wth

201

0-20

20 (%

)

South Asia

ASEAN

South Korea

Greater China

ANZ

Japan

3rd party net sales in 2010

SRM = Strategic Relevant Market

BASF will generate highest sales growth in Greater China, South Asia and ASEAN

Sales vs. SRM growth by sub-region

43


Task forces will explore untapped markets in Asia Pacific

Mongolia

Myanmar

Laos

Cambodia

GDP (nominal) in 2012

Source: GDP: United Nations; Mongolia sales: WASP; Cambodia, Laos, Myanmar: ASEAN sub-region

Total Population 2012: 72.4 million 2020: 77.8 million

Mongolia (GDP: US$10.2 billion) Natural mineral & mining industry Construction Agriculture

Laos (GDP: US$8.9 billion) Low cost labor Agriculture (livestock & crop)

Myanmar (GDP: US$54.0 billion) Natural resources (e.g. gas) Newly opening attractive market

Cambodia (GDP: US$14.4 billion) Low cost labor Textile industry Agriculture


Appendix 3:

others

45


Index Revenue (2001 = 1) Ratio capex / depreciation

Capex as percentage of sales

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

0

0,5

1

1,5

2

2,5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Investments: Capex for organic growth* develops in line with business growth

Ratio capex/ depreciation

Revenue

Capex as % of sales

* Without acquisitions


46