Value. We add value as one company. Florian Greger Director Investor Relations. Chemicals. Performance Products. Oil & Gas. Functional Materials

Transcription

1 Florian Greger Director Investor Relations Redburn European Conference Chemicals Toronto November 21-22, 2013 Oil & Gas Performance Products Value Agricultural Solutions Functional Materials & Solutions We add value as one company

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 forwardlooking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations. BASF Capital Market Story November

3 We create chemistry for a sustainable future Positioning Performance Perspective Geismar, USA Freeport, USA Ludwigshafen, Germany Antwerp, Belgium Nanjing, China Kuantan, Malaysia Verbund site 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 16% average annual dividend increase, >3% yield in every single year** ~ 70 billion market capitalization*** Chemistry as an enabler BASF has superior growth opportunities: sustainable innovations investments emerging markets Ambitious financial targets BASF Capital Market Story November 2013 * Restated numbers, reflecting IFRS 10/11 changes ** for ***as of November 7,

4 BASF today a well-balanced portfolio Total sales 2012: 72.1 billion* Percentage of sales 2012** * Restated numbers, reflecting IFRS 10/11 changes, new segment structure effective Jan. 1, 2013 BASF Capital Market Story November 2013 ** Not depicted here: ~5% of Group sales reported as Other 4

5 Business review BASF strategy & growth targets Strategic levers BASF Capital Market Story November

6 Robust 3 rd quarter 2013 for BASF 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 % 4.03 (4%) Adjusted EPS % % Operating cash flow 2.0 billion +21% 6.0 billion +19% Sales development Period Volumes Prices Portfolio Currencies Q3 13 vs. Q3 12 6% (1%) 1% (5%) BASF Capital Market Story November

7 Strong free cash flow generation Free cash flow* in billion ** Q1-Q * Cash provided by operating activities less capex (in 2005 before CTA) BASF Capital Market Story November 2013 ** 2009 adjusted for re-classification of settlement payments for currency derivatives 7

8 Delivering attractive shareholder returns Dividend per share in 1.50 CAGR 16% Dividend payments Dividend of 2.60 per share for : 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* 3.1% 3.2% 3.1% 4.1% 3.8% 7.0% 3.9% 3.7% 4.6% 3.7% BASF Capital Market Story November 2013 * Dividend yield based on share price at year-end ** Based on BASF share price of on Dec. 28,

9 Outlook 2013 Outlook 2013 We do not anticipate an acceleration of global economic growth in the 4 th 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 Assumptions 2013 GDP: Industrial production: Chemical production: +2.0% (unchanged) +2.7% (unchanged) +3.1% (unchanged) US$ / Euro: 1.30 (unchanged) Oil price (US$ / bbl): 105 (unchanged) BASF Capital Market Story November

10 Delivering consistent, long-term value Average annual performance with dividends reinvested Last 10 years November 2003 October 2013 Last 5 years November 2008 October % BASF +29.4% +4.9% Euro Stoxx % +9.5% DAX % +10.8% MSCI World Chemicals +14.3% BASF Capital Market Story November

11 Business review BASF strategy & growth targets Strategic levers BASF Capital Market Story November

12 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 BASF Capital Market Story November

13 Key financial targets 2015 / 2020 are ambitious Growth targets Profitability targets 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 Sales ~ 80 billion EBITDA ~ 14 billion EPS ~ Sales ~ 110 billion EBITDA ~ 22 billion BASF Capital Market Story November

14 Business review BASF strategy & growth targets Strategic levers Portfolio development Market approach Innovations for a sustainable future Investments Acquisitions Operational excellence BASF Capital Market Story November

15 A different look at our current portfolio... Oil & Gas Classical Chemicals Customized Products Functionalized Materials & Solutions Excellent position and growth opportunities; synergies with chemical businesses Chemical business based on our production Verbund Customer-oriented specialties, backward integration in Verbund value chains Integration of competencies in chemistry: R&D, technology, market knowledge and global access to customer industries Exploration & production of oil and gas, gas trading activities Cracker products, plastizicers, acrylic acid, MDI/TDI PU systems, vitamins, personal care ingredients Battery materials, water solutions, crop protection agents, engineering plastics BASF Capital Market Story November

16 Portfolio development Moving downstream towards customer industries Classical Chemicals Customized Products Functionalized Materials & Solutions 2001 in % of sales** Chemical Industry ~ 50% First customer industries* ~ 50% 2010 in % of sales** ~ 40% ~ 60% 2020 in % of sales** ~ 30% ~ 70% * Agriculture, Construction, Consumer Goods, Health & Nutrition, Electronics, Energy & Resources, Transportation BASF Capital Market Story November 2013 ** Sales excluding Oil & Gas. Targets were published on November 29,

17 Portfolio development Towards more market driven and innovative businesses Acquisitions 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 Selected transactions 2001 today* Strong partnerships Gazprom Statoil Monsanto Petronas Shell Sinopec Total Pharma Fibers Divestitures Printing systems Polyolefins Polystyrene Americas Agro generics Vitamins premix Fertilizers Styrenics (transferred into Styrolution JV on Oct. 1, 2011) Construction equipment, flooring systems ~ 16bn sales ~ 10bn sales** BASF Capital Market Story November 2013 * Only closed deals have been considered ** Without Styrenics 17

18 Market approach Cross-divisional customer industry approach BASF sales by first customer industry* Bubble Size: BASF divisional sales by first customer industry (2012)* / ** Consumer goods > 15 % Transportation > 15 % Construction > 10 % Energy & Resources < 10 % Monomers Dispersions & Pigments Care Chemicals Coatings Construction Chemicals Petrochemicals Intermediates Performance Chemicals Paper Chemicals Catalysts Performance Materials BASF Capital Market Story November 2013 * Excluding Oil & Gas, Crop Protection and Other ** Nutrition & Health sales predominantly into Health & Nutrition market 18

19 Cross-divisional approach: Smartforvision Technology competencies combined with customer know-how Lightweight tridion cell High performance foams Solar roof with transparent organic solar panels and OLED modules E-textiles Infrared-reflective film Infrared-reflective coating Multifunctional seat All-plastic wheel Daimler & BASF concept car Smartforvision BASF Capital Market Story November

20 Strong commitment to innovation Innovations for a sustainable future R&D expenditures in billion Corporate Research 23% Oil & Gas 2% Agricultural Solutions 25% Functional Mat. & Sol. 20% Performance Products 20% Chemicals 10% Key facts 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 BASF Capital Market Story November

21 Innovation with adidas: Infinergy Technology competencies combined with customer know-how Key facts Joint development with adidas, illustrating our customer focus New 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 Photo: adidas BASF Capital Market Story November 2013 * TPU (Thermoplastic polyurethane) 21

22 BASF growth fields focus on enabling technologies Resources, Environment & Climate Food & Nutrition Quality of life Chemistry as enabler Customer industries Transportation Construction Consumer Goods Health & Nutrition Electronics Agriculture Energy & Resources Batteries for mobility Heat management Enzymes Medical Organic electronics Plant biotechnology E-Power management Growth Fields* Lightweight composites Functional crop care Wind energy Water solutions Technology fields Raw Material Change Materials Systems & Nanotechnology White Biotechnology BASF Capital Market Story November 2013 * Including growth fields still under evaluation 22

23 Enabling technology: Battery Materials Driving the future of electromobility Business potential 2020 Strategic relevant market: > 5 billion globally (~ 4 billion in Asia Pacific) Sales potential BASF: > 500 million globally (~ 350 million in Asia Pacific) BASF activities Start of business unit Battery Materials in 2012 Several technology-driven acquisitions undertaken Three-digit million euro invest for R&D and production R&D network with universities / industrial partners BASF s technology roadmap- Battery materials for today and tomorrow Technology Li-ion HE/HV Li-ion Li-ion HE/HV Generation 2: Current Generation 3: 2017 Generation 4: From Li-ion to Lithium-sulfur Li-S Li-S** Driving range (km)* BASF Capital Market Story November 2013 * Driving range (km) of an electric car (with a 100kg battery) 23

24 Investments: Capex for organic growth* develops in line with business growth Index Revenue (2001 = 1) Ratio capex / depreciation Capex as percentage of sales BASF Capital Market Story November 2013 * Without acquisitions 24

25 Investments will boost future organic growth Future investments in billion ~ % 35-45% ~20% Total investments Thereof investments in emerging markets BASF Capital Market Story November

26 Investments Major projects Expansion Verbund site Nanjing, China* MDI plant Chongqing, China Acrylic acid complex Camacari, Brazil TDI plant Ludwigshafen, Germany Aroma Ingredients Kuantan, Malaysia Expansion oil & gas activities BASF Capital Market Story November 2013 * Memorandum of Understanding signed 26

27 BASF aims to further increase its sales share from emerging markets Developed markets* Emerging markets 2001 in % of sales ( 28 bn**) ~ 78% ~ 22% 2012 in % of sales ( 62bn**) ~ 65% ~ 35% 2020 in % of sales** ~ 55% ~ 45% *BASF definition: Developed markets include EU15, Norway, Switzerland, North America, Japan, Australia, New Zealand ** Sales excluding Oil & Gas BASF Capital Market Story November

28 Acquisitions will contribute to profitable growth in the future We want to acquire businesses which Generate profitable growth above the industry average Are innovation-driven Offer a special value proposition to customers Provide a minimum return on investment of 8% p.a. after tax Are EPS accretive by year three at the latest Reduce earnings cyclicality Strategic acquisition criteria Financial acquisition criteria BASF Capital Market Story November

29 Operational excellence programs STEP program on track: ~ 1 billion earnings contribution by 2015 Annual earnings contribution in million 3,000 2,000 1,000 0 Former cost saving programs NEXT STEP NEXT Program NEXT program successfully completed Annual earnings contribution of ~ 1 billion achieved in 2012 STrategic Excellence Program STEP Targeted annual earnings contribution of ~ 1 billion by end of 2015 Project timeline: 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 BASF Capital Market Story November

30 Appendix 1: Q Reporting BASF Capital Market Story November

31 Important corporate developments Restructuring in Pigments business Optimization of global production network Reduction of 650 positions worldwide Investment of 250 million in production and R&D Acquisition of Verenium enzyme biotechnology Enterprise value ~62 million US dollars Acquisition successfully completed (October 31, 2013) Verenium strengthens BASF s footprint in the enzyme growth market Transaction with Statoil completed 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* * Euro/dollar exchange rate July 31, 2013: 1 = $ BASF Capital Market Story November

32 Chemicals Pressure on volumes and margins Q3 13 segment sales (million ) vs. Q3 12 EBIT before special items (million ) Intermediates 700 (7%) 4,224 (8%) Monomers 1,599 (11%) Petrochemicals 1,925 (6%) Q3 Q4 Q1 Q2 Q Sales development Period Volumes Prices Portfolio Currencies Q3 13 vs. Q3 12 (2%) (3%) 0% (3%) BASF Capital Market Story November

33 Performance Products Growth in volumes and earnings Q3 13 segment sales (million ) vs. Q3 12 EBIT before special items (million ) Care Chemicals 1,209 (1%) Paper Chemicals 365 (8%) 3,939 (1%) Performance Chemicals 896 (3%) Nutrition & Health % Dispersions & Pigments 929 (2%) Q3 Q4 Q1 Q2 Q Sales development Period Volumes Prices Portfolio Currencies Q3 13 vs. Q3 12 6% (3%) 1% (5%) BASF Capital Market Story November

34 Functional Materials & Solutions Sound overall demand, especially in automotive Q3 13 segment sales (million ) vs. Q3 12 EBIT before special items (million ) Performance Materials 1,669 +5% 4,439 +3% Construction Chemicals 576 (9%) Catalysts 1, % Coatings 728 (5%) 0 Q3 Q4 Q1 Q2 Q Sales development Period Volumes Prices Portfolio Currencies Q3 13 vs. Q3 12 8% 2% (1%) (6%) BASF Capital Market Story November

35 Agricultural Solutions Sales growth despite pronounced currency headwinds Q3 13 segment sales (million ) vs. Q3 12 EBIT before special items (million ) ,008 1, Q3 Q Q3 Q3 Sales development Period Volumes Prices Portfolio Currencies Q3 13 vs. Q3 12 8% 4% 3% (10%) BASF Capital Market Story November

36 Oil & Gas Substantially higher net income Q3 13 segment sales (million ) vs. Q3 12 EBIT bsi/net income (million ) Natural Gas Trading 2, % 3, % Exploration & Production % Q3/2012 Net Income Q3/2013 Net Income Exploration & Production Natural Gas Trading Net income Sales development Period Volumes Prices/Currencies Portfolio Q3 13 vs. Q % (2%) 5% BASF Capital Market Story November

37 Appendix 2: Charts from Roundtable Oil & Gas (London, September 13, 2013) BASF Capital Market Story November

38 Oil & Gas Strong earnings contribution to BASF Group Net income Oil & Gas (million ) 1,500 1, ,064 1, HY BASF Capital Market Story November

39 Oil & Gas Strong free cash flow contribution to BASF Group Cash flow Oil & Gas* (million ) Operating cash flow Oil & Gas Free cash flow** Oil & Gas 45% of operating cash flow delivered to BASF Group (Avg ) * Wintershall cash flow, not BASF Group consolidated view BASF Capital Market Story November 2013 ** Free cash flow: Operating cash flow less payments related to property, plant and equipment and intangible assets 39

40 Share of Oil & Gas in BASF portfolio Average EBITDA* ( billion) Oil & Gas 2.2 (24%) Cumulative capex (plant, property, equipment) ( billion) Oil & Gas 5.2** (30%) BASF Group w/o Oil & Gas 7.0 (76%) BASF Group w/o Oil & Gas 12.3 (70%) Key facts : Oil & Gas: Solid profit contributor to BASF Group Oil & Gas accounted for 30% of BASF Group capex EBITDA share of Oil & Gas in BASF s portfolio expected to remain in the same order of magnitude in the upcoming years Capex share of Oil & Gas business in BASF portfolio will slightly decline BASF Capital Market Story November 2013 * Excluding non-deductible oil taxes **Fixed assets, tangible assets from acquisitions, activated exploration expenditures 40

41 Oil & Gas provides earnings stability EBIT before special items BASF Group* (million ) Excluding non-compensable taxes on oil production EBIT bsi BASF Group w/o Oil & Gas EBIT bsi* Oil & Gas BASF Capital Market Story November 2013 * Excluding non-compensable taxes on oil production 41

42 Active portfolio management Focus on profitable upstream activities 1 Focus Oil & Gas business 3 Exit natural gas on attractive E&P activities storage and trading business Upstream Exploration / Development / Production Natural Gas Transport Natural Gas Storage / Trading 2 Harvest gas transport business BASF Capital Market Story November

43 Clear regional focus: Four core regions and two development regions Europe Russia North Africa. Caspian Sea Region Middle East South America Operating company / production Representative office Current activities Current activities in development region Core region Development region BASF Capital Market Story November

44 Oil & Gas Excellent further growth opportunities Production volumes (million boe)* Key Facts South America Russia Europe North Africa/Middle East 2015 target maintained despite restatement (Effect: -18 million boe in 2012) Continue to significantly invest in core and development regions E&P Capex ~ 2.0 billion** Russia/Caspian Sea ~ 0.5 billion Europe ~ 1.2 billion South America and Middle East ~ 0.3 billion * Restated, figures for 2012 adjusted to changes in IFRS; 2012 reported: 144 million boe BASF Capital Market Story November 2013 ** Without capex in financial participations 44

45 Oil & Gas Outlook restated 2013 Financial performance Sales to 3 rd parties: EBIT before special items: Net income: 12.7 billion 1.9 billion 1.2 billion E&P: In 2013, we expect an increase in sales and earnings due to higher production volumes. Natural Gas Trading: Decrease in earnings due to margin pressure. Production volumes Total production: 126 million boe Overall higher production expected due to the further field development of Achimgaz and our transaction with Statoil in Norway. Sales volumes Natural gas sales: 47 billion m³ Natural gas sales expected on similar level. Investments*/ Expenditures Investments (IFRS old):~ 5.2 billion thereof E&P: ~ 3.1 billion Investments** : thereof E&P: ~ 2.4 billion ~ 2.0 billion thereof Natural Gas Trading: ~ 2.1 billion thereof Natural Gas Trading: ~ 0.4 billion Macroeconomic assumptions Average oil price (brent): $112 per barrel Average exchange rate: $1.28 per Forecast 2013: $105 per barrel $1.30 per * Incl. tangible assets from acquisitions, activated exploration expenditures, without capex in financial participations BASF Capital Market Story November 2013 ** Without tangible assets from acquisitions and activated exploration expenditures 45

46 BASF Capital Market Story November