We add value as one company

Transcription

1 Martin Liedemit Deputy Head of IR Nirath Perakath IR Manager Asia Pacific Roadshow Edinburgh June 30 & July 1, 2016 We add value as one company BASF Capital Market Story, June

2 Cautionary note regarding forward-looking statements 150 years 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 forwardlooking 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. BASF Capital Market Story, June

3 We create chemistry for a sustainable future 150 years Positioning Performance Perspective Geismar, Louisiana Freeport, Texas Ludwigshafen, Germany Antwerp, Belgium Nanjing, China Kuantan, Malaysia Verbund site The #1 chemical company 70.4 billion sales, 6.7 billion EBIT bsi in 2015 #1-3 in ~70% of businesses, present in almost all countries 6 integrated Verbund sites, production in 60 countries A track record of strong sales and earnings growth >3.5% dividend yield in every single year from ~ 64 billion market capitalization on June 1, 2016 Chemistry as an enabler BASF has superior growth opportunities: sustainable innovations investments emerging markets BASF Capital Market Story, June

4 150 years BASF today a well-balanced portfolio Total sales 2015: 70.4 billion Percentage of sales 2015* * Not depicted here: ~4% of Group sales reported as Other ** Natural Gas Trading has been divested on Sep. 30, BASF Capital Market Story, June

5 150 years Verbund: Unique competitive advantage Verbund generates > 1 billion p.a. global cost savings* & supports sustainability Global reduction in carbon emissions of 6 million metric tons p.a. and reduction of waste Example Ludwigshafen site: avoidance of 7 million metric tons of freight p.a. = 280,000 fewer truckloads Shared use of on-site facilities: fire department, security, waste water treatment and analytics BASF Capital Market Story, June 2016 * Savings include only tangible synergies. Additional (intangible) benefits and retained profits are not included. 5

6 150 years Strong free cash flow development 2015 Free cash flow* (in billion ) ** * Cash provided by operating activities less capex BASF Capital Market Story, June 2016 ** 2009 adjusted for re-classification of settlement payments for currency derivatives 6

7 150 years Outlook 2016 confirmed Outlook 2016 Sales will be considerably below prior year, due to the divestiture of the natural gas trading and storage activities and the lower oil and gas prices. Excluding the effects of acquisitions and divestitures, we expect higher volumes in all segments. We expect EBIT before special items to be slightly below the previous year driven by drastically lower earnings of Oil & Gas. We plan higher earnings in our chemicals business and in the Agricultural Solutions segment. EBIT after cost of capital is expected to be significantly below prior year. However, we still expect to earn a premium on our cost of capital. Assumptions 2016 GDP growth: +2.3% Growth in industrial production: +2.0% Growth in chemical production (excl. pharma): +3.4% Exchange rate: $1.10 per euro Oil price (Brent): $40 per barrel BASF Capital Market Story, June

8 Business development Path forward: Our priorities Appendix Q reporting BASF Capital Market Story, June

9 150 years Components of growth Sales* analysis (in billion ) CAGR Volumes 3.4% Prices FX M&A (in billion ) Net sales 2010 Volumes Prices FX M&A BASF Group w/o Oil & Gas 51.4 Oil & Gas (+1.1% CAGR) +7.7 (+14.2% CAGR) Sales CAGR % % BASF Capital Market Story, June 2016 * 2010, 2011 indicative, adjusted for IFRS 10 & 11 9

10 Portfolio development towards more market-driven and innovative businesses 150 years Acquisitions Functional crop care Personal care & food Omega-3 fatty acids Enzymes Battery materials Specialty plastics Selected assets in Oil & Gas ~ 4.5 billion sales in emerging and innovation-driven businesses BASF core business Selected transactions 2010 until today Strong partnerships Gazprom Monsanto Petronas Shell Sinopec Statoil Total Yara Styrenics Fertilizers Divestitures Selected assets in Oil & Gas Natural gas trading & storage Custom synthesis business Textile chemicals Industrial coatings** Polyolefin catalysts** ~ 20 billion sales* in businesses with limited fit and differentiation potential BASF Capital Market Story, June 2016 * Includes sales of non-consolidated businesses (Styrenics, VNG participation); ** Closing expected in

11 150 years Steady earnings growth EBIT and EBITDA* (in billion, ) CAGR EBIT 16.6% CAGR EBITDA 7.9% EBITDA EBIT BASF Capital Market Story, June 2016 * 2010, 2011 indicative, adjusted for IFRS 10 & 11; as reported, without non-compensable foreign income taxes on oil production 11

12 Strong track record in operational excellence 150 years BASF Group* (indexed; CAGR ) CAGR EBITDA 9% CAGR Sales 6% EBITDA Sales CAGR Fixed Costs 3% Fixed Costs BASF Capital Market Story, June 2016 * Excl. companies with major IFRS 10/11 restatements, i.e. BASF YPC Nanjing, Libya onshore, other Oil & Gas and Catalysts companies 12

13 150 years Attractive shareholder return Dividend per share ( ) Dividend policy We want to grow or at least maintain our dividend at the previous year s level Key facts 2015 Dividend of 2.90 per share, an increase of 3.6% Dividend yield of 4.1% in 2015 Dividend yield above 3.5% in any given year since 2006 Yield* 4.1% 3.8% 7.0% 3.9% 3.7% 4.6% 3.7% * Dividend yield based on share price at year-end 3.5% 4.0% 4.1% BASF Capital Market Story, June

14 150 years Delivering consistent, long-term value Average annual performance with dividends reinvested Last 10 years June 2006 May 2016 Last 5 years June 2011 May % BASF +5.9% +1.4% Euro Stoxx % +6.1% DAX % +7.2% MSCI World Chemicals +6.5% BASF Capital Market Story, June

15 Business development Path forward: Our priorities Appendix Q reporting BASF Capital Market Story, June

16 Moderate GDP growth expected for 2016 recovery in the medium term 150 years GDP growth in key regions (in % per year) European Union United States Emerging Asia South America World BASF Capital Market Story, June 2016 Source: BASF 16

17 150 years Chemicals remains a growth industry Agriculture Health & nutrition Energy & resources Construction & housing Consumer goods Transportation Electrical & Electronics ~10 bn Chemistry as enabler for current and future needs 70% 50% 30% people by 2050 of the world population will live in cities by 2050 more primary energy consumption by 2050 more food needed by 2050 BASF Capital Market Story, June

18 Emerging markets driving chemical production growth above global GDP 150 years Real chemical production excl. pharma (in billion US$**) 5,000 4,000 3,000 2,000 1,000 Global GDP CAGR: 2.6% CAGR* 3.7% +1% +3% +0% +4% +0% +6% Global GDP CAGR: 3.0% CAGR* 3.7% +2% +2% +1% +4% +2% +5% Global GDP CAGR: 3.1% CAGR* 3.8% +2% +2% +1% +3% +3% +5% South America Asia Pacific Western Europe Middle East, Africa North America Eastern Europe BASF Capital Market Story, June 2016 * Real chemical production excluding pharmaceuticals; ** Measured in value of

19 The path forward: Our priorities 150 years Grow sales and earnings faster than global chemical production, driven by Continued focus on innovations Capital expenditures Acquisitions Operational excellence and Verbund advantages Focus on cash generation/conversion Continue with our progressive dividend policy Focus on pruning our portfolio Maintain industry-leading position in sustainability BASF Capital Market Story, June

20 Managing volatility: BASF almost perfectly hedged on hydrocarbon price changes 150 years BASF production and consumption of oil and gas (in million boe, 2015) 153 Oil and liquids Natural gas >100 Naphtha and other oil-based raw materials Natural gas for energy and as raw material Production of oil, liquids and gas Consumption of oil derivatives and gas BASF hydrocarbon consumption almost equals hydrocarbon production BASF Capital Market Story, June

21 Chemicals with stable profitability, little correlation to oil price 150 years EBITDA margin Chemicals / oil price (indexed, 2001 = 100) Oil price EBITDA margin Chemicals (as % of sales) * 2007* restated BASF Capital Market Story, June 2016 * Without Catalysts (now part of Functional Materials & Solutions segment) 21

22 Strategic lever: Continuous portfolio development 150 years Growth fields Innovation pipeline Specialties and solutions Attractive markets Differentiation by customer proximity and innovations Differentiated commodities Attractive markets Differentiation by process technologies and integration ~ 50% ~ 50% target (in % of sales*) Acquisitions Divestment of businesses, e.g., due to lower market attractiveness Commoditization leads to restructuring Divestment of businesses, e.g., due to loss of differentiation Maintaining a balanced portfolio BASF Capital Market Story, June 2016 * Excluding Oil & Gas sales 22

23 Strategic lever: Acquisitions 150 years 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, June

24 BASF to acquire Chemetall Transaction highlights 150 years Chemetall a global technology and innovation leader in metals surface treatment Purchase price of US$3.2 billion (debt free) All-cash offer, financing secured Expected closing of transaction by the end of 2016 Transaction will significantly enhance BASF Coatings position as complete solutions provider Synergies on industry-typical level EPS accretive in year 1 excluding integration costs, in year 2 including integration costs BASF Capital Market Story, June

25 Chemetall a global leader in surface treatment products and services 150 years Facts Figures One of the strongest globally managed brands in the sector Proprietary manufacturing technologies, rigorous product quality and performance standards Leading market positions in the automotive, aerospace and cold forming segments Long-standing, service-intensive customer relationships Significant global presence and record of accelerated expansion in emerging markets Track record of strong growth and high profitability BASF Capital Market Story, June 2016 * average analysts estimates 25 Sales EBITDA EBITDA margin CAGR sales ( ) Key customer industries Regional sales Employees Sites 2015: US$845 million 2016E*: US$851 million 2017E*: US$895 million 2015: US$202 million 2016E*: US$217 million 2017E*: US$231 million 2015: 24% 2016E*: 25% 2017E*: 26% ~7% (at constant exchange rates) Automotive, aerospace, coil, metal forming ~50% Western Europe ~30% North America ~20% Emerging markets, mainly Asia ~2,500 (~50% sales professionals) 21 production sites in all regions 10 R&D sites

26 Chemetall complements BASF s portfolio, adding highly attractive surface treatment 150 years Chemetall Pre-treatment BASF Coatings Complete surface treatment provider In-depth customer insights across wide industry range Excellent customer access and approvals especially in automotive Offer full solution competence to customers across wide range of industries Recognized technology leader in metal surface treatment + Well recognized customer service offering in coatings Benefit from convergence of pre-treatment and coatings, offering superior product and process solutions Complete portfolio beyond pure surface treatment Chemical know-how and strong R&D platforms within BASF Group Develop superior application processes leveraging joint expertise BASF Capital Market Story, June

27 Chemetall an excellent strategic fit for BASF Coatings 150 years Technology adjacency Downstream solution business Access to key growth markets Enhanced technology basis Strong and robust financials Industry-leading expert team Compelling combination of surface treatment and coatings technologies Creates unmatched solution competence for customers Complex formulation businesses based on application know-how Customer centricity, product quality and technical service as differentiators Superior access to growth industries (e.g. automotive, aerospace) Global footprint with local production, technical centers in China and India Growth opportunities through combining broad technical and application competence with BASF s chemistry and formulation know-how Excellent track record of growth above market and attractive margins Asset light business model with strong free cash flow conversion High-quality resources and technical expertise ~1,200 sales professionals with in-depth application and process know-how BASF Capital Market Story, June

28 Strategic lever: Capital expenditures 150 years Differentiated commodities With proprietary technology and/or Verbund advantages Focus on: emerging markets backward integration in the U.S. upgrading our asset base in Europe Specialties and solutions Incremental investments for new products Regional expansion of businesses Oil & Gas Focus investment budget by active portfolio optimization to secure free cash flow Keep reserve-to-production ratio of approx. 10 years BASF Capital Market Story, June

29 150 years Investments for organic growth Capex budget by segment Capex budget by region Performance Products 16% Functional Materials & Solutions 12% Agricultural Solutions 4% Other 14% 19.5 billion Chemicals 30% Oil & Gas 24% Asia Pacific 18% South America* 9% Other 1% North America 26% 19.5 billion Europe 46% * Including Africa and Middle East BASF Capital Market Story, June

30 Strategic lever: Innovations 150 years Allow for creativity Balance incremental und disruptive innovations Manage innovation pipeline efficiently on all levels Build on our global R&D Verbund Leverage external collaborations even more Align R&D activities with business models: Differentiated commodities Focus on improving processes and addressing raw material change Launch selected product innovations Specialties and solutions Develop new, tailored offerings in close collaboration with customers Pursue solution-oriented approach Keep annual R&D spending at ~3% of sales* BASF Capital Market Story, June 2016 * Without Oil & Gas 30

31 150 years Strong commitment to innovation Innovations for a sustainable future R&D expenditures (billion ) Corporate Research 21% Oil & Gas 2% Agricultural Solutions 26% Functional Mat. & Sol. 20% Performance Products 20% Chemicals 11% Key facts 1.95 billion R&D expenditures in 2015; to be maintained in 2016 ~10,000 employees in R&D ~3,000 projects Ranked No.1 in the Patent Asset Index ~1,000 new patents in 2015 Research Verbund: Cooperations with more than 600 excellent partners from universities, start-ups and industry BASF Capital Market Story, June

32 Innovation: Four-Way Conversion Catalyst (FWC ) 150 years FWC reduces emission of gaseous pollutants and particulates HC CO NOx Particulates Leading position: Global mobile emissions catalysts patents* 150 N 2 CO 2 H 2 O FWC Combines functionality of a 3-way conversion catalyst with integrated filter on a ceramic substrate Reduces gaseous emissions Precious metal-based catalytic coating removes exhaust gases from engine emissions** Removes particulates Filters & combusts particulates BASF Competitors Complies with emissions limits Helps automakers meet new Euro 6c regulatory standards FWC introduced in 2013 Sustains BASF s leading technology position * ** Hydrocarbons, carbon monoxide, nitrogen oxides BASF Capital Market Story, June 2016 *** 32

33 High Environmental Impact Low 150 years Innovation: Green Sense Concrete for sustainable construction BASF s Green Sense Concrete system consists of: 1) Innovative admixture products 2) Concrete mix services 3) Eco-efficiency analysis Reference Concrete Replaces up to 70% of cement with recycled materials Superior eco-efficiency Applied in the construction of landmark projects, e.g. One World Trade Center, NYC High Total Cost of Ownership Low BASF Capital Market Story, June

34 150 years Innovation: Trilon M Chelating agent for more sustainable detergents and cleaners Trilon M alternative to phosphate for automatic dish washing High sustainability performance: bio-degradable and eco-friendly Fast growing global market demand driven by regulatory changes and consumer demand 2010: Capacity expansion to 120,000 tons 2015: Startup of a new Trilon M world-scale plant in Theodore, Alabama Compared with alternative chelating agents Trilon M Is readily bio-degradable Meets eco-label requirements Has better eco-toxicology profile Shows high performance BASF Capital Market Story, June

35 150 years Innovation: SAVIVA Highly efficient Superabsorbent Polymers (SAP) SAVIVA based on a pioneering SAP technology platform SAVIVA the next generation of SAP Round-shaped particles with micro-pores initiates innovative liquid distribution mechanism Compared to other SAPs SAVIVA leads to: Efficiency gains: SAP reduction Fluff reduction Reduction of storage, packaging and transportation costs Improved sustainability: Better carbon footprint due to SAP and weight reduction Enabler for future diaper designs offering a new level of comfort and dryness SAVIVA round shaped particle BASF Capital Market Story, June

36 150 years Innovation: New acrylic acid technology BASF with best-in-class acrylic acid process Acrylic acid production technology benchmark (Industry average costs = 100; normalized) Key facts Lower production cost than industry average Efficiency gains: run-time extension higher throughput lower energy consumption Proprietary technology, new process protected by 280 active patent families 80 BASF new process BASF classic process Industry average 4 out of 6 production sites already equipped: Ludwigshafen, Antwerp, Nanjing and Camaҫari (Brazil) BASF Capital Market Story, June 2016 Source: BASF estimate 36

37 Strategic lever: Sustainability Sustainable Solution Steering 150 years 71.0% 26.6% Sustainable Solution Steering 2.2% 0.2% Substantial sustainability contribution in the value chain Meets basic sustainability standards in the market Specific sustainability issue which is actively addressed Significant sustainability concern, action plan in development Novel methodology to screen and steer our portfolio* 26.6% Accelerators: outgrow their markets by 2-10% deliver margins >10% above the average represent >60% of BASF s R&D pipeline 71% Performers <1% Challenged products Increase the share of Accelerators from 23% in 2014 to 28% by 2020 BASF Capital Market Story, June 2016 * More than 60,000 product applications analyzed representing 64.9 billion in sales or 95.4% of BASF s portfolio. 37

38 Strategic lever: Operational excellence DrivE with ~ 1 billion earnings contribution 150 years Annual earnings contribution (in million ) 4,000 3,000 2,000 1,000 DrivE program Targeted annual earnings contribution of 1 billion from end of 2018 on Optimization of processes and structures in all regions, e.g. manufacturing incremental capacities productivity increase Project timeline: NEXT DrivE STEP BASF Capital Market Story, June

39 Profitability of BASF will grow faster than global chemical production 150 years Financial targets for the coming years Sales growth Slightly faster than the global chemical production EBITDA growth Well above global chemical production Deliver attractive returns Earn a significant premium on cost of capital Remain a strong cash provider Continuously generate high levels of free cash flow Progressive dividend policy We want to grow or at least maintain our dividend BASF Capital Market Story, June

40 Business development Path forward: Our priorities Appendix Q reporting BASF Capital Market Story, June

41 Q1 2016: BASF with slightly lower earnings compared to strong prior-year quarter 150 years Financial figures Q Q Change Sales 14.2 billion 20.1 billion (29%) EBITDA 2.8 billion 2.9 billion (3%) EBIT before special items 1.9 billion 2.1 billion (8%) EBIT 1.9 billion 2.0 billion (6%) Net income 1.4 billion 1.2 billion +18% Reported EPS % Adjusted EPS % Operating cash flow 1.0 billion 2.4 billion (56%) Sales development Volumes Prices Portfolio Currencies Q vs. Q % (6%) (22%) (1%) BASF Capital Market Story, June

42 Chemicals Lower margins and higher fixed costs result in considerably decreased earnings 150 years Sales Q vs. Q million EBIT before special items million Intermediates 646 (12%) Monomers 1,307 (18%) 3,149 (19%) Petrochemicals 1,196 (22%) Q1 Q2 Q3 Q4 Q Sales development Volumes Prices Portfolio Currencies Q vs. Q (3%) (16%) 0% 0% BASF Capital Market Story, June

43 Performance Products Increase in earnings by 6%, supported by successful restructuring 150 years Sales Q vs. Q million EBIT before special items million Performance Chemicals 955 (10%) Nutrition & Health 488 (5%) 3,783 (6%) Dispersions & Pigments 1,136 (2%) Care Chemicals 1,204 (7%) Q1 Q2 Q3 Q4 Q Sales development Volumes Prices Portfolio Currencies Q vs. Q % (4%) (2%) (1%) BASF Capital Market Story, June

44 150 years Functional Materials & Solutions Good demand from the automotive and construction industries Sales Q vs. Q million EBIT before special items million Performance Materials 1,670 (2%) Coatings 738 (6%) 4,408 (4%) Catalysts 1,467 (8%) Construction Chemicals % Q1 Q2 Q3 Q4 Q Sales development Volumes Prices Portfolio Currencies Q vs. Q % (7%) 0% (2%) BASF Capital Market Story, June

45 150 years Agricultural Solutions Slight earnings increase in a challenging market environment Sales million EBIT before special items million 2,000 1,898 (6%) 1, % 400 1, Q1 Q1 0 Q1 Q Sales development Volumes Prices Portfolio Currencies Q vs. Q (5%) 2% 0% (3%) BASF Capital Market Story, June

46 150 years Oil & Gas Significantly lower sales and earnings Sales million EBIT before special items, net income million 5,000 4,000 4, ,000 2,000 1,000 4,249 (88%) * 47 0 Q * Q EBIT bsi Net income EBIT bsi Net income Q1 Q * Including transportation business * Including transportation business Exploration & Production Natural Gas Trading Exploration & Production Natural Gas Trading Sales development Volumes Prices/Currencies Portfolio Q vs. Q % (4%) (86%) BASF Capital Market Story, June

47 150 years Review of Other million Q Q Sales EBIT before special items (219) (613) Thereof Corporate research costs (99) (101) Costs of corporate headquarters (55) (55) Foreign currency results, hedging and other measurement effects 68 (382) Other businesses Special items (26) (82) EBIT (245) (695) BASF Capital Market Story, June

48 150 years Cash flow Q million Q Q Cash provided by operating activities 1,046 2,390 Thereof changes in net working capital (1,248) 309 miscellaneous items (39) 5 Cash used in investing activities (1,258) (1,502) Thereof payments related to tangible / intangible assets (1,001) (1,278) acquisitions / divestitures 0 26 Cash used in / provided by financing activities 1,997 (400) Thereof changes in financial liabilities 1,996 (299) dividends (4) (101) BASF Capital Market Story, June

49 150 years Balance sheet remains strong Balance sheet March 31, 2016 vs. December 31, 2015 billion Long-term assets Inventories Accounts receivable Other assets Liquid funds Dec Mar Dec Mar Stockholders equity Financial debt Other liabilities Total assets increased by 2.9 billion, mainly due to higher cash position and seasonally-driven increase in accounts receivable Long-term assets slightly lower caused by currency effects Provisions for pension obligations increased by 2.0 billion as a result of lower interest rates Net debt slightly declined to 12.8 billion Equity ratio: 42% BASF Capital Market Story, June

50 150 years BASF Capital Market Story, June