We add value as one company

Transcription

1 Florian Greger Director Investor Relations Jefferies 2014 Global Industrials Conference New York City August 12, 2014 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 August

3 BASF Share information Ordinary Share information Symbol: BAS Trading Platform: Deutsche Börse ISIN: DE000BASF111 IPO: January 30, 1952 Type of shares: Registered shares Trading lot: none, one share is tradable Free float (according to Deutsche Börse): 100 % Number of subscribed shares outstanding (as of 12/31/2013): 918,478,694 ADR information Symbol: BASFY OTC Trading Platform: OTCQX CUSIP: Ratio: 1 ADR : 1 Ordinary Share Depositary bank: Deutsche Bank Trust Company Americas Tel: (New York broker desk) Tel: (London broker desk) adr@db.com Website: Depositary bank s local custodian: Deutsche Bank AG, Frankfurt BASF Capital Market Story August

4 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 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* > 70 billion market capitalization in July 2014 Chemistry as an enabler BASF has superior growth opportunities: sustainable innovations investments emerging markets Ambitious financial targets BASF Capital Market Story August 2014 * For

5 BASF today a well-balanced portfolio Total sales 2013: 74 billion Percentage of sales 2013* BASF Capital Market Story August 2014 * Not depicted here: ~6% of Group sales reported as Other 5

6 Verbund generates > 1 billion p.a. global cost savings*, supports sustainability 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 BASF Capital Market Story August 2014 * Savings include only tangible synergies. Additional (intangible) benefits and retained profits are not included. 6

7 Business review BASF strategy & growth targets Strategic levers BASF Capital Market Story August

8 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 % Adjusted EPS % 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%) BASF Capital Market Story August

9 BASF outperformed global chemical production by ~3 percentage points p.a. Sales to third parties billion IFRS Impact Currencies 13.7 M&A Volumes Prices Currencies M&A Prices Volumes restated 2013 BASF Capital Market Story August

10 Strong and profitable growth in emerging markets Sales BASF Group excl. Oil & Gas billion by location of customer EBITDA BASF Group excl. Oil & Gas billion by location of customer % CAGR +10.2%* 35% 33% CAGR +5.0%* CAGR 37% +12.8%* 36% CAGR +7.8%* % Emerging markets Developed markets** BASF Capital Market Story August 2014 * Nominal CAGR ** BASF definition: Developed markets include EU15, Norway, Switzerland, North America, Japan, Australia, New Zealand 10

11 Operational excellence Strong track record BASF Group* Index CAGR % 8 % 3 % EBITDA Sales Fixed costs BASF Capital Market Story August 2014 * Excl. companies with major IFRS 10/11 restatements, i.e. BASF YPC Nanjing, Libya onshore, other Oil & Gas and Catalysts companies 11

12 Strong free cash flow generation Free cash flow* in billion ** H 2014 * Cash provided by operating activities less capex (in 2005 before CTA) BASF Capital Market Story August 2014 ** 2009 adjusted for re-classification of settlement payments for currency derivatives 12

13 Attractive dividend yield Dividend per share in CAGR 14% Dividend payments Dividend of 2.70 per share for 2013, an increase of 3.8% : Average annual dividend increase of ~14% Attractive dividend yield of 3.5% in 2013** Dividend yield above 3% in any given year since Dividend yield* 3.2% 3.1% 4.1% 3.8% 7.0% 3.9% 3.7% 4.6% 3.7% 3.5% BASF Capital Market Story August 2014 * Dividend yield based on share price at year-end ** Based on BASF share price of on Dec. 30,

14 Delivering consistent, long-term value Average annual performance with dividends reinvested Last 10 years August 2004 July 2014 Last 5 years August 2009 July % BASF +21.4% +4.5% Euro Stoxx % +9.2% DAX % +10.8% MSCI World Chemicals +13.6% BASF Capital Market Story August

15 Outlook 2014 confirmed Outlook 2014 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 Assumptions 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 BASF Capital Market Story August

16 Business review BASF strategy & growth targets Strategic levers BASF Capital Market Story August

17 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 August

18 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 August

19 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 August

20 Portfolio development Moving downstream towards customer industries * Agriculture, Construction, Consumer Goods, Health & Nutrition, Electronics, Energy & Resources, Transportation BASF Capital Market Story August 2014 ** Sales excluding Oil & Gas. Targets were published on November 29,

21 Portfolio development Towards more market driven and innovative businesses Acquisitions Catalysts Construction chemicals Water-based resins Pigments, plastic additives Oil & Gas Personal care & food Battery materials Functional crop care Omega-3 fatty acids Enzymes ~ 14 billion sales BASF core business Selected transactions 2004 today Strong partnerships Gazprom Monsanto Petronas Shell Sinopec Statoil Total Divestitures Printing systems Agro generics Vitamin premixes Styrenics Fertilizers Construction equipment, flooring and wall systems Natural gas trading and storage business ~ 16 billion sales* BASF Capital Market Story August 2014 * Without styrenics (transferred into Styrolution JV on Oct. 1, 2011). Natural Gas Trading: Closing expected in autumn

22 Market approach Cross-divisional customer industry approach BASF sales by first customer industry* Bubble Size: BASF divisional sales by first customer industry* / ** 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 August 2014 * Excluding Oil & Gas, Crop Protection and Other numbers ** Nutrition & Health sales predominantly into Health & Nutrition market 22

23 Cross-divisional approach BASF s technology Verbund 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 August

24 Customer Verbund - adidas and BASF Working together for disruptive innovation: Infinergy BASF Capital Market Story August

25 Strong commitment to innovation Innovations for a sustainable future R&D expenditures in billion Corporate Research 21% Oil & Gas 3% Agricultural Solutions 26% Functional Mat. & Sol. 20% Performance Products 20% Chemicals 10% Key facts 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 BASF Capital Market Story August

26 Chemistry-based innovations Growth and technology fields Global needs Key customer industries Growth fields Technology fields Batteries for Mobility Resources, Environment & Climate Transportation Agriculture Enzymes E-Power Management Functional Crop Care Materials, Systems & Nanotechnology Food & Nutrition Construction Energy & Resources Heat Management for Construction Lightweight Composites Raw Material Change Organic Electronics Quality of Life Consumer Goods Electronics Plant Biotechnology Water Solutions White Biotechnology Wind Energy Health & Nutrition... BASF Capital Market Story August

27 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 August 2014 * Driving range (km) of an electric car (with a 100kg battery) 27

28 Investments Capex budget by segment and region Capex budget by segment Capex budget by region Performance Products 15% Functional Materials & Solutions 12% Agricultural Solutions 7% Other 13% 20 billion Chemicals 33% Oil & Gas 20% Asia Pacific 18% South America 4% Other 4% North America 25% 20 billion Europe 49% BASF Capital Market Story August

29 Investments Major projects Ammonia and gas-to-propylene in USA* 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 August 2014 * Under evaluation 29

30 Sales share from emerging markets to further increase * BASF definition: Developed markets include EU15, Norway, Switzerland, North America, Japan, Australia, New Zealand BASF Capital Market Story August 2014 ** Sales excluding Oil & Gas 30

31 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 August

32 Operational excellence programs STEP program on track: ~ 1 billion earnings contribution by 2015 Annual earnings contribution in million 3,000 2,000 1,000 STEP program 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: Former cost saving programs NEXT STEP Program is on track Total of ~ 600 million achieved by the end of 2013 One-time cost & investments: ~ 1 billion BASF Capital Market Story August

33 Restructuring in Performance Products Announced measures to strengthen competitiveness Leather and textile chemicals (March 18, 2013) Water, oilfield and mining chemicals (March 27, 2013) Plastic additives and pigments (April 23, 2013) Pigments (October 23, 2013) Measures Establishment of global innovation center in China Optimization of various functions and relocation to Asia Pacific Establishment of global business unit to realize synergies Divestment of industrial water management business Adjustments at sites in the Basel area to adapt to changed market conditions Downsizing of R&D activities Optimization of global production network Closure, restructuring and evaluation of strategic options for production assets Reduction of >2,000 positions until end of 2017 Annual earnings contribution of ~ 500 million from 2017 onwards Paper (January 23, 2014) Nutrition & Health (April 25, 2014) Care Chemicals (June 5, 2014) Ongoing efficiency projects in various businesses Shutdown of latex production in Europe Ongoing portfolio optimization Adaption of product portfolio and organizational processes to market realities Set of measures to adapt to changed customer needs and market conditions within its Home Care, Industrial & Institutional Cleaning and Formulation Technologies businesses Site closures and relocations Adaption of organizational setup to market needs One-time costs in the magnitude of ~ million BASF Capital Market Story August

34 Appendix: Q Reporting BASF Capital Market Story August

35 Portfolio optimization Sale of 50% share in Styrolution to Ineos Strengthen competitiveness of Performance Products Enlarged production footprint in Asia Pacific to support growing demand Capacity expansions in Functional Materials and Solutions BASF Capital Market Story August

36 Chemicals North America drives volume and profit growth Q2 14 segment sales (million ) vs. Q2 13 EBIT before special items (million ) Petrochemicals 2,019 +9% 4,298 +3% Intermediates 701 (2%) Monomers 1,578 (2%) Q2 Q3 Q4 Q1 Q Sales development Period Volumes Prices Portfolio Currencies Q2 14 vs. Q2 13 9% (3%) 0% (3%) BASF Capital Market Story August

37 Performance Products Restructuring measures increase earnings Q2 14 segment sales (million ) vs. Q2 13 EBIT before special items (million ) Care Chemicals 1,204 (2%) Paper Chemicals 342 (8%) 3,924 (3%) Performance Chemicals 824 (3%) Nutrition & Health 520 (4)% Dispersions & Pigments 1,034 0% Q2 Q3 Q4 Q1 Q Sales development Period Volumes Prices Portfolio Currencies Q2 14 vs. Q2 13 1% 0% 0% (4%) BASF Capital Market Story August

38 Functional Materials & Solutions Continued good demand from automotive industry Q2 14 segment sales (million ) vs. Q2 13 EBIT before special items (million ) Performance Materials 1,693 (0%) 4,518 0% Construction Chemicals 541 (8%) Catalysts 1,528 +4% Coatings % 0 Q2 Q3 Q4 Q1 Q Sales development Period Volumes Prices Portfolio Currencies Q2 14 vs. Q2 13 6% 0% (1%) (5%) BASF Capital Market Story August

39 Agricultural Solutions Exchange rate driven sales and earnings decrease Q2 14 segment sales (million ) vs. Q2 13 EBIT before special items (million ) ,727 1, Q2 Q2 0 Q2 Q Sales development Period Volumes Prices Portfolio Currencies Q2 14 vs. Q2 13 0% 2% 0% (6%) BASF Capital Market Story August

40 Oil & Gas Higher production volumes drive earnings Q2 14 segment sales (million ) vs. Q2 13 EBIT bsi/net income (million ) Natural Gas Trading 2,387 +3% 3, % Exploration & Production % Q2/2013 Net Income Q2/2014 Net Income Exploration & Production Natural Gas Trading Net income Sales development Period Volumes Prices/Currencies Portfolio Q2 14 vs. Q % 16% 5% BASF Capital Market Story August

41 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) Special items (12) 3 EBIT (340) (214) 37 BASF Capital Market Story August

42 Operating cash flow in H 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 2,781 (2,592) 1,762 (2,585) BASF Capital Market Story August

43 Balance sheet remains strong Balance sheet June 30, 2014 vs. December 31, 2013 (billion ) Long-term assets Disposal group 2.8 Inventories 9.6 Accounts receivable 9.4 Other assets 3.7 Liquid funds 1.8 Dec June Dec June Stockholders equity Financial debt Disposal group Other liabilities 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% BASF Capital Market Story August

44 BASF Capital Market Story August