BASF: Fit for 2012 and beyond

Transcription

1 BASF: Fit for 2012 and beyond Dr. Stefan Marcinowski Member of the Board of Executive Directors Paris December 08, 2011 BASF Strategy: We create chemistry November

2 Business review BASF Today Trends Targets Strategic levers BASF Tomorrow Board priorities 2

3 BASF with good earnings in Q3 Highlights Q Business performance Q3 11 vs. Q3 10 Sales 17.6 billion +12% EBITDA 2.7 billion (8%) EBITDA margin 15.4% 18.6% EBIT before special items (bsi) 2.0 billion (11%) EBIT bsi adjusted for non-comp. oil taxes 2.0 billion (1%) EBIT 1.9 billion (13%) Net income 1.2 billion (4%) EPS 1.30 (4%) Adjusted EPS % Further sales growth in chemical activities mainly due to successful price increases Acquired Cognis business continues to perform strongly; synergy targets increased Agricultural Solutions on track for record year in sales and earnings EBIT before special items amounted to 2 billion. Adjusted for Libya, which contributed 355 million in last year s quarter, EBIT before special items increased by 6% compared to Q

4 Outlook 2011 confirmed Outlook 2011 We expect to generate significantly higher sales We aim to significantly exceed the 2010 EBIT before special items adjusted for non-compensable oil taxes (2010: 7.2 billion) We will earn a high premium on our cost of capital Dividend policy We aim to continuously increase the annual dividend, or at least maintain it at the level of the previous year. 4

5 Business review BASF Today Trends Targets Strategic levers BASF Tomorrow Board priorities 5

6 Outperformed global chemical production by 4 percentage points p.a. Sales to third parties in billion BASF total growth BASF volumes + M&A BASF volumes Global chemical production 7.8% p.a. 6.6% p.a. 4.1% p.a. 3.0% p.a Volumes Prices Currencies M&A

7 Portfolio development towards more market driven and innovative businesses Acquisitions Crop protection Engineering plastics Electronic chemicals Custom synthesis Catalysts Construction chemicals Water-based coatings Pigments Plastic additives Oil & Gas Personal care & food 15bn (Sales) BASF core business Selected transactions 2001 today Strong partnerships Gazprom Monsanto Petronas Shell Sinopec Total Divestitures Pharma Fibers Printing systems Polyolefins Polystyrene Americas Agro generics Vitamins premix Fertilizers (planned) Styrolution (planned) 9bn (Sales excl. planned measures) 7

8 Strong and profitable growth in emerging markets Sales BASF Group excluding Oil & Gas in billion by location of customer EBITDA BASF Group excluding Oil & Gas in billion by location of customer % 22% CAGR 13% CAGR 5.4% 53 34% % CAGR 18% CAGR 12% % Emerging markets Developed markets* * BASF definition: Developed markets include EU15, Norway, Switzerland, North America, Japan, Australia, New Zealand 8

9 Strong focus on operational excellence BASF Group Index CAGR 12 % 8 % 2 % EBITDA Sales Fixed costs

10 Continuous strong free cash flow generation Free cash flow in billion * Cash provided by operating activities less capex (in 2005 before CTA) ** 2009 adjusted for re-classification of settlement payments for currency derivatives 10

11 Delivering consistent, long-term value Last 10 years Long-term performance December 2001 November 2011 (average annual performance with dividends reinvested) +13.8% BASF Last 5 years +13.9% 1.7% Euro Stoxx % +2.0% DAX % +7.1% MSCI World Chemicals +3.5% BASF Strategy: We create chemistry November

12 Business review BASF Today Trends Targets Strategic levers BASF Tomorrow Board priorities 12

13 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 13

14 Key trends for the chemical industry Growth will accelerate Innovation gains importance Sustainability as strategic driver Competitive landscape will change Industrial production > GDP Chemical production > GDP Emerging markets will outgrow developed markets Chemistry as enabler Chemical products replace traditional materials Create innovative sustainable solutions Use opportunities from sustainability Increase resource efficiency Renewables as raw materials Stakeholder dialogue Integrated chemical companies remain cornerstone Emerging markets players grow quickly Raw material players invest further downstream Chemical industry remains an attractive growth industry 14

15 Chemicals to outgrow key customer industries Chemical production growth CAGR in % p.a in % Chemicals growth above customer industries Health & Nutrition Energy & Resources Agriculture Construction Electronics Transportation Customer industry growth CAGR in % p.a Consumer Goods Chemicals growth = customer industries growth = Market of 2020 in bn (real, 2008) Chemicals growth below customer industries Source: BASF 15

16 Business review BASF Today Trends Targets Strategic levers BASF Tomorrow Board priorities 16

17 Striving for strong profitable growth Sales* in billion CAGR ~6% Innovations Acquisitions ~115 Investments 64 Investments Innovations Acquisitions ~ Target Target We will outperform chemical production by 2 percentage points p.a. * Potential impact of IFRS changes not included 17

18 All regions will deliver profitable growth Regional sales targets 2020 (by location of customers) in billion North America ~5.5% p.a. 20%* 13 ~ South America, Africa, Middle East ~8% p.a. 8%* 19%* 5 ~ %* Europe ~4.5% p.a. 52%* 33 ~ %* Asia Pacific ~8% p.a. ~ %* %* * Percentage of total sales 18

19 Doubling EBITDA by 2020 EBITDA* in billion 11.1 Growth Op. Excellence CAGR ~7.5% Growth Acquisitions ~15 Op. Excellence Acquisitions ~ Target Target * Assumptions : Exchange rate $/ Ø 1.40, Oil price Ø $110/bbl 19

20 Business review BASF Today Trends Targets Strategic levers Portfolio development Market approach Innovations for a sustainable future Investments Operational excellence BASF Tomorrow Board priorities 20

21 Portfolio Development We expand from chemicals to chemistry New molecules Improved applications Chemistry as key enabler for functionalized materials & solutions Deep understanding of customer value chains required Functionalized materials & solutions Batteries, membranes... 21

22 Portfolio Development 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 Strategy: We create chemistry November

23 Portfolio Development Oil & Gas: significant advantages for BASF Strong contributor to BASF s profitable growth Hydrocarbon hedge Significant cash flow and long-term profitability Technological synergies through BASF Verbund Oil & Gas 23

24 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 ** Sales excluding Oil & Gas 24

25 Market Approach Cross-divisional customer industry approach BASF sales by first customer industry* Bubble Size: BASF divisional sales by first customer industry (2010)** Consumer goods > 15 % Transportation Construction > 15 % < 10 % Energy & Resources < 10 % Inorganics Petro- Chemicals * Excluding Oil & Gas and Other ** Excluding Agricultural Solutions, Health & Nutrition, Oil & Gas and Other Construction Chemicals Catalysts Intermediates Coatings Dispersions & Pigments Care Chemicals Performance Chemicals Paper Chemicals Polyurethanes Performance Polymers 25

26 Innovations for a sustainable future Combining cross-divisional technology competencies with customer know-how Smart forvision joint concept car of Daimler and BASF 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 26

27 Innovations for a sustainable future Strengthening our R&D platform in Asia Pacific Innovation in Asia for Asia 8 R&D sites plus technical centers in Asia Pacific R&D experts to increase from 550 to more than 800 by million investment includes innovation campus and Greater China head office Leverage global R&D capabilities with Competence Centers in Singapore, India and China Co-operations with ~100 institutes and universities BASF s new innovation campus in Shanghai BASF Strategy: We create chemistry November

28 Innovations for a sustainable future Target EBITDA from innovations: 7 billion in 2020 Sales and EBITDA from innovations in billion ~30 Sales from innovations launched within last 5 years EBITDA from innovations launched within last 5 years ~10 ~2.5 ~7 Sales from innovations launched within last 10 years EBITDA from innovations launched within last 10 years Targeted spending of ~3% of sales (w/o Oil & Gas) p.a. on R&D 28

29 Investments Investments will boost future organic growth Future investments in billlion ~ % 35-45% ~20% Total investments Thereof investments in emerging markets 29

30 Investments Major projects in emerging markets MDI plant Chongqing, China Expansion Verbund site Nanjing* Expansion Verbund site Kuantan* Acrylic acid complex, Brazil Expanding gas production, Russia* 15% Stake in South Stream Emerging market sales target 2020: 45 % * Memoranda of Understanding signed 30

31 Operational Excellence New program STEP : Earnings contribution ~ 1 billion Annual earnings contribution in million 3,000 NEXT Program Annual earnings contribution of more than 1 billion will be achieved in ,000 1,000 0 Former cost saving programs NEXT STEP STEP STrategic Excellence Program Optimization of processes, structures and production sites in all regions Measures: Fixed cost savings Margin improvement Capacity increase Better sourcing Project timeline: Targeted earnings contribution of about 1 billion by end of

32 Business review BASF Today Trends Purpose and strategic principles Targets Strategic levers BASF Tomorrow Board priorities 32

33 Key financial targets 2015 / 2020 Growth targets Profitability targets Grow at least 2 percentage points above chemical production Earn a premium on cost of capital of at least 2.5 billion on average p.a Sales ~ 85 billion EBITDA ~ 15 billion 2020 Sales ~ 115 billion Double EBITDA to ~ 23 billion (compared with 2010) 33

34 Our strategy will create shareholder value Earnings per share* in CAGR ~9% STEP Share buy-back ~ Margin 0.5 Tax rate 0.8 Share buy-back 4.96 Growth 1.30 Business growth * Reported EPS; adjusted for 2:1 stock split in 2008 Target 2015

35 BASF Tomorrow Roadmap to 2020 We add value as One company Continued top and bottom line growth with key focus on emerging markets Expansion of portfolio downstream towards functionalized materials and solutions Strong focus on sustainability and innovation Commitment to deliver long-term shareholder value 35

36 Forward-looking statements This presentation includes 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. This presentation contains a number of forward-looking statements including, 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 with respect to future events and financial performance. Actual financial performance of the entities described herein 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. Forward-looking statements represent estimates and assumptions only as of the date that they were made. 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. 36

37 We create chemistry

38 Backup BASF track record BASF Strategy: We create chemistry November

39 Decade of outperformance in sector margins EBITDA margin in % BASF Group EBITDA margin European chemical sector Ø* US chemical sector Ø** Asian chemical sector Ø*** * AkzoNobel, Arkema, Clariant, DSM, Evonik (Degussa), Lanxess, Solvay ** Celanese, Dow, DuPont, Huntsman, PPG *** Formosa Plastics, Mitsubishi Chemicals, Mitsui Chemicals, Sinopec Chemicals, Sumitomo Chemicals Source: Company reports, Thomson One, Reuters BASF Strategy: We create chemistry November

40 Generating high EBITDA EBITDA in billion CAGR ( ) 12%

41 Generating strong EPS growth Earnings per share* in CAGR ( ) 18% ** * Reported EPS; adjusted for 2:1 stock split in 2008 ** Excluding extraordinary income BASF Strategy: We create chemistry November

42 Delivering attractive shareholder returns Dividend per share in 0.65 CAGR 14.5% Dividend payments From 2001 to 2010, BASF paid dividends in the amount of ~ 13 billion Share buy-backs From 2001 to 2010, BASF bought back shares in the amount of 8.9 billion This equaled ~25% of total shares outstanding Yield* 3.1% 3.9% 3.1% 3.2% 3.1% 4.1% 3.8% 7.0% 3.9% 3.7% * Dividend yield based on share price at year-end 42

43 Solid track record of earning a premium on cost of capital EBIT after cost of capital* in billion Target first established ** * Cost of capital rate varied from 9% to 13% ** Including Ciba integration costs of 0.8 billion BASF Strategy: We create chemistry November

44 Best-in-class asset profitability Capital turnover improved by 2% p.a.* EBITDA on total assets in % % 20% 15% 10% 5% AkzoNobel DSM Bayer SABIC DuPont Degussa Dow BASF 2010 Lanxess SABIC DSM Evonik DuPont Bayer Dow Celanese AkzoNobel BASF 0% Celanese * Capital turnover = sales over total assets Sales in billion BASF Strategy: We create chemistry November = EBIT 80

45 Strong sales and earnings increase in all segments Chemicals Plastics Performance Products 10% p.a % p.a % p.a % p.a % p.a % p.a Functional Solutions 17% p.a % p.a Agricultural Solutions 1.5% p.a. 7% p.a Oil & Gas 10% p.a % p.a Sales in billion EBITDA in billion Growth rate p.a. 45

46 Backup Macro-economic assumptions BASF Strategy: We create chemistry November

47 Assumptions Global GDP Chemical production (excl. Pharma) Growth (Forecast*) 3.0% p.a. 4.0% p.a. Growth % p.a. 3.0% p.a. Industrial production 3.8% p.a. 2.4% p.a. * Assumptions : US$/ Ø oil price Ø US$110/bbl 47

48 Backup Acquisition Criteria BASF Strategy: We create chemistry November

49 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 Are EPS accretive by year three at the latest Provide a minimum return on investment of 8% after tax Reduce earnings cyclicality Strategic acquisition criteria Financial acquisition criteria 49

50 Backup Emerging Markets BASF Strategy: We create chemistry November

51 Growth above market with increasing share from emerging markets Developed markets* Emerging markets 2001 in % of sales ( 28 bn**) ~ 78% ~ 22% 2010 in % of sales ( 53bn**) ~ 66% ~ 34% 2020 in % of sales** ~55% ~ 45% *BASF definition: Developed markets include EU15, Norway, Switzerland, North America, Japan, Australia, New Zealand ** Sales without Oil & Gas 51

52 Backup Innovation BASF Strategy: We create chemistry November

53 Innovations for a sustainable future Chemistry as an enabler Sustainability in customer industries will drive our innovative growth fields Customer industries Transportation Construction Consumer Goods Health & Nutrition Electronics Agriculture Energy & Resources Batteries for mobility Heat management Enzymes Medical Organic Electronics Plant biotechnology Energy management Growth Fields* Lightweight composites Heat management Functional crop care Rare earth metals recycling Wind energy Water solutions Ongoing inflow of new growth fields *including growth fields still under evaluation 53

54 BASF s global R&D footprint today North America: 1,330 employees in R&D Europe: 7,500 employees in R&D South America: 220 employees in R&D Asia 550 employees in R&D Major R&D site BASF Strategy: We create chemistry November

55 Backup Business development Q BASF Strategy: We create chemistry November

56 Chemicals Significant sales growth driven by strong price increases Q3 11 segment sales (million ) vs. Q3 10 EBIT before special items (million ) Intermediates % 3, % Inorganics % Petrochemicals 2, % Q3 Q4 Q1 Q2 Q Sales development Period Volumes Prices Portfolio Currencies Q3 11 vs. Q3 10 (3)% 18% 0% (5)% 56

57 Plastics Sales up mainly due to a strong Performance Polymers business Q3 11 segment sales (million ) vs. Q3 10 EBIT before special items (million ) Polyurethanes 1,480 +2% 2,801 +8% Performance Polymers 1, % 0 Q3 Q4 Q1 Q2 Q Sales development Period Volumes Prices Portfolio Currencies Q3 11 vs. Q3 10 2% 10% 0% (4)% 57

58 Performance Products Strong contributions from acquired Cognis businesses Q3 11 segment sales (million ) vs. Q3 10 EBIT before special items (million ) Care Chemicals 1, % Nutrition & Health 471 3, % Performance Chemicals % +32% Dispersions Paper Chemicals & Pigments % +5% Q3 Q4 Q1 Q2 Q Sales development Period Volumes Prices Portfolio Currencies Q3 11 vs. Q3 10 (2%) 7% 23% (4)% 58

59 Functional Solutions Strong performance of Catalysts Q3 11 segment sales (million ) vs. Q3 10 EBIT before special items (million ) Catalysts 1, % 2, % Construction Chemicals 599 0% Coatings % 0 Q3 Q4 Q1 Q2 Q Sales development Period Volumes Prices Portfolio Currencies Q3 11 vs. Q3 10 4% 11% 3% (6)% 59

60 Agricultural Solutions On track for record year in sales and earnings Q3 11 segment sales (million ) vs. Q3 10 EBIT before special items (million ) % % 95 0 Q Q Q Q Sales development Period Volumes Prices Portfolio Currencies Q3 11 vs. Q % 3% 0% (6)% 60

61 Oil & Gas EBIT before SI on last year s level (adjusted for non-compensable oil taxes) Q3 11 segment sales (million ) vs. Q3 10 EBIT before special items/ Net income (million ) Exploration & Production % 2,195-1% Natural Gas Trading 1, % Q Non-compensable oil taxes Q Sales development EBIT bsi Exploration & Production EBIT bsi Natural Gas Trading Net income Period Volumes Prices/Currencies Portfolio Q3 11 vs. Q3 10 (25)% 24% 0% 61