We add value as one company

Transcription

1 Ingo Rose Director Investor Relations Deutsche Bank ADR Virtual Investor Conference March 17, 2016 We add value as one company BASF Capital Market Story March

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 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 March

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 12/31/2015): 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 March

4 We create chemistry for a sustainable future 150 years Positioning Performance Perspective Geismar, USA Freeport, USA 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, 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 ~ 54 billion market capitalization Feb Chemistry as an enabler BASF has superior growth opportunities: sustainable innovations investments emerging markets BASF Capital Market Story March

5 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/a. and reduction of waste Example Ludwigshafen site: 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 March 2016 * Savings include only tangible synergies. Additional (intangible) benefits and retained profits are not included. 5

6 BASF today a well-balanced portfolio Total sales 2015: 70.4 billion Percentage of sales 2015* BASF Capital Market Story March 2016 * Not depicted here: ~4% of Group sales reported as Other ** Natural Gas Trading has been sold Sep. 30, 2015 to Gazprom. 6

7 Strong free cash development 2015 Free cash flow* (in billion ) ** * Cash provided by operating activities less capex BASF Capital Market Story March 2016 ** 2009 adjusted for re-classification of settlement payments for currency derivatives 7

8 Attractive shareholder return Dividend per share (in ) Proposal: Dividend policy We want to grow or at least maintain our dividend Key facts 2015 Dividend proposal 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% 3.5% 4.0% 4.1% BASF Capital Market Story March 2016 * Dividend yield based on share price at year-end 8

9 Delivering consistent, long-term value Average annual performance with dividends reinvested Last 10 years March 2006 February 2016 Last 5 years March 2011 February % BASF +3.4% +0.6% Euro Stoxx % +5.1% DAX % +6.2% MSCI World Chemicals +4.9% BASF Capital Market Story March

10 Path forward: Our priorities 2016 & beyond BASF Capital Market Story March

11 Outlook 2016 Expectations for the global economy Forecast (actual) GDP 2.3% 2.4% Chemicals (excl. pharma) 3.4% 3.6% Industrial production 2.0% 2.0% US$ / Euro Oil price: Brent (US$ / bbl) BASF Capital Market Story March

12 Outlook 2016 BASF Group Sales will be considerably below prior year, due to the divestiture of the Natural Gas Trading and Storage activities and the lower oil & 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. In the volatile and challenging macroeconomic environment, we regard our targets for 2016 as ambitious. Achieving them will depend on the development of the oil price. BASF Capital Market Story March

13 Outlook 2016 Forecast by segment EBIT before special items Million 2015 Forecast 2016 Chemicals 2,156 considerable decrease Performance Products 1,366 slight increase Functional Materials & Solutions 1,649 slight increase Agricultural Solutions 1,090 slight increase Oil & Gas 1,366 considerable decrease Other (888) considerable increase BASF Group 6,739 slight decrease With respect to EBIT before special items, slight means a change of 1-10%, while considerable is used for changes greater than 11%. At prior-year level indicates no change (+/-0%). BASF Capital Market Story March

14 Priorities 2016 Focus on capex discipline: Reduce capital expenditures to 4.2 billion in 2016 Cost control and operational excellence: DrivE targeting ~ 1 billion earnings contribution by 2018 Portfolio optimization ongoing: E.g. agreement to sell industrial coatings business to AkzoNobel Strong commitment to innovation: Maintain R&D spending at ~ 1.95 billion in 2016 BASF Capital Market Story March

15 Capex 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% BASF Capital Market Story March 2016 * Including Africa and Middle East 15

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

17 Operational excellence Strong track record BASF Group* (Index; CAGR ) CAGR EBITDA 9% CAGR Sales 6% EBITDA Sales CAGR Fixed Costs 3% Fixed Costs BASF Capital Market Story March 2016 * Excl. companies with major IFRS 10/11 restatements, i.e. BASF YPC Nanjing, Libya onshore, other Oil & Gas and Catalysts companies 17

18 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 Divestitures Styrenics Fertilizers Construction equipment, flooring and wall systems Decorative paints in Europe Selected assets in Oil & Gas Natural gas trading and storage Custom synthesis business ~ 20 billion sales* in businesses with limited fit and differentiation potential BASF Capital Market Story March 2016 * Includes sales of non-consolidated businesses (Styrenics, VNG participation) 18

19 Innovation Innovations for a sustainable future R&D expenditures (in 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 expenditure 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 March

20 Innovation 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, Camaҫari BASF Capital Market Story March 2016 Source: BASF estimate 20

21 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 March

22 Profitability of BASF will grow faster than global chemical production 150 years Financial targets for next 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 March 2016 * Without considering Natural Gas Trading and Storage business 22

23 Appendix: 4Q & FY 2015 Reporting BASF Capital Market Story March

24 BASF with lower sales and earnings in difficult economic environment 150 years Business performance Q4 15 vs. Q4 14 FY 15 vs. FY 14 Sales 13.9 billion (23%) 70.4 billion (5%) EBITDA 1.9 billion (34%) 10.6 billion (4%) EBIT before special items 1.0 billion (30%) 6.7 billion (8%) EBIT 0.3 billion (81%) 6.2 billion (18%) Net income 0.3 billion (76%) 4.0 billion (23%) Reported EPS 0.37 (76%) 4.34 (23%) Adjusted EPS 1.01 (3%) 5.00 (8%) Operating cash flow 1.0 billion (53%) 9.4 billion +36% Sales development Period Volumes Prices Portfolio Currencies Q4 15 vs. Q4 14 4% (11%) (19%) 3% FY 15 vs. FY 14 3% (9%) (5%) 6% BASF Capital Market Story March

25 Chemicals Significant earnings decline due to lower cracker margins Q4 15 segment sales (million ) vs. Q4 14 EBIT before special items (million ) Intermediates 671 (2%) Monomers 1,396 (12%) 3,189 (22%) Petrochemicals 1,122 (38%) Q4' Q4'15 3,000 2,000 1, ,367 FY'14 2,156 FY'15 (57%) (9%) Sales development Period Volumes Prices Portfolio Currencies Q4 15 vs. Q4 14 (5%) (19%) (2%) 4% FY 15 vs. FY 14 (2%) (17%) (2%) 7% BASF Capital Market Story March

26 Performance Products Slightly higher earnings on improved margins 150 years Q4 15 segment sales (million ) vs. Q4 14 EBIT before special items (million ) Performance Chemicals 987 (4%) Nutrition & Health 429 (13%) 3,627 (2%) Dispersions & Pigments 1,043 +1% Care Chemicals 1,168 0% Q4' Q4'15 1,500 1, ,455 FY'14 1,366 FY'15 +5% (6%) Sales development Period Volumes Prices Portfolio Currencies Q4 15 vs. Q4 14 0% (4%) (2%) 4% FY 15 vs. FY 14 (1%) (4%) (1%) 7% BASF Capital Market Story March

27 Functional Materials & Solutions Strong operating performance drives earnings up 150 years Q4 15 segment sales (million ) vs. Q4 14 EBIT before special items (million ) Performance Materials 1,590 0% Coatings % 4,506 +1% Catalysts 1,545 (2%) Construction Chemicals % Q4' Q4'15 1,600 1, ,197 FY'14 1,649 FY'15 +77% +38% Sales development Period Volumes Prices Portfolio Currencies Q4 15 vs. Q4 14 3% (7%) 0% 5% FY 15 vs. FY 14 0% (4%) 0% 9% BASF Capital Market Story March

28 Agricultural Solutions Strong finish despite tough market environment 150 years Q4 15 segment sales (million ) vs. Q4 14 EBIT before special items (million ) 1,200 1, ,109 1, , ,109 1,090 0 Q4 Q4 0 Q4'14 Q4'15 0 FY'14 FY' % (2%) Sales development Period Volumes Prices Portfolio Currencies Q4 15 vs. Q4 14 3% 6% 0% (4%) FY 15 vs. FY 14 1% 5% 0% 1% BASF Capital Market Story March

29 Oil & Gas Earnings drop due to significantly lower oil and gas prices 150 years Q4 15 segment sales (million ) vs. Q4 14 EBIT before special items / Net income (million ) 4,000 3,000 2,000 1, , ,277 Q * Q * * Q4 '14 Q4 '15 Exploration & Production 2,000 1,795 1,464 1,366 1, ,412 1, FY '14 FY '15 Natural Gas Trading Net income Sales development * Including transportation business Period Volumes Price/Currencies Portfolio Q4 15 vs. Q4 14 3% (4%) (81%) FY 15 vs. FY 14 15% (9%) (20%) BASF Capital Market Story March

30 Review of Other Million Q Q Sales ,790 3,609 EBIT before special items (114) (28) (888) (566) Thereof corporate research costs group corporate costs currency results, hedges and other valuation effects other businesses (95) (61) (11) 75 (98) (59) (402) (233) (220) 170 (389) (218) (2) Special items (21) 473 (97) 433 EBIT (135) 445 (985) (133) 133 BASF Capital Market Story March

31 Cash flow development in 2015 Million Cash provided by operating activities 9,446 6,958 Thereof changes in net working capital miscellaneous items 1,347 (336) (623) (1,029) Cash provided by investing activities (5,235) (4,496) Thereof payments related to tangible / intangible assets (5,812) (5,296) acquisitions / divestitures Cash used in financing activities (3,673) (2,478) Thereof changes in financial liabilities dividends (933) (2,806) 288 (2,766) 2015 Record operating cash flow of 9.4 billion Free cash flow more than doubled to 3.6 billion High dividend payout in 2015 of 2.8 billion BASF Capital Market Story March

32 Balance sheet remains strong Balance sheet 2015 vs (billion ) Long-term assets Inventories Accounts receivable 10.4 Other assets 4.0 Liquid funds 1.7 Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2015 Stockholders Equity Financial debt Other liabilities Highlights 2015 Total assets almost stable Long-term assets up by 2.3 billion as a result of our investment projects Short-term assets down by 2.9 billion due to strict working capital management and the asset swap Equity grew by 3.4 billion Provisions for pensions down by 1.0 billion Net debt decreased to 13.0 billion Net debt/ebitda ratio: 1.2 Equity ratio: 45% BASF Capital Market Story March

33 BASF Capital Market Story March