BASF: Fit for Dr. Hans Engel. CFO of BASF SE, Chairman and CEO of BASF Corporation. Boston & New York, November 7-8, 2011

Transcription

1 BASF: Fit for 2012 Dr. Hans Engel CFO of BASF SE, Chairman and CEO of BASF Corporation Boston & New York, November 7-8, 2011 BASF Capital Market Story November

2 1 Business review 2 Focus on operational excellence 3 Well positioned for profitable growth 4 Outlook BASF Capital Market Story November

3 BASF with good earnings in Q3 Third quarter 2011 highlights 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 BASF Capital Market Story November

4 Growth in all segments except Oil & Gas Segment million Sales Δ Q EBITDA EBITDA margin EBIT before SI Δ Q Chemicals 3, % % % Plastics 2,801 +8% % 317 (15)% Performance Products Functional Solutions Agricultural Solutions 3, % % % 2, % % % % % % Oil & Gas 2,195 (2%) % 350 (39%) BASF Capital Market Story November

5 Major milestones in our active portfolio management achieved Styrolution JV set on track Divestiture of fertilizer activities Styrolution, joint venture between BASF and INEOS, established on October 1, 2011 With pro-forma sales of 6.4 billion in 2010* Styrolution is global market leader in its industry BASF received ~ 600 million in October as compensation for its contributed business * unaudited Agreement with EuroChem signed to sell BASF s fertilizer assets in Antwerp BASF also plans to sell its 50%-stake in PEC-Rhin JV to EuroChem Total transaction value ~ 700 million Closing expected by the end of Q BASF Capital Market Story November

6 Continuous strong cash flow Cash Flow (billion ) Q1-Q3 Cash provided by operating activities Free cash flow* * Cash provided by operating activities less capex (in 2005 before CTA) ** 2009 adjusted for re-classification of settlement payments for currency derivatives BASF Capital Market Story November **

7 Attractive shareholder returns Record dividend Dividend per share ( ) Key facts Average annual dividend increase of 14.5% ( ) Dividend yield above 3% in any given year since 2001 Attractive dividend yield of 3.7% in 2010* 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 BASF Capital Market Story November

8 Delivering consistent, long-term value Long-term performance October 2001 September 2011 (average annual performance with dividends reinvested) +12.8% BASF -1.4% Euro Stoxx % DAX % MSCI World Chemicals BASF Capital Market Story November

9 1 Business review 2 Focus on operational excellence 3 Well positioned for profitable growth 4 Outlook BASF Capital Market Story November

10 Unique Verbund concept Cost savings of > 500 million p.a. in Ludwigshafen alone BASF site Ludwigshafen, Germany Verbund Concept Vertical and horizontal integration of production plants, energy and waste flows, logistics and site infrastructure Know-how Verbund Energy Verbund and combined heat and power plants lead to - Savings of 2.6 million tons oil equivalent p.a. - Reduction of CO 2 -emissions of ~6 million tons p.a. 10 BASF Capital Market Story November

11 Stringent fixed cost management BASF Group development Index 300 Δ ~170% ~100% 150 ~20% Fixed costs indexed Sales indexed EBITDA indexed Key facts Fixed costs represent around 30% of total costs Only slightly higher fixed costs, despite major acquisitions (Engelhard, Degussa Construction Chemicals, Ciba and Cognis) Ciba and Cognis synergies as well as NEXT program will drive fixed costs down Cost synergies Ciba: > 450 million by 2012 Cost synergies Cognis: 145 million by 2013 BASF Capital Market Story November

12 Sustainable improvement of cost base Efficiency program NEXT on track Annual earnings contribution (million ) 2,500 2,000 1,500 1, New EXcellence Targets (NEXT) > 500 individual projects to simplify processes, structures and production sites in all regions Project timeline: Annual earnings contribution of 600 million in 2010 achieved Targeted earnings contribution by 2012: 1 billion New efficiency program NEXT Completed restructuring programs BASF Capital Market Story November

13 1 Business review 2 Focus on operational excellence 3 Well positioned for profitable growth 4 Outlook BASF Capital Market Story November

14 Well positioned for profitable growth Leading positions in growth industries and emerging markets Continue expansion in emerging markets, especially Asia Translate megatrends into business growth Ongoing portfolio optimization Continue with active portfolio management Drive portfolio closer to end customer Excellent innovation platform Product and system innovation as growth drivers Megatrend innovations for long-term growth Growth target: We strive to outperform global chemical production growth by at least 2 percentage points p.a. BASF Capital Market Story November

15 Leading positions in growth industries and emerging markets BASF Capital Market Story November

16 Emerging markets Significant sales growth in emerging markets BASF Group (w/o Oil & Gas) Net sales in billion % CAGR 13% CAGR 7% 27% Emerging Markets Sales 2010 in emerging markets: 14.5 billion (27%) Investments in emerging markets : 3 billion Ongoing increase of -sales force - regional R&D Emerging markets definition, according to Dow Jones: 35 countries * Emerging Markets (Dow Jones definition) Developed Markets * Bahrain, Brazil, Bulgaria, Chile, China, Colombia, Czech Republic, Egypt, Estonia, Hungary, India, Indonesia, Jordan, Latvia, Kuwait, Lithuania, Malaysia, Mauritius, Mexico, Morocco, Oman, Pakistan, Peru, Philippines, Poland, Qatar, Romania, Russia, Slovakia, Sri Lanka, South Africa, South Korea, Taiwan, Thailand, Turkey, United Arab Emirates BASF Capital Market Story November

17 Emerging markets Recently announced major projects 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 * Memoranda of Understanding signed BASF Capital Market Story November

18 BASF s profitable growth path in Asia Pacific Sales by location of customers (in billion ) Achievements Sales growth +14% p.a. (vs. Asian market growth +10.5% p.a.) Record EBITDA of 1.7 billion in 2010, resulting in an EBITDA margin of 14% % p.a * 2020 * Excluding Cognis Target Well on track to double sales by 2020 (based on sales of 9 billion in 2008) Outgrowing Asian Pacific chemical market by 2 percentage points p.a. through Innovations out of Asia Investments : 2.3 billion Generating 70% of sales based on local manufacturing Strengthening market focus through industry and customer target groups BASF Capital Market Story November

19 Ongoing portfolio optimization BASF Capital Market Story November

20 Pro-active portfolio management Major acquisitions Crop protection Oil & Gas (Revus) Engineering Plastics Electronic Chemicals Custom synthesis Catalysts (Engelhard) Construction Chem. Water-based resins Pigments (Ciba) Plastic additives (Ciba) Care Chem. (Cognis) Nutrition & Health (Cognis) 15 billion Euro (Sales) Selected transactions 2001 to date BASF core businesses Powerful partnerships Gazprom Monsanto Petronas Shell Sinopec Total Major divestitures Pharmaceuticals Fibers Printing systems Polyolefins (Basell) Polystyrene North America Agchem generics Premix Styrenics (JV Styrolution established) Fertilizers (contract signed) 9 billion Euro * (Sales) Sale of shares in K+S (Proceeds for BASF ~ 1 billion) * Not including styrenics and fertilizer businesses BASF Capital Market Story November

21 Cognis integration Synergy target increased to 290 million Target Acquisition EPS accretive as of 2012 Integration Costs 300 million one-time costs until end of 2013 thereof 200 million incurred by the end of Q million inventory step-up fully incurred already 60 million each incurred in Q and Q Synergies 290 million of additional annual EBIT targeted 145 million cost synergies by the end of million growth synergies by the end of 2015 BASF Capital Market Story November

22 Active portfolio management pays off EBITDA by activity (in billion, excluding Other) * ** 2010 Our diversified portfolio is a key strength Recent acquisitions reshaped portfolio Closer to end customers Innovation-driven Profitable growth above industry average BASF s EBITDA in 2010 (excluding Other) amounted to 11.7 billion Chemical activities Agricultural Solutions Oil & Gas, including non-deductible oil taxes * Based on German GAAP ** As of 2007 according to new segment structure (excl. Styrenics and corporate costs) BASF Capital Market Story November

23 Excellent innovation platform BASF Capital Market Story November

24 Natugrain TS X-SEED PCI Geofug Ecovio CypoSol Electromobility Kaurit Light Elastopave Xemium BASF Capital Market Story November

25 Innovations for the mobility of tomorrow smart forvision joint concept car by Daimler and BASF Presented at the International Motor Show in Frankfurt in September 2011 BASF solutions are based on three main technology platforms: 1. Electrical energy efficiency - OPVs, OLEDs* support range extension 2. Multifunctional lightweight construction - Composite body parts, wheel rims and car seats 3. Integrated temperature management - Cool pigment coating, temperature reflecting foil * OPVs = Organic Photovoltaics, OLEDs = Organic Light Emitting Diodes Chemical solutions by BASF are playing a key role in bringing electromobility quicker to the roads BASF Capital Market Story November

26 Innovation will spur further growth Total R&D expenditures 2010 (billion ) Strong commitment to R&D Chemicals Corporate Research 1.5 billion R&D expenditures in 2010 (2009: 1.4 billion) 9% Plastics 22% ~ 8 billion R&D expenditures in the period % Performance Products 1.5 billion Other 2% ~9,600 employees in R&D ~3,000 projects and topics 19% Functional Solutions 12% Agricultural Solutions 26% Research Verbund: About 1,900 partnerships with universities, start-ups and industry partners Further increase in R&D spending planned for 2011 BASF Capital Market Story November

27 Innovation pipeline worth 21 billion Net present value by segments (billion ) R&D contributes significantly to earnings growth bn 21 bn 3% Chemicals 7% Plastics 14% Performance Products 8% Functional Solutions The pipeline NPV of 21 billion is a bottom-up aggregation of all R&D projects High success rate due to stringent R&D controlling via Phasegate process % Agricultural Solutions 2% Oil & Gas 20% Corporate Research 0, ,0 Expected Commercial Value: ~50% of NPV (probabilityweighted) In 2010, sales of new products (5 years or younger) exceeded the target of 6 billion Target 2015: up to 8 billion sales with new products * New or improved products or new applications, max. 5 years on market, including Growth Clusters BASF Capital Market Story November

28 1 Business review 2 Focus on operational excellence 3 Well positioned for profitable growth 4 Outlook BASF Capital Market Story November

29 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 Medium-term targets We aim to grow sales on average by two percentage points per year faster than chemical production growth We strive to grow our earnings further year by year, and to achieve an EBITDA margin of 18% by 2012 Dividend policy We aim to continuously increase the annual dividend, or at least maintain it at the level of the previous year. as of October 27, 2011; 3rd Quarter 2011 Reporting BASF Capital Market Story November

30 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. BASF Capital Market Story November

31 BASF Capital Market Story November

32 Backup Macro-economic assumptions 2011 BASF Capital Market Story November

33 Macro-economic assumptions 2011 Previous forecast New forecast GDP 3%-4% 2.5%-3% Chemical production (excl. Pharma) 5%-6% 4.5%-5% Industrial production 5%-6% 4.5%-5% US$ / Euro Oil price (US$ / bbl) BASF Capital Market Story November 2011 as of October 27, 2011; 3 rd Quarter 2011 Reporting

34 Backup Business development Q BASF Capital Market Story November

35 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)% BASF Capital Market Story November

36 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)% BASF Capital Market Story November

37 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)% BASF Capital Market Story November

38 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)% BASF Capital Market Story November

39 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)% BASF Capital Market Story November

40 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% BASF Capital Market Story November

41 Review of Other Million Q Q Sales 1,637 1,452 thereof Styrenics* EBIT before special items (21) 58 thereof Corporate research Group corporate costs Currency results, hedges and other valuation effects Styrenics, fertilizers, other businesses (86) (58) (67) (54) 104 Special items (33) (68) EBIT (54) (10) 77 * Since January 1, 2011, Styrenics only includes the carved-out Styrenics businesses; the previous year s values were adjusted accordingly. BASF Capital Market Story November

42 Operating cash flow remains strong Million Jan - Sep 2011 Jan - Sep 2010 Cash provided by operating activities 5,028 5,307 thereof Changes in net working capital (1,337) (783) Cash used in investing activities (957) (1,175) thereof Payments related to tangible / intangible assets (2,101) (1,518) Cash used in financing activities (4,105) (3,814) thereof Changes in financial liabilities Dividends (1,727) (2,378) (2,003) (1,811) Third quarter 2011 Operating cash flow strong at 2.0 billion Free cash flow again high at 1.2 billion Net debt further reduced by ~ 650 million to 11.6 billion since end of Q BASF Capital Market Story November

43 Financial highlights Million Q Q Δ% Q Δ% Sales changes due to - volumes -prices - portfolio - currencies 17,607 15, % (3)% +14% +5% (4)% 18,461 (5)% EBITDA 2,709 2,934 (8)% 3,015 (10)% EBIT before special items 1,964 2,213 (11)% 2,237 (12)% EBIT before special items adjusted for non-compensable oil taxes 1,964 1,989 (1)% 2,237 (12)% Special items (82) (58) - (20) - EBIT 1,882 2,155 (13)% 2,217 (15)% Net income 1,192 1,245 (4)% 1,454 (18)% EPS ( ) (4)% 1.59 (18)% Adjusted EPS ( ) % 1.75 (13)% BASF Capital Market Story November

44 Backup Business overview 2010 BASF Capital Market Story November

45 Excellent segment performance 2010 Segment million Sales Δ vs EBITDA EBITDA margin EBIT before SI Δ vs Chemicals 11, % 3, % 2, % Plastics 9, % 1, % 1, % Performance Products Functional Solutions Agricultural Solutions 12, % 2, % 1, % 9, % % % 4, % % 749 (4%) Oil & Gas 10,791 (5%) 2, %* 2,430 +6% * Excluding non-compensable oil taxes: 18.5% BASF Capital Market Story November

46 Backup Capital expenditures BASF Capital Market Story November

47 Planned capital expenditures By segment By region Oil & Gas* 35% Agricultural Solutions 4% Other (Infrastructure, R&D) 12% 12.6 billion Chemicals 15% Plastics 14% Performance Products 14% Functional Solutions 6% Asia Pacific 17% North America 14% South America, Africa, Middle East 4% 12.6 billion Europe** 63% Alternative sites under review 2% * Excluding investments in Nord Stream ** Thereof ~ 4.4 billion for Oil & Gas BASF Capital Market Story November