We create chemistry for a sustainable future. Alex Sokolowski BASF Investor Relations HSBC GEMs Investor Forum, New York City June 4, 2018

Transcription

1 We create chemistry for a sustainable future Alex Sokolowski BASF Investor Relations HSBC GEMs Investor Forum, New York City June 4, 2018

2 Cautionary note regarding forward-looking statements This presentation contains forward-looking statements. These statements are based on current estimates and projections of the Board of Executive Directors and currently available information. Forward-looking statements are not guarantees of the future developments and results outlined therein. These are dependent on a number of factors; they involve various risks and uncertainties; and they are based on assumptions that may not prove to be accurate. Such risk factors include those discussed in the Opportunities and Risks Report from page 111 to 118 of the BASF Report BASF does not assume any obligation to update the forward-looking statements contained in this presentation above and beyond the legal requirements. 2 June 2018 BASF Capital Market Story

3 Agenda 1 At a glance 2 Strategic levers 3 4 Emerging markets and Asia Pacific Segments 3 June 2018 BASF Capital Market Story

4 BASF shares an attractive investment Growth above chemical industry average driven by innovative and sustainable products and solutions Broad and resilient portfolio with global market access and strong customer relationships Unique Verbund concept competitive advantage based on integrated sites, operational excellence and best-in-class technologies Earnings growth and strong cash flow generation based on operational and financial strength Long-term value creation with progressive dividend policy grow or at least maintain dividend at the previous year s level 4 June 2018 BASF Capital Market Story

5 Chemicals a growth industry Global annual growth rate of ~3.4%* Agriculture Health & Nutrition Energy & Resources Construction & Housing Consumer Goods Transportation Electrical & Electronics Chemistry as enabler to meet current and future needs ~10 bn 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 June 2018 BASF Capital Market Story * Forecast average annual real change ; BASF Report 2017, p. 121

6 Broad and resilient portfolio 2017: Sales of 64.5 billion; EBITDA of 12.7 billion Percentage of sales 2017* 25% 25% 9% 5% Chemicals Performance Products Functional Materials & Solutions Agricultural Solutions Oil & Gas EBITDA 5.4 billion Petrochemicals Monomers Intermediates EBITDA 2.4 billion Dispersions & Pigments Care Chemicals Nutrition & Health Performance Chemicals EBITDA 2.3 billion Catalysts Construction Chemicals Coatings Performance Materials EBITDA 1.3 billion Crop Protection EBITDA 2.1 billion Exploration & Production; Natural Gas Transport 6 June 2018 BASF Capital Market Story * Not depicted here: Other 4% of BASF Group sales and EBITDA of (679) million

7 Global market access through regional presence North America Sales 15,357 million EBIT 1,236 million Employees 18,295 Antwerp Ludwigshafen Florham Park Europe Sales 29,214 million EBIT 4,742 million Employees 71,653 Asia Pacific Sales 14,343 million EBIT 2,209 million Employees 18,256 Freeport South America, Africa, Middle East Sales 5,561 million EBIT 335 million Employees 7,286 Geismar São Paulo Kuantan Regional centers Selected sites Verbund sites Selected research and development sites Nanjing Hong Kong 7 June 2018 BASF Capital Market Story 2017: Sales by location of customer; EBIT by location of company

8 Verbund unique competitive advantage Actively managed in line with market requirements People, Customers, Technology, Production Energy savings > 300 million p.a. Logistics savings > 600 million p.a. Infrastructure savings > 100 million p.a. Annual cost savings of more than 1 billion through integrated production Verbund concept supports sustainability, reduces waste and avoids CO 2 emissions of 6 million tons p.a. 8 June 2018 BASF Capital Market Story

9 BASF Group with slight earnings increase in Q ^^ Financial figures Q Q Change % Sales 16,646 million 16,857 million (1) EBITDA before special items 3,439 million 3,507 million (2) EBITDA 3,448 million 3,502 million (2) EBIT before special items 2,512 million 2,457 million 2 EBIT 2,521 million 2,451 million 3 Net income 1,679 million 1,709 million (2) Reported EPS (2) Adjusted EPS (2) Operating cash flow 1,231 million 833 million 48 Sales development Volumes Prices Portfolio Currencies Q vs. Q % 5% 0% (8%) 9 June 2018 BASF Capital Market Story

10 Stepwise increase of earnings level 12.7 EBIT and EBITDA* billion, CAGR EBIT 17% CAGR EBITDA 8% Q EBIT EBITDA Avg. EBITDA level in depicted years 10 June 2018 BASF Capital Market Story * 2010, 2011 indicative, adjusted for IFRS 10/11; as reported, without non-compensable foreign income taxes on oil production

11 Strong cash flow development Operating cash flow and free cash flow billion, Operating cash flow Free cash flow 11 June 2018 BASF Capital Market Story

12 Attractive dividend Dividend per share Dividend policy We want to grow or at least maintain our dividend at previous year s level Key facts Dividend of 3.10 per share, an increase of 10 cents Dividend yield of 3.4% in Yield* 3.1% 3.9% 3.1% 3.2% 3.1% 4.1% 3.8% 7.0% 3.9% 3.7% 4.6% 3.7% 3.5% 4.0% 4.1% 3.4% 3.4% 12 June 2018 BASF Capital Market Story * Dividend yield based on share price at year-end

13 Delivering consistent, long-term value Current market capitalization: 77 billion* Average annual performance with dividends reinvested Last 10 years June 2008 May 2018 Last 3 years June 2015 May % BASF +2.5% +2.0% Euro Stoxx % +5.9% DAX % +6.1% MSCI World Chemicals +6.3% June 2018 BASF Capital Market Story * As of May 31, 2018

14 Financial targets for the coming years Sales growth slightly faster than 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 grow or at least maintain dividend at the previous year s level 14 June 2018 BASF Capital Market Story

15 Our priorities We aim to grow sales and earnings faster than global chemical production in the coming years, driven by Innovations for a sustainable future Investments in organic growth M&A opportunities and portfolio pruning measures Operational excellence and cost discipline 15 June 2018 BASF Capital Market Story

16 Outlook 2018 for BASF Group confirmed We anticipate slightly* higher sales in EBIT before special items is expected to be up slightly on the 2017 level. EBIT is forecast to decline slightly in We aim to once again earn a significant premium on our cost of capital in However, EBIT after cost of capital will decrease considerably, mainly due to lower EBIT as well as the additional cost of capital from the planned acquisitions. * For sales, slight represents a change of 1 5%, while considerable applies to changes of 6% and higher. For earnings, slight means a change of 1 10%, while considerable is used for changes of 11% and higher. This outlook takes into account the agreed transactions with Bayer and Solvay. The intended merger of our oil and gas activities with the business of DEA Deutsche Erdoel AG and its subsidiaries is not taken into account in this outlook. 16 June 2018 BASF Capital Market Story

17 Agenda At a glance Strategic levers Portfolio development Investments Innovation Sustainability Operational excellence Emerging markets and Asia Pacific Segments 17 June 2018 BASF Capital Market Story

18 Continuous global portfolio development to maintain a balanced portfolio Growth fields Specialties and solutions Attractive markets Differentiation by customer proximity and innovations Differentiated commodities Attractive markets Differentiation by process technologies and integration Innovation pipeline ~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 18 June 2018 BASF Capital Market Story * Excluding Oil & Gas sales

19 Portfolio development towards more market-driven and innovative businesses Acquisitions Functional crop care Personal care & food Omega-3 fatty acids Enzymes Battery materials Specialty plastics Selected assets in Oil & Gas Refinish coatings Surface treatment ~ 5.5 billion sales in emerging and innovation-driven businesses BASF core business Selected transactions 2010 today Strong Partnerships Gazprom PETRONAS Sinopec Total Divestitures Styrenics Fertilizers Selected assets in Oil & Gas Natural gas trading & storage Custom synthesis business Textile chemicals Polyolefin catalysts Industrial coatings Leather chemicals ~ 21.1 billion sales in businesses with limited fit and differentiation potential 19 June 2018 BASF Capital Market Story

20 Clear acquisition criteria Strategic acquisition criteria We want to acquire businesses which generate profitable growth above the industry average are innovation-driven offer a special value proposition to customers reduce earnings cyclicality Acquisition criteria Financial acquisition criteria We want to acquire businesses which provide a return on investment above the WACC are EPS accretive by year three at the latest 20 June 2018 BASF Capital Market Story

21 Update on recently announced M&A activities BASF to acquire Solvayʼs integrated global polyamide business Purchase price: ~ 1.6 billion Sales 2016: ~ 1.3 billion EBITDA 2016: ~ 200 million Market CAGR: >3.5% BASF and Solvay aim for a closing in Q BASF to acquire agricultural solutions businesses and assets from Bayer Purchase price: ~ 7.6 billion Sales 2016: ~ 2.0 billion EBITDA 2016*: ~ 550 million Subject to the closing of the acquisition of Monsanto by Bayer and regulatory approvals, closing expected in Q2/Q BASF and LetterOne intend to merge their oil and gas subsidiaries Pro-forma sales 2017: ~ 4.7 billion Pro-forma EBITDA 2017: ~ 2.8 billion BASF and LetterOne are conducting a confirmatory due diligence and are negotiating transaction agreements Closing could be expected in H June 2018 BASF Capital Market Story * On a pro-forma adjusted basis

22 BASF to acquire agricultural solutions businesses and assets from Bayer Facts about transactions with Bayer BASF to become an even better partner for farmers by strengthening its crop protection portfolio and entering the seeds business in key agricultural markets Cash EPS accretive in the first full fiscal year, EPS accretive by 2020 Financing through a combination of cash on hand, commercial papers and bonds Subject to approval of the relevant merger control authorities Following the closing of the acquisition of Monsanto by Bayer expected in Q2 2018, BASF also expects to close most of the acquisition in Q2 2018, with the vegetable seeds business closing in Q Combined figures of transactions with Bayer All-cash purchase price Sales 2017 Sales 2016 Sales by region EBITDA 2016* R&D expenses 2016 Sites 7.6 billion (subject to certain adjustments at closing, asset and share deal) ~ 2.2 billion ~ 2.0 billion ~60% North America ~15% South America ~15% Europe, Middle East, Africa ~10% Asia Pacific ~ 550 million ~ 350 million 5 chemical production and formulation sites 17 R&D sites Regional seed production and breeding facilities * On a pro-forma adjusted basis 22 June 2018 BASF Capital Market Story

23 Agreement signed in October 2017 Strong seeds for key row crops, non-selective herbicides and an excellent R&D platform Scope Fully enabled seed and trait businesses Attractive seeds portfolio for canola/oilseed rape, soybean and cotton in the Americas and Europe Excellent trait research platform for canola, soybean and cotton LibertyLink technology and related trademarks for herbicide tolerance Complementary crop protection business Figures Sales 2017 Sales 2016 Sales by region EBITDA 2016 R&D pipeline and IP ~ 1.5 billion ~ 1.3 billion ~70% North America ~15% South America ~10% Asia Pacific ~5% Europe, Middle East, Africa ~ 385 million >250 patent families Global glufosinate-ammonium-based non-selective herbicide business Employees >1,800 State-of-the-art production facilities in the U.S., Canada and Germany Experienced team of dedicated professionals Sites 5 chemical production and formulation sites 10 R&D sites Regional seed production and breeding facilities 23 June 2018 BASF Capital Market Story

24 Agreement signed in April 2018 Extended scope of agricultural solutions businesses and assets with high profitability and strong growth prospects Scope Global vegetable seeds business Well-established seed treatment business R&D platform for hybrid wheat State-of-the-art digital farming platform Other businesses and assets: Oilseed rape business in Australia Certain glyphosate-based herbicides in Europe, used predominantly for industrial applications Figures Sales 2017 Sales 2016 Sales by region EBITDA 2016* R&D pipeline and IP ~ 745 million ~ 710 million ~40% Europe, Middle East, Africa ~40% North America ~10% South America ~10% Asia Pacific ~ 165 million >250 patent families Canola-quality juncea research projects Certain non-selective herbicides research projects Nematicide research projects Experienced team of dedicated professionals Employees >2,500 Sites 7 R&D sites Regional seed production and breeding facilities * On a pro-forma adjusted basis 24 June 2018 BASF Capital Market Story

25 BASF and LetterOne signed letter of intent to merge their oil and gas subsidiaries Wintershall and DEA Combined business with pro-forma 2017 sales of 4.7 billion, EBITDA of 2.8 billion and net income of 740 million Creation of one of the largest independent European exploration and production companies with significant growth potential, optimization of the portfolio footprint of the combined business and realization of synergies BASF to initially hold 67% and LetterOne 33% in Wintershall DEA; value of Wintershall s gas transportation business to be reflected through the issuance of a mandatory convertible bond to BASF* BASF and LetterOne are currently conducting a confirmatory due diligence and are negotiating definitive transaction agreements; closing could be expected in the second half of 2018, subject to customary regulatory approvals Initial Public Offering (IPO) envisaged in the medium term * No later than 36 months after closing, this bond will be converted into new shares in Wintershall DEA, resulting in a higher shareholding ratio for BASF 25 June 2018 BASF Capital Market Story

26 BASF and Solenis to join forces by combining paper and water chemicals businesses BASF s paper wet-end and water chemicals business Sales 2017: ~ 0.8 billion Employees: ~1,300 Production sites and plants* in the UK, the U.S., Mexico, India and Australia Subject to the approval by the relevant authorities, BASF will hold a 49% share of the combined entity Key capabilities Technology expertise World-scale manufacturing Markets and products: packaging, dry strength, paper coloration, municipal waste water treatment, water treatment chemicals Creating a customer-focused global solutions provider for the paper and water treatment industries Solenis a global producer of specialty chemicals for water intensive industries Sales 2017: ~ 1.6 billion Employees: ~3,700 employees Manufacturing facilities in 35 countries worldwide Subject to the approval by the relevant authorities, funds managed by Clayton, Dubilier & Rice will hold a 51% share of the combined entity Key capabilities Customer intimacy Services: application domain experts, digital solutions Markets and products: packaging, tissue, biocides, wet and dry strength, industrial water treatment * BASF s paper wet-end and water chemicals production plants strongly embedded in the Verbund in Ludwigshafen, Germany, and Nanjing, China, are not transferred, and will deliver products and raw materials to the combined entity under mid- to long-term supply agreements. BASF s paper coating chemicals portfolio is not part of the transaction. 26 June 2018 BASF Capital Market Story

27 Performance Products differentiated business strategies will drive profitable growth EBITDA margin 2017 Higher Lower Lower Growth businesses Mid-term GDP growth rate Core businesses Area of bubbles = Sales of strategic businesses unit in June 2018 BASF Capital Market Story Opportunistic businesses Ø EBITDA margin Higher Mid-term growth Growth businesses Expand position through R&D activities, capex and M&A Core businesses Focus on operational excellence, process innovation, growth in emerging markets, new business models Opportunistic businesses Changing market environment requires review of strategic options Strategic priorities for Performance Products Organic growth Commercial and operational excellence Portfolio management

28 Investments in organic growth Investments of ~ 4.0 billion planned for 2018 Capex budget by segment Capex budget by region Other 18% Chemicals 25% Other** 5% South America*** 8% Europe 54% Oil & Gas* 18% 19.0 billion Performance Products 16% Asia Pacific 14% 19.0 billion Agricultural Solutions 4% Functional Materials & Solutions 19% North America 19% * If the merger of BASF s oil and gas activities with DEA is consummated as intended, these capital expenditures will no longer be reported as investments by the BASF Group. ** Alternative sites currently being investigated; *** Including Africa and Middle East 28 June 2018 BASF Capital Market Story

29 Selected investment projects Replacement of BASF s acetylene plant in Ludwigshafen Expansion of BASF s mobile emissions catalysts site in Poland New ibuprofen plant in Ludwigshafen; capacity expansion in the U.S. New plastic additives plant in Shanghai, China ~20 production facilities on the site use acetylene as a raw material 90,000 tons per year World s most efficient production process Startup end of 2019 BASF s largest emissions catalysts production site in Europe New production lines and additional infrastructure Best-in-class technology to meet tightening NOx and particulate emissions standards for diesel or gasoline engines First world-scale ibuprofen plant in Europe Additional capacity expansion of ibuprofen plant in Bishop, Texas Investments: ~ 200 million for both projects Startup in 2021 Production of antioxidants, related forms and blends 42,000 tons per year Commercial production to start by June 2018 BASF Capital Market Story

30 Innovation will drive future growth R&D expenditures 2017 Key facts 1.9 billion R&D expenditures in 2017 Corporate Research 20% Chemicals 7% R&D expense to sales ratio ~3% ~10,000 employees in R&D Oil & Gas 2% Agricultural Solutions 27% 1.9 billion Performance Products 21% Functional Materials & Solutions 23% ~3,000 projects ~800 new patents in 2017 Research Verbund: Cooperations with more than 600 excellent partners from universities, startups and industry In 2017, sales of > 9 billion from innovations launched on the market in the past five years 30 June 2018 BASF Capital Market Story

31 Corporate Research: BASF s key technology capabilities are bundled in seven focus areas Selected key technology capabilities reflect where BASF requires continued effort and resources to safeguard today s and tomorrow s excellence in innovation. BASF s key technology capabilities Biotechnology Catalysis Production processes Materials Polymer technologies Biodegradable & bio-based materials Enabling methods 31 June 2018 BASF Capital Market Story

32 Automotive is a growth business for BASF BASF sales to Automotive vs. global vehicle production (indexed) 200% 175% BASF sales to Automotive CAGR 6.7% 150% 125% 100% CAGR 3.0% Global vehicle production 75% 50% June 2018 BASF Capital Market Story * Excl. precious metals, coatings refinish business; CAGR shown for

33 BASF capturing the fast-growing battery materials market E-mobility drives battery materials growth Chemistry of cathode active materials (CAM) is key to address e-mobility challenges ~15-20% p.a Li-ion battery market 2025 Market projections for 2025: 8-15 million electric vehicles * built per year kt of CAM in e-mobility billion CAM market size BASF enables electromobility Unparalleled access and commitment to the automotive industry Strategic global supply, technology and production partnerships Well-established position in key CAM technologies (NCA & NCM)** Rapid expansion to global, cost-competitive asset Industry leading position in NCA capacity footprint 33 June 2018 BASF Capital Market Story *Electric vehicles: BEV, HEV and PHEV **NCA: nickel cobalt aluminum oxide; NCM: nickel cobalt manganese

34 Key supplier in battery materials, well-positioned for further growth Elyria, Ohio BASF TODA America Europe, planned production Onoda/Kitakyushu, Japan BASF TODA Battery Materials Battle Creek, Michigan BASF TODA America Amagasaki, Japan R&D, Application Technology Center Beachwood, Ohio R&D, Application Technology Center Production site Technology center Ludwigshafen, Germany R&D, Application Technology Center Shanghai, China R&D, Application Technology Center Shanghai, China BASF Battery Materials Headquarters Innovation in battery materials Leading technology portfolio and core patents ~ 250 million total R&D spent so far ~150 scientists at four R&D centers across all regions Highest energy density CAM commercialized for EV application Market presence Triple-digit-million euro battery material sales Supplier to world s largest cell producers Already supplying leading OEMs platforms Under qualification for future key platforms 34 June 2018 BASF Capital Market Story

35 Sustainable Solution Steering Goal: Increase the share of Accelerators from 23% in 2014 to 28% by 2020 Percentage of sales % Substantial sustainability contribution in the value chain >60,000 product applications analyzed 27.3% Accelerators strong growth in their markets 68.3% Sustainable Solution Steering Meets basic sustainability standards on the market Specific sustainability issues which are being actively addressed deliver margins above the average represent majority of BASF s R&D pipeline 68.3% Performers <1% Challenged products 4.3% 0.1% Significant sustainability concern identified and action plan developed 35 June 2018 BASF Capital Market Story

36 BASF products and solutions in everyday life Innovations for a sustainable future Nutrilan Superabsorbents Sokalan Omega-3 ecoflex / ecovio Trilon M Tinuvin Ultramid Tinosorb Luquafleece Coatings Cellasto Infinergy 36 June 2018 BASF Capital Market Story

37 Resource efficiency Responsible use of carbon sources We are committed to resource efficiency and climate protection BASF uses carbon raw materials responsibly: 82% of carbon converted to products, 17% consumed for process energy and converted to CO 2, 1% waste* Comparisons with European emissions trading benchmarks show that our chemical plants operate at above-average energy efficiency 23 million tons of CO 2 emissions by BASF worldwide in 2017 compared to million tons p.a. for one coal-fired power plant Customers use of BASF s climate protection products sold in 2017 avoided 570 million tons of CO 2 equivalents (thereof 6% attributable to BASF)** In 2017, BASF achieved CDP leadership status once again * BASF carbon mass balance calculation (2017, non-audited) ** Based on the chemical industry standard of the International Council of Chemical Associations (ICCA) and the World Business Council for Sustainable Development (WBCSD) 37 June 2018 BASF Capital Market Story

38 Operational excellence DrivE with ~ 1 billion targeted earnings contribution from end of 2018 onwards Annual earnings contribution DrivE million 0,.001 1, million 150 million Goal 1 billion DrivE program Optimization of processes and structures in all regions, including manufacturing incremental capacities million 650 million productivity increase Project timeline: Total 38 June 2018 BASF Capital Market Story

39 Strong track record in operational excellence BASF Group* indexed; CAGR CAGR EBITDA 8% CAGR Sales 5% EBITDA Sales CAGR Fixed Costs 3% Fixed Costs June 2018 BASF Capital Market Story * Excl. companies with major IFRS 10/11 restatements, i.e. BASF YPC Nanjing, Libya onshore,other Oil & Gas and Catalysts companies

40 Digitalization will support BASF s growth and efficiency Digital Business Models Growth Digital business models New revenue streams Smart Innovation Customer connectivity Digitalization in R&D Increased supply share Higher innovation output Smart Supply Chain Efficiency Predictive maintenance Increased capacity Augmented reality in production Increased work efficiency Smart Manufacturing Smart supply chain Reduced working capital 40 June 2018 BASF Capital Market Story

41 Agenda 1 At a glance 2 Strategic levers 3 4 Emerging markets and Asia Pacific Segments 41 June 2018 BASF Capital Market Story

42 Today s emerging markets are expected to account for around 65% of global chemical production in 2025 BASF sales* in emerging markets 42 June 2018 BASF Capital Market Story * Percentage of BASF Group sales (excluding Oil & Gas) by location of customer

43 43 June 2018 BASF Capital Market Story

44 We participate in innovative and growing markets Estimated CAGR for selected industries, Asia Pacific 6.7% 4.9% 4.4% Electronics Consumer Products Construction 3.1% 2.9% Agriculture Transportation 44 June 2018 BASF Capital Market Story Source: BASF

45 BASF is growing in and with Asia Pacific First business contact in India First production in China Business started in Malaysia Inauguration of Nanjing Verbund site Inauguration of Shanghai Innovation Campus Inauguration of Chongqing MDI plant 1850s 1950s 1970s 1990s 2010s First delegate in China First business contact in South Korea Ulsan site started in South Korea First production in Japan Inauguration of Kuantan Verbund site Inauguration of Dahej site Inauguration of Mumbai Innovation Campus 45 June 2018 BASF Capital Market Story

46 BASF in Asia Pacific 2017 BASF is present in 18 markets ~100 production sites * Nanjing Hong Kong ~125 sales offices * 18,256 employees ** Kuantan ~ 14.3 billion sales *** Kuala Lumpur Regional center Verbund sites Selected sites R&D/Technical centers Shared Services Center ~ 2.2 billion EBIT * Only selected sites and offices are depicted on this chart. Site and office numbers refer to companies of significant size where BASF holds a stake greater than 50%. ** As of December 31, *** Sales by location of customer. 46 June 2018 BASF Capital Market Story

47 47 June 2018 BASF Capital Market Story

48 BASF in Asia Pacific: Balanced portfolio Sales* by segment in 2017 (billion ) Sales* by sub-region in 2017 (billion ) Agricultural Solutions 4% Other 3% South Korea 8% Australia, New Zealand 3% 14.3 billion Chemicals 28% South Asia 11% 14.3 billion Japan 12% Functional Materials & Solutions 36% Performance Products 29% ASEAN 15% Greater China 51% *Sales to third parties by location of customer; figures do not include sales of joint ventures consolidated at equity such as BASF-YPC Ltd., Nanjing, China 48 June 2018 BASF Capital Market Story South Asia: ASEAN: India, Pakistan, Bangladesh, Sri Lanka Singapore, Philippines, Vietnam, Thailand, Indonesia, Malaysia, Myanmar

49 49 June 2018 BASF Capital Market Story

50 50 June 2018 BASF Capital Market Story * As of December 31, 2017

51 China is the third largest market for BASF globally China nominal GDP growth 2017: 6.9% Heilongjiang China chemical production 2020: US$1.7 trillion; around 70% of Asian real chemical production Xinjiang Tibet GDP growth rate 2017: 9% 6.9% <9% < 6.9% Qinghai Sichuan Yunnan Inner Mongolia Beijing Tianjin Hebei Ningxia Shanxi Shandong Gansu Shaanxi Henan Hubei Chongqing Guizhou Hunan Hainan Liaoning Jiangsu Anhui Shanghai Zhejiang Jiangxi Fujian Guangxi Guangdong Jilin Initiatives such as One Belt One Road and Made in China 2025 expected to boost growth and innovation More stringent enforcement of laws related to protection of the environment Chemistry will enable innovations in downstream industries Source: National Bureau of Statistics and provincial bureaus of statistics, P.R. China 51 June 2018 BASF Capital Market Story

52 Greater China BASF s extensive network guarantees access to major local markets Mainland China, Hong Kong, Taiwan 25 major wholly-owned subsidiaries Jilin 7 joint ventures Xinjiang Beijing Tianjin Liaoning 25 production sites Shandong Jiangsu 24 sales offices Legend *** Asia Pacific headquarters Greater China headquarters R&D and Technical Centers Verbund site Production site Sales office Shanghai Sichuan Anhui Chongqing Zhejiang Fujian Taiwan Guangdong Guangxi Hong Kong 8,982 employees * ~ 7.3 billion sales ** in 2017 (excl. BASF-YPC, Nanjing) * As of December 31, 2017 ** By location of customer *** Some sites are not shown due to scale. 52 June 2018 BASF Capital Market Story

53 Open innovation Innovate with our partners: network for Asian Open Research (NAO) * Tsinghua University * Changchun Institute of Applied Chemistry * Beijing University of Chemical Technology * Kyoto University * Sichuan University * Seoul National University * The Chinese University of Hong Kong * Fudan University Zhejiang University * Universities with long time collaboration or at least 2 collaboration projects 53 June 2018 BASF Capital Market Story

54 Agenda At a glance Strategic levers Emerging markets and Asia Pacific Segments Chemicals Performance Products Functional Materials & Solutions Agricultural Solutions Oil & Gas 54 June 2018 BASF Capital Market Story

55 Chemicals Increased earnings driven by higher margins and volumes Sales Q vs. Q million EBIT before special items million Intermediates % 4,286 +4% Petrochemicals 1,779 +8% 1, ,120 1,102 1,053 1,134 Monomers 1,723 +1% 0 Q1 Q2 Q3 Q4 Q Sales development Volumes Prices Portfolio Currencies Q vs. Q % 8% 0% (7%) 55 June 2018 BASF Capital Market Story

56 Performance Products Higher prices could not compensate for negative currency effects and outage-related lower volumes; earnings declined slightly Sales Q vs. Q million Performance Chemicals 938-7% Nutrition & Health % 3,991-6% Dispersions & Pigments 1,324-5% Care Chemicals 1,305-4% EBIT before special items million Q1 Q2 Q3 Q4 Q Sales development Volumes Prices Portfolio Currencies Q vs. Q (1%) 2% (1%) (6%) 56 June 2018 BASF Capital Market Story

57 Functional Materials & Solutions Earnings declined considerably due to lower margins and higher fixed costs Sales Q vs. Q million Performance Materials 1,919-2% Coatings 940-6% 5,139-1% Catalysts 1,736 +3% Construction Chemicals 544-3% EBIT before special items million Q1 Q2 Q3 Q4 Q Sales development Volumes Prices Portfolio Currencies Q vs. Q % 6% 0% (8%) 57 June 2018 BASF Capital Market Story

58 Agricultural Solutions Earnings negatively impacted by currency headwinds, higher fixed costs and a late start to the season Sales Q vs. Q million EBIT before special items million 2,000 1,855-7% 1, % 423 1, Q Q Q Q Sales development Volumes Prices Portfolio Currencies Q vs. Q % (2%) 0% (8%) 58 June 2018 BASF Capital Market Story

59 Oil & Gas Earnings increased considerably, mainly due to higher prices and volumes as well as lower depreciation Sales Q vs. Q million EBIT before special items / net income million 1, % Q Q Q Q Q Q EBIT before special items Net income Sales development Volumes Prices/Currencies Portfolio Q vs. Q % 3% 0% 59 June 2018 BASF Capital Market Story

60 Review of Other Financial figures Q Q million million Sales EBIT before special items (213) (250) Thereof Costs of corporate research (80) (81) Costs of corporate headquarters (53) (52) Foreign currency results, hedging and other measurement effects 41 (31) Other businesses (8) 5 Special items (8) 7 EBIT (221) (243) 60 June 2018 BASF Capital Market Story

61 Cash flow development Q Cash flow development Q Q million million Cash provided by operating activities 1, Thereof Changes in net working capital (1,345) (1,985) Miscellaneous items (30) 58 Cash used in investing activities (634) (1,215) Thereof Payments made for tangible / intangible assets (627) (767) Acquisitions / divestitures 34 (22) Cash provided by financing activities Thereof Changes in financial liabilities Dividends (19) 6 Free cash flow June 2018 BASF Capital Market Story

62 Balance sheet remains strong Balance sheet March 31, 2018 vs. December 31, 2017 billion Long-term assets Inventories Accounts receivable Other assets Liquid funds Equity Financial debt Other liabilities Total assets increased by 1.7 billion, mainly due to higher accounts receivable as well as cash and cash equivalents Net debt decreased by 1.0 billion to 10.5 billion Equity ratio at 45.2% as of March 31, 2018 Mar 31, 2018 Dec 31, 2017 Mar 31, 2018 Dec 31, June 2018 BASF Capital Market Story

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