We add value as one company

Transcription

1 Dr. Kurt Bock Chairman of the Board of Executive Directors Nomura Global Chemical Industry Leaders Conference Rome March 23, 2012 We add value as one company

2 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. 2

3 Business Business review review BASF Today Trends BASF Today Purpose Trends and strategic principles Targets Purpose and strategic principles Strategic levers BASF Targets Tomorrow Board priorities Strategic levers Roadmap 2020 BASF Strategy: We create chemistry November

4 Record year 2011 Business performance FY 11 vs. FY 10 Sales EBITDA EBIT before special items EBIT Net income Reported EPS Adjusted EPS Operating cash flow 73.5 billion +15% 12.0 billion +8% 8.4 billion +4% 8.6 billion +11% 6.2 billion +36% % % 7.1 billion +10% Sales development Period Volumes Prices Portfolio Currencies FY 11 vs. FY 10 0% 12% 5% (2)% 4

5 Major achievements in 2011 Investments Start-up of Nanjing expansion Commissioning of Nord Stream and the OPAL pipeline Portfolio management Completion of Cognis integration Start of business of Styrolution JV with Ineos Divestiture of K+S shares and agreement to sell fertilizer assets (Antwerp) Operational excellence Completion of NEXT program annual earnings contribution of more than 1 billion as of

6 Delivering attractive shareholder returns Dividend per share in Proposal 2.50 Strong commitment to shareholder returns Dividend of 2.50 per share proposed to AGM Attractive dividend yield of 4.6% in 2011* Average annual dividend increase of 15% over last ten years Dividend yield above 3% in any given year since Dividend yield* 3.9% 3.1% 3.2% 3.1% 4.1% 3.8% 7.0% 3.9% 3.7% 4.6% * Dividend yield based on share price at year-end 6

7 Outlook 2012 Expectations for global economy 2011 Forecast 2012 GDP 2.7% 2.7% Chemicals (excl. Pharma) 4.8% 4.1% Industrial production 4.7% 4.1% US$ / Euro Oil price (US$ / bbl)

8 Outlook 2012 by region Chemical production (excl. pharma) 2011 Forecast 2012 World 4.8% 4.1% EU % 0.8% USA 2.1% 2.2% Asia (excl. Japan) 11.1% 8.0% Japan -3.1% 3.4% South America 4.7% 3.9% 8

9 Outlook BASF Group 2012 BASF Group aims to exceed the record levels of sales and EBIT before special items achieved in In H1 2012, BASF will most likely not achieve the exceptionally high results of the comparable period in However, we aim to outperform H More specifically, we plan to increase sales and earnings in all our business segments with the exception of the segment Chemicals. In 2012, BASF will strive to earn again a high premium on cost of capital. 9

10 Business Business review review BASF Today Trends BASF Today Purpose Trends and strategic principles Targets Purpose and strategic principles Strategic levers BASF Targets Tomorrow Board priorities Strategic levers Roadmap 2020 BASF Strategy: We create chemistry November

11 Outperformed global chemical production by >3 percentage points p.a. Sales to third parties in billion Volumes Prices Currencies M&A BASF total growth BASF volumes + M&A BASF volumes Global chemical production 9.6% p.a. 6.8% p.a. 3.5% p.a. 3.6% p.a. 11

12 Strong and profitable growth in emerging markets Sales BASF Group excluding Oil & Gas in billion by location of customer % Emerging markets % Developed markets* * BASF definition: Developed markets include EU15, Norway, Switzerland, North America, Japan, Australia, New Zealand Target 2020: ~45% sales share of Emerging Markets 12

13 Strong focus on operational excellence BASF Group Index CAGR % 10 % 4 % EBITDA Sales Fixed costs

14 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 14

15 Delivering consistent, long-term value 10-year performance (February 2002 January 2012) (average annual performance with dividends reinvested) +14.2% BASF Last 5 years +14.5% -1.4% Euro Stoxx % +2.4% DAX % +8.0% MSCI World Chemicals +3.3%

16 Business Business review review BASF Today Trends BASF Today Purpose Trends and strategic principles Targets Purpose and strategic principles Strategic levers BASF Targets Tomorrow Board priorities Strategic levers Roadmap 2020 BASF Strategy: We create chemistry November

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 17

18 Key trends for the chemical industry Growth will accelerate Innovation gains in 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 dialog Integrated chemical companies remain cornerstone Emerging markets players grow quickly Raw material players invest further downstream Chemical industry remains an attractive growth industry 18

19 Business Business review review BASF Today Trends BASF Today Purpose Trends and strategic principles Targets Purpose and strategic principles Strategic levers BASF Targets Tomorrow Board priorities Strategic levers Roadmap 2020 BASF Strategy: We create chemistry November

20 Our purpose We create chemistry for a sustainable future. 20

21 Our strategic principles We add value as one company. We drive sustainable solutions. We innovate to make our customers more successful. We form the best team. 21

22 Business Business review review BASF Today Trends BASF Today Purpose Trends and strategic principles Targets Purpose and strategic principles Strategic levers BASF Targets Tomorrow Board priorities Strategic levers Roadmap 2020 BASF Strategy: We create chemistry November

23 Striving for strong profitable growth Medium- and long-term sales target Sales* in billion Acquisitions ~115 Innovations 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 23

24 Striving for strong profitable growth 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 24

25 Striving for strong profitable growth Doubling EBITDA by 2020 EBITDA* in billion 11.1 Growth Op. Excellence Acquisitions ~15 Growth Op. Excellence Acquisitions ~ Target Target * Assumptions : Exchange rate $/ Ø 1.40, Oil price Ø $110/bbl 25

26 Business Business review review BASF Today Trends BASF Today Purpose Trends and strategic principles Targets Purpose and strategic principles Strategic levers BASF Targets Tomorrow Board priorities Strategic levers Roadmap 2020 BASF Strategy: We create chemistry November

27 Business Business review review BASF BASF Today Today Trends Trends Purpose Purpose and and strategic strategic principles principles Targets Targets Strategic Strategic levers levers Portfolio development Portfolio development Market approach Market approach Innovations for a sustainable future Innovations for a sustainable future Investments Investments Acquisitions Acquisitions Operational excellence Operational excellence BASF Roadmap Tomorrow 2020 Board priorities BASF Strategy: We create chemistry November

28 We expand from chemicals to chemistry New molecules Chemistry as key enabler for functionalized materials & solutions Improved applications Functionalized materials & solutions Deep understanding of customer value chains required Batteries, membranes... 28

29 Portfolio development towards more market driven and innovative businesses Acquisitions Crop protection Engineering plastics Electronic chemicals Custom synthesis Catalysts Construction chemicals Water-based resins 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) Styrenics (Styrolution JV) 9bn (Sales) excluding fertilizers, styrenics 29

30 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 30

31 Business Business review review BASF BASF Today Today Trends Trends Purpose Purpose and and strategic strategic principles principles Targets Targets Strategic Strategic levers levers Portfolio development Portfolio development Market approach Market approach Innovations for a sustainable future Innovations for a sustainable future Investments Investments Acquisitions Acquisitions Operational excellence Operational excellence BASF Roadmap Tomorrow 2020 Board priorities BASF Strategy: We create chemistry November

32 Building on our 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 > 15 % Construction < 10 % Energy & Resources < 10 % Inorganics Catalysts Petrochemicals * Excluding Oil & Gas and Other ** Excluding Agricultural Solutions, Health & Nutrition, Oil & Gas and Other Construction Chemicals Intermediates Coatings Dispersions & Pigments Care Chemicals Performance Chemicals Paper Chemicals Polyurethanes Performance Polymers 32

33 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 33

34 Business Business review review BASF BASF Today Today Trends Trends Purpose Purpose and and strategic strategic principles principles Targets Targets Strategic Strategic levers levers Portfolio development Portfolio development Market approach Market approach Innovations for sustainable future Innovations for a sustainable future Investments Investments Acquisitions Acquisitions Operational excellence Operational excellence BASF Roadmap Tomorrow 2020 Board priorities BASF Strategy: We create chemistry November

35 Chemistry as an enabler for many customer industries 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 Sustainability in customer industries will drive our innovative growth fields * Including growth fields still under evaluation 35

36 Growth field: Batteries for electromobility Business potential 2020 Market size: > 20 billion Sales potential for BASF: > 500 million Existing activities Chemicals & materials for lithium-ion batteries Work on battery concepts for Generation IV Intensive collaboration with universities & industry partners Targets Position BASF as a system supplier for cell manufacturers Utilize technology and business synergies Expand electrolyte activities 36

37 Growth field: Water Solutions Business potential 2020 Market size: 20 billion BASF sales potential: > 800 million Existing activities High-performance flocculants, desalination and antifouling chemicals & polymers used in membranes (BASF & Ciba) Acquired know-how on membrane technologies and module systems (inge watertechnologies) Targets Position BASF as the leading supplier of innovative chemical solutions worldwide Forward integration into membrane technologies Leverage synergies to develop improved additives, flocculants and polymers 37

38 Growth field: Plant biotechnology Business potential 2020 Global trait value in 2020: ~ 11 billion Expected gross trait sales potential of plant biotech pipeline before partner share in 2020: 1.8 billion Existing activities Yield & Stress collaboration with Monsanto (corn, soy, cotton, canola and wheat) Further collaborations with Bayer, Cargill, CTC, Embrapa and KWS Targets Position BASF as The Trait Technology Partner Achieve more efficient agriculture and healthier nutrition Implement a Plant Biotechnology operating division within the Agricultural Solutions segment 38

39 Innovation will spur further growth Total R&D expenditures 2011 in billion Chemicals 8% Plastics 9% Performance Products 21% Functional Solutions 12% 1.6 billion Corporate Research 23% 24% 1% Oil & Gas 1% Agricultural Solutions 26% Strong commitment to shareholder returns 1.6 billion R&D expenditures in 2011 (2010: 1.5 billion) ~10,100 employees in R&D ~2,800 projects Research Verbund: About 1,950 partnerships with universities, start-ups and industry partners Increase R&D spending to 1.7 billion in

40 7 billion EBITDA targeted from innovations 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

41 Business Business review review BASF BASF Today Today Trends Trends Purpose Purpose and and strategic strategic principles principles Targets Targets Strategic Strategic levers levers Portfolio development Portfolio development Market approach Market approach Innovations for a sustainable future Innovations for a sustainable future Investments Investments Acquisitions Acquisitions Operational excellence Operational excellence BASF Roadmap Tomorrow 2020 Board priorities BASF Strategy: We create chemistry November

42 Investments will boost future organic growth Future investments in billlion ~ % 35-45% ~20% Total investments Thereof investments in emerging markets 42

43 Major investment projects MDI plant Chongqing, China Expansion Verbund site Nanjing, China* Expansion joint venture activities in Malaysia* Acrylic acid complex, Brazil Expansion oil & gas activities TDI plant Ludwigshafen, Germany * Memoranda of Understanding signed 43

44 Business Business review review BASF BASF Today Today Trends Trends Purpose Purpose and and strategic strategic principles principles Targets Targets Strategic Strategic levers levers Portfolio development Portfolio development Market approach Market approach Innovations for a sustainable future Innovations for a sustainable future Investments Investments Acquisitions Acquisitions Operational excellence Operational excellence BASF Tomorrow Board priorities Roadmap 2020 BASF Strategy: We create chemistry November

45 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% after tax Are EPS accretive by year three at the latest Reduce earnings cyclicality Strategic acquisition criteria Financial acquisition criteria 45

46 Business Business review review BASF BASF Today Today Trends Trends Purpose Purpose and and strategic strategic principles principles Targets Targets Strategic Strategic levers levers Portfolio development Portfolio development Market approach Market approach Innovations for a sustainable future Innovations for a sustainable future Investments Investments Acquisitions Acquisitions Operational excellence Operational excellence BASF Roadmap Tomorrow 2020 Board priorities BASF Strategy: We create chemistry November

47 New operational excellence program STEP: Earnings contribution ~ 1 billion Annual earnings contribution in million NEXT Program Annual earnings contribution of 1 billion will be achieved in 2012 Achieved by end 2011: > 800 million Former cost saving programs NEXT STEP STrategic Excellence Program STEP Project timeline: Measures to optimize processes and structures in all regions, e.g. manufacturing, maintenance supply chain engineering, best cost country sourcing (CapEx) Fixed cost savings and margin improvements One-time costs & investments: ~ 1 billion Targeted annual earnings contribution: ~ 1 billion by end of

48 Business Business review review BASF Today Trends BASF Today Purpose Trends and strategic principles Targets Purpose and strategic principles Strategic levers BASF Targets Tomorrow Board priorities Strategic levers Roadmap 2020 BASF Strategy: We create chemistry November

49 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 EPS ~ Sales ~ 115 billion Double EBITDA to ~ 23 billion (compared with 2010) 49

50 Fit for 2012 and beyond 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 50

51 51

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

53 Financial highlights Q Business performance Q4 11 vs. Q4 10 Sales EBITDA EBIT before special items EBIT Net income Reported EPS Adjusted EPS Operating cash flow 18.1 billion +10% 2.9 billion +7% 1.5 billion -14% 1.9 billion +15% 1.1 billion +3% % % 2.1 billion +80% Sales development Period Volumes Prices Portfolio Currencies Q4 11 vs. Q4 10 (1)% 9% 2% 0% 53

54 Chemicals Price increases could not compensate for lower volumes Q4 11 segment sales (million ) vs. Q4 10 EBIT before special items (million ) Intermediates 631-4% 3,122 +6% Inorganics % ,000 1,000 2,302 2,441 Petrochemicals 2,136 +9% 0 Q4 '10 Q4 '11 0 FY '10 FY '11 Sales development Period Volumes Prices Portfolio Currencies Q4 11 vs. Q4 10 (8)% 7% 6% 1% FY 11 vs. FY 10 (1)% 16% 2% (3)% 54

55 Plastics Weaker demand led to receding margins Q4 11 segment sales (million ) vs. Q4 10 EBIT before special items (million ) Polyurethanes 1,395 +2% 2,573 +5% Performance Polymers 1,178 +8% Q4 '10 Q4 '11 1, ,284 1,203 FY '10 FY '11 Sales development Period Volumes Prices Portfolio Currencies Q4 11 vs. Q4 10 (3)% 6% 1% 1% FY 11 vs. FY 10 4% 10% 0% (2)% 55

56 Performance Products Earnings burdened by destocking and integration costs Q4 11 segment sales (million ) vs. Q4 10 EBIT before special items (million ) Care Chemicals 1, % Nutrition & Health % 3, % Performance Chemicals % ,000 1,500 1, ,554 1,727 Paper Chemicals 390-4% Dispersions & Pigments % 0 Q4 '10 Q4 '11 0 FY '10 FY '11 Sales development Period Volumes Prices Portfolio Currencies Q4 11 vs. Q4 10 (6)% 6% 19% 0% FY 11 vs. FY 10 (1)% 6% 25% (2)% 56

57 Functional Solutions Continuous strong earnings improvement Q4 11 segment sales (million ) vs. Q4 10 EBIT before special items (million ) Catalysts 1, % 2, % Construction Chemicals % Coatings % Q4 '10 Q4 ' FY '10 FY '11 Sales development Period Volumes Prices Portfolio Currencies Q4 11 vs. Q4 10 6% 8% (1)% (1)% FY 11 vs. FY 10 9% 10% 1% (3)% 57

58 Agricultural Solutions Another record year for Crop Protection Q4 11 segment sales (million ) vs. Q4 10 EBIT before special items (million ) 1, Q Q Q4 '10 Q4 '11 0 FY '10 FY '11 Sales development Period Volumes Prices Portfolio Currencies Q4 11 vs. Q4 10 (5)% 2% 0% 0% FY 11 vs. FY 10 6% 0% 0% (3)% 58

59 Oil & Gas Higher oil prices improved sales and net income Q4 11 segment sales (million ) vs. Q4 10 EBIT before special items / Net income (million ) Exploration & Production 1,017-4% 3, % Natural Gas Trading 2, % Q4 '10 Q4 '11 2,500 2,000 1,500 1, ,430 2,111 1, FY '10 FY '11 EBIT bsi Natural Gas Trading EBIT bsi Exploration & Production Net income Sales development Period Volumes Prices/Currencies Portfolio Q4 11 vs. Q4 10 7% 25% 1% FY 11 vs. FY 10 (11)% 23% 0% 59

60 Backup New targets for environment health and safety 60 BASF Strategy: We create chemistry November

61 BASF sets new ambitious goals for environment, health and safety Status 2011 Prior goal 2020 New goal 2020 Greenhouse gases* - 35 % - 25 % - 40 % Energy efficiency + 26 % + 25 % + 35 % CO 2 emissions from gas transport* Drinking water for production Sustainable water management NEW NEW NEW - 10 % - 50 % 100 % Health: Continuous improvement * specific To date 1 criterion Now KPI with 5 criteria 61

62 Global goals reached by the start of 2012 Nitrogen emissions into water by 2020, compared to 2002 Heavy metal emissions into water by 2020, compared to % - 60 % 62

63 63