BASF posts strong results

Transcription

1 BASF posts strong results Markus Zeise Director, Investor Relations New York, September 14,

2 1 Business review 2 Focus on operational excellence 3 Well positioned for profitable growth 4 Outlook 2

3 BASF posts strong results Second quarter 2011 highlights Business performance Q2 11 vs. Q2 10 Sales 18.5 billion +14% EBITDA 3.0 billion +5% EBITDA margin 16.3% 17.7% EBIT before special items (bsi) 2.2 billion +1% EBIT bsi adjusted for non-comp. oil taxes 2.2 billion +12% EBIT 2.2 billion +7% Net income 1.5 billion +23% EPS % Adjusted EPS % Robust sales and earnings growth in the chemicals business with volumes up 5% Excellent performance of the acquired former Cognis business Earnings in Agricultural Solutions increased despite adverse weather conditions Sales growth in Oil & Gas was price driven. Net income rose by 74% 3

4 Strong segment performance in 1H 2011 Segment million Sales Δ 1H 2010 EBITDA EBITDA margin EBIT before SI Δ 1H 2010 Chemicals 6, % 1, % 1, % Plastics 5, % % % Performance Products Functional Solutions Agricultural Solutions 8, % 1, % 1, % 5, % % % 2,435 +3% % % Oil & Gas 5,916 +6% 1, %* 1,076 (6%) * Excluding non-compensable oil taxes: 17.4% 4

5 Important milestones in Q Styrolution New TDI plant in Europe Joint venture of BASF and INEOS to form the global market leader in styrenics Joint venture contract signed FTC and EU antitrust approval received Closing subject to remaining approvals from antitrust authorities in other countries Closing of joint venture expected in Q TDI is a key component for polyurethane foams with growth rates above GDP BASF to expand its leading position in TDI with a new 300kt/a plant in Europe The world s largest single-train TDI plant Superior technology and unique Verbund concept provide industry leading cost structure Start-up of production in

6 Continuous strong cash flow Cash Flow (billion ) H1 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 ** 6

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 7

8 Delivering consistent, long-term value Long-term performance September 2001 August 2011 (average annual performance with dividends reinvested) +12.3% BASF -2.1% Euro Stoxx % DAX % MSCI World Chemicals

9 1 Business review 2 Focus on operational excellence 3 Well positioned for profitable growth 4 Outlook 9

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

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: 140 million by

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 12

13 1 Business review 2 Focus on operational excellence 3 Well positioned for profitable growth 4 Outlook 13

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. 14

15 Leading positions in growth industries and emerging markets 15

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 16

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 17

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. * 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 18

19 Ongoing portfolio optimization 19

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 (Styrolution) (JV contract signed) Fertilizers (Sale planned) 9 billion Euro * (Sales) Sale of shares in K+S (Proceeds for BASF ~ 1 billion) * Not including styrenics and fertilizer businesses 20

21 Cognis integration objectives Targets Achieve 20% EBITDA margin in the Performance Products segment by 2012 Acquisition accretive as of 2012 Costs One-time integration costs of 290 million until end of 2013 Inventory step-up of 120 million Costs already incurred: 2010: 80 million (thereof 60 million inventory step-up) H1/2011: 210 million (thereof 60 million inventory step-up) Synergies Generate 275 million of additional EBIT p.a. 135 million p.a. growth synergies by the end of million p.a. cost synergies by the end of

22 BASF + Cognis Improved market positions Previous BASF position Future BASF position Personal care ingredients 3 1 Home care ingredients 1 1 Mining chemicals 3 2 Functional nutrition ingredients 6 3 Coating additives 7 3 Heavy-duty driveline lubricants >

23 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) 23

24 Excellent innovation platform 24

25 Natugrain TS X-SEED PCI Geofug Ecovio CypoSol Electromobility Kaurit Light Elastopave Xemium 25

26 Focus on future markets BASF intensifying R&D around electromobility Market trends Sustainable electromobility is key to climate friendly mobility High-performance batteries and innovative solutions for weight reduction and heat management are essential for efficient electromobility BASF activities Investment of three-digit million euro sum over the next five years for R&D and production of battery materials Current investment in innovative cathode materials plant in Elyria, Ohio to start up in mid-2012 Portfolio expansion by entering electrolytes and positioning BASF as future system supplier for high performance batteries Lightweight construction solutions and heat management systems further help to reduce energy consumption Electromobility leveraging BASF s R&D and business platforms 26

27 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 10% Performance Products 19% Functional Solutions 1.5 billion 22% Other 2% Agricultural Solutions ~9,600 employees in R&D ~3,000 projects and topics Research Verbund: About 1,900 partnerships with universities, start-ups and industry partners 12% 26% Further increase in R&D spending planned for

28 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 28

29 1 Business review 2 Focus on operational excellence 3 Well positioned for profitable growth 4 Outlook 29

30 Outlook 2011 Assumptions We forecast Brent oil price of $110/bbl (from $100/bbl) and US$/ of $1.40 (from $1.35) We assume that oil production in Libya will not restart during 2011 EBIT before special items from our Libyan oil production for the full year 2011 will be about 1 billion lower compared with 2010 (thereof about 700 million of non-compensable oil taxes) Targets 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 expect to achieve 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 as of July 28, nd Quarter 2011 Reporting 30

31 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. 31

32 32

33 Backup Macro-economic assumptions

34 Outlook BASF Group 2011 Expectations for global economy 2010 Forecast 2011 GDP 3.9% 3-4% Chemical production (excl. Pharma) 9.4% 5-6% Industrial production 7.4% 5-6% US$ / Euro Oil price (US$ / bbl) as of July 28, 2011 (2 nd Quarter 2011 Reporting) 34

35 Backup Business development Q

36 Chemicals Robust sales and earnings supported by price increases Q2 11 segment sales (million ) vs. Q2 10 EBIT before special items (million ) Intermediates % 3, % Inorganics % Petrochemicals 2, % Q2 Q3 Q4 Q1 Q Sales development Period Volumes Prices Portfolio Currencies Q2 11 vs. Q2 10 2% 20% 0% (8)% 36

37 Plastics Strong demand in all product lines resulted in increased earnings Q2 11 segment sales (million ) vs. Q2 10 EBIT before special items (million ) Polyurethanes 1,498 +7% 2,828 +9% Performance Polymers 1, % 0 Q2 Q3 Q4 Q1 Q Sales development Period Volumes Prices Portfolio Currencies Q2 11 vs. Q2 10 4% 12% 0% (7)% 37

38 Performance Products Strong earnings contributions from acquired Cognis business Q2 11 segment sales (million ) vs. Q2 10 EBIT before special items (million ) Care Chemicals 1, % Nutrition & Health % Paper Chemicals 417 (5)% 4, % Performance Chemicals % Dispersions 100 & Pigments Q2 Q3 Q4 Q1 Q2 +9% Sales development Period Volumes Prices Portfolio Currencies Q2 11 vs. Q2 10 2% 6% 27% (5)% 38

39 Functional Solutions Strong demand from automotive drove earnings growth Q2 11 segment sales (million ) vs. Q2 10 EBIT before special items (million ) Catalysts 1, % 2, % Construction Chemicals 577 0% Coatings % 0 Q2 Q3 Q4 Q1 Q Sales development Period Volumes Prices Portfolio Currencies Q2 11 vs. Q % 8% 0% (7)% 39

40 Agricultural Solutions High global demand for agricultural products drove volume growth Q2 11 segment sales (million ) vs. Q2 10 EBIT before special items (million ) 1,400 1,200 1,000 1,211 0% 1, % Q Q Q Q Sales development Period Volumes Prices Portfolio Currencies Q2 11 vs. Q2 10 6% 0% 0% (6)% 40

41 Oil & Gas Higher oil and gas prices compensated for lower volumes Q2 11 segment sales (million ) vs. Q2 10 EBIT before special items/ Net income (million ) Exploration & Production 563 (34)% 2,461 +4% 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 Q2 11 vs. Q2 10 (18)% 22% 0% 41

42 Review of Other Million Q Q Sales 1,714 1,471 thereof Styrenics * EBIT before special items (163) (301) thereof Corporate research Group corporate costs Currency results, hedges and other valuation effects Styrenics, fertilizers, other businesses (87) (59) (118) 76 (78) (55) (198) Special items 27** (106) EBIT (136) (407) 67 * Since January 1, 2011, Styrenics only includes the carved-out styrenics businesses; the previous year s values were adjusted accordingly ** Incl. 68 million from repeal of fine imposed by the EU on Ciba in

43 Operating cash flow in H Million H H Cash provided by operating activities 3,038 2,721 thereof Changes in net working capital (1,178) (1,355) Cash provided by investing activities 81 (599) thereof Payments related to tangible / intangible assets (1,265) (889) Cash used in financing activities (2,764) (2,054) thereof Changes in financial liabilities Dividends (486) (2,278) (292) (1,762) First half 2011 Operating cash flow at 3.0 billion despite reclassification of 887 million gain from the sale of K+S stake Free cash flow at 1.8 billion Net debt amounted to 12.3 billion, a reduction of 1.3 billion since end of

44 Financial highlights Million Q Q Δ% Q Δ% Sales changes due to - volumes -prices - portfolio - currencies 18,461 16, % +2% +13% +5% (6)% 19,361 (5)% EBITDA 3,015 2,867 +5% 3,365 (10)% EBIT before special items 2,237 2,206 +1% 2,732 (18)% EBIT before special items adjusted for non-compensable oil taxes 2,237 1, % 2,452 (9)% Special items (20) (127) - (182) - EBIT 2,217 2,079 +7% 2,550 (13)% Net income 1,454 1, % 2,411 (40)% EPS ( ) % 2.62 (39)% Adjusted EPS ( ) % 1.94 (10)% 44

45 Balance sheet review Balance sheet June 30, 2011 vs. end of 2010 (billion ) Long-term assets Inventories Accounts receivable Other assets Liquid funds Jun Dec Jun Dec Stockholders Equity Financial debt Other liabilities Long-term assets decreased by 2.0 billion amongst others due to the sale of shares in K+S Inventories increased by 0.8 billion reflecting the expansion of our business and raw material inflation Net debt decreased by 1.3 billion to 12.3 billion Accounts receivable were up by 0.7 billion as a result of the expansion of our business Equity ratio at 39% (up 1 percentage point) 45

46 Backup Business overview

47 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% 47

48 Backup Capital expenditures 48

49 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 49