BASF in Europe Setting course for higher growth

Transcription

1 Hartwig Michels President Region Europe Redburn CEO Forum November 29, 2016 BASF in Europe Setting course for higher growth BASF Equity Story Region Europe, November

2 Cautionary note regarding forward-looking statements This presentation may contain forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. Forward-looking statements may include, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand. BASF has based these forwardlooking statements on its views and assumptions with respect to future events and financial performance. Actual financial performance could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. The information contained in this presentation is subject to change without notice and BASF does not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations. BASF Equity Story Region Europe, November

3 BASF in Europe: Focused on stronger growth Leverage #1 position in BASF s core market, outgrow markets Seize growth opportunities Enhance sales & marketing to increase customer proximity Introduce innovative products and solutions Focus investments on fast growing markets Exploit opportunities in Eastern Europe, Middle East, Africa Maintain highly efficient production sites, accelerate operational excellence BASF Equity Story Region Europe, November

4 Agenda 1 Business environment in Europe 2 BASF in Region Europe 3 Growth at different speeds BASF Equity Story Region Europe, November

5 Region Europe is a significant and growing chemicals market Chemical production (excl. pharma) in Europe (in billion US$, real production in prices of 2010) +1.3% Macroeconomic Situation Population of ~1.5 billion people* GDP and industrial production growth of 1%-2% p.a. expected Western Europe Emerging Europe (Central & Eastern Europa, Middle East, Africa) Western Europe: Moderate growth resuming Southern Europe starting to see improvement Emerging Europe: Growing substantially faster than Western Europe BASF Equity Story Region Europe, November 2016 Source: BASF Economic Intelligence; * Europe, Africa, Middle East 5

6 EU: A strong exporter of innovative specialties and consumer chemicals Extra-EU trade balance for chemicals (in billion ) EU chemical production Chemical production in 2015: US$660 billion* Second largest market for chemicals globally Expected growth: 0.8% p.a Petrochemicals Specialty chemicals Consumer chemicals Basic inorganics Polymers EU is a net-exporter of chemicals Strong export growth of specialties and consumer chemicals EU turned from a net-exporter of petrochemicals into a net-importer BASF Equity Story Region Europe, November 2016 Source: Cefic; * Measured in value of

7 Specialty chemicals to drive growth of chemical production in Europe Automotive Construction Electrical & Electronics Renewable energy Lightweight Insulation Fuel cells Wind energy Batteries Smart homes Solar cells Photovoltaics Electronics Smart grids Catalysts BASF Equity Story Region Europe, November

8 Agenda 1 Business environment in Europe 2 BASF in Region Europe 3 Growth at different speeds BASF Equity Story Region Europe, November

9 Europe is region with the largest sales and earnings contribution to BASF Group Sales* in Q Q (in billion ) EBIT before SI in Q Q (in billion ) 9% 7% 13% 21% BASF Group % 22% BASF Group % 25%. Europe North America Asia Pacific South America, Africa, Middle East BASF Equity Story Region Europe, November 2016 * By location of customer 9

10 Regional organization close to customers Antwerp >125 Countries served ~70,000 Employees Sales 96 offices 138 Production sites R&D 28 sites Ludwigshafen (regional headquarters) South Africa Verbund site Selected production sites / sales offices Major local headquarters BASF Equity Story Region Europe, November

11 Agenda 1 Business environment in Europe 2 BASF in Region Europe 3 Growth at different speeds Western Europe Central Europe Emerging Europe BASF Equity Story Region Europe, November

12 Stable business in past years, focus in the future on accelerated organic growth Sales development chemicals business and crop protection in Europe Volume (in billion ) Volume CAGR CAGR % ~4.5% Structural Excellence Program Europe Accelerate organic business growth in Europe Lean, centralized setup for commodity businesses Setup closer to customers in downstream businesses Dedicated responsibilities for growth in emerging markets YTD Volume growth above market; slight sales decline due to lower oil price and lower commodity margins Strong volume growth in 2016 despite price pressure due to low oil price BASF Equity Story Region Europe, November

13 Western Europe: Core market of BASF Verbund site Selected sites Cheadle Ludwigshafen Western Europe Population: 403 million Real GDP: US$17.4 trillion Chemical production: US$646 billion Antwerp Levallois Cesano Maderno Tarragona Core market of BASF Expected chemical production growth: 0.8% p.a. Strong production set-up with two Verbund sites More than 20 global key accounts steered from Western Europe BASF Equity Story Region Europe, November

14 Western Europe: Accelerate profitable growth New bio-acrylamide plant in Bradford Innovations for the automotive industry Sustainable construction Synvina: JV for biobased furandicarboxylic acid Acetylene plant in Ludwigshafen Support globalization of customers TDI plant in Ludwigshafen Set-up to capture growth opportunities: Accelerate profitable growth Stronger local presence Deeper customer interaction, especially in downstream businesses Using BASFʼs global network to support globalization of customers Focus on innovation or sustainability-driven industries Upgrading of regional production base Managing costs BASF Equity Story Region Europe, November

15 Central Europe: Attractive market next door Bratislava Ljubljana Zagreb Warsaw Belgrade Bucharest Athens Central Europe Population: 103 million Real GDP: US$1.5 trillion Chemical production: US$41 billion Economies in transition from emerging into developed stage Expected chemical production growth: 2.2% p.a. Local presence especially in downstream businesses and crop protection BASF Equity Story Region Europe, November

16 Central Europe: Participate in local growth opportunities PU system house in Slovakia Automotive Systems in Hungary Mobile Catalysts Production in Środa Śląska Construction systems in Romania Agro Field Days in Greece Set-up to capture growth opportunities: Continuously expand market position Being close to our customers Strengthen joint innovation activities Selective investments: Serve growing local markets Capitalize on lower cost structure for export business (e.g. catalysts in Poland) BASF Equity Story Region Europe, November

17 Russia & CIS: Localization and transformation offers growth opportunities St. Petersburg Minsk Moscow Astana Russia & CIS Population: 206 million Real GDP: US$2.4 trillion Chemical production: US$72 billion Kyiv Tbilisi Almaty Atyrau Growth drivers: housing, food, infrastructure, oil and gas Expected chemical production growth: 2.3% p.a. Target industries: Crop protection products Construction chemicals Automotive coatings Energy & resources BASF Equity Story Region Europe, November

18 Russia & CIS: Proximity to customers is key Automotive coatings in Moscow St. Petersburg Admixtures & construction systems Moscow Kasan Astana Almaty Crop protection formulations in Kirov Elastokam (JV with NKNC, PU sytems) in Nizhnekamsk Set-up to capture growth opportunities: Local presence ensures customer proximity: Production of construction chemicals Central production hubs (e.g. coatings, PU systems) to leverage economies of scale Laboratories to support technical sales initiatives (e.g. fuel additives, lubricants, automotive fluids, mining, dispersions, chemicals, cosmetics). BASF Equity Story Region Europe, November

19 Turkey & Middle East: Focus on locally consuming industries Istanbul Gebze Turkey & Middle East Population: 273 million Real GDP: US$3.1 trillion Chemical production: US$124 billion Izmir Dubai Growth drivers: housing, food, consumer goods, infrastructure Expected chemical production growth: 3.9% p.a. Focus on Turkey and Arabian peninsula Target industries: Energy & resources Chemicals & plastics Construction BASF Equity Story Region Europe, November

20 Turkey & Middle East: Understand and tap on local market needs Nutrition lab in Istanbul Nutrition lab in Beirut* Plastic Additives in Bahrain Sustainable construction Gas treatment solutions Set-up to capture growth opportunities: Regional hubs: Istanbul, Dubai ~3,000 customers Accelerated market penetration by being close to local industries and markets, e.g.: Food ingredients for bakery and dessert production Customer specific plastic additives blends in Bahrain Gas treatment solutions for LNG production BASF concrete admixture solutions for Burj Khalifa Automotive in Turkey BASF Equity Story Region Europe, November 2016 * Operated by distributor on behalf of BASF 20

21 Africa: Growth opportunities in a heterogeneous market BASF Maroc S.A. Casablanca Africa (target market) Population: 466 million Real GDP: US$1.6 trillion Chemical production: US$43 billion BASF West Africa Ltd. Lagos Northern Africa Eastern Africa Southern Africa Western Africa BASF East Africa Ltd. Nairobi BASF South Africa (Pty.) Ltd. Midrand Large, dynamic but heterogeneous market Expected chemical production growth: 3.6% p.a. Fastest urbanization rate Improving economic performance Focus on four regional clusters Africa presents a profitable growth opportunity BASF Equity Story Region Europe, November

22 Africa: Market penetration by presence and new concepts New agro distribution concept BASF Ivory Coast Ltd. Abidjan Construction Chemicals in Lagos Northern Africa Eastern Africa Southern Africa Western Africa Construction Chemicals retail concept in Egypt Establishment of BASF Tanzania Ltd. Dar es Salaam Construction Chemicals expansion in South Africa Set-up to capture growth opportunities: Business focused on Construction chemicals Crop protection products Consumer goods Energy & Resources Strengthened local presence 13 legal entities 9 production sites Sales > 500 million BASF Equity Story Region Europe, November

23 BASF in Europe: Focused on stronger growth Leverage #1 position in BASF s core market, outgrow markets Seize growth opportunities Enhance sales & marketing to increase customer proximity Introduce innovative products and solutions Focus investments on fast growing markets Exploit opportunities in Eastern Europe, Middle East, Africa Maintain highly efficient production sites, accelerate operational excellence BASF Equity Story Region Europe, November

24 BASF Capital Market Story BASF Capital Market Story, November

25 Cautionary note regarding forward-looking statements This presentation may contain forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. Forward-looking statements may include, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand. BASF has based these forwardlooking statements on its views and assumptions with respect to future events and financial performance. Actual financial performance could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. The information contained in this presentation is subject to change without notice and BASF does not undertake any duty to update the 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

26 We create chemistry for a sustainable future Positioning Performance Perspective Geismar, Louisiana Freeport, Texas Ludwigshafen, Germany Antwerp, Belgium Nanjing, China Kuantan, Malaysia Verbund site The #1 chemical company 70.4 billion sales, 6.7 billion EBIT bsi in 2015 #1-3 in ~70% of businesses, present in almost all countries 6 integrated Verbund sites, production in 60 countries A track record of strong sales and earnings growth >3.5% dividend yield in every single year from ~ 73.6 billion market capitalization on October 27, 2016 Chemistry as an enabler BASF has superior growth opportunities: sustainable innovations investments emerging markets BASF Capital Market Story, November

27 BASF today a well-balanced portfolio Total sales 2015: 70.4 billion Percentage of sales 2015* * Not depicted here: ~4% of Group sales reported as Other ** Natural Gas Trading has been divested on Sep. 30, BASF Capital Market Story, November

28 Verbund: Unique competitive advantage Verbund generates > 1 billion p.a. global cost savings* and supports sustainability Global reduction in carbon emissions of 6 million metric tons p.a. and reduction of waste Example Ludwigshafen site: avoidance of 7 million metric tons of freight p.a. = 280,000 fewer truckloads Shared use of on-site facilities: fire department, security, waste water treatment and analytics BASF Capital Market Story, November 2016 * Savings include only tangible synergies. Additional (intangible) benefits and retained profits are not included. 28

29 Q3 2016: Financial figures for BASF Group Financial figures Q Q Change Sales 14.0 billion 17.4 billion (20%) EBITDA 2.4 billion 2.9 billion (15%) EBIT before special items 1.5 billion 1.6 billion (5%) EBIT 1.5 billion 1.9 billion (22%) Net income 0.9 billion 1.2 billion (27%) Reported EPS (26%) Adjusted EPS % Operating cash flow 2.5 billion 3.4 billion (25%) Sales development Volumes Prices Portfolio Currencies Q vs. Q % (5%) (18%) (1%) BASF Capital Market Story, November

30 Free cash flow development Free cash flow* (in billion ) ** Q1-Q * Cash provided by operating activities less capex BASF Capital Market Story, November 2016 ** 2009 adjusted for re-classification of settlement payments for currency derivatives 30

31 Outlook 2016 for BASF Group confirmed Assumptions 2016 GDP growth: +2.3% Growth in industrial production: +2.0% Growth in chemical production*: +3.4% Exchange rate: $1.10 per euro Oil price (Brent): $45 per barrel (previous forecast: $40 per barrel) Outlook 2016 Sales will be considerably below prior year due to the divestiture of the natural gas trading and storage activities and the lower oil and gas prices. We expect EBIT before special items to be slightly below the previous year level due to significantly lower earnings in Oil & Gas. * Excluding pharma BASF Capital Market Story, November

32 Business development Path forward: Our priorities Appendix Q reporting BASF Capital Market Story, November

33 Components of growth Sales* analysis (in billion ) CAGR Volumes 3.4% Prices FX M&A (in billion ) Net sales 2010 Volumes Prices FX M&A BASF Group w/o Oil & Gas 51.4 Oil & Gas (+1.1% CAGR) +7.7 (+14.2% CAGR) Sales CAGR % % BASF Capital Market Story, November 2016 * 2010, 2011 indicative, adjusted for IFRS 10 & 11 33

34 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* ~ 5.2 billion sales in emerging and innovation-driven businesses BASF core business Selected transactions 2010 until today Strong partnerships Gazprom Monsanto Petronas Shell Sinopec Statoil Total Yara Styrenics Fertilizers Divestitures Selected assets in Oil & Gas Natural gas trading & storage Custom synthesis business Textile chemicals Polyolefin catalysts Industrial coatings* ~ 20 billion sales in businesses with limited fit and differentiation potential BASF Capital Market Story, November 2016 * Closing expected in

35 Steady earnings growth EBIT and EBITDA* (in billion, ) CAGR EBIT 16.6% CAGR EBITDA % Q1-Q EBITDA EBIT BASF Capital Market Story, November 2016 * 2010, 2011 indicative, adjusted for IFRS 10 & 11; as reported, without non-compensable foreign income taxes on oil production 35

36 Strong track record in operational excellence BASF Group* (indexed; CAGR ) CAGR EBITDA 9% CAGR Sales 6% EBITDA Sales CAGR Fixed Costs 3% Fixed Costs BASF Capital Market Story, November 2016 * Excl. companies with major IFRS 10/11 restatements, i.e. BASF YPC Nanjing, Libya onshore, other Oil & Gas and Catalysts companies 36

37 Attractive shareholder return Dividend per share ( ) Dividend policy We want to grow or at least maintain our dividend at the previous year s level Key facts 2015 Dividend of 2.90 per share, an increase of 3.6% Dividend yield of 4.1% in 2015 Dividend yield above 3.5% in any given year since 2006 Yield* 4.1% 3.8% 7.0% 3.9% 3.7% 4.6% 3.7% * Dividend yield based on share price at year-end 3.5% 4.0% 4.1% BASF Capital Market Story, November

38 Delivering consistent, long-term value Average annual performance with dividends reinvested Last 10 years November 2006 October 2016 Last 5 years November 2011 October % BASF +12.5% +0.4% Euro Stoxx % +5.5% DAX % +6.9% MSCI World Chemicals +9.9% BASF Capital Market Story, November

39 Business development Path forward: Our priorities Appendix Q reporting BASF Capital Market Story, November

40 The path forward: Our priorities Grow sales and earnings faster than global chemical production, driven by Continued focus on innovations Capital expenditures Acquisitions Operational excellence and Verbund advantages Focus on cash generation/conversion Continue with our progressive dividend policy Focus on pruning our portfolio Maintain industry-leading position in sustainability BASF Capital Market Story, November

41 Chemicals with stable profitability, little correlation to oil price EBITDA margin Chemicals / oil price (indexed, 2001 = 100) Oil price EBITDA margin Chemicals (as % of sales) * 2007* Q1-Q3 restated 2016 BASF Capital Market Story, November 2016 * Without Catalysts (now part of Functional Materials & Solutions segment) 41

42 Strategic lever: Continuous portfolio development Growth fields Innovation pipeline Specialties and solutions Attractive markets Differentiation by customer proximity and innovations Differentiated commodities Attractive markets Differentiation by process technologies and integration ~ 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 Maintaining a balanced portfolio BASF Capital Market Story, November 2016 * Excluding Oil & Gas sales 42

43 Strategic lever: Acquisitions 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 return on investment above the WACC Are EPS accretive by year three at the latest Reduce earnings cyclicality Strategic acquisition criteria Financial acquisition criteria BASF Capital Market Story, November

44 BASF to acquire Chemetall Transaction highlights Chemetall a global technology and innovation leader in metals surface treatment Purchase price of US$3.2 billion (debt free) All-cash offer, financing secured Expected closing of transaction by the end of 2016 Transaction will significantly enhance BASF Coatings position as complete solutions provider Synergies on industry-typical level EPS accretive in year 1 excluding integration costs, in year 2 including integration costs BASF Capital Market Story, November

45 Chemetall a global leader in surface treatment products and services Facts Figures One of the strongest globally managed brands in the sector Proprietary manufacturing technologies, rigorous product quality and performance standards Leading market positions in the automotive, aerospace and cold forming segments Long-standing, service-intensive customer relationships Significant global presence and record of accelerated expansion in emerging markets Track record of strong growth and high profitability BASF Capital Market Story, November 2016 * average analysts estimates 45 Sales EBITDA EBITDA margin CAGR sales ( ) Key customer industries Regional sales Employees Sites 2015: US$845 million 2016E*: US$851 million 2017E*: US$895 million 2015: US$202 million 2016E*: US$217 million 2017E*: US$231 million 2015: 24% 2016E*: 25% 2017E*: 26% ~7% (at constant exchange rates) Automotive, aerospace, coil, metal forming ~50% Western Europe ~30% North America ~20% Emerging markets, mainly Asia ~2,500 (~50% sales professionals) 21 production sites in all regions 10 R&D sites

46 Strategic lever: Capital expenditures Differentiated commodities With proprietary technology and/or Verbund advantages Focus on: emerging markets backward integration in the U.S. upgrading our asset base in Europe Specialties and solutions Incremental investments for new products Regional expansion of businesses Oil & Gas Focus investment budget by active portfolio optimization to secure free cash flow Keep reserve-to-production ratio of approx. 10 years BASF Capital Market Story, November

47 Investments for organic growth Capex budget by segment Capex budget by region Performance Products 16% Functional Materials & Solutions 12% Agricultural Solutions 4% Other 14% 19.5 billion Chemicals 30% Oil & Gas 24% Asia Pacific 18% South America* 9% Other 1% North America 26% 19.5 billion Europe 46% * Including Africa and Middle East BASF Capital Market Story, November

48 Strategic lever: Innovations Allow for creativity Balance incremental und disruptive innovations Manage innovation pipeline efficiently on all levels Build on our global R&D Verbund Leverage external collaborations even more Align R&D activities with business models: Differentiated commodities Focus on improving processes and addressing raw material change Launch selected product innovations Specialties and solutions Develop new, tailored offerings in close collaboration with customers Pursue solution-oriented approach Keep annual R&D spending at ~3% of sales* BASF Capital Market Story, November 2016 * Without Oil & Gas 48

49 Strong commitment to innovation Innovations for a sustainable future R&D expenditures (billion ) Corporate Research 21% Oil & Gas 2% Agricultural Solutions 26% Functional Mat. & Sol. 20% Performance Products 20% Chemicals 11% Key facts 1.95 billion R&D expenditures in 2015; to be maintained in 2016 ~10,000 employees in R&D ~3,000 projects Ranked No.1 in the Patent Asset Index ~1,000 new patents in 2015 Research Verbund: Cooperations with more than 600 excellent partners from universities, start-ups and industry BASF Capital Market Story, November

50 Hyundai Motor and BASF showcase joint development of RN30 concept car Body coating: Color Pro IC waterborne basecoat and igloss clearcoat Fender and spoiler: Elastolit rigid foam and reaction injection molding systems Seat cover and steering wheel: unique surface technology valure Electronics and electric: Ultramid advanced plastics for sophisticated components BASF Capital Market Story, November

51 Strategic lever: Sustainability Sustainable Solution Steering 71.0% 26.6% Sustainable Solution Steering 2.2% 0.2% Substantial sustainability contribution in the value chain Meets basic sustainability standards in the market Specific sustainability issue which is actively addressed Significant sustainability concern, action plan in development Novel methodology to screen and steer our portfolio* 26.6% Accelerators: outgrow their markets by 2-10% deliver margins >10% above the average represent >60% of BASF s R&D pipeline 71% Performers <1% Challenged products Increase the share of Accelerators from 23% in 2014 to 28% by 2020 BASF Capital Market Story, November 2016 * More than 60,000 product applications analyzed representing 64.9 billion in sales or 95.4% of BASF s portfolio. 51

52 Solutions for a sustainable future SLENTITE high-performance insulation material Trilon M high-performance phosphate alternative Acronal MB from biomass to dispersions ecovio biodegradable polymer solution Green Sense resource efficient concrete production Four-Way Conversion Catalyst removes particulates BASF Capital Market Story, November

53 Sustainability goals Overview Procurement Goal Product stewardship Goal Sustainability performance assessment of relevant suppliers 70% 31% Risk assessment of products 2) >99% 67.8% Employees Goal Women in leadership positions 22-24% 19.5% Long-term goal 2015 Non-German senior executives 35.6% Senior executives with international experience >80% 82.9% Production Goal Process safety incidents 1) Lost-time injury rate 1) Energy & climate protection Goal Greenhouse gas emissions 3) 40% 34.6% Introduction of ISO energy management system 4) 90% 39.5% Water Goal Sustainable water management at Verbund sites and water stress areas 100% 36.2% Products & Solutions Goal Proportion of Accelerators 5) in product portfolio 28% 26.6% Annual goal 2015 Health Performance Index > ) per one million working hours 2) for products >1 metric ton per year 3) per metric ton of sales products; excl. Oil & Gas, baseline ) at all relevant sites (primary energy demand, local energy prices) 5) products with substantial contribution to sustainability BASF Capital Market Story, November

54 Ludwigshafen site Sustainably maintaining the basis million 1,700 1,500 Maintenance, replacement, retrofitting, modernization 1,300 1, * Forecast BASF Capital Market Story, November

55 Safety Continual improvement in operational safety Work-related accidents Lost-time injury rate per 1 million working hours BASF SE Safety has top priority at BASF Significantly fewer work-related accidents than the average in the chemical industry in Germany* Same safety standards for the partner companies of BASF Regular audits and inspections Jan.-Sep. BASF Capital Market Story, November 2016 * Source: BG RCI 55

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

57 Profitability of BASF will grow faster than global chemical production Financial targets for the coming years Sales growth Slightly faster than the global chemical production EBITDA growth Well above global chemical production Deliver attractive returns Earn a significant premium on cost of capital Remain a strong cash provider Continuously generate high levels of free cash flow Progressive dividend policy We want to grow or at least maintain our dividend BASF Capital Market Story, November

58 Business development Path forward: Our priorities Appendix Q reporting BASF Capital Market Story, November

59 Chemicals Higher volumes, but margin pressure in Petrochemicals and Intermediates Sales Q vs. Q million EBIT before special items million Intermediates 662 (6%) Monomers 1,405 (8%) 3,377 (7%) Petrochemicals 1,310 (7%) Q3 Q4 Q1 Q2 Q Sales development Volumes Prices Portfolio Currencies Q vs. Q % (12%) 0% 0% BASF Capital Market Story, November

60 Performance Products Significant increase in earnings driven by higher volumes, improved margins and lower fixed costs Sales Q vs. Q million EBIT before special items million Performance Chemicals 945 (6%) Nutrition & Health % 3,771 (3%) Dispersions & Pigments 1,147 (2%) Care Chemicals 1,175 (4%) Q3 Q4 Q1 Q2 Q Sales development Volumes Prices Portfolio Currencies Q vs. Q % (3%) (2%) 0% BASF Capital Market Story, November

61 Functional Materials & Solutions Significantly higher earnings on continued good demand in automotive and construction as well as lower fixed costs Sales Q vs. Q million EBIT before special items million Performance Materials 1,712 +2% Coatings % 4,660 3% Catalysts 1,552 +5% Construction Chemicals 606 (1%) Q3 Q4 Q1 Q2 Q Sales development Volumes Prices Portfolio Currencies Q vs. Q % (3%) (1%) (1%) BASF Capital Market Story, November

62 Agricultural Solutions Significantly higher earnings due to improved margins and lower fixed costs Sales Q vs. Q million 1,200 1, ,077 1,049 (3%) Q3 Q3 EBIT before special items million Q3 90 million 97 Q Sales development Volumes Prices Portfolio Currencies Q vs. Q (4%) 0% 0% 1% BASF Capital Market Story, November

63 Oil & Gas Considerably lower sales and earnings due to disposal of gas trading business as well as lower prices Sales Q vs. Q million EBIT before special items, net income million 5,000 4,000 3, , (83%) ,000 1, ,939 Q3 618* Q * Q Q Q Q * Including transportation business * Including transportation business Exploration & Production Exploration & Production Natural Gas Trading Natural Gas Trading Net income Sales development Volumes Prices/Currencies Portfolio Q vs. Q % (3%) (83%) BASF Capital Market Story, November

64 Review of Other million Q Q Sales EBIT before special items (233) (98) Thereof Corporate research costs (77) (104) Costs of corporate headquarters (54) (53) Foreign currency results, hedging and other valuation effects (101) 22 Other businesses Special items (23) 26 EBIT (256) (72) BASF Capital Market Story, November

65 Cash flow Q1 Q million Q1 Q Q1 Q Cash provided by operating activities 5,840 8,494 Thereof changes in net working capital (393) 2,500 miscellaneous items (172) (497) Cash used in investing activities (2,776) (4,955) Thereof payments related to tangible / intangible assets (2,915) (4,387) acquisitions / divestitures Cash used in financing activities (1,898) (3,504) Thereof changes in financial liabilities 837 (649) dividends (2,753) (2,900) BASF Capital Market Story, November

66 Strong balance sheet Balance sheet September 30, 2016 vs. December 31, 2015 billion Long-term assets Inventories Accounts receivable Other assets Liquid funds Dec Sep Dec Sep Equity Financial debt Other liabilities Total assets increased by 2.3 billion, mainly due to higher liquid funds Inventories were stable Provisions for pensions and similar obligations increased by 3.6 billion Net debt declined by around 600 million to 12.3 billion Equity ratio: 41% BASF Capital Market Story, November

67 BASF Capital Market Story, November