Andrea Frenzel President South and East Asia, ASEAN and ANZ Roadshow Kuala Lumpur June 5, 2017 We create chemistry for a sustainable future
Cautionary note regarding forward-looking statements This presentation contains forward-looking statements. These forward-looking statements are based on current estimates and projections of the Board of Executive Directors and on currently available information. These forward-looking statements are not guarantees of the future developments and results outlined therein. Rather, they depend on a number of factors, involve various risks and uncertainties, and are based on assumptions that may not prove to be accurate. Such risk factors particularly include those discussed on pages 111 to 118 of the BASF Report 2016. The BASF Report is available online at basf.com/report. BASF does not assume any obligation to update the forward-looking statements contained in this presentation. 2
Agenda 1 2 3 4 5 At a glance Strategic levers Asia Pacific Outlook Appendix 3
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
Chemicals a growth industry Global annual growth rate of ~3.6%* Agriculture Health & Nutrition Energy & Resources Construction & Housing Consumer products Automotive & Transport Electric & 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 2050 * Forecast average annual real change 2017-2019; BASF Report 2016, p.121 5
Broad and resilient portfolio 2016: Sales of 57.6 billion; EBITDA of 10.5 billion Percentage of sales 2016* * Not depicted here: Other 3% of Group sales and EBITDA (1.0) billion 6
Verbund unique competitive advantage Actively managed in line with market requirements People, Customers, Technology, Production Energy savings > 300 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. 7
Global market access through regional presence North America Sales 14,042 million EBIT 1,113 million Employees 17,583 Freeport South America Sales 5,304 million EBIT 432 million Employees 7,307 Europe Sales 26,039 million EBIT 3,632 million Employees 70,784 Antwerp Ludwigshafen Florham Park Geismar Kuantan São Paulo Asia Pacific Sales 12,165 million EBIT 1,098 million Employees 18,156 Nanjing Hong Kong Sales by location of customer; EBIT by location of company Regional centers Selected sites Verbund sites Selected research and development sites 8
Stepwise increase of earnings level EBIT and EBITDA* billion, 2001 2016 12 10 8 6 4 2 3.7 4.7 4.6 2.2 2.2 7.0 7.2 4.5 4.8 8.4 5.5 8.9 6.0 CAGR EBIT 16% 7.7 4.6 CAGR EBITDA 7% 6.5 2.8 9.9 6.7 11.2 8.0 10.0 10.4 6.7 7.2 11.0 7.6 10.6 10.5 6.2 6.3 0 0.7 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EBIT EBITDA Avg. EBITDA level in depicted years * 2010, 2011 indicative, adjusted for IFRS 10 & 11; 2001 2009 as reported, without non-compensable foreign income taxes on oil production 9
Strong track record in operational excellence BASF Group* 2001 2016 indexed; CAGR 2001 2016 350 300 CAGR EBITDA 8% EBITDA 250 200 CAGR Sales 4% Sales 150 100 CAGR Fixed Costs 3% Fixed Costs 50 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 * Excl. companies with major IFRS 10/11 restatements, i.e. BASF YPC Nanjing, Libya onshore, other Oil & Gas and Catalysts companies 10
Strong cash flow development billion, 2001-2016 10 9 8 7 6 5 4 3 2 1 0 9.4 6.3% 8.1 7.7 7.1 6.5 6.6 7.0 5.9 5.8 5.7 5.3 4.9 5.0 4.6 2.3 2.3 3.9 3.7 3.3 3.5 3.2 3.2 3.2 3.6 3.6 2.8 2.6 2.5 2.6 1.7-0.5-0.1 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Operating cash flow Free cash flow 11
Attractive dividend We want to grow or at least maintain dividend at the previous year s level Dividend per share 3 2.50 2.60 2.70 2.80 2.90 3.00 2.20 2 1.50 1.95 1.95 1.70 1 0.65 0.70 0.70 0.85 1.00 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 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% * Dividend yield based on share price at year-end 12
Delivering consistent, long-term value Current market capitalization: 82 billion* Average annual performance (with dividends reinvested) Last 10 years May 2007 April 2017 Last 5 years May 2012 April 2017 +11.7% BASF +11.4% +1.0% Euro Stoxx 50 +12.2% +5.3% DAX 30 +13.0% +6.9% 0 2 4 6 8 10 12 14 MSCI World Chemicals +10.7% 0 2 4 6 8 10 12 14 * As of April 28, 2017 13
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 previous year s level 14
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 Cost discipline and operational excellence 15
Agenda 1 2 At a glance Strategic levers Portfolio development Investments Innovation Sustainability Operational excellence 16
Continuous global portfolio development 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 Maintaining a balanced portfolio * Excluding Oil & Gas sales 17
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 ~ 5.4 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 ~ 20.7 billion sales in businesses with limited fit and differentiation potential 18
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 19
Investments in organic growth Investments of ~ 3.9 billion planned for 2017 Capex budget 2017-2021 (by segment) Capex budget 2017-2021 (by region) Other 13% Chemicals 24% Other** 3% South America* 10% Europe 49% Oil & Gas 23% 19.0 billion Agricultural Solutions 4% Performance Products 21% Functional Materials & Solutions 15% Asia Pacific 16% North America 22% 19.0 billion Oil & Gas Europe * Including Africa and Middle East, ** Alternative sites currently being investigated 20
Selected investments in Asia Pacific to be started up in 2017 Aroma ingredients complex Automotive coatings Highly reactive polyisobutene Chemical catalysts Mobile emissions catalysts Kuantan, Malaysia Caojing, China Kuantan, Malaysia Caojing, China Rayong, Thailand Total investments > 500 million Second coatings plant within 3 years Capacity: 50,000 metric tons BASF s first facility in Asia Pacific to produce process catalysts New site to produce light-duty and motorcycle emissions catalysts 21
Innovation will drive future growth R&D expenditures 2016 Key facts 1.86 billion R&D expenditures in 2016 Corporate Research 21% Chemicals 10% R&D expense to sales ratio ~3% ~10,000 employees in R&D ~3,000 projects Oil & Gas 2% 1.86 billion Performance Products 20% ~850 new patents in 2016 Agricultural Solutions 26% Functional Materials & Solutions 21% Research Verbund: Cooperations with more than 600 excellent partners from universities, startups and industry In 2016, sales of > 10 billion with products launched during last 5 years 22
Innovation Campus Asia Pacific in Shanghai supporting growth industries Phase II opened in Q4 2015 Focus on research on advanced materials and polymers Integrated into global R&D network Global HQ for Advanced Materials & Systems Research Total investment (phase I & II): ~ 145 million Close cooperation with customers, materials scientists, technical and business experts First regional design consultation center in Asia Pacific, assisting designers in various phases of product development 23
Innovation Campus Asia Pacific in Mumbai An important hub for BASF s global R&D network Startup of 20,000 m 2 facility in March 2017 By 2020, around 300 scientists will collaborate globally and regionally Target industries: crop protection, performance chemicals, resins and coatings, personal care The BASF Innovation Campus Mumbai is part of a 100% BASF-owned entity. 24
Sustainable Solution Steering Novel methodology to screen and steer our portfolio Percentage of sales 2016 27.2% Substantial sustainability contribution in the value chain >60,000 product applications analyzed ( 53.2 billion sales, 95.9% of BASF s portfolio) 68.3% Sustainable Solution Steering Meets basic sustainability standards on the market Specific sustainability issues which are being actively addressed 27.2% Accelerators outgrow their markets deliver margins above the average represent majority of BASF s R&D pipeline 68.3% Performers 4.2% 0.3% Significant sustainability concern, action plan developed <1% Challenged products Increase the share of Accelerators from 23% in 2014 to 28% by 2020 25
Carbon efficiency Responsible use of raw materials by the chemical industry Growing world population needs access to energy, housing, healthcare and food Consumption of resources has to be reduced in order to limit global warming to <2 C Chemistry as enabler for low-carbon technologies (e.g., lightweight parts, battery materials, insulation, etc.) BASF uses raw materials responsibly: ~80% of carbon converted to products, ~20% needed for processes* Continuous efficiency improvements 22 million tons CO 2 emissions by BASF in 2016 compared to 10-30 million tons p.a. for one coal-fired power plant Chemical industry: only ~10% of global consumption of fossil resources** 20% CO 2 80% products *BASF carbon mass balance calculation (2016, non-audited) **IEA 2015 26
Operational excellence DrivE with ~ 1 billion targeted earnings contribution Annual earnings contribution DrivE million 1,000 1.000 650 million Goal 1 billion DrivE program Targeted annual earnings contribution of 1 billion from end of 2018 on Optimization of processes and structures in all regions, including manufacturing incremental capacities productivity increase Project timeline: 2016 2018 0 350 million Earnings contribution 2016 2017-2018 Total 27
Digitalization will support BASF s growth and efficiency Digital Business Models Smart Innovation Growth Digital business models Customer connectivity Digitalization of R&D New revenue streams Increased supply share Higher innovation output Smart Supply Chain Smart Manufacturing Efficiency Predictive maintenance Augmented reality in production Smart supply chain Increased capacity Increased work efficiency Reduced working capital 28
Agenda 1 2 3 4 5 At a glance Strategic levers Asia Pacific Outlook Appendix 29
Asia and China continue to dominate global chemical production Real chemical production (excl. pharma) (trillion US$) World Asia Pacific 9% 18% 23% 50% 16% CAGR 2012 2020 3.2 3.7% 4.3 18% 8% 58% 1% 7% 9% 6% 12% 2012 1.6 65% CAGR 5.6% 1% 6% 6% 5% 9% 2020 2.5 73% Asia Pacific North America Greater China South Asia South East Asia Europe Others Japan South Korea ANZ Source: BASF 30
BASF in Asia Pacific 2016 BASF is present in 17 countries Customers from 38 markets Kuala Lumpur Nanjing Hong Kong Kuantan ~100 production sites * >120 sales offices * 18,156 employees ** ~ 12.2 billion sales *** Regional center Verbund sites Selected sites R&D/Technical centers Shared Services Center ~ 1.1 billion EBIT * Only selected sites and offices are depicted in this chart. Site and office numbers refer to companies of significant size where BASF holds a stake greater than 50%. ** As of December 31, 2016. *** Sales by location of customer. 31
BASF s performance in Asia Pacific Sales* (billion ) Developments in Q1 2017 15 10 5 0 1.5 1.0 0.5 12.5 12.4 12.3 12.3 2012 2013 2014 2015 2016 Q1 2017 EBIT (billion ) 0.9 0.8 0.7 0.4 12.2 Strong volume and earnings growth Positive portfolio effect from Chemetall acquisition 3.5 Some negative top-line impact due to portfolio pruning Inauguration of automotive catalysts plant and Innovation Campus in India Cost discipline 1.1 0.5 0.0 2012 2013 2014 2015 2016 Q1 2017 * By location of customer 32
BASF in Asia Pacific: Balanced portfolio Sales* by segment in 2016 (billion ) Sales* by sub-region in 2016 (billion ) Agricultural Solutions 4% Other 3% South Korea 9% Australia, New Zealand 3% 12.2 billion Chemicals 27% South Asia 11% 12.2 billion Japan 13% Functional Materials & Solutions 37% Performance Products 29% South East Asia 15% Greater China 49% * Sales to third parties by location of customer 33
Balanced asset base in Asia Pacific: Investments for profitable growth Selected major capex projects* Startup 2012 2016 Startup planned for 2017-2021 Care chemicals Polyurethane specialties Specialty plastics Engineering plastics Polymer dispersions 2-Ethylhexanoic acid Amines Surfactants Acrylic acid & SAP Resins Specialty plastics Crop protection products MDI (Chongqing) Innovation Campus (Shanghai) Polyamides China Neopentylglycol Isononanol Coating resins Automotive coatings Butanediol/PolyTHF Specialty amines Ethylene oxide Polyvinylpyrrolidone Aroma chemicals Automotive catalysts Highly reactive polyisobutene Innovation Campus (Mumbai) Automotive coatings Specialty plastics Plastic additives Asia Pacific** Process catalysts Emollients and waxes MDI (Caojing) Automotive coatings Plastic additives Planned investments 2017 2021: ~ 3 billion (16% of BASF Group) Increasing focus on investments where BASF: is technologically leading has a competitive advantage expects strong profitable market growth Target remains: ~75% own manufactured products by 2020 (today: ~59%) * Investments in property, plant and equipment (excluding acquisitions) ** Without China 34
Agenda 1 2 3 4 5 At a glance Strategic levers Asia Pacific Outlook Appendix 35
Outlook 2017 for BASF Group confirmed Assumptions 2017 GDP growth: +2.3% Growth in industrial production: +2.3% Growth in chemical production* +3.4% Exchange rate: US$1.05 per euro Oil price (Brent): US$55 per barrel Outlook 2017 We expect BASF Group sales to grow considerably in the 2017 business year. We want to slightly raise EBIT before special items compared with 2016. BASF Group EBIT is also expected to grow slightly in 2017. We are likely to once again earn a significant premium on our cost of capital in 2017. * Excluding pharma 36
Agenda 1 2 3 4 5 At a glance Strategic levers Asia Pacific Outlook Appendix 37
BASF Group Q1 2017 Sales and earnings considerably above prior-year quarter Financial figures Q1 2017 Q1 2016 Change Sales 16.9 billion 14.2 billion 19% EBITDA 3.5 billion 2.8 billion 25% EBIT before special items 2.5 billion 1.9 billion 29% EBIT 2.5 billion 1.9 billion 31% Net income 1.7 billion 1.4 billion 23% Reported EPS 1.86 1.51 23% Adjusted EPS 1.97 1.64 20% Operating cash flow 833 million 1,046 million (20)% Sales development Volumes Prices Portfolio Currencies Q1 2017 vs. Q1 2016 8% 8% 1% 2% 38
Chemicals Considerably higher earnings driven by increased margins and volumes Sales Q1 2017 vs. Q1 2016* million EBIT before special items* million Intermediates 752 +16% 4,105 +36% Petrochemicals 1,654 +38% 1,000 800 600 400 457 458 488 629 958 Monomers 1,699 +44% 200 0 Q1 Q2 Q3 Q4 Q1 2016 2017 Sales development Volumes Prices Portfolio Currencies Q1 2017 vs. Q1 2016 10% 24% 0% 2% * Effective January 1, 2017, the Monomers and Dispersions & Pigments divisions activities for the electronics industry were combined into the global Electronic Materials business unit and allocated to the Dispersions & Pigments division in the Performance Products segment. The 2016 figures have been adjusted accordingly. 39
Performance Products Sales increased, earnings impacted by lower margins Sales Q1 2017 vs. Q1 2016* million EBIT before special items* million Performance Chemicals 1,013 +6% Nutrition & Health 486 0% 4,260 +9% Dispersions & Pigments 1,399 +11% Care Chemicals 1,362 +13% 800 600 400 200 0 555 512 473 515 237 Q1 Q2 Q3 Q4 Q1 2016 2017 Sales development Volumes Prices Portfolio Currencies Q1 2017 vs. Q1 2016 7% 2% (2%) 2% * Effective January 1, 2017, the Monomers and Dispersions & Pigments divisions activities for the electronics industry were combined into the global Electronic Materials business unit and allocated to the Dispersions & Pigments division in the Performance Products segment. The 2016 figures have been adjusted accordingly. 40
Functional Materials & Solutions Earnings grew significantly, mainly driven by continued strong demand from automotive Sales Q1 2017 vs. Q1 2016 million EBIT before special items million Performance Materials 1,950 +17% Coatings 999 +35% 5,198 +18% Catalysts 1,689 +15% Construction Chemicals 560 +5% 800 600 400 200 0 535 497 531 456 458 Q1 Q2 Q3 Q4 Q1 2016 2017 Sales development Volumes Prices Portfolio Currencies Q1 2017 vs. Q1 2016 8% 3% 4% 3% 41
Agricultural Solutions Sales increased slightly, earnings impacted by less favorable product mix Sales Q1 2017 vs. Q1 2016 million EBIT before special items million 2,000 1,780 1,855 +4% 800 600 591-10% 533 1,000 400 200 0 Q1 2016 Q1 2017 0 Q1 2016 Q1 2017 Sales development Volumes Prices Portfolio Currencies Q1 2017 vs. Q1 2016 2% 0% 0% 2% 42
Oil & Gas Sales and earnings up, mainly due to higher prices Sales Q1 2017 vs. Q1 2016 million 1,000 829 EBIT before special items, net income million 300 500 611 +36% 200 170 140 100 66 47 0 Q1 2016 Q1 2017 0 Q1 2016 Q1 2017 EBIT before special items Net income Sales development Volumes Prices/Currencies Portfolio Q1 2017 vs. Q1 2016 12% 24% 0% 43
Review of Other million Q1 2017 Q1 2016 Sales 610 477 EBIT before special items (250) (219) Thereof Costs of corporate research (81) (99) Costs of corporate headquarters (52) (55) Foreign currency results, hedging and other measurement effects (31) 68 Other businesses 5 18 Special items 7 (26) EBIT (243) (245) 44
Cash flow development Q1 2017 million Q1 2017 Q1 2016 Cash provided by operating activities 833 1,046 Thereof Changes in net working capital (1,985) (1,248) Miscellaneous items 58 (39) Cash used in investing activities (1,215) (1,258) Thereof Payments made for tangible / intangible assets (767) (1,001) Acquisitions / divestitures (22) 0 Cash provided by financing activities 831 1,997 Thereof Changes in financial liabilities 811 1,996 Dividends 6 (4) Free cash flow 66 45 45
46 BASF Investor Day 2015 Keynote speech 46