We add value as one company - PDF Free Download

Hans Engel CFO of BASF SE New York, September 11, 2012 We add value as one company

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

BASF today - The Chemical Company Facts & figures The leading chemical company worldwide - Sales 2011: 73.5 billion - EBIT before special items 2011: 8.4 billion - ~111,000 employees Customers in >200 countries and in virtually all industries # 1-3 market position in over 75% of businesses Unique Verbund concept for integrated production - Six Verbund sites in all major regions - Production sites in 41 countries International, interdisciplinary R&D network - More than 10,000 employees in R&D Highly experienced management team - Senior executives from 36 countries 3

BASF today a well-balanced portfolio Total sales 2011: 73.5 billion Percentage of sales 2011* Chemicals Inorganics Petrochemicals Intermediates Plastics Performance Polymers Polyurethanes Performance Products Dispersions & Pigments Performance Chemicals Care Chemicals Nutrition & Health Paper Chemicals Agricultural Solutions Crop Protection Functional Solutions Catalysts Construction Chemicals Coatings Oil & Gas Exploration & Production and Natural Gas Trading * not depicted here: 9% of Group sales reported as Other 4

Business review BASF Today Trends Business review Purpose and strategic principles Targets BASF strategy & growth targets Strategic Strategic levers levers BASF Tomorrow Board priorities Fit for 2020 BASF BASF Capital Strategy: Market We Story September create chemistry November 2012 2011 5

BASF shows solid development Second quarter 2012 highlights Business performance Q2 12 vs. Q2 11 Sales 19.5 billion +6% EBITDA 3.1 billion +4% EBIT before special items 2.5 billion +11% EBIT 2.2 billion +1% Net income 1.2 billion (15%) EPS 1.34 (16%) Adjusted EPS 1.60 (9%) New second quarter record for sales and earnings in Agricultural Solutions Oil & Gas outperformed mainly due to the resumption of oil production in Libya Demand in chemical businesses did not match the strong previous year level Weaker than expected demand in China Overall sales and earnings in H1 2012 came in above H1 2011 6

Strong free cash flow generation Free cash flow* in billion 2.8 2.6 3.3 3.5 3.2 2.5 3.2 3.9 3.7 1.8-0.1 2002 2003 2004 2005 2006 2007 2008 2009** 2010 2011 H1 2012 * Cash provided by operating activities less capex (in 2005 before CTA) ** 2009 adjusted for re-classification of settlement payments for currency derivatives 7

Delivering attractive shareholder returns Dividend per share in 0.70 0.70 Dividend yield* 3.9% 3.1% 0.85 1.00 * Dividend yield based on share price at year-end 1.50 1.95 1.95 1.70 3.2% 3.1% 4.1% 3.8% 7.0% 3.9% 2.20 3.7% 2.50 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 4.6% Dividend payments 2.50 dividend per share for 2011, dividend yield 4.6%* 15% average annual dividend increase for 2002-2011 period Dividend yield above 3% in any given year since 2002, total payout 14.5 billion Share buy-backs Between 1999 & 2008, BASF bought back 28.65% of shares outstanding, spent 9.9 billion AGM 2012 approved new share buy-back program; up to 10% of shares, 5 years 8

Delivering consistent, long-term value Average annual performance with dividends reinvested Last 10 years September 2002 August 2012 Last 5 years September 2007 August 2012 +15.7% BASF + 9.6% +1.9% Euro Stoxx 50-7.5% +6.5% DAX 30-1.8% +9.0% MSCI World Chemicals +1.5% 0 3 6 9 12 15 18 9

Outlook 2012 confirmed Outlook 2012 For the FY 2012, BASF aims to exceed the record levels of sales and EBIT before special items achieved in 2011 BASF will strive again to earn a high premium on cost of capital Chemical businesses: Given the weak demand outlook, we expect volumes to be flat in H2 2012 vs. H1 2012 In 2012, EBIT before special items is expected to come in below the level of 2011 Revised assumptions 2012 GDP: +2.3% (before: 2.7%) Industrial production: +3.4% (before: 4.1%) Chemical production: +3.5% (before: 4.1%) US$/Euro: 1.30 (unchanged) Oil price (US$/bbl): 110 (unchanged) 10

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 12

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 13

Striving for strong profitable growth Medium- and long-term sales target* Sales** in billion Acquisitions ~115 Innovations Investments 64 Investments Innovations Acquisitions ~85 2010 Target Target 2015 2020 We aim to grow 6 percent p.a.; 2 percentage points above chemical production outperform chemical production * Published by on November 29, 2011 ** Potential impact of IFRS changes not included 14

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 ~22 2010 2020 South America, Africa, Middle East ~8% p.a. 8%** 19%** 5 ~11 2010 2020 10%** Europe ~4.5% p.a. 52%** 33 ~53 2010 2020 46%** Asia Pacific ~8% p.a. ~29 13 20%** 2010 2020 25%** * Published on November 29, 2011 ** Percentage of total sales 15

Striving for strong profitable growth Doubling EBITDA by 2020* EBITDA** in billion 11.1 Growth Op. Excellence Acquisitions ~15 Growth Op. Excellence Acquisitions ~23 2010 Target Target 2015 2020 * Published on November 29, 2011 ** Assumptions 2010-2020: Exchange rate $/ Ø 1.40, Oil price Ø $110/bbl 16

Business review BASF Business Today review Trends BASF strategy & growth targets Purpose and strategic principles Targets Strategic levers Strategic Portfolio levers development Market approach BASF Tomorrow Board priorities Innovations for a sustainable future Investments Acquisitions Operational excellence Fit for 2020 BASF BASF Capital Strategy: Market We Story September create chemistry November 2012 2011

Portfolio development We expand from chemicals to chemistry 1960 1970 1980 1990 2000 2010 2020 New molecules Chemistry as key enabler for functionalized materials & solutions Improved applications Functionalized materials & solutions Deep understanding of customer value chains required Batteries, membranes... 18

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 Battery materials BASF core business Selected transactions 2001 today Strong partnerships Gazprom Monsanto Petronas Shell Sinopec Total Pharma Fibers Divestitures Printing systems Polyolefins Polystyrene Americas Agro generics Vitamins premix Fertilizers Styrenics (transferred into Styrolution JV on Oct. 1, 2011) ~ 15bn sales ~ 10bn sales* * without Styrenics 19

Portfolio development 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 20

Market approach 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 Construction Chemicals Intermediates Coatings Dispersions & Pigments Care Chemicals Performance Chemicals Paper Chemicals Polyurethanes Performance Polymers * Excluding Oil & Gas and Other ** Excluding Agricultural Solutions, Health & Nutrition, Oil & Gas and Other 21

Cross-divisional approach: Smartforvision Technology competencies combined with customer know-how 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 Daimler & BASF concept car Smartforvison 22

Cross-divisional approach Biopolymer for enhanced oil recovery Potential Increased incremental oil recovery of up to 10% on waterflooding. Sales potential to be defined after completion of trials Schizophyllum commune Approach Leverage BASF s Verbund knowhow in white biotechnology for Oil & Gas production Proprietary biopolymer from Schizophyllum fungus allows for enhanced oil recovery due to its high viscosifying efficiency Biopolymer is stable in high temperature and high salinity reservoirs Schizophyllan biopolymer Current activities Schizophyllan biopolymer to be produced at BASF Ludwigshafen via fermentation. First trial in mature Wintershall oil field starting in 2012 (Bockstedt, Germany) 23

Cross-divisional approach ecovio biodegradable plastic in paper applications Business potential 2020 Market size: opportunity to substitute > 200 kt of various products Sales potential for BASF: ~ 40 million (ecovio FS Paper for extrusion coating) Additional business opportunities in wet-end applications under evaluation Concept Leverage BASF know-how on biodegradable plastics and paper chemicals to offer sustainable solutions for packaging and foodservice ware Current activities ecovio FS Paper launched in various markets since 2010 Business Model for sustainable Closed System throughout whole value chain (incl. waste management) R&D-projects for additional applications and solutions 24

Innovations for a sustainable future Commitment to R&D 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 R&D 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 2012 25

Innovations for a sustainable future 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 26

Innovations for a sustainable future BASF growth field examples Growth Field examples Batteries for mobility Water solutions Plant biotechnology Business potential 2020* Existing Activities Targets Market size: > 20 billion BASF sales potential: > 500 million New global business unit for battery chemicals & materials Electrode material plant being built in Ohio. Acquired Novolyte, Merck s electrolytes, Ovonik, equity position in Sion Power R&D network with academia Sites in US, China, Europe Become the leading supplier of battery materials Target customers: Battery producers Market size: ~ 20 billion BASF sales potential: > 800 million BASF expertise and portfolio (high-performance flocculants, desalination and antifouling chemicals.) Acquired inge water-technologies (membranes) to offer module systems Leading supplier of innovative water solutions Forward integration into membrane technologies Market size: ~ 11 billion gross trait value BASF sales potential: 1.8 billion gross trait sales before partner share BASF as Trait Technology Partner of leading trait and seed companies Yield & Stress collaboration with Monsanto (corn, soy, cotton, canola and wheat) Contribute to more efficient agriculture, healthier nutrition Make Plant Biotechnology an operating division within the Agricultural Solutions segment * Published on November 29, 2011 27

Investments will boost future organic growth Future investments in billlion ~15 15-20 10.9 30-40% 35-45% ~20% 2006 2010 2011 2015 2016 2020 Total investments Thereof investments in emerging markets 28

Investments Major 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 * Memorandum of Understanding signed 29

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 30

Operational excellence Strong track record BASF Group 2002 2011 Index CAGR 2002 2011 300 250 200 10 % 10 % 4 % EBITDA Sales Fixed costs 150 100 50 2002 2005 2008 2011 31

Operational excellence New program STEP: Earnings contribution ~ 1 billion Annual earnings contribution in million 3,000 2,000 1,000 0 Former cost saving programs 2012 2015 NEXT STEP NEXT Program Annual earnings contribution of 1 billion will be achieved in 2012 Achieved by end 2011: > 800 million STrategic Excellence Program STEP Project timeline: 2012 2015 Measures to optimize processes and structures in all regions, e.g. manufacturing, maintenance supply chain engineering, best-cost country sourcing Fixed cost savings and margin improvements One-time costs & investments: ~ 1 billion Targeted annual earnings contribution: ~ 1 billion by end of 2015, thereof 100 million in 2012 (run-rate) 32

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. 2015 Sales ~ 85 billion EBITDA ~ 15 billion EPS ~ 7.50 2020 Sales ~ 115 billion Double EBITDA to ~ 23 billion (compared with 2010) 34

Appendix Business development Q2 2012 BASF Strategy: We create chemistry November 2011

Chemicals Earnings impacted by weaker margins throughout the portfolio Q2 12 segment sales (million ) vs. Q2 11 EBIT before special items (million ) Intermediates 763 +10% 3,348-1% Inorganics 426 +21% 800 600 400 674 621 381 467 436 Petrochemicals 2,159 (8%) 200 0 Q2 Q3 Q4 Q1 Q2 2011 2012 Sales development Period Volumes Prices Portfolio Currencies Q2 12 vs. Q2 11 (14%) (2%) 10% 5% 36

Plastics Sequential earnings improvement in challenging environment Q2 12 segment sales (million ) vs. Q2 11 EBIT before special items (million ) Polyurethanes 1,580 +5% 2,878 +2% 400 200 383 317 110 219 256 Performance Polymers 1,298 (2%) 0 Q2 Q3 Q4 Q1 Q2 2011 2012 Sales development Period Volumes Prices Portfolio Currencies Q2 12 vs. Q2 11 (5%) 0% 1% 6% 37

Performance Products Higher prices could not fully compensate weak demand vs.q2 11 Q2 12 segment sales (million ) vs. Q2 11 EBIT before special items (million ) Care Chemicals 1,237 (9%) Nutrition & Health 509 +6% Paper Chemicals 427 +2% 4,122 +1% Performance Chemicals 944 +4% Dispersions & Pigments 1,005 +7% 600 400 200 0 513 440 452 446 220 Q2 Q3 Q4 Q1 Q2 2011 2012 Sales development Period Volumes Prices Portfolio Currencies Q2 12 vs. Q2 11 (5%) 1% 0% 5% 38

Functional Solutions Demand from the automotive industry remained strong Q2 12 segment sales (million ) vs. Q2 11 EBIT before special items (million ) Catalysts 1,620 +8% 2,974 +8% Construction Chemicals 621 +8% 200 150 100 50 167 162 88 148 134 Coatings 733 +6% 0 Q2 Q3 Q4 Q1 Q2 2011 2012 Sales development Period Volumes Prices Portfolio Currencies Q2 12 vs. Q2 11 0% (1%) 3% 6% 39

Agricultural Solutions Record Q2 sales and earnings driven by strong demand Q2 12 segment sales (million ) vs. Q2 11 EBIT before special items (million ) 1.000 1,205 1,467 400 331 414 500 200 0 Q2 Q2 0 Q2 Q2 2011 2012 2011 2012 Sales development Period Volumes Prices Portfolio Currencies Q2 12 vs. Q2 11 14% 2% 0% 6% 40

Oil & Gas Strong growth supported by oil production in Libya Q2 12 segment sales (million ) vs. Q2 11 EBIT bsi/net income (million ) Exploration & Production 1,251 +122% 3,585 +46% Natural Gas Trading 2,334 +23% 1,000 800 600 400 200 0 332 269 63 257 880 793 87 Q2/2011 Q2/2012 Exploration & Production Non compensable oil taxes (Q2 2011: 0 million; Q2 2012: 445 million) 213 Sales development Natural Gas Trading Net income Period Volumes Prices/Currencies Portfolio Q2 12 vs. Q2 11 31% 14% 1% 41

Review of Other Million Q2 2012 Q2 2011 Sales 1,107 1,714 thereof Styrenics - 811 EBIT before special items (76) (163) thereof Corporate research Group corporate costs Currency results, hedges and other valuation effects Styrenics, fertilizers, other businesses (95) (61) 52 13 (87) (59) (118) Special items (116) 27 EBIT (192) (136) 76 42

Strong operating cash flow at 3.5 billion Million H1 2012 H1 2011 Cash provided by operating activities 3,460 3,038 thereof Changes in net working capital (651) (1,178) Cash provided by investing activities (1,084) 81 thereof Payments related to tangible / intangible assets (1,669) (1,265) thereof Acquisitions / divestitures 430 32 Cash used in financing activities (2,198) (2,764) thereof Changes in financial liabilities Dividends 269 (2,462) First half 2012 Increase in net working capital by 0.7 billion Free cash flow amounted to 1.8 billion Dividend payments to BASF SE shareholders 2.3 billion Net debt decreased by 0.7 billion to 11.5 billion in comparison to H1 2011 (486) (2,278) 43

Appendix 45 BASF Strategy: We create chemistry November 2011 45

Our purpose We create chemistry for a sustainable future. 46

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. 47

Strong and profitable growth in emerging markets Sales BASF Group excluding Oil & Gas in billion by location of customer ~115 45% 61 34% Emerging markets Developed markets* 28 22% * BASF definition: Developed markets include EU15, Norway, Switzerland, North America, Japan, Australia, New Zealand Target 2020: ~45% sales share of Emerging Markets 48

Innovations for a sustainable future 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 2015 2020 49

Outlook 2012 Expectations for global economy GDP World 2.3% Chemicals by region -0.2% EU-27 Chemicals (excl. Pharma) 3.5% 2.2% USA Industrial production 3.4% 7.5% Asia (excl. Japan) US$ / Euro 1.30 2.8% Japan Oil price (US$ / bbl) 110 3.3% South America 50

Global shale gas development and impact on BASF Shale gas development in trillion m³ North America 50 years demand (at 2010 level) South America Europe* Shale gas potential Proved reserves * Western Europe plus Baltics and Ukraine Asia** ** China, India, Pakistan Key Trends Shale gas in the USA already reality, in Asia and South America shale gas exploitation in early stage Realization potential in Europe at risk (public acceptance) Price advantage for methane and ethane in North America shift to lighter cracker feedstock leads to higher propylene and butadiene prices Impact on BASF US cracker: projects in place to further increase share of lighter feed Cost savings for energy and C1-based value chains Lower availability of propylene and butadiene in North America lead to higher prices Further opportunities for BASF`s value chains are explored Source: EIA, IHS, CERA 51