BASF: Fit for 2012 Dr. Hans Engel CFO of BASF SE, Chairman and CEO of BASF Corporation Boston & New York, November 7-8, 2011 BASF Capital Market Story November 2011 1
1 Business review 2 Focus on operational excellence 3 Well positioned for profitable growth 4 Outlook BASF Capital Market Story November 2011 2
BASF with good earnings in Q3 Third quarter 2011 highlights Business performance Q3 11 vs. Q3 10 Sales 17.6 billion +12% EBITDA 2.7 billion (8%) EBITDA margin 15.4% 18.6% EBIT before special items (bsi) 2.0 billion (11%) EBIT bsi adjusted for non-comp. oil taxes 2.0 billion (1%) EBIT 1.9 billion (13%) Net income 1.2 billion (4%) EPS 1.30 (4%) Adjusted EPS 1.52 0% Further sales growth in chemical activities mainly due to successful price increases Acquired Cognis business continues to perform strongly; synergy targets increased Agricultural Solutions on track for record year in sales and earnings EBIT before special items amounted to 2 billion. Adjusted for Libya, which contributed 355 million in last year s quarter, EBIT before special items increased by 6% compared to Q3 2010. BASF Capital Market Story November 2011 3
Growth in all segments except Oil & Gas Segment million Sales Δ Q3 2010 EBITDA EBITDA margin EBIT before SI Δ Q3 2010 Chemicals 3,168 +10% 848 26.8% 621 +1% Plastics 2,801 +8% 418 14.9% 317 (15)% Performance Products Functional Solutions Agricultural Solutions 3,991 +25% 602 15.1% 440 +19% 2,907 +12% 258 8.9% 162 +3% 908 +9% 137 15.1% 95 +44% Oil & Gas 2,195 (2%) 474 21.6% 350 (39%) BASF Capital Market Story November 2011 4
Major milestones in our active portfolio management achieved Styrolution JV set on track Divestiture of fertilizer activities Styrolution, 50-50 joint venture between BASF and INEOS, established on October 1, 2011 With pro-forma sales of 6.4 billion in 2010* Styrolution is global market leader in its industry BASF received ~ 600 million in October as compensation for its contributed business * unaudited Agreement with EuroChem signed to sell BASF s fertilizer assets in Antwerp BASF also plans to sell its 50%-stake in PEC-Rhin JV to EuroChem Total transaction value ~ 700 million Closing expected by the end of Q1 2012 BASF Capital Market Story November 2011 5
Continuous strong cash flow Cash Flow (billion ) 7 6 5 5.0 4 3 2.9 2 1 0-1 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q1-Q3 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 BASF Capital Market Story November 2011 6 **
Attractive shareholder returns Record dividend Dividend per share ( ) Key facts 2.50 2.00 1.50 1.00 0.65 0.70 0.70 0.85 1.00 1.50 1.95 1.95 1.70 2.20 Average annual dividend increase of 14.5% (2001-2010) Dividend yield above 3% in any given year since 2001 Attractive dividend yield of 3.7% in 2010* 0.50 0.0 2001 2004 2007 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 BASF Capital Market Story November 2011 7
Delivering consistent, long-term value Long-term performance October 2001 September 2011 (average annual performance with dividends reinvested) +12.8% BASF -1.4% Euro Stoxx 50 +2.5% DAX 30 +7.4% MSCI World Chemicals -3 0 3 6 9 12 15 BASF Capital Market Story November 2011 8
1 Business review 2 Focus on operational excellence 3 Well positioned for profitable growth 4 Outlook BASF Capital Market Story November 2011 9
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. 10 BASF Capital Market Story November 2011 10
Stringent fixed cost management BASF Group development 2001-2010 Index 300 Δ ~170% 250 200 ~100% 150 ~20% 100 50 2001 2004 2007 2010 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: 145 million by 2013 BASF Capital Market Story November 2011 11
Sustainable improvement of cost base Efficiency program NEXT on track Annual earnings contribution (million ) 2,500 2,000 1,500 1,000 500 0 2003 2005 2007 2009 2012 New EXcellence Targets (NEXT) > 500 individual projects to simplify processes, structures and production sites in all regions Project timeline: 2008-2011 Annual earnings contribution of 600 million in 2010 achieved Targeted earnings contribution by 2012: 1 billion New efficiency program NEXT Completed restructuring programs BASF Capital Market Story November 2011 12
1 Business review 2 Focus on operational excellence 3 Well positioned for profitable growth 4 Outlook BASF Capital Market Story November 2011 13
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. BASF Capital Market Story November 2011 14
Leading positions in growth industries and emerging markets BASF Capital Market Story November 2011 15
Emerging markets Significant sales growth in emerging markets BASF Group (w/o Oil & Gas) Net sales in billion 60 50 40 30 22% 20 10 CAGR 13% CAGR 7% 27% Emerging Markets Sales 2010 in emerging markets: 14.5 billion (27%) Investments in emerging markets 2005-2010: 3 billion Ongoing increase of -sales force - regional R&D Emerging markets definition, according to Dow Jones: 35 countries * 0 2005 2010 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 BASF Capital Market Story November 2011 16
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 BASF Capital Market Story November 2011 17
BASF s profitable growth path in Asia Pacific Sales by location of customers (in billion ) Achievements 2005-2010 20 20 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% 15 10 5 0 6.5 +14% p.a. 12.5 2005 2010* 2020 * Excluding Cognis Target 2011-2020 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 2011-2015: 2.3 billion Generating 70% of sales based on local manufacturing Strengthening market focus through industry and customer target groups BASF Capital Market Story November 2011 18
Ongoing portfolio optimization BASF Capital Market Story November 2011 19
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 (JV Styrolution established) Fertilizers (contract signed) 9 billion Euro * (Sales) Sale of shares in K+S (Proceeds for BASF ~ 1 billion) * Not including styrenics and fertilizer businesses BASF Capital Market Story November 2011 20
Cognis integration Synergy target increased to 290 million Target Acquisition EPS accretive as of 2012 Integration Costs 300 million one-time costs until end of 2013 thereof 200 million incurred by the end of Q3 2011 120 million inventory step-up fully incurred already 60 million each incurred in Q4 2010 and Q1 2011 Synergies 290 million of additional annual EBIT targeted 145 million cost synergies by the end of 2013 145 million growth synergies by the end of 2015 BASF Capital Market Story November 2011 21
Active portfolio management pays off EBITDA by activity (in billion, excluding Other) 12 10 8 6 4 2 0 2001* 2004 2007** 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) BASF Capital Market Story November 2011 22
Excellent innovation platform BASF Capital Market Story November 2011 23
Natugrain TS X-SEED PCI Geofug Ecovio CypoSol Electromobility Kaurit Light Elastopave Xemium BASF Capital Market Story November 2011 24
Innovations for the mobility of tomorrow smart forvision joint concept car by Daimler and BASF Presented at the International Motor Show in Frankfurt in September 2011 BASF solutions are based on three main technology platforms: 1. Electrical energy efficiency - OPVs, OLEDs* support range extension 2. Multifunctional lightweight construction - Composite body parts, wheel rims and car seats 3. Integrated temperature management - Cool pigment coating, temperature reflecting foil * OPVs = Organic Photovoltaics, OLEDs = Organic Light Emitting Diodes Chemical solutions by BASF are playing a key role in bringing electromobility quicker to the roads BASF Capital Market Story November 2011 25
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 22% ~ 8 billion R&D expenditures in the period 2011-2015 10% Performance Products 1.5 billion Other 2% ~9,600 employees in R&D ~3,000 projects and topics 19% Functional Solutions 12% Agricultural Solutions 26% Research Verbund: About 1,900 partnerships with universities, start-ups and industry partners Further increase in R&D spending planned for 2011 BASF Capital Market Story November 2011 26
Innovation pipeline worth 21 billion Net present value by segments (billion ) R&D contributes significantly to earnings growth 20 15 19 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 10 5 0 2009 2010 46% Agricultural Solutions 2% Oil & Gas 20% Corporate Research 0,0 4.5 3.5 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 BASF Capital Market Story November 2011 27
1 Business review 2 Focus on operational excellence 3 Well positioned for profitable growth 4 Outlook BASF Capital Market Story November 2011 28
Outlook 2011 confirmed Outlook 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 will earn 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 Dividend policy We aim to continuously increase the annual dividend, or at least maintain it at the level of the previous year. as of October 27, 2011; 3rd Quarter 2011 Reporting BASF Capital Market Story November 2011 29
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. BASF Capital Market Story November 2011 30
BASF Capital Market Story November 2011 31
Backup Macro-economic assumptions 2011 BASF Capital Market Story November 2011 32
Macro-economic assumptions 2011 Previous forecast New forecast GDP 3%-4% 2.5%-3% Chemical production (excl. Pharma) 5%-6% 4.5%-5% Industrial production 5%-6% 4.5%-5% US$ / Euro 1.40 1.40 Oil price (US$ / bbl) 110 110 BASF Capital Market Story November 2011 as of October 27, 2011; 3 rd Quarter 2011 Reporting
Backup Business development Q3 2011 BASF Capital Market Story November 2011 34
Chemicals Significant sales growth driven by strong price increases Q3 11 segment sales (million ) vs. Q3 10 EBIT before special items (million ) Intermediates 671 +4% 3,168 +10% Inorganics 356 +11% Petrochemicals 2,141 +12% 800 600 400 200 0 765 617 674 621 537 Q3 Q4 Q1 Q2 Q3 2010 2011 Sales development Period Volumes Prices Portfolio Currencies Q3 11 vs. Q3 10 (3)% 18% 0% (5)% BASF Capital Market Story November 2011 35
Plastics Sales up mainly due to a strong Performance Polymers business Q3 11 segment sales (million ) vs. Q3 10 EBIT before special items (million ) Polyurethanes 1,480 +2% 2,801 +8% 400 200 371 285 393 383 317 Performance Polymers 1,321 +16% 0 Q3 Q4 Q1 Q2 Q3 2010 2011 Sales development Period Volumes Prices Portfolio Currencies Q3 11 vs. Q3 10 2% 10% 0% (4)% BASF Capital Market Story November 2011 36
Performance Products Strong contributions from acquired Cognis businesses Q3 11 segment sales (million ) vs. Q3 10 EBIT before special items (million ) Care Chemicals 1,265 +85% Nutrition & Health 471 3,991 +24% Performance Chemicals 904 +9% +32% Dispersions Paper Chemicals & Pigments 423 928-6% +5% 600 500 400 300 200 100 0 554 513 440 370 294 Q3 Q4 Q1 Q2 Q3 2010 2011 Sales development Period Volumes Prices Portfolio Currencies Q3 11 vs. Q3 10 (2%) 7% 23% (4)% BASF Capital Market Story November 2011 37
Functional Solutions Strong performance of Catalysts Q3 11 segment sales (million ) vs. Q3 10 EBIT before special items (million ) Catalysts 1,608 +19% 2,907 +12% Construction Chemicals 599 0% 150 100 50 158 33 142 167 162 Coatings 700 +9% 0 Q3 Q4 Q1 Q2 Q3 2010 2011 Sales development Period Volumes Prices Portfolio Currencies Q3 11 vs. Q3 10 4% 11% 3% (6)% BASF Capital Market Story November 2011 38
Agricultural Solutions On track for record year in sales and earnings Q3 11 segment sales (million ) vs. Q3 10 EBIT before special items (million ) 1.000 800 600 400 200 832 +9% 908 150 100 50 66 +44% 95 0 Q3 2010 Q3 2011 0 Q3 2010 Q3 2011 Sales development Period Volumes Prices Portfolio Currencies Q3 11 vs. Q3 10 12% 3% 0% (6)% BASF Capital Market Story November 2011 39
Oil & Gas EBIT before SI on last year s level (adjusted for non-compensable oil taxes) Q3 11 segment sales (million ) vs. Q3 10 EBIT before special items/ Net income (million ) Exploration & Production 534-39% 2,195-1% Natural Gas Trading 1,661 +23% 600 400 200 0 573 503 272 70 123 Q3 2010 Non-compensable oil taxes 224 350 227 Q3 2011 225 Sales development EBIT bsi Exploration & Production EBIT bsi Natural Gas Trading Net income Period Volumes Prices/Currencies Portfolio Q3 11 vs. Q3 10 (25)% 24% 0% BASF Capital Market Story November 2011 40
Review of Other Million Q3 2011 Q3 2010 Sales 1,637 1,452 thereof Styrenics* 739 683 EBIT before special items (21) 58 thereof Corporate research Group corporate costs Currency results, hedges and other valuation effects Styrenics, fertilizers, other businesses (86) (58) 104 82 (67) (54) 104 Special items (33) (68) EBIT (54) (10) 77 * Since January 1, 2011, Styrenics only includes the carved-out Styrenics businesses; the previous year s values were adjusted accordingly. BASF Capital Market Story November 2011 41
Operating cash flow remains strong Million Jan - Sep 2011 Jan - Sep 2010 Cash provided by operating activities 5,028 5,307 thereof Changes in net working capital (1,337) (783) Cash used in investing activities (957) (1,175) thereof Payments related to tangible / intangible assets (2,101) (1,518) Cash used in financing activities (4,105) (3,814) thereof Changes in financial liabilities Dividends (1,727) (2,378) (2,003) (1,811) Third quarter 2011 Operating cash flow strong at 2.0 billion Free cash flow again high at 1.2 billion Net debt further reduced by ~ 650 million to 11.6 billion since end of Q2 2011 BASF Capital Market Story November 2011 42
Financial highlights Million Q3 2011 Q3 2010 Δ% Q2 2011 Δ% Sales changes due to - volumes -prices - portfolio - currencies 17,607 15,781 +12% (3)% +14% +5% (4)% 18,461 (5)% EBITDA 2,709 2,934 (8)% 3,015 (10)% EBIT before special items 1,964 2,213 (11)% 2,237 (12)% EBIT before special items adjusted for non-compensable oil taxes 1,964 1,989 (1)% 2,237 (12)% Special items (82) (58) - (20) - EBIT 1,882 2,155 (13)% 2,217 (15)% Net income 1,192 1,245 (4)% 1,454 (18)% EPS ( ) 1.30 1.35 (4)% 1.59 (18)% Adjusted EPS ( ) 1.52 1.52 0% 1.75 (13)% BASF Capital Market Story November 2011 43
Backup Business overview 2010 BASF Capital Market Story November 2011 44
Excellent segment performance 2010 Segment million Sales Δ vs. 2009 EBITDA EBITDA margin EBIT before SI Δ vs. 2009 Chemicals 11,377 +51% 3,000 26.4% 2,302 +126% Plastics 9,830 +38% 1,721 17.5% 1,284 +123% Performance Products Functional Solutions Agricultural Solutions 12,288 +31% 2,162 17.6% 1,554 +123% 9,703 +36% 861 8.9% 467 +123% 4,033 +11% 938 23.3% 749 (4%) Oil & Gas 10,791 (5%) 2,977 27.6%* 2,430 +6% * Excluding non-compensable oil taxes: 18.5% BASF Capital Market Story November 2011 45
Backup Capital expenditures BASF Capital Market Story November 2011 46
Planned capital expenditures 2011-2015 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 BASF Capital Market Story November 2011 47