BASF Capital Market Story

Hans-Ulrich Engel Chief Financial Officer of BASF SE Roadshow Frankfurt July 28, 2016 BASF Capital Market Story BASF Capital Market Story, July 2016 1

Cautionary note regarding forward-looking statements 150 years 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, July 2016 2

We create chemistry for a sustainable future 150 years 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 2006-2015 ~ 66 billion market capitalization on July 25, 2016 Chemistry as an enabler BASF has superior growth opportunities: sustainable innovations investments emerging markets BASF Capital Market Story, July 2016 3

150 years 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, 2015. BASF Capital Market Story, July 2016 4

150 years Verbund: Unique competitive advantage Verbund generates > 1 billion p.a. global cost savings* & 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, July 2016 * Savings include only tangible synergies. Additional (intangible) benefits and retained profits are not included. 5

150 years Q2 2016: Financial figures for BASF Group Financial figures Q2 2016 Q2 2015 Change Sales 14.5 billion 19.1 billion (24%) EBITDA 2.8 billion 3.0 billion (7%) EBIT before special items 1.7 billion 2.0 billion (16%) EBIT 1.7 billion 2.0 billion (16%) Net income 1.1 billion 1.3 billion (14%) Reported EPS 1.19 1.38 (14%) Adjusted EPS 1.30 1.49 (13%) Operating cash flow 2.3 billion 2.8 billion (17%) Sales development Volumes Prices Portfolio Currencies Q2 2016 vs. Q2 2015 2% (7%) (16%) (3%) BASF Capital Market Story, July 2016 6

150 years Free cash flow development Free cash flow* (in billion ) 5 4 3.2 3.2 3.9 3.7 3.2 3.6 3 2.5 2.6 2 1 1.7 1.4 0 2007 2008 2009** 2010 2011 2012 2013 2014 2015 1HJ 2016 * Cash provided by operating activities less capex BASF Capital Market Story, July 2016 ** 2009 adjusted for re-classification of settlement payments for currency derivatives 7

150 years Outlook 2016 for BASF Group confirmed Assumptions 2016 GDP growth: +2.3% Growth in industrial production: +2.0% Growth in chemical production (excl. pharma): +3.4% Exchange rate: $1.10 per euro Oil price (Brent): $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. BASF Capital Market Story, July 2016 8

Business development Path forward: Our priorities Appendix Q2 2016 reporting BASF Capital Market Story, July 2016 9

150 years Components of growth Sales* analysis 2010 2015 (in billion ) CAGR 80 60 59.6 +10.5 Volumes 3.4% -1.4 +2.6-0.9 Prices FX M&A 70.4 40 20 2010 2015 (in billion ) Net sales 2010 Volumes Prices FX M&A BASF Group w/o Oil & Gas 51.4 Oil & Gas 8.2 +2.8 (+1.1% CAGR) +7.7 (+14.2% CAGR) Sales CAGR 2010-2015 -0.9 +2.6 +1.6 +2.3% -0.5 +0.0-2.5 +9.6% BASF Capital Market Story, July 2016 * 2010, 2011 indicative, adjusted for IFRS 10 & 11 10

Portfolio development towards more market-driven and innovative businesses 150 years 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, July 2016 * Closing expected in 2016 11

150 years Steady earnings growth EBIT and EBITDA* (in billion, 2001-2015) 12 10 8 6 4.7 4.6 7.0 7.2 CAGR EBIT 16.6% 8.4 5.5 CAGR EBITDA 7.9% 8.9 6.0 7.7 6.5 9.9 6.7 11.2 8.0 10.0 10.4 6.7 7.2 11.0 7.6 10.6 6.2 4 3.7 4.5 4.8 4.6 2 2.2 2.2 2.8 0 0.7 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 EBITDA EBIT BASF Capital Market Story, July 2016 * 2010, 2011 indicative, adjusted for IFRS 10 & 11; 2001 2009 as reported, without non-compensable foreign income taxes on oil production 12

Strong track record in operational excellence 150 years BASF Group* 2001 2015 (indexed; CAGR 2001 2015) 350 300 250 200 CAGR EBITDA 9% CAGR Sales 6% EBITDA 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 BASF Capital Market Story, July 2016 * Excl. companies with major IFRS 10/11 restatements, i.e. BASF YPC Nanjing, Libya onshore, other Oil & Gas and Catalysts companies 13

150 years Attractive shareholder return Dividend per share ( ) 2.90 3.00 2.80 2.50 2.60 2.70 2.50 2.20 1.95 1.95 2.00 1.70 1.50 1.50 1.00 0.50 0.0 2006 2009 2012 2015 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, July 2016 14

150 years Delivering consistent, long-term value Average annual performance with dividends reinvested Last 10 years July 2006 June 2016 Last 5 years July 2011 June 2016 +12.4% BASF +3.9% +0.7% Euro Stoxx 50 +3.2% +5.5% DAX 30 +5.6% +6.9% MSCI World Chemicals +5.7% 0 3 6 9 12 15 BASF Capital Market Story, July 2016 15

Business development Path forward: Our priorities Appendix Q2 2016 reporting BASF Capital Market Story, July 2016 16

The path forward: Our priorities 150 years 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, July 2016 17

Managing volatility: BASF almost perfectly hedged on hydrocarbon price changes 150 years BASF production and consumption of oil and gas (in million boe, 2015) 153 Oil and liquids Natural gas 40 113 >100 Naphtha and other oil-based raw materials Natural gas for energy and as raw material Production of oil, liquids and gas Consumption of oil derivatives and gas BASF hydrocarbon consumption almost equals hydrocarbon production BASF Capital Market Story, July 2016 18

Chemicals with stable profitability, little correlation to oil price 150 years EBITDA margin Chemicals / oil price (indexed, 2001 = 100) 500 400 Oil price 300 200 100 0 EBITDA margin Chemicals (as % of sales) 2001 2002 2003 2004 2005 2006* 2007* 2008 2009 2010 2011 2012 2013 2014 2015 restated BASF Capital Market Story, July 2016 * Without Catalysts (now part of Functional Materials & Solutions segment) 19

Strategic lever: Continuous portfolio development 150 years 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, July 2016 * Excluding Oil & Gas sales 20

Strategic lever: Acquisitions 150 years 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% p.a. after tax Are EPS accretive by year three at the latest Reduce earnings cyclicality Strategic acquisition criteria Financial acquisition criteria BASF Capital Market Story, July 2016 21

BASF to acquire Chemetall Transaction highlights 150 years 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, July 2016 22

Chemetall a global leader in surface treatment products and services 150 years 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, July 2016 * average analysts estimates 23 Sales EBITDA EBITDA margin CAGR sales (2007 2015) 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

Chemetall complements BASF s portfolio, adding highly attractive surface treatment 150 years Chemetall Pre-treatment BASF Coatings Complete surface treatment provider In-depth customer insights across wide industry range Excellent customer access and approvals especially in automotive Offer full solution competence to customers across wide range of industries Recognized technology leader in metal surface treatment + Well recognized customer service offering in coatings Benefit from convergence of pre-treatment and coatings, offering superior product and process solutions Complete portfolio beyond pure surface treatment Chemical know-how and strong R&D platforms within BASF Group Develop superior application processes leveraging joint expertise BASF Capital Market Story, July 2016 24

Chemetall an excellent strategic fit for BASF Coatings 150 years Technology adjacency Downstream solution business Access to key growth markets Enhanced technology basis Strong and robust financials Industry-leading expert team Compelling combination of surface treatment and coatings technologies Creates unmatched solution competence for customers Complex formulation businesses based on application know-how Customer centricity, product quality and technical service as differentiators Superior access to growth industries (e.g. automotive, aerospace) Global footprint with local production, technical centers in China and India Growth opportunities through combining broad technical and application competence with BASF s chemistry and formulation know-how Excellent track record of growth above market and attractive margins Asset light business model with strong free cash flow conversion High-quality resources and technical expertise ~1,200 sales professionals with in-depth application and process know-how BASF Capital Market Story, July 2016 25

Strategic lever: Capital expenditures 150 years 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, July 2016 26

150 years Investments for organic growth Capex budget 2016-2020 by segment Capex budget 2016-2020 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, July 2016 27

Strategic lever: Innovations 150 years 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, July 2016 * Without Oil & Gas 28

150 years Strong commitment to innovation Innovations for a sustainable future R&D expenditures (billion ) 2.0 1.5 1.0 0.5 0.00 1.6 1.7 1.8 1.9 1.95 2011 2012 2013 2014 2015 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, July 2016 29

Innovation: Four-Way Conversion Catalyst (FWC ) 150 years FWC reduces emission of gaseous pollutants and particulates HC CO NOx Particulates Leading position: Global mobile emissions catalysts patents* 150 N 2 CO 2 H 2 O FWC Combines functionality of a 3-way conversion catalyst with integrated filter on a ceramic substrate Reduces gaseous emissions Precious metal-based catalytic coating removes exhaust gases from engine emissions** Removes particulates Filters & combusts particulates 100 50 0 BASF Competitors Complies with emissions limits Helps automakers meet new Euro 6c regulatory standards FWC introduced in 2013 Sustains BASF s leading technology position * 2009 2013 ** Hydrocarbons, carbon monoxide, nitrogen oxides BASF Capital Market Story, July 2016 *** https://www.basf.com/en/company/news-and-media/science-around-us/catalytic-converter.html 30

150 years Innovation: Green Sense Concrete for sustainable construction BASF s Green Sense Concrete system consists of: Low 1) Innovative admixture products 2) Concrete mix services Environmental Impact 3) Eco-efficiency analysis Replaces up to 70% of cement with recycled materials Superior eco-efficiency Applied in the construction of landmark projects, e.g. One World Trade Center, NYC High Reference Concrete High Total Cost of Ownership Low BASF Capital Market Story, July 2016 31

150 years Innovation: Trilon M Chelating agent for more sustainable detergents and cleaners Trilon M alternative to phosphate for automatic dish washing High sustainability performance: bio-degradable and eco-friendly Fast growing global market demand driven by regulatory changes and consumer demand 2010: Capacity expansion to 120,000 tons 2015: Startup of a new Trilon M world-scale plant in Theodore, Alabama Compared with alternative chelating agents Trilon M Is readily bio-degradable Meets eco-label requirements Has better eco-toxicology profile Shows high performance BASF Capital Market Story, July 2016 32

150 years BASF Crop Protection Engagement in digital agronomic decision support BASF invests in digital farming tools for improved decision support on the farm To focus on connecting data, technology and people To improve productivity and sustainability First tools are launched Maglis: New agricultural platform; offering a range of practical and intuitive tools for gathering, interpreting and monitoring of crop management information Tools: Maglis Crop Plan; Maglis Customer Navigator; Maglis Sustainability Assessment* BASF Capital Market Story, July 2016 33

Strategic lever: Sustainability Sustainable Solution Steering 150 years 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, July 2016 * More than 60,000 product applications analyzed representing 64.9 billion in sales or 95.4% of BASF s portfolio. 34

Strategic lever: Operational excellence DrivE with ~ 1 billion earnings contribution 150 years 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: 2016 2018 0 2015 2018 NEXT 2008-2011 DrivE 2016-2018 STEP 2012-2015 BASF Capital Market Story, July 2016 35

Profitability of BASF will grow faster than global chemical production 150 years 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, July 2016 36

Business development Path forward: Our priorities Appendix Q2 2016 reporting BASF Capital Market Story, July 2016 37

150 years Chemicals Higher volumes, but continuing margin pressure Sales Q2 2016 vs. Q2 2015 million EBIT before special items million Intermediates 680 (8%) Monomers 1,371 (13%) 3,373 (15%) Petrochemicals 1,322 (20%) 800 600 400 200 0 633 548 465 467 249 Q2 Q3 Q4 Q1 Q2 2015 2016 Sales development Volumes Prices Portfolio Currencies Q2 2016 vs. Q2 2015 4% (17%) 0% (2%) BASF Capital Market Story, July 2016 38

Performance Products Significant increase in earnings driven by lower fixed costs, improved margins and higher volumes 150 years Sales Q2 2016 vs. Q2 2015 million EBIT before special items million Performance Chemicals 958 (10%) Nutrition & Health 497 (11%) 3,846 (6%) Dispersions & Pigments 1,213 (3%) Care Chemicals 1,178 (3%) 600 400 200 0 547 503 304 319 228 Q2 Q3 Q4 Q1 Q2 2015 2016 Sales development Volumes Prices Portfolio Currencies Q2 2016 vs. Q2 2015 2% (3%) (3%) (2%) BASF Capital Market Story, July 2016 39

150 years Functional Materials & Solutions Considerable earnings increase supported by all divisions Sales Q2 2016 vs. Q2 2015 million EBIT before special items million Performance Materials 1,766 (1%) Coatings 800 (2%) 4,703 (4%) Catalysts 1,508 (11%) Construction Chemicals 629 +1% 600 400 200 0 535 458 456 371 389 Q2 Q3 Q4 Q1 Q2 2015 2016 Sales development Volumes Prices Portfolio Currencies Q2 2016 vs. Q2 2015 5% (6%) 0% (3%) BASF Capital Market Story, July 2016 40

Agricultural Solutions Decrease in sales and earnings due to lower volumes and currency headwinds 150 years Sales Q2 2016 vs. Q2 2015/H1 2016 vs. H1 2015 million EBIT before special items Q2 2016 vs. Q2 2015/H1 2016 vs. H1 2015 million 4,000 3,000 2,000 1,000 1,678 (13%) 1,459 3,576 (9%) 3,239 1,000 800 600 400 200 365 (12%) 320 (3%) 939 911 0 Q2 2015 Q2 2016 H1 2015 H1 2016 0 Q2 2015 Q2 2016 H1 2015 H1 2016 Sales development Volumes Prices Portfolio Currencies Q2 2016 vs. Q2 2015 (8%) 1% 0% (6%) BASF Capital Market Story, July 2016 41

150 years Oil & Gas Significantly lower sales and earnings Sales Q2 2016 vs. Q2 2015 million 5,000 EBIT before special items, net income million 600 4,000 3,000 2,000 1,000 0 3,668 704 2,964 Q2 (83%) 617 Q2 400 200 0 431 288 250 143 94 100 Q2 2015 Q2 2015 Q2 2016 Q2 2016 2015 2016 Exploration & Production Natural Gas Trading Exploration & Production Natural Gas Trading Net income Sales development Volumes Prices/Currencies Portfolio Q2 2016 vs. Q2 2015 2% (3%) (82%) BASF Capital Market Story, July 2016 42

150 years Review of Other million Q2 2016 Q2 2015 Sales 485 757 EBIT before special items (212) (63) Thereof Corporate research costs (88) (102) Costs of corporate headquarters (56) (64) Foreign currency results, hedging and other measurement effects (116) 151 Other businesses 33 30 Special items 65 (20) EBIT (147) (83) BASF Capital Market Story, July 2016 43

150 years Cash flow in 1st half 2016 million H1 2016 H1 2015 Cash provided by operating activities 3,339 5,143 Thereof changes in net working capital (1,045) 877 miscellaneous items (122) (32) Cash used in investing activities (1,988) (3,331) Thereof payments related to tangible/intangible assets (1,979) (2,845) acquisitions/divestitures 51 (15) Cash used in financing activities (1,814) (1,033) Thereof changes in financial liabilities 944 1,723 dividends (2,768) (2,803) BASF Capital Market Story, July 2016 44

150 years Strong balance sheet Balance sheet June 30, 2016 vs. December 31, 2015 billion Long-term assets 70.8 72.2 70.8 72.2 46.3 46.5 31.5 15.2 29.0 15.9 Equity Financial debt Total assets increased by 1.3 billion on higher trade accounts receivable and deferred taxes Inventories were stable at 9.7 billion Provisions for pension obligations increased by 3.3 billion Net debt at 14.1 billion Equity ratio: 40% Inventories Accounts receivable Other assets Liquid funds 9.7 9.7 9.5 10.6 3.1 3.6 2.2 1.8 Dec 31, 2015 June 30, 2016 24.1 Dec 31, 2015 27.3 June 30, 2016 Other liabilities BASF Capital Market Story, July 2016 45

150 years BASF Capital Market Story, July 2016 46