BASF 3Q2011 results speech

1,398 views

Published on

Charts and Speech accompanying the 3Q2011 Conference Call for investors and analysts on October 27, 2011

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
1,398
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
15
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

BASF 3Q2011 results speech

  1. 1. BASF 3rd Quarter 2011 Analyst Conference CallOctober 27, 2011, 11:00 (CEST), Ludwigshafen BASF with good earnings in Q3 Third Quarter 2011 Financial highlights October 27, 2011 BASF 3rd Quarter 2011 Analyst Conference Call 1Analyst Conference Call ScriptDr. Kurt BockDr. Hans-Ulrich EngelThe spoken word applies.
  2. 2. Page 2BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 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 3rd Quarter 2011 Analyst Conference Call 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 3rd Quarter 2011 Analyst Conference Call 3
  3. 3. Page 3BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011Kurt BockLadies and gentlemen,Good morning and thank you for joining us.[Chart 3: BASF with good earnings in Q3] BASF again posted good results in Q3 2011. Sales rose by 12 percent to 17.6 billion euros compared to the same quarter last year. Successful price increases in all our segments contributed 14 percentage points to sales growth. Another 5 percentage points came from the acquired Cognis businesses. Volumes on the other hand were slightly below the very strong third quarter of the previous year – due to 25 percent lower volumes in the Oil & Gas business as a result of the suspension of our oil production in Libya in the beginning of this year. Currencies – in particular the weakening of the U.S. dollar – had a negative sales effect of 4 percent. Volumes in our chemical activities were stable year-over-year. Adjusted for a special effect – resulting from the optimization of our supply chain of cracker products in North America – volumes in our chemical activities increased by 1 percent compared to last year. Hans will explain this in more detail in a minute. EBIT before special items amounted to 2 billion euros and thus was 11 percent below the very strong result of Q3 2010. Adjusted for Libya, which contributed 355 million euros in last year’s quarter, EBIT before special items increased by 6 percent compared with the third quarter of last year.
  4. 4. Page 4BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
  5. 5. Page 5BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 At 1.2 billion euros, net income came in slightly below the previous year’s figure. Adjusted earnings per share were 1.52 euros and matched the level of Q3 2010.
  6. 6. Page 6BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 Major milestones in our active portfolio management achieved Styrolution JV set on track Divestiture of fertilizer activities Styrolution, 50-50 joint venture between Agreement with EuroChem signed to BASF and INEOS, established on sell BASF‘s fertilizer assets in Antwerp October 1, 2011 BASF also plans to sell its 50%-stake in With pro-forma sales of €6.4 billion in PEC-Rhin JV to EuroChem 2010* Styrolution is global market leader Total transaction value ~€700 million in its industry Closing expected by the end of Q1 2012 BASF received ~€600 million in October as compensation for its contributed business BASF 3rd Quarter 2011 Analyst Conference Call * unaudited 4
  7. 7. Page 7BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011[Chart 4: Major milestones in our active portfolio managementachieved]In the last months, we achieved further important milestones tooptimize our portfolio. On October 1, Styrolution, the 50-50 joint venture between BASF and INEOS, began operating independently from its parents. With pro-forma sales of 6.4 billion euros in 2010, Styrolution is the global market leader in the styrenics industry. Given the higher value of BASF’s assets, we received a payment of 600 million euros at the beginning of October. The new joint venture will be consolidated at-equity, and as of Q4 2011, the equity income will be reported in the financial result. In addition, the disposal result will be booked as a special item in the EBIT of ‘Other’ in the fourth quarter of this year. At the end of September, we also reached an agreement with EuroChem to sell our fertilizer activities in Antwerp, Belgium. The total transaction value is in the range of 700 million euros. The divestment is subject to approval by the appropriate antitrust authorities, and we expect closing by the end of the first quarter of 2012.
  8. 8. Page 8BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 Important investments to spur further profitable growth Nanjing expansion on track Acrylic acid complex in Brazil Joint investment of USD1.4 billion with World-scale acrylic acid and SAP* Sinopec for first expansion phase of production complex (Camaçari, Bahia) Nanjing Verbund site With more than €500 million BASF‘s Steam cracker expansion, butadiene largest investment in South America extraction, non-ionic surfactants plants Raw material and utilities supply secured are now on-stream via long-term contracts with Braskem Majority of remaining plants expected to Construction will begin in Q4; come on stream around end of 2011 start-up planned for 2014 BASF 3rd Quarter 2011 Analyst Conference Call * Superabsorbent polymers 5
  9. 9. Page 9BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011[Chart 5: Important investments to spur further profitablegrowth]In the past few weeks, we made significant progress with importantprojects to spur organic growth in emerging markets. At our Verbund site Nanjing, China, the first new production facilities, which are part of the 1.4 billion U.S. dollar expansion, have started operations. Along with the successful completion of the steam cracker expansion, the newly constructed butadiene extraction plant and the non-ionic surfactants plant are now up and running. The majority of the remaining plants will come on- stream around the end of this year. In Brazil, we will soon begin construction on our new world-scale production site for acrylic acid, butyl acrylate and superabsorbent polymers. Our plants will be the first acrylic acid and superabsorbents production facilities in South America. At more than 500 million euros, it is the largest investment in BASF’s century-long history in South America. Production is scheduled to begin in the fourth quarter of 2014.
  10. 10. Page 10BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 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 3rd Quarter 2011 Analyst Conference Call 6
  11. 11. Page 11BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011[Chart 6: Innovations for the mobility of tomorrow]With our innovations we are working on the solutions for tomorrow.smart forvision – a joint concept car of Daimler and BASF – waspresented at the recent International Motor Show in Frankfurt inSeptember. Thanks to the combination of smart’s automotive competence and BASF’s material and system expertise, a vehicle has been created, which showcases technologies for sustainable and holistic electric mobility of the future. The smart forvision’s innovations are based on three main technology platforms: 1. Electrical energy efficiency: A number of solutions such as our organic dye solar cells as well as organic light-emitting diodes (OLEDs) help to increase the electrical efficiency. 2. Multifunctional lightweight construction: Many of the parts usually made from metal are now composed of fiber-reinforced plastic – significantly reducing weight. The most exciting example is the plastic wheel rim made of our engineering plastic Ultramid. 3. Integrated temperature management: A novel transparent film applied in the windshield and side windows reflects most of the solar radiation and thus keeps the car interior cool.Ladies and Gentlemen, we create chemistry. Our chemical solutionsare playing a key role in bringing electrical mobility quicker to theroads, and hence to the consumer.
  12. 12. Page 12BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 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. BASF 3rd Quarter 2011 Analyst Conference Call 7
  13. 13. Page 13BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011[Chart 7: Outlook 2011 confirmed]Now, let me comment on current trading and the outlook for thisyear. In Q3, our business has developed positively. Demand from our main customer industries remained on a high level. The pace of growth, however, was – as expected – lower compared to the exceptionally strong first half of this year. We anticipate a continuation of this trend in the fourth quarter. Therefore, we now expect worldwide growth of GDP and industrial and chemical production in 2011 to be just under one percentage point lower than our previous forecast. Given the current uncertainties about the future development of the economy, customers have become more cautious in their ordering behavior in the last weeks. Everyone is closely monitoring working capital. At BASF, we will continue to focus our attention on protecting our margins and controlling our fixed costs, as well as keeping working capital at a minimum level. As a consequence, we are managing our inventories accordingly. Furthermore, I would like to point out that we have successfully resumed our onshore oil production in Libya in last week. We are currently producing about 20,000 barrels of oil per day – compared to 100,000 barrels of oil a day before the stoppage in February.
  14. 14. Page 14BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
  15. 15. Page 15BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011Now to the outlook: We confirm our outlook for a strong full year2011. For 2011, we expect to generate significantly higher sales than in the record year 2010. As our oil production in Libya was suspended for most of this year, EBIT before special items excluding non-compensable oil taxes provides a much more meaningful guidance for 2011. We expect to significantly exceed the 2010 EBIT before special items excluding non-compensable oil taxes, which amounted to 7.2 billion euros last year. We will earn a high premium on our cost of capital once again in 2011.With this, I’ll hand it over to Hans for more details on Q3.
  16. 16. Page 16BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 Chemicals Significant sales growth driven by strong price increases Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €) Intermediates Inorganics 800 765 671 356 674 617 621 +4% +11% 537 600 €3,168 400 +10% 200 Petrochemicals 2,141 0 +12% Q3 Q4 Q1 Q2 Q3 2010 2011 Sales development Period Volumes Prices Portfolio Currencies Q3’11 vs. Q3’10 (3)% 18% 0% (5)% BASF 3rd Quarter 2011 Analyst Conference Call 8
  17. 17. Page 17BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011Hans-Ulrich EngelGood morning ladies and gentlemen.I would like to highlight the financial performance of each segmentin more detail and focus on the respective business developmentsin comparison to the third quarter of 2010.[Chart 8: Chemicals: Significant sales growth driven by strongprice increases]In Chemicals, the significant sales growth was driven by double-digit price increases across all three divisions, which by far offsetthe negative currency effects. Demand remained on a high level.EBIT before special items was slightly above the very high level ofthe previous year. In Petrochemicals, higher raw materials costs were passed on via price increases, leading to a strong rise in sales. Demand for cracker products remained high, but the modification of a swap transaction for a cracker product in North America led to a volume decrease. This adjustment was earnings-neutral. Excluding this effect, divisional volumes as well as segment volumes were stable. In industrial petrochemicals, demand softened, primarily for plasticizers in North America. Earnings reached the very good level of the third quarter of last year. Sales in Inorganics were significantly up, driven by price increases and slightly higher volumes. Demand from automotive customers was high, while we saw signs of weakening in the electronic industry, primarily in Asia. Earnings grew.
  18. 18. Page 18BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
  19. 19. Page 19BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 Sales in Intermediates rose mainly due to significant price increases. Last month, we lifted a force majeure for the butanediol value chain, caused by a fire at our Ludwigshafen acetylene plant in May. Earnings matched the previous year’s figure.
  20. 20. Page 20BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 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 400 371 393 383 1,480 317 +2% 285 €2,801 200 +8% Performance Polymers 0 1,321 +16% Q3 Q4 Q1 Q2 Q3 2010 2011 Sales development Period Volumes Prices Portfolio Currencies Q3’11 vs. Q3’10 2% 10% 0% (4)% BASF 3rd Quarter 2011 Analyst Conference Call 9
  21. 21. Page 21BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011[Chart 9: Plastics: Sales up mainly due to a strong PerformancePolymers business]Driven by significant price increases and further volume growth,sales in Plastics rose strongly despite negative currency effects.Demand from the automotive industry remained high. EBIT beforespecial items was lower, mainly due to a weaker TDI business. Performance Polymers had another very good quarter. Caprolactam prices stayed at record levels and demand continued to be strong in most other product lines. Engineering plastics and our specialties, particularly Basotect and Ecoflex, performed very well. Earnings went up substantially due to a combination of higher volumes and better margins. In Polyurethanes, sales were slightly higher. Demand in the automotive industry stayed high, while it weakened in construction. Our specialty elastomers and systems performed again strongly. In TDI, volumes and prices declined, resulting from improved product availability after the start-up of new capacities in Asia and Europe by competitors. Due to the lower contribution from our TDI business, earnings came in below the high level of last year.
  22. 22. Page 22BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 Performance Products Strong contributions from acquired Cognis businesses Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €) Care Chemicals Performance 600 554 513 1,265 Chemicals 500 440 +85% 904 400 370 +9% Nutrition €3,991 300 294 & Health +24% 200 471 +32% Dispersions 100 Paper Chemicals & Pigments 0 423 928 Q3 Q4 Q1 Q2 Q3 -6% +5% 2010 2011 Sales development Period Volumes Prices Portfolio Currencies Q3’11 vs. Q3’10 (2%) 7% 23% (4)% BASF 3rd Quarter 2011 Analyst Conference Call 10
  23. 23. Page 23BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011[Chart 10: Performance Products: Strong contributions fromacquired Cognis businesses]Performance Products continued to perform strongly. Sales rosesubstantially, driven by strong price increases and the inclusion ofthe acquired Cognis businesses. EBIT before special items went upsignificantly despite low double-digit million euro integration costsfor Cognis. Price increases in Dispersions and Pigments drove up sales and offset slightly lower volumes as well as adverse currency effects. In pigments, customers started to draw down their inventories, especially for high-value products. Higher raw material costs could only partly be passed on. As a consequence, earnings decreased. In Care Chemicals, sales went up sharply mainly due to the inclusion of Cognis. Price increases – especially for detergents and formulators as well as for superabsorbents – nearly compensated for higher raw materials costs. Earnings grew substantially. Sales in Nutrition and Health were sharply up, primarily as a result of the acquired Cognis businesses. We were able to significantly increase sales volumes, particularly in animal nutrition and pharma. Prices were overall stable to slightly improving, with vitamin prices still below last year, but showing an upward trend. Earnings increased.
  24. 24. Page 24BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
  25. 25. Page 25BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 The business environment in Paper Chemicals continues to be challenging. Sales declined as a result of lower volumes, partly attributable to weaker demand and our measures to streamline the product portfolio. Despite reduced fixed costs, earnings were lower than a year ago. In Performance Chemicals, price increases and the inclusion of Cognis lifted sales. Declining volumes and currency effects had a negative impact on sales growth. In plastic additives, volumes decreased as customers increasingly focused on reducing their stock levels. Fuel and lubricant solutions developed positively. Earnings were significantly higher. The previous year’s results included a one-time expense for valuation adjustments on receivables.
  26. 26. Page 26BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 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 3rd Quarter 2011 Analyst Conference Call 11
  27. 27. Page 27BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011[Chart 11: Cognis integration – Synergy target increased to€290 million]Let me give you a short update on the Cognis integration, which isin full swing. The biggest part of the structural integration will becompleted by the end of this year. The acquisition will be EPSaccretive by 2012. One-time integration costs will total about 300 million euros by 2013 – thereof two-thirds already incurred by the end of the third quarter. We increased our synergy target from 275 million to 290 million euros. We now expect 145 million euros each from cost and growth synergies to be fully achieved in 2013 and 2015, respectively. For cost synergies, we anticipate a run-rate of roughly 60 million euros by the end of this year, representing 40 percent of total cost synergies.
  28. 28. Page 28BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 Functional Solutions Strong performance of Catalysts Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €) Catalysts Construction 158 167 162 1,608 Chemicals 150 142 +19% 599 0% €2,907 100 +12% 50 33 Coatings 700 0 +9% Q3 Q4 Q1 Q2 Q3 2010 2011 Sales development Period Volumes Prices Portfolio Currencies Q3’11 vs. Q3’10 4% 11% 3% (6)% BASF 3rd Quarter 2011 Analyst Conference Call 12
  29. 29. Page 29BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011[Chart 12: Functional Solutions: Strong performance ofcatalysts]Sales in Functional Solutions increased, mainly driven bycontinued high demand from the automotive industry. EBIT beforespecial items improved primarily as a result of the strongperformance of Catalysts. In Catalysts, sales rose substantially with higher prices. Volumes were up due to higher demand, not only for mobile emissions catalysts, but also for chemical and refinery catalysts. At 674 million euros, the contribution from precious metals trading was at the level of the previous year. Earnings improved strongly. In Construction Chemicals, the business environment in North America and Southern Europe remains challenging. However, in the other parts of Europe as well as in Asia we saw a positive trend in demand. As we could not fully pass on higher raw material costs, earnings came in lower. In Coatings continuing high worldwide demand for automotive coatings as well as for decorative paints in Brazil drove up volumes and sales. We were able to almost pass on higher raw material costs to the market. Earnings were only slightly below the good level of last year.
  30. 30. Page 30BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 Agricultural Solutions On track for record year in sales and earnings Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €) 1.000 908 150 832 +9% 800 95 100 600 +44% 66 400 50 200 0 0 Q3 Q3 Q3 Q3 2010 2011 2010 2011 Sales development Period Volumes Prices Portfolio Currencies Q3’11 vs. Q3’10 12% 3% 0% (6)% BASF 3rd Quarter 2011 Analyst Conference Call 13
  31. 31. Page 31BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011[Chart 13: Agricultural Solutions: On track for a record year insales and earnings]Agricultural Solutions again had a very successful quarter. Salesincreased by 9 percent, currency-adjusted by 15 percent. We wereable to raise prices by 3 percent. As a result of strong demand in allregions, we increased volumes by 12 percent. In South America, we had a very good start to the growing season. Demand was especially strong for our new AgCelence® production system and for insecticides. Business with the Clearfield® herbicide tolerance technology expanded rapidly. In Europe, the fall season also began successfully. Demand for canola herbicides was strong in France and Eastern Europe. Weather-related factors in North America pushed the application period for fungicides into the third quarter, resulting in higher sales. In Asia, we again saw high growth. In India, fungicides excelled. Please also note that we just received registrations for our fungicide blockbuster candidate Xemium® in major European countries. We expect the first sales of Xemium® in France as early as the fourth quarter of this year. EBIT before special items jumped to 95 million euros. Due to our strong sales growth in the emerging markets of the Southern hemisphere, we have turned the third quarter into a steady earnings contributor: In this seasonal industry, we have been reporting positive quarterly EBIT since 2008.
  32. 32. Page 32BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
  33. 33. Page 33BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 As our year-to-date earnings are already above the full-year 2010 result, we are on track for a new record year in Agricultural Solutions – both in terms of sales and earnings.
  34. 34. Page 34BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 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 573 600 534 Non-compensable -39% oil taxes 224 €2,195 400 350 -1% 503 227 200 Natural Gas 272 225 Trading 123 70 1,661 0 +23% Q3 Q3 2010 2011 EBIT bSI Exploration & Production Net income EBIT bSI Natural Gas Trading Sales development Period Volumes Prices/Currencies Portfolio Q3’11 vs. Q3’10 (25)% 24% 0% BASF 3rd Quarter 2011 Analyst Conference Call 14
  35. 35. Page 35BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011[Chart 14: Oil & Gas: EBIT before special items on last year’slevel (adjusted for non-compensable oil taxes)]Sales in Oil & Gas were nearly stable despite the suspension of ouroil production in Libya. Higher oil and gas prices offset most of the25-percent volume decline. EBIT before special items wasconsiderably below last year. However, adjusted for non-compensable oil taxes, EBIT before special items matched theprevious year’s figure. In Exploration & Production, volumes fell sharply primarily due to the lack of oil production in Libya. As a consequence, sales and earnings declined despite substantially higher crude oil and natural gas prices. The average price for Brent was 113 U.S. dollars per barrel, compared with 77 U.S. dollars per barrel in the previous year. Sales in Natural Gas Trading rose strongly, primarily as a result of increased gas prices. Margins, however, were negatively impacted by the time-lag effect, the delayed adjustment of sales prices to purchase prices. This effect was compensated by a one- time gain from contract adjustments with customers. Earnings, therefore, were above last year’s level. As already mentioned by Kurt, we are again producing oil in Libya, on- and offshore. As we are still in the start-up phase of our onshore operations, our focus is currently on the stabilization of production at 20,000 barrels of oil per day and on lifting the first shipment.
  36. 36. Page 36BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
  37. 37. Page 37BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 Crude oil production from the offshore platform Al Jurf in the Mediterranean Sea, in which Wintershall has a 6.75 percent stake, began a few weeks ago. We expect an EBIT contribution from Libya of less than 100 million euros for the remainder of this year.
  38. 38. Page 38BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 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 (86) (67) Group corporate costs (58) (54) Currency results, hedges and other 104 104 valuation effects Styrenics, fertilizers, other businesses 82 77 Special items (33) (68) EBIT (54) (10) * Since January 1, 2011, Styrenics only includes the carved-out Styrenics businesses; the previous year’s values were adjusted accordingly. BASF 3rd Quarter 2011 Analyst Conference Call 15
  39. 39. Page 39BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011[Chart 15: Review of ‘Other’]In “Other”, sales grew primarily as a result of higher prices in theStyrenics business and raw material trading. A weaker U.S. dollarled to foreign currency losses in Q3. At the same time, we reporteda gain from the reversal of provisions for our long-term incentive(LTI) program, as a result of the lower share price. Special items in‘Other’ include a settlement payment in a class action lawsuit in theUnited States. Earnings were lower than last year.
  40. 40. Page 40BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 Operating cash flow remains strong Jan - Sep Jan - Sep Million € 2011 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 (1,727) (2,003) Dividends (2,378) (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 3rd Quarter 2011 Analyst Conference Call 16
  41. 41. Page 41BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011[Chart 16: Operating cash flow remains strong]Let me now briefly conclude with our cash flow.At 5 billion euros, we generated a very strong operating cash flow inthe first nine months of this year – thereof 2 billion euros comingfrom the third quarter. Net working capital rose by 554 million euroscompared to the same period last year mainly due to an increase ininventories – resulting from growing our business, higher rawmaterial costs and the build-up of natural gas volumes in ourstorage facilities.In the first nine months, we used 957 million euros in investingactivities. Capex amounted to 2.1 billion euros, considerably abovelast year, but still below depreciation.Free cash flow reached 2.9 billion euros in the first nine months ofthis year, thereof 1.2 billion euros generated in the third quarter.Since the end of 2010, we reduced net debt by 1.9 billion euros to11.6 billion euros end of September, thereof roughly 650 millioneuros reduction in Q3.Thank you for your attention. We are now happy to take yourquestions.
  42. 42. Page 42BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 BASF 3rd Quarter 2011 Analyst Conference Call 17 Macro-economic assumptions 2011 Previous forecast New forecast GDP 3%-4% 2.5%-3% Chemical production 5%-6% 4.5%-5% (excl. Pharma) Industrial production 5%-6% 4.5%-5% US$ / Euro 1.40 1.40 Oil price (US$ / bbl) 110 110 BASF 3rd Quarter 2011 Analyst Conference Call
  43. 43. Page 43BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011 Financial highlights Million € Q3 2011 Q3 2010 Δ% Q2 2011 Δ% Sales 17,607 15,781 +12% 18,461 (5)% changes due to - volumes (3)% - prices +14% - portfolio +5% - currencies (4)% 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 1,964 1,989 (1)% 2,237 (12)% adjusted for non-compensable oil taxes 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 3rd Quarter 2011 Analyst Conference Call 19 Cognis integration Generating €290 million of growth and cost synergies Synergies (million €) Growth synergies Providing joint customer base with access to broader portfolio 350 Increasing solution capabilities 300 Extending innovation capabilities 250 Leveraging regional set-up 145 200 Cost synergies 150 Realizing procurement cost 100 savings 145 Consolidating of administrative 50 structures 0 Improving production efficiency Consolidating IT landscape Cost synergies (by the end of 2013) Growth synergies (by the end of 2015) BASF 3rd Quarter 2011 Analyst Conference Call

×