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BASF Capital Market Story 05/2012

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  • 1. May 2012 We add value as one companyBASF Capital Market Story__May 2012
  • 2. Forward-looking statementsThis presentation includes forward-looking statements that are subject to risks anduncertainties, including those pertaining to the anticipated benefits to be realized from theproposals described herein. This presentation contains a number of forward-lookingstatements including, in particular, statements about future events, future financialperformance, plans, strategies, expectations, prospects, competitive environment,regulation and supply and demand. BASF has based these forward-looking statements onits views with respect to future events and financial performance. Actual financialperformance of the entities described herein could differ materially from that projected in theforward-looking statements due to the inherent uncertainty of estimates, forecasts andprojections, and financial performance may be better or worse than anticipated. Given theseuncertainties, readers should not put undue reliance on any forward-looking statements.Forward-looking statements represent estimates and assumptions only as of the date thatthey were made. The information contained in this presentation is subject to change withoutnotice 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 byapplicable laws and regulations.BASF Capital Market Story__May 2012 2
  • 3. BASF today – a well-balanced portfolioTotal sales 2011: €73.5 billionPercentage of sales 2011* Chemicals Plastics  Inorganics  Performance Polymers  Petrochemicals  Polyurethanes  Intermediates Performance Products Functional Solutions  Dispersions & Pigments  Catalysts  Performance Chemicals  Construction Chemicals  Care Chemicals  Coatings  Nutrition & Health  Paper Chemicals Agricultural Solutions Oil & Gas  Crop Protection  Exploration & Production and Natural Gas TradingBASF Capital Market Story__May 2012 * not depicted here: 9% of Group sales reported as ‚Other‘ 3
  • 4. Business review BASF Today Trends Business review Purpose and strategic principles Targetsgrowth targets BASF Strategic levers Strategic levers BASF Tomorrow – Board priorities Fit for 2020BASF Capital Market Story__May 2012 BASF Strategy: We create chemistry__November 2011 4
  • 5. BASF with solid start to 2012First quarter highlights Business performance Q1’12 vs. Q1’11  Sales €20.6 billion +6%  EBITDA €3.9 billion +16%  EBIT before special items €2.5 billion (7%)  EBIT €3.1 billion +22%  Net income €1.7 billion (28%)  EPS €1.88 (28%)  Adjusted EPS €1.57 (19%)  Sales increase primarily driven by higher prices, volumes stable  Demand in chemical activities did not match the exceptionally strong level of Q1 2011  Agricultural Solutions and Oil & Gas with strong start into the year  Divestiture of fertilizer activities completed, ~€650 million disposal gain booked as special itemBASF Capital Market Story__May 2012 5
  • 6. Continuous strong free cash flowgenerationFree cash flow*in billion € 3.9 3.7 3.3 3.5 3.2 3.2 2.8 2.6 2.5 0.9 -0.1 2002 2003 2004 2005 2006 2007 2008 2009** 2010 2011 Q1 2012 * Cash provided by operating activities less capex (in 2005 before CTA) ** 2009 adjusted for re-classification of settlement payments for currency derivativesBASF Capital Market Story__May 2012 6
  • 7. Delivering attractive shareholder returnsDividend per share Dividend paymentsin €  €2.50 dividend per share for 2.50 2011, dividend yield 4.6%* 2.20  15% average annual dividend 1.95 1.95 increase for 2002-2011 period 1.70 1.50  Dividend yield above 3% in any given year since 2002, 1.00 total payout €14.5 billion 0.85 0.70 0.70 Share buy-backs  Between 1999 & 2008, BASF bought back 28.65% of shares 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 outstanding, spent €9.9 billion Dividend yield*  AGM 2012 approved new share buy-back program; 3.9% 3.1% 3.2% 3.1% 4.1% 3.8% 7.0% 3.9% 3.7% 4.6% up to 10% of shares, 5 years* Dividend yield based on share price at year-endBASF Capital Market Story__May 2012 7
  • 8. Outlook 2012 confirmedOutlook 2012 BASF aims to exceed the record levels of sales and EBIT before SI achieved in 2011 In H1 2012, BASF will most likely not achieve the exceptionally high results of the comparable period in 2011. However, we aim to outperform H2 2011. In 2012, BASF will strive again to earn a high premium on cost of capitalAssumptions 2012 GDP: +2.7% Industrial production: +4.1% Chemical production: +4.1% US$ / Euro: 1.30 Oil price (US$ / bbl): 110BASF Capital Market Story__May 2012 8
  • 9. Business review BASF Today Trends Business review Purpose and strategic principles Targetsgrowth targets BASF Strategic levers Strategic levers BASF Tomorrow – Board priorities Fit for 2020BASF Capital Market Story__May 2012 BASF Strategy: We create chemistry__November 2011 9
  • 10. Demographic challenges set the stagefor the future of the chemical industryNine billion people in 2050 but only one earth Resources, Environment Food & Nutrition Quality of Life & Climate Chemistry as enablerBASF Capital Market Story__May 2012 10
  • 11. Key trends for the chemical industryGrowth Innovation gains Sustainability Competitivewill accelerate in importance as strategic driver landscape will change Industrial  Chemistry as  Use opportunities  Integrated chemical production > GDP enabler from sustainability companies remain cornerstone Chemical  Chemical  Increase resource production > GDP products replace efficiency  Emerging markets traditional players grow quickly Emerging markets materials  Renewables as will outgrow raw materials  Raw material players developed  Create innovative invest further markets sustainable  Stakeholder dialog downstream solutions Chemical industry remains an attractive growth industryBASF Capital Market Story__May 2012 11
  • 12. Striving for strong profitable growthMedium- and long-term sales targetSales*in billion € Acquisitions ~115 Innovations Investments Acquisitions ~85 Innovations 64 Investments 2010 Target Target 2015 2020 We will outperform chemical production by 2 percentage points p.a. * Potential impact of IFRS changes not includedBASF Capital Market Story__May 2012 12
  • 13. Striving for strong profitable growthAll regions will deliver profitable growthRegional sales targets 2020 (by location of customers)in billion € Europe North America ~4.5% p.a. ~53 ~5.5% p.a. ~22 33 13 20%* 19%* 2010 2020 52%* 46%* Asia Pacific 2010 2020 ~8% p.a. South America, Africa, Middle East ~29 ~8% p.a. 13 ~11 5 20%* 25%* 8%* 10%* 2010 2020 2010 2020 * Percentage of total salesBASF Capital Market Story__May 2012 13
  • 14. Striving for strong profitable growthDoubling EBITDA by 2020EBITDA*in billion € ~23 Acquisitions Op. Excellence Growth Acquisitions ~15 Op. Excellence 11.1 Growth 2010 Target Target 2015 2020 * Assumptions 2010-2020: Exchange rate $/€ Ø 1.40, Oil price Ø $110/bblBASF Capital Market Story__May 2012 14
  • 15. Business review BASF Today Business review Trends BASF growth targets Purpose and strategic principles Targets levers Strategic Strategic levers – Portfolio development – Market approach BASF Tomorrow – Board priorities – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence Fit for 2020BASF Capital Market Story__May 2012 BASF Strategy: We create chemistry__November 2011 15
  • 16. We expand from chemicals to chemistry 1960 1970 1980 1990 2000 2010 2020  Chemistry as key enabler New for functionalized materials molecules & solutions Improved  Deep understanding of applications customer value chains required Functionalized materials & solutions Batteries, membranes ...BASF Capital Market Story__May 2012 16
  • 17. Portfolio development towards moremarket driven and innovative businesses Acquisitions BASF Divestitures core business  Crop protection  Pharma Selected transactions  Engineering plastics 2001 − today  Fibers  Electronic chemicals  Printing systems  Custom synthesis  Polyolefins  Catalysts Strong partnerships  Polystyrene Americas  Construction chemicals  Agro generics  Water-based resins  Gazprom  Vitamins premix  Pigments  Monsanto  Fertilizers  Plastic additives  Petronas  Styrenics (transferred into Styrolution JV on Oct. 1, 2011)  Oil & Gas  Shell  Personal care & food  Sinopec  Total ~ €15bn sales ~ €10bn sales* * without StyrenicsBASF Capital Market Story__May 2012 17
  • 18. Moving downstream towards customerindustries Functionalized Materials Classical Chemicals Customized Products & Solutions First customer Chemical Industry industries*2001in % of ~ 50% ~ 50%sales**2010in % of ~ 40% ~ 60%sales**2020in % of ~30% ~ 70%sales*** Agriculture, Construction, Consumer Goods, Health & Nutrition, Electronics, Energy & Resources, Transportation** Sales excluding Oil & GasBASF Capital Market Story__May 2012 18
  • 19. Building on our cross-divisionalcustomer industry approach BASF sales by first Bubble Size: BASF divisional sales by first customer industry (2010)** customer industry* Consumer goods > 15 % Transportation > 15 % Construction < 10 % Energy & Resources < 10 % Inorganics Petro- Construction Dispersions Performance Poly- chemicals Chemicals & Pigments Chemicals urethanes Care Paper Performance Catalysts Intermediates Coatings Chemicals Polymers Chemicals* Excluding Oil & Gas and Other** Excluding Agricultural Solutions, Health & Nutrition, Oil & Gas and OtherBASF Capital Market Story__May 2012 19
  • 20. Combining cross-divisional technologycompetencies with customer know-how Smart forvision – Joint concept car of Daimler and BASFLightweight tridion cell Solar roof with transparent organic solar panels and OLED modulesHigh performance foams E-textilesInfrared-reflective film Multifunctional seatInfrared-reflectivecoating All-plastic wheelBASF Capital Market Story__May 2012 20
  • 21. Chemistry as an enabler for manycustomer industriesCustomerindustries Consumer Health & Energy & Transportation Construction Electronics Agriculture Goods Nutrition Resources Batteries for Heat Enzymes Medical Organic Plant Energy mobility management Electronics biotechnology management Lightweight Functional Rare earth Growth composites crop care metals Fields* recycling Heat management 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 21 BASF Capital Market Story__May 2012
  • 22. BASF growth field examples Batteries for mobility Water solutions Plant biotechnology Growth Field examples Business  Market size:  Market size:  Market size: potential >€20 billion ~€20 billion ~€11 billion gross trait value 2020  BASF sales potential:  BASF sales potential:  BASF sales potential: €1.8 billion >€500 million >€800 million gross trait sales before partner share Existing  New global business unit for  BASF expertise and portfolio  BASF as Trait Technology Partner Activities battery chemicals & materials (high-performance flocculants, of leading trait and seed  Electrode material plant being desalination and antifouling companies built in Ohio. Acquired Novolyte, chemicals….)  Yield & Stress collaboration with Merck’s electrolytes, Ovonik,  Acquired inge water-technologies Monsanto (corn, soy, cotton, equity position in Sion Power (membranes) to offer module canola and wheat)  R&D network with academia systems  Sites in US, China, Europe Targets  Become the leading supplier of  Leading supplier of innovative  Contribute to more efficient battery materials water solutions agriculture, healthier nutrition  Target customers: Battery  Forward integration into  Make Plant Biotechnology an producers membrane technologies operating division within the Agricultural Solutions segmentBASF Capital Market Story__May 2012 22
  • 23. Innovation will spur further growthTotal R&D expenditures 2011 Strong commitment to R&Din billion €  €1.6 billion R&D expendituresChemicals Corporate Research in 2011 (2010: €1.5 billion)8% 23%  ~10,100 employees in R&DPlastics  ~2,800 projects9% 24% Oil & Gas €1.6  Research Verbund:Performance 1%Products billion About 1,950 partnerships with21% 1% universities, start-ups and industry partnersFunctional AgriculturalSolutions Solutions12% 26% Increase R&D spending to €1.7 billion in 2012BASF Capital Market Story__May 2012 23
  • 24. €7 billion EBITDA targeted frominnovations in 2020Sales and EBITDA from innovationsin billion € ~30 Sales from innovations Sales from innovations launched within last 5 launched within last 10 years ~10 years ~7 EBITDA from innovations EBITDA from innovations launched within last 5 ~2.5 launched within last 10 years years 2015 2020BASF Capital Market Story__May 2012 24
  • 25. Investments will boost future organicgrowthFuture investmentsin € billlion 15-20 ~15 10.9 35-45% 30-40% ~20% 2006 – 2010 2011 – 2015 2016 – 2020 Total investments Thereof investments in emerging marketsBASF Capital Market Story__May 2012 25
  • 26. Major investment projects MDI plant Chongqing, Expansion Verbund site Expansion joint venture China Nanjing, China* activities in Malaysia Acrylic acid complex, Expansion oil & gas TDI plant Ludwigshafen, Brazil activities Germany * Memorandum of Understanding signedBASF Capital Market Story__May 2012 26
  • 27. Acquisitions will contribute to profitablegrowth in the futureWe want to acquire businesses which … Generate profitable growth  Provide a minimum return on above the industry average investment of 8% after tax Are innovation-driven  Are EPS accretive by year three at the latest Offer a special value proposition to customers Reduce earnings cyclicality Strategic acquisition criteria Financial acquisition criteriaBASF Capital Market Story__May 2012 27
  • 28. Strong focus on operational excellenceBASF Group 2002–2011 CAGR 2002 – 2011Index300 10 % EBITDA 10 % Sales250 4% Fixed costs200150100 50 2002 2005 2008 2011BASF Capital Market Story__May 2012 28
  • 29. New operational excellence programSTEP: Earnings contribution ~€1 billionAnnual earnings contribution NEXT Programin € million  Annual earnings contribution of €1 billion will be achieved in 2012  Achieved by end 2011: >€ 800 million3,000 STrategic Excellence Program ‘STEP’  Project timeline: 2012–20152,000  Measures to optimize processes and structures in all regions, e.g. − manufacturing, maintenance1,000 − supply chain − engineering, best-cost country sourcing  Fixed cost savings and margin 0 improvements 2012 2015  One-time costs & investments: ~€1 billion Former cost  Targeted annual earnings contribution: NEXT STEP saving programs ~€1 billion by end of 2015, thereof €100 million in 2012 (run-rate)BASF Capital Market Story__May 2012 29
  • 30. Business review BASF Today Trends Business review Purpose and strategic principles Targetsgrowth targets BASF Strategic levers Strategic levers BASF Tomorrow – Board priorities Fit for 2020BASF Capital Market Story__May 2012 BASF Strategy: We create chemistry__November 2011 30
  • 31. Key financial targets 2015 / 2020 Growth targets Profitability targets  Grow at least 2 percentage  Earn a premium on cost of points above chemical capital of at least €2.5 billion on production average p.a.  Sales ~€85 billion  EBITDA ~€15 billion 2015  EPS ~€7.50  Sales ~€115 billion  Double EBITDA to ~€23 billion 2020 (compared with 2010)BASF Capital Market Story__May 2012 31
  • 32. Appendix Business development Q1 2012BASF Capital Market Story__May 2012 BASF Strategy: We create chemistry__November 2011 32 32
  • 33. ChemicalsMargins improved over Q4 2011 thanks to higher pricesQ1’12 segment sales (million €) vs. Q1’11 EBIT before special items (million €)Intermediates Inorganics 354683 +0%-4% €3,484 +6% Petrochemicals 2,447 +11% 2011 2012Sales developmentPeriod Volumes Prices Portfolio CurrenciesQ1’12 vs. Q1’11  (4%)  (1%)  8%  3%BASF Capital Market Story__May 2012 33
  • 34. PlasticsTDI and MDI margins improved on higher prices vs. Q4 2011Q1’12 segment sales (million €) vs. Q1’11 EBIT before special items (million €)Polyurethanes1,409-5% €2,678 -4% Performance Polymers 1,269 -3% 2011 2012Sales developmentPeriod Volumes Prices Portfolio CurrenciesQ1’12 vs. Q1’11  (9%)  2%  1%  2%BASF Capital Market Story__May 2012 34
  • 35. Performance ProductsSolid demand but below exceptionally high level of Q1 2011Q1’12 segment sales (million €) vs. Q1’11 EBIT before special items (million €)Care Chemicals Performance1,283 Chemicals-7% 900 +1%Nutrition €3,999& Health +0%476+1% DispersionsPaper Chemicals & Pigments410 930+4% +10% 2011 2012Sales developmentPeriod Volumes Prices Portfolio CurrenciesQ1’12 vs. Q1’11  (5%)  3% 0%  2%BASF Capital Market Story__May 2012 35
  • 36. Functional SolutionsGood performance driven by high demand from automotiveQ1’12 segment sales (million €) vs. Q1’11 EBIT before special items (million €)Catalysts Construction1,630 Chemicals-3% 502 +7% €2,845 +1% Coatings 713 +6% 2011 2012Sales developmentPeriod Volumes Prices Portfolio CurrenciesQ1’12 vs. Q1’11  (4%)  (1%)  4%  2%BASF Capital Market Story__May 2012 36
  • 37. Agricultural Solutions Excellent start into the year Q1’12 segment sales (million €) vs. Q1’11 EBIT before special items (million €) 1,327 419 1,230 400 3431,000 200 500 0 0 Q1 Q1 Q1 Q1 2011 2012 2011 2012 Sales development Period Volumes Prices Portfolio Currencies Q1’12 vs. Q1’11  3%  3% 0%  2% BASF Capital Market Story__May 2012 37
  • 38. Oil & GasHigher volumes and prices boosted sales and earningsQ1’12 segment sales (million €) vs. Q1’11 EBIT bSI/Net income (million €)Exploration & 1,157 1,200Production1,336 1,000+25% 800 744 €4,975 600 955 +44% 400 626 Natural Gas 200 416 306 Trading 118 202 0 3,639 Q1/2011 Q1/2012 +52% Exploration & Production Non compensable oil taxes (Q1 2011: €280 million; Q1 2012: €451 million) Natural Gas Trading Net incomeSales developmentPeriod Volumes Prices/Currencies PortfolioQ1’12 vs. Q1’11  22%  23%  (1%)BASF Capital Market Story__May 2012 38
  • 39. BASF Capital Market Story__May 2012 39

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