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BASF Catalyst Division: Driving accelerated growth

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  • 1. BASF’s Catalysts Division: Driving Accelerated Growth Frank Bozich President Catalysts Division September 5, 2012BASF Investor Day Automotive September 5, 2012 Catalysts 1
  • 2. Catalysts – a strategic fit for BASFBASF Group sales 2011 Functional Solutions Performance Products 15% 21% Catalysts 9% Agricultural Solutions Other 6% 9% €73.5 billion Oil & Gas 16% Plastics Chemicals 15% 18%BASF Investor Day Automotive September 5, 2012 Catalysts 2
  • 3. 1 | BASF a market leader in catalysts 2 | Strategy for growth in automotive 3 | Emerging opportunity in Battery MaterialsBASF Investor Day Automotive September 5, 2012 Catalysts 3
  • 4. Global megatrends drive catalysts demand Air quality Process efficiency Energy efficiency Market expansionTightening regulations Higher yields Increasing energy Evolving market Mobile emissions Shift in desired costs dynamics regulations industrial output Efficient use of crude Accelerated shift to Fuel & environmental Cleaner and more oil, natural gas, coal BRIC markets regulations efficient use of raw and feedstock Continually growing material feedstock Raw material change industrial capacities Innovation is the key to success in the catalysts market; We create chemistry for a sustainable futureBASF Investor Day Automotive September 5, 2012 Catalysts 4
  • 5. Robust growth in catalyst solutions marketAnnual catalysts demand (in € billion) ~24.3 R CAG .a. p ~15.5 12.7 Precious metals demand 8% (w/o jewelry) Refinery 3.3 catalysts ~11.6 AGR 2 %C 3.1 5.6 Chemical R 6% CAG catalysts 11.6 Catalyst demand 4.5 (w/o PM) Mobile AGR 6.5 emissions 13% C 4.0 catalysts 2011 2011 2015 BASF strategic BASF strategic relevant market* (w/o PM) relevant marketData source: BASF internal data *Strategic relevant market (w/o PM) includes mobile emissions catalysts, chemical catalysts and refinery catalystsBASF Investor Day Automotive September 5, 2012 Catalysts 5
  • 6. BASF – The # 1 global catalysts solutions providerBASF Investor Day Automotive September 5, 2012 Catalysts 6
  • 7. BASF has strongest portfolio in theindustry – catalysts, materials, services Mobile Emissions Chemical Refinery Battery Catalysts Catalysts Catalysts Materials Emissions-control Chemical and FCC* catalysts Current and next-gen catalysts for cars, polyolefin catalysts and additives battery materials trucks, motorcycles plus adsorbents for oil refining development Precious & Base Metal New Business Services Development Supports precious metal-based Creates new “white space” catalyst businesses with full-loop business ventures in areas distribution, financial services for such as energy storage, clean Platinum Group Metals (PGMs) air, recycling, catalytic coatings* FCC - Fluid catalytic cracking catalystsBASF Investor Day Automotive September 5, 2012 Catalysts 7
  • 8. BASF – leading position in globalcatalysts market Product group Global positioning* Regional strength Mobile Emissions #1 North America #1 Catalysts Europe #2 South America #2 Japan and Korea #1 China #1 India #1 Chemical Catalysts #1 North America #1 Europe #1 Asia #2 Refinery Catalysts #3 North America #3 Europe #5 Asia #5* Overall position in strategic relevant markets excluding precious metals and substrates; includes BASF joint ventures in Japan and KoreaBASF Investor Day Automotive September 5, 2012 Catalysts 8
  • 9. Strong focus on Mobile EmissionsCatalystsTotal sales 2011 (in € million) Underlying sales 2011 (in € million) w/o “Precious & Base Metal Services” and precious metalsMobile Emissions Precious & Base Mobile Emissions RefineryCatalysts Metal Services Catalysts Catalysts2,484 2,860 1,319 415 €6.4* €2.4* billion billionChemical Refinery ChemicalCatalysts Catalysts Catalysts566 415 566* Including €55 million in other salesBASF Investor Day Automotive September 5, 2012 Catalysts 9
  • 10. Balanced sales baseSales 2011 by region* Sales 2011 by industry*South America, Africa,Middle East North America Other Motor vehicles12% 34% 2% 56% €2.4 €2.4 billion billionEurope Asia Chemicals Refinery29% 25% 24% 18%* Excludes “Precious & Base Metal Services” and precious metalsBASF Investor Day Automotive September 5, 2012 Catalysts 10
  • 11. Global manufacturing and R&D footprint,with close customer proximity Netherlands United Kingdom Germany USA Italy Japan Spain Korea China Thailand India Brazil South Africa Manufacturing sites R&D sitesBASF Investor Day Automotive September 5, 2012 Catalysts 11
  • 12. Strong R&D platform Key facts Global R&D presence ~€131 million in catalysis De Meern, Netherlands Hannover, R&D spend in 2011 Nienburg, Germany Germany Focus on product Ludwigshafen, Germany innovation and aligning Union & Iselin, regional capabilities to Beachwood, New Jersey local market needs Ohio Huntsville, Tokyo, Japan (NE Chemcat)Pasadena, >650 catalyst experts Texas Alabama Seoul, Korea (Heesung) globally Shanghai, China Guilin, China Supported by 10,000 scientists in global Verbund R&D sitesBASF Investor Day Automotive September 5, 2012 Catalysts 12
  • 13. Sales and profitability development bybusinessUnderlying sales (in € billion) Sales of “Precious & Base Metal Services”w/o “Precious & Base Metal Services” (in € billion)and precious metalsSales (in € bn) EBITDA Indexed Sales (in € bn) EBITDA: avg. 3% . 2.9 2.4 2.5 2.5 2.4 1.8 1.8 1.6 1.2 1.4BASF Investor Day Automotive September 5, 2012 Catalysts 13
  • 14. 1 | BASF a market leader in catalysts 2 | Strategy for growth in automotive 3 | Emerging opportunity in Battery MaterialsBASF Investor Day Automotive September 5, 2012 Catalysts 14
  • 15. Growth drivers for Mobile EmissionsCatalysts Global tightening of environmental regulations – in established and emerging markets – driving heavy-duty diesel market CAGR of 22% through 2015 Accelerated shift of vehicle manufacturing to BRIC countries – Chinese automotive production will grow to 26 million units by 2015 which corresponds to 11% CAGR Ongoing powertrain changes, requiring continuous development of new catalytic solutionsBASF Investor Day Automotive September 5, 2012 Catalysts 15
  • 16. Emissions catalysts market – regulationremains primary demand driver Announced Regulations Future Regulations Phase in CA LEV III US Tier 3 USA US 2010 Global, 4a Global, 4b Euro 5 Euro 6 Euro 7 Europe Global, 4a Euro VI Global, 4b Euro VII Euro 4 Euro 5 Euro 5 Euro 6 Brazil Euro V Euro VI Euro 4 Euro 5 Euro 6 Russia Euro IV Euro V Euro VI Euro 4 Euro 5 Euro 6 India Euro IV Euro V Euro VI Euro 3 Euro 4 Euro 5 Euro 4 Euro 5 Euro 6 China Euro IV Euro V Euro 3 Euro 4 Euro 5 South Euro V Euro VI Euro VII Korea Japan Global, 4a Global, 4b Vietnam Euro 3 Euro 4 Thailand Euro 4 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Light Duty Heavy Duty MotorcycleBASF Investor Day Automotive September 5, 2012 Catalysts 16
  • 17. BASF – leading mobile emissions catalystsproviderMobile Emissions Catalysts SRM* (in € billion) BASF: # 1 in light-duty vehicles # 2 in heavy-duty diesel vehicles R 6.5 # 2 in motorcycles CAG p.a. % Heavy-duty 13 diesel a . p. 4.0 % Motorcycles 22 . p.a 1 5% p.a. 10% Light-duty* Strategic relevant market excluding precious metalsBASF Investor Day Automotive September 5, 2012 Catalysts 17
  • 18. What makes BASF the Mobile EmissionsCatalysts market leader? # 1 in Light-duty # 2 in Heavy-duty diesel # 2 in Motorcycles Key factors: Technology leadership – matching innovation focus with regulation maturity Proximity to the customer – local manufacturing, technical services and R&D presence, especially in emerging regions Greater access to Asia – strong position in Asia through joint ventures in Japan and Korea Focus on high growth market – heavy-duty diesel vehicles Leveraging BASF’s inroads – excellent customer relations in global automotive marketsBASF Investor Day Automotive September 5, 2012 Catalysts 18
  • 19. Technology leadershipProvider of choice for innovative technology solutions Lean Nitrogen Oxides Selective Catalytic Diesel Oxidation Trap (LNT) Reduction (SCR) on filter Catalyst (DOC)/LNT and SCR on filter Converts nitrogen oxides Controls nitrogen oxides Saves mass, space and (NOx) to nitrogen and particulate matter cost by combining four functions in just two High-quality and cost- Superior durability; components effective solution for NOx maintains performance emission control while saving systems Selected for Hyundai’s space and weight HED-7 concept car ~38% of Mobile Emission Catalysts sales in 2011 come from innovations developed over the last five yearsBASF Investor Day Automotive September 5, 2012 Catalysts 19
  • 20. Technology leadershipInnovation leader in environmental technologyGlobal emissions catalysts patent applications (2006 – Q1 2012)Number of patents BASF CompetitorsBASF Investor Day Automotive September 5, 2012 Catalysts 20
  • 21. Proximity to the customerLeveraging local presence and capabilities in ChinaA decade of progress in China Estimated annual sales of 25 million passenger cars in China by 2020 BASF is a market leader in China BASF has leading position among top 5 local OEMs >20 million catalysts manufactured at BASF catalysts site in Shanghai BASF catalysts site in Shanghai integrated Shanghai emissions catalysts and R&D hub since 2000 >€65 million invested in Shanghai-based operations to date Targeting €54 million in incremental Catalysts division investment in China through 2016 BASF catalysts site in Shanghai BASF catalysts site in ShanghaiBASF Investor Day Automotive September 5, 2012 Catalysts 21
  • 22. Proximity to the customerExpansions in high-growth mobile emissions catalysts regions Brazil growing at 9% CAGR 2011 – 15 #2 catalysts supplier Manufacturing capacity expanded at Indaiatuba, Brazil, production site (2008, 2010, 2011) India growing at 16% CAGR BASF catalysts site in Brazil BASF catalysts site in Brazil #1 catalysts supplier Manufacturing capacity expanded at Chennai, India, production site (2009, 2011) BASF invested ~€16 million to expand capacities in these high-growth regions since 2006 Targeting €42 million incremental investments in Brazil and India through 2016 BASF catalysts plant in India BASF catalysts plant in IndiaBASF Investor Day Automotive September 5, 2012 Catalysts 22
  • 23. Greater access to AsiaStrong position in Asia through joint venturesLocation Joint Established Ownership Joint ventures expand BASF’s venture stake Asian leadership: BASF and JV partners have Heesung leading ~30% mobile emissions Catalysts catalysts market share in Asia Corporation Korea 1983 BASF 50% BASF has ~50% share with Partner: Koo Family, Japanese and Korean OEMs, founder of LG Group e.g. Hyundai and Nissan Access to a high percentage of global transplant business with N. E. Chemcat leading OEMs Corporation Greater R&D capabilities and Japan Partner: 1963 BASF 50% collaboration Sumitomo Metal Mining Co., LtdBASF Investor Day Automotive September 5, 2012 Catalysts 23
  • 24. Focus on high-growth marketHeavy-duty diesel vehicles BASF’s current technologies and business Leading edge technologies for new on-road and off-road regulations Cost effective state-of-the art technologies for emerging markets On-road market: Significant new business already awarded to BASF Off-road market: Gold Certification status at Caterpillar – the #1 player in off-road Targets Increase market share in on-road market Secure leading share with top customers in emerging off-road marketBASF Investor Day Automotive September 5, 2012 Catalysts 24
  • 25. Strong relationship with all major globaland regional OEMsBASF Investor Day Automotive September 5, 2012 Catalysts 25
  • 26. We have won “majority of platform competitions over the 2008 – 2011 timeframe”BASF Investor Day Automotive September 5, 2012 Catalysts 26
  • 27. 1 | BASF a market leader in catalysts 2 | Strategy for growth in automotive 3 | Emerging opportunity in Battery MaterialsBASF Investor Day Automotive September 5, 2012 Catalysts 27
  • 28. ElectromobilityThe race to the future Batteries are the key enabling technology for future mobility Electromobility supports global sustainable transportation needs and reduced emissions targets The future of electromobility depends on batteries with higher energy density, greater power, lower cost Innovative solutions from the chemical industry will determine the future performance of batteries Battery materials such as cathodes and electrolytes are vital to performance, cost and safety of batteriesBASF Investor Day Automotive September 5, 2012 Catalysts 28
  • 29. All major powertrain visions rely on battery Electromobility will play a significant role in future automotive alternatives Conventional Honda CR-Z Ford Fusion Toyota Prius PHV Chevrolet Volt Nissan Leaf Plug-in Range Full Conventional Mild Hybrid Full Hybrid Hybrid Extender Electric 0.5 Kwh 2 Kwh 4 Kwh 16 Kwh 24 Kwh Combustion Fuel tank E-motor Battery Extender Chemistry is the key enablerBASF Investor Day Automotive September 5, 2012 Catalysts 29
  • 30. BASF – developing a leading position inbattery materials solutions BASF SRM* (cathodes and electrolytes): >€5 billion market potential by 2020 Battery Materials Activities: Developing advanced cathodes and electrolytes for lithium-ion batteries as well as next generation battery systems Collaborating with leading universities, institutes & industry partners Battery Materials Targets: Position BASF as a leading global solution provider for battery and cell manufacturers Leverage technology and business synergies, with strong cooperation from battery producers and OEMs Achieve sales of at least €500 million by 2020 BASF intends to become a leading player in the global battery materials market* Strategic relevant marketBASF Investor Day Automotive September 5, 2012 Catalysts 30
  • 31. Battery materials acquisitionsExtending our capabilities and technical strength Nickel-Metalhydride (NiMH) batteries Acquisition of Ovonic Battery Co. (Feb. 2012) Electrolyte technologies Acquisition of Merck’s electrolytes activities (April 2012) Electrolyte formulations for lithium-ion batteries Acquisition of Novolyte Technologies (April 2012) Lithium-sulfur batteries Investment of $50 million in Sion Power (Jan. 2012)BASF Investor Day Automotive September 5, 2012 Catalysts 31
  • 32. BASF: Investing & expandingTargeting a three-digit million Euro investment 2011-2016 BASF NCM production plant Elyria, Ohio Cathode Materials Investments in Elyria, Ohio; production start-up by end of 2012 Suitable for NCM* materials and next-generation HE-NCM* Lithium iron phosphate cathode technology Licensing agreement for production and sale BASF research laboratory, Ludwigshafen of advanced cathode material used in hybrid vehicles and grid storage batteries Electrolytes Extension of BASF’s business with high-purity electrolyte formulations Acquired global vinylene carbonate license from Mitsubishi Chemical * NCM: Nickel Cobalt Manganese, HE-NCM: High Energy Nickel Cobalt ManganeseBASF Investor Day Automotive September 5, 2012 Catalysts 32
  • 33. BASF’s Technology Roadmap –Battery materials technologies for today and tomorrowDriving range(in km) Gen2: Gen 3: Gen 4: Gen1: Current 2017 2022+Li-S*Li-ion HV**Li-ion** From Ni-MH to Lithium-SulfurNi-MH**** Li-S: Lithium-Sulfur, *** Ni-MH: Nickel-metal hydride** Li-ion: Lithium ion, Li-ion HV: Lithium high voltage Current activities focused on technology licensingBASF Investor Day Automotive September 5, 2012 Catalysts 33
  • 34. BASF’s Catalysts Division targets 2015Operational targets Extend our position as the global leader in catalysis Maintain our # 1 market position in light duty gasoline vehicles, particularly in emerging Asia Significantly increase our market share in heavy duty diesel vehicles Build on our industry-leading technology position Build a leadership position in global Battery Materials marketBASF Investor Day Automotive September 5, 2012 Catalysts 34
  • 35. BASF’s Catalysts Division targets 2015Financial targets Achieve total Catalysts division sales, ex. metals*, of at least €3.0 billion by 2015 (as disclosed in 2011) Earn a premium on cost of capital** by 2014* Excluding ‘Precious & Base Metal Services’ and precious metals** Excluding ‘Precious & Base Metal Services’, precious metals and battery materialsBASF Investor Day Automotive September 5, 2012 Catalysts 35
  • 36. BASF Investor Day Automotive September 5, 2012 Catalysts 36 36