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At the heart of the Verbund
INVESTOR DAY
Chemicals segment 2014
Kurt Bock
Chairman of the
Board of Executive
Directors
Way...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 2
Cautionary note regarding
forward-looking statements
...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 3
Why do we talk about Chemicals today?
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 4
Chemicals
28%
Chemicals
23%
2013: €74.0 billion* 2013...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 5
Chemicals in a nutshell (2013)
~1,500
~6,000customers...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 6
EBIT after cost of capital Chemicals
EBIT after cost ...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 7
Several events shaped the Chemicals
segment since 200...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 8
Butadiene extraction
Antwerp, Belgium
Ammonia and
gas...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 9
Agenda
Trends in the chemicals market
Chemicals segme...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 10
Current trends in the upstream chemical
industry
Glo...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 11
Real chemical production excluding pharma (World)*
i...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 12
Chemistry as an enabler: Global chemical
market grow...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 13Global growth 13
Sustainability as future growth
driv...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 14Global growth 14Sustainability Raw material change Co...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 15
Fossil feedstocks to remain backbone
Renewables prov...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 16
Crude oil and natural gas are the major
raw material...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 17
.
Raw materials landscape is diversifying
based on r...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 18
Increasing usage of alternative feedstock
in global ...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 19
.
Europe
 Ongoing restructuring of olefins and poly...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 20
Changes in the competitive environment
Oil & Gas
Com...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 21
 Engineering plastics
 Catalysts
 Construction ch...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 22
Operational and technology excellence
Commodity mark...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 23
Operational and technology excellence
Commodity mark...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 24
Agenda
Trends in the chemicals market
Chemicals segm...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 25
BASF’s Chemicals segment is a strong cash and
earnin...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 26
Sales to other BASF segments
Sales to 3rd parties
Ch...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 27
0
100
200
300
400
500
2001 2002 2003 2004 2005 2006*...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 28
Chemicals is a stable earnings
contributor to BASF G...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 29
2001 2002 2003 2004 2005 2006* 2007* 2008 2009 2010 ...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 30
Chemicals – Three distinct divisions,
one mission: C...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 31
Balanced portfolio of products for internal
supply a...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 32
Principles for internal supply driven and
merchant m...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 33
2004 2005 2007 2008 2012 20131999 2006 2010 20112000...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 34
BASF has leading positions in the
chemical markets
...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 35
Agenda
Trends in the chemicals market
Chemicals segm...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 36
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 37
We add value as one company
People
Verbund
Technolog...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 38
Raw
materials
Chemicals
Segment
Ammonia
Methanol
Hyd...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 39
Ludwigshafen – the role model
Verbund site
2,000buil...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 40
Chemicals global asset footprint:
Verbund and major ...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 41
Global reduction in carbon
emissions of 6.1 million ...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 42
Verbund simulator enables
 Optimized operations
 E...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 43
Philosophy of transfer pricing
 Safe and flexible s...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 44
Propylene
(Steam cracker)
Acrylic acid
Acrylic
dispe...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 45
Case study acrylic acid: Leveraging the
BASF Technol...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 46
Case study acrylic acid: Leading
technology strength...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 47
Natural
Gas
Methanol
Form-
aldehyde
1,4-
Butanediol
...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 48
Agenda
Trends in the chemicals market
Chemicals segm...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 49
Chemicals supplies key raw materials to
Performance ...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 50
Chemicals supplies key raw materials to
Functional M...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 51
Chemicals supplies key raw materials to
BASF Crop Pr...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 52
Merchant
Market
Value chains
of the
BASF
Verbund
 E...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 53
MDI sales to downstream
businesses
 Polyurethane sy...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 54
3rd Party salesCaptive demand
MDI
global
sales split...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 55
Acrylic acid sales to
downstream businesses
 Supera...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 56
Acrylic acid
global
sales split
2013
3rd Party sales...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 57
Caprolactam sales to
downstream businesses
 Enginee...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 58
Caprolactam
global
sales split
2015+
3rd party sales...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 59
Agenda
Trends in the chemicals market
Chemicals segm...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 60
High capex intensity
commands extraordinary
focus on...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 61
0%
2%
4%
6%
8%
10%
12%
14%
16%
0
50
100
150
200
250
...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 62
Modelling cost curve dynamics
Market demand
Marginal...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 63
Continuous process innovation
leads to best-in-class...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 64
 Leading single-train technology
 New TDI plant st...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 65
BASF caprolactam production
focused on captive deman...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 66
Sites with major announced investment projects
Camaҫ...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 67
Sites with major announced investment projects
Korla...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 68
.
Sites with major announced investment projects
Kor...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 69
Agenda
Trends in the chemicals market
Chemicals segm...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 70
Price development of oil / natural gas
Shale gas in ...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 71
North American shale gas will only have a
limited im...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 72
Natural Gas Liquids
 Ethane
 Propane
 Butane
► Cr...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 73
Converted Port Arthur
cracker with high feed
flexibi...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 74
Port Arthur cracker* has full feed flexibility
benef...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 75
Ammonia joint venture* enables low raw
materials cos...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 76
BASF is currently a net-purchaser of
propylene in No...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 77
Gas-to-propylene complex* covers
internal demand at ...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 78
 Cost position of BASF plants in North America will...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 79
Agenda
Trends in the chemicals market
Chemicals segm...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 80
 Chemicals enable growth of
downstream businesses
...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 81
BASF’s Chemicals segment is a strong cash and
earnin...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 82
Key figures to remember about BASF Chemicals:
► Grow...
BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 83
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BASF Investor Day Chemicals Segment 2014

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Keynote Speech at BASF Investor Day Chemicals Segment 2014 by Kurt Bock and Wayne T. Smith.
More on the investor day at http://on.basf.com/1jxFrWf

Published in: Investor Relations, Business

Transcript of "BASF Investor Day Chemicals Segment 2014"

  1. 1. At the heart of the Verbund INVESTOR DAY Chemicals segment 2014 Kurt Bock Chairman of the Board of Executive Directors Wayne T. Smith Member of the Board of Executive Directors Investor Day Chemicals segment May 22, 2014
  2. 2. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 2 Cautionary note regarding forward-looking statements 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 forward-looking 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.
  3. 3. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 3 Why do we talk about Chemicals today?
  4. 4. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 4 Chemicals 28% Chemicals 23% 2013: €74.0 billion* 2013: €10.4 billion* Chemicals – strong contribution to BASF’s sales and profitability Functional Materials & Solutions 23% Performance Products 21% 2013 Sales* to 3rd parties EBITDA* Agricultural Solutions 7% Oil & Gas 20% Functional Materials & Solutions 15% Performance Products 19% 2013 Agricultural Solutions 13% Oil & Gas 30% * Segment share excluding Other: Sales: €4.7 billion (6% of sales); EBITDA: - €533 million (-5% of total EBITDA )
  5. 5. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 5 Chemicals in a nutshell (2013) ~1,500 ~6,000customers in all regionsVerbundsite Globalasset footprint Core of each €6.4 billion transfers to BASF downstream divisions €178million R&D expenses €17 billion sales to third parties BASF Investor Day Chemicals segment – Key note speech, May 22, 2014 BASF Corp., Geismar, US 5 products* €3.0 billion EBITDA * without electronic materials
  6. 6. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 6 EBIT after cost of capital Chemicals EBIT after cost of capital* in million € restated Chemicals earned a premium on cost of capital even during the 2008 / 2009 recession*** * EBIT after cost of capital concept was introduced in 2004. *** The former Plastics segment also earned a premium on cost of capital during the 2008 / 2009 recession. Chemicals is a strong earnings contributor 0 500 1.000 1.500 2.000 2004 2005 2006** 2007** 2008 2009 2010 2011 2012 2013 2,000 1,500 1,000 500 0 ** Without Catalysts (now part of Functional Materials & Solutions segment)
  7. 7. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 7 Several events shaped the Chemicals segment since 2008 Major events shaping Chemicals Last Chemicals Investor Day 2008 / 2009 recession Expansion BASF-YPC, Nanjing New segment structure Feedflex, Port Arthur Acrylic acid to Petrochemicals Major shale gas- based investment projects* Focus on organic growth capex 2009 2010 20122008 20132011 2014 * Under evaluation
  8. 8. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 8 Butadiene extraction Antwerp, Belgium Ammonia and gas-to-propylene in USA* Expansion Verbund site Nanjing, China MDI plant Chongqing, China Acrylic acid complex Camacari, Brazil TDI plant Ludwigshafen, Germany Chemicals: Strengthen our Verbund and secure growth Major Chemicals investment projects * Under evaluation
  9. 9. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 9 Agenda Trends in the chemicals market Chemicals segment within BASF Chemicals: At the core of the Verbund Chemicals support growth of BASF Shale Gas – An opportunity Chemicals 2020 Capital expenditures drive profit growth Ludwigshafen Antwerp
  10. 10. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 10 Current trends in the upstream chemical industry Global growth Sustainability Raw material change Dynamic competitive environment
  11. 11. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 11 Real chemical production excluding pharma (World)* in trillion US$ 10% CAGR 2010-2020 World: 4.3% (GDP: 3%) Emerging Markets: 6.7% (GDP: 5%) Source: BASF * Revised statistics with new baseline, recognizing larger market demand in Asia; ** BASF not focused on base-products, e.g. PVC, polyolefines, fertilizers Chemical production continues to outpace GDP, especially in emerging markets 2020 4.7 trillion 2013 3.4 trillion 2010 3.1 trillion 57% Asia Pacific Rest of WorldEurope North America 9% 18% 16% 50% 10% 22% 18% 45% 20% 25% Global growth 11Sustainability Raw material change Competitive environment Strategically relevant market of BASF’s Chemicals segment 2013: ~US$550 billion**
  12. 12. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 12 Chemistry as an enabler: Global chemical market growth expected to accelerate Global growth 12Sustainability Raw material change  Chemistry as an enabler  Major growth drivers are – Increasing standards of living in emerging markets – Substitution of established materials – New chemistry-based solutions Competitive environment Diapers in emerging markets Functional textiles High growth examples Coldchains in emerging markets Lightweight materials in cars
  13. 13. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 13Global growth 13 Sustainability as future growth driver  Enable customers to develop more sustainable solutions Balancing of sustainability dimensions is key  Governments set regulatory framework Key aspects for Chemicals  Downstream growth  Energy consumption  Emissions, climate protection  Occupational health and safety  Renewable resources Sustainable chemicals production balances ecology, economy and society Operationa l Excellence Society EconomyEcology Sustain- ability Sustainability Raw material change Competitive environment
  14. 14. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 14Global growth 14Sustainability Raw material change Competitive environment Sustainable solutions provide major business opportunities for BASF Example: Solar power Heat storage systems using sodium nitrate Specialty sealants made from Oppanol® Insulation materials made from Basotect® Plastics protected with light stabilizers and UV filters Mounting systems made from polyamide Chemistry as an enabler  Sustainability enables and supports long-term business success Chemicals segment benefits from sustainability aspects, driving demand for chemicals  e.g. sodium nitrate  e.g. polyamide  e.g. precursors for Basotect®  e.g. precursors for Oppanol®
  15. 15. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 15 Fossil feedstocks to remain backbone Renewables provide new opportunities  “Renewed” availability, high public acceptance  New technologies, processes emerge rapidly  Potentially higher total costs ► Opportunities can be captured by differentiation versus petrochemicals: Better economics and / or better properties Renewables based chemical process Global growth 15Sustainability Raw material change Competitive environment  Processes optimized for efficiency and economics  Further upside: Incremental improvements and step-changing / breakthrough innovation ► Fossil feedstock will remain backbone of chemical industry in mid-term future Fossil feedstock based chemical process
  16. 16. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 16 Crude oil and natural gas are the major raw materials for chemicals Natural gas Ethylene (C2) Propylene (C3) C4-Olefins Aromatics (C6, C7) Methanol (C1) Acetylene (C1*) Ammonia (C1*) Downstream Chemicals Oil Global growth 16Sustainability Raw material change * C1-derived Competitive environment
  17. 17. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 17 . Raw materials landscape is diversifying based on regional differences Shale gas Naphtha Renewables Naphtha Abundant coal Naphtha Global growth 17Sustainability Raw material change Competitive environment Ethane, natural gas Mixed feed
  18. 18. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 18 Increasing usage of alternative feedstock in global chemicals market Coal Renewables Ethylene Propylene C4 Olefins Aromatics Methanol Ammonia Downstream Chemicals Oil Intermediates Global growth 18Sustainability Raw material change Competitive environment Natural gas Shale gas Acetylene
  19. 19. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 19 . Europe  Ongoing restructuring of olefins and polyolefins industry  Focus on innovative chemistry  Integrated production setups will remain competitive North America  New capacities based on shale gas  Export of NGLs*/ LPG** and base-products China  Strong domestic demand will drive capacity additions  Abundant coal reserves drive coal-to-chemicals investments  Expected to remain a net importer of many basic chemicals Middle East  Diminishing feedstock advantage due to shale gas (USA) and coal (China)  Export hub for raw materials and base-products South America  Focus on renewable resources  Will remain net importer of chemicals from the U.S. Raw material supply and integration concepts will define competitiveness * Natural Gas Liquids ** Liquefied Petroleum Gas Global growth 19Sustainability Raw material change Competitive environment
  20. 20. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 20 Changes in the competitive environment Oil & Gas Commodities Specialties Pharma Crop protection Plant-Biotech Petro– chemicals 1980 Dow BASF DuPont Shell Hoechst 2013 Sanofi Shell Celanese Conoco Invista DuPont AstraZeneca Sinopec Rhône Poulenc BASF Ineos Formosa Bayer Dow Solvay ICI Sabic Clariant Reliance Global growth 20Sustainability Raw material change Bayer Competitive environment Lanxess Syngenta AkzoNobel Lyondell Basell
  21. 21. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 21  Engineering plastics  Catalysts  Construction chemicals  Water-based resins  Pigments, plastic additives  Oil & Gas  Personal care & food  Battery materials  Functional crop care  Omega-3 fatty acids  Enzymes  … BASF core business Strong partnerships  Gazprom  Monsanto  Petronas  Shell  Sinopec  Statoil  Total Selected transactions 2001 − today Acquisitions ~ €16 billion sales Divestitures  Pharma  Agro generics  Vitamins premix  Printing systems  Construction equipment, wall & flooring systems  Gas Trading*  … Global growth 21Sustainability Raw material change Competitive environment * Closing expected by mid of 2014 ~ €22 billion sales ** Transferred into Styrolution JV on Oct. 1, 2011  Fibers  Polyolefins  Fertilizers  Styrenics** Chemicals divestitures Active portfolio management at BASF
  22. 22. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 22 Operational and technology excellence Commodity marketing Reliable, low cost logistics Complexity reduction Scale, Verbund integration, competitive raw material supply ClassicalChemicals Upstream and downstream business models clearly differentiated at BASF Global growth 22Sustainability Raw material change Competitive environment € $
  23. 23. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 23 Operational and technology excellence Commodity marketing Reliable, low cost logistics Complexity reduction Scale, Verbund integration, competitive raw material supply ClassicalChemicals Global growth 23Sustainability Raw material change Customer proximity and application know-how Tailored offerings for market and industries Industry and application experts Customized services and solutions Deep understanding of customer needs FunctionalizedMaterials&Solutions Competitive environment Upstream and downstream business models clearly differentiated at BASF € $
  24. 24. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 24 Agenda Trends in the chemicals market Chemicals segment within BASF Chemicals: At the core of the Verbund Chemicals support growth of BASF Shale Gas – An opportunity Chemicals 2020 Capital expenditures drive profit growth Freeport Geismar
  25. 25. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 25 BASF’s Chemicals segment is a strong cash and earnings contributor We will ► continue to strengthen the Verbund, create synergies and add value ► maintain our high level of profitability through process innovations and stringent cost management ► grow externally with the chemicals market Our strategic focus is to enable and support growth of ► BASF’s downstream segments ► BASF in emerging markets Shale gas is an opportunity for BASF
  26. 26. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 26 Sales to other BASF segments Sales to 3rd parties Chemicals segment grows by selling into the BASF Verbund and to the market * IFRS 10 & 11 impact: -€1.3Bn; Impact of new segment structure: +€5.3Bn 0 5.000 10.000 15.000 20.000 25.000 2001 2002 2003 2004 2005 2006** 2007** 2008 2009 2010 2011 2012 restated 2013 25,000 20,000 15,000 10,000 5,000 0 Sales Chemicals in million € CAGR 2001-2013 11% 5% Volume CAGR 2001-2013 ** Without Catalysts (now part of Functional Materials & Solutions segment)
  27. 27. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 27 0 100 200 300 400 500 2001 2002 2003 2004 2005 2006* 2007* 2008 2009 2010 2011 2012 restated 2013 EBITDA margin Chemicals / oil price Index 2001 = 100 Chemicals with stable profitability, little correlation to oil price EBITDA margin Chemicals (as % of sales) Oil price * Without Catalysts (now part of Functional Materials & Solutions segment)
  28. 28. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 28 Chemicals is a stable earnings contributor to BASF Group EBITDA BASF Group in million € 0 2.000 4.000 6.000 8.000 10.000 12.000 14.000 2001 2002 2003 2004 2005 2006* 2007* 2008 2009 2010 2011 2012 restated 2013 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 thereof EBITDA Chemicals EBITDA BASF Group * Without Catalysts (now part of Functional Materials & Solutions segment)
  29. 29. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 29 2001 2002 2003 2004 2005 2006* 2007* 2008 2009 2010 2011 2012 restated 2013 Chemicals generates strong and steady free cash flow Cash flow Chemicals in million € * Without Catalysts (now part of Functional Materials & Solutions segment) Free cash flow (EBITDA – additions to plant, property & equipment) Since 2001, Chemicals contributed ~€17 billion of free cash flow to BASF Group Operating cash flow (EBITDA) 2,000 3,000 4,000 1,000 -1,000 0
  30. 30. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 30 Chemicals – Three distinct divisions, one mission: Create value  Supply of cracker products and basic chemicals  Focus on C3 and C4 value chain  Supply high-volume monomers and inorganic chemicals  Focus on aromatics and ammonia based value chains  Supply of broad portfolio of intermediates for the chemicals industry  Focus on C1 value chain Intermediates Monomers Petrochemicals Stefano Pigozzi Sanjeev Gandhi Rainer Diercks
  31. 31. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 31 Balanced portfolio of products for internal supply and merchant market sales  Industrial gases  Acetylene  Purified ethylene oxide  Formaldehyde  Ammonia  Cracker products  Butanediol  Caprolactam  PBT** base resin  Acrylic acid  MDI Internal supply driven  TDI  PolyTHF®  Amines  Higher alcohols  Polyalcohols and specialties  Formic acid  Inorganic salts  Glues and resins Merchant market driven ** Polybutylene terephthalate captive use only
  32. 32. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 32 Principles for internal supply driven and merchant market driven products  Reliable supply of key raw materials  Access to chemicals not available in the market Internal supply driven  Capture value of attractive chemicals markets  Top-3 position in target market Merchant market driven Economic advantages through superior technologies and Verbund
  33. 33. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 33 2004 2005 2007 2008 2012 20131999 2006 2010 20112000 Continuous development of Chemicals global asset footprint PVC Polyolefins Minority share in ‘Williams cracker’ Styrenics Acrylonitrile, Seal Sands Divestitures / Joint ventures BASF Petronas, Kuantan BASF-YPC, Nanjing Major investments Polyamide fibers Steam cracker, Port Arthur Isocyanates, China Expansion BASF-YPC, Nanjing BASF Specialty Chemicals, Nanjing Feedflex, Port Arthur Expansion Antwerp cracker Fertilizers
  34. 34. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 34 BASF has leading positions in the chemical markets  MDI, TDI  Glacial acrylic acid  Acrylic esters  Polyamide film  Oxo alcohols  Polyalcohols No.1 globally* Leading regional market position  Inorganic salts  Glues and impregnating resins  Plasticizers  Solvents  Standard amines  Butanediol and derivatives  Purified ethylene oxide  Specialty amines  Carboxylic acids (~50% of sales of BASF Chemicals) BASF Investor Day Chemicals segment – Key note speech, May 22, 2014 BASF SE, Antwerp, Belgium 34* 2013
  35. 35. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 35 Agenda Trends in the chemicals market Chemicals segment within BASF Chemicals: At the core of the Verbund Chemicals support growth of BASF Shale Gas – An opportunity Chemicals 2020 Capital expenditures drive profit growth Ludwigshafen Antwerp
  36. 36. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 36
  37. 37. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 37 We add value as one company People Verbund Technology Verbund Production Verbund Customer VerbundBASF
  38. 38. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 38 Raw materials Chemicals Segment Ammonia Methanol Hydrogen Chlorine Sulfur dioxide Sulfuric acid Caustic soda PSA Carbon dioxide Carbon oxide C4-cut Propylene Ethylene Acetylene Oxygen AH-salts Adipic acid Caprolactam Hydrosulfites Na-bisulfites Na-sulfites Na-nitrite, -nitrate Propyleneglycoles Melamine Carbon dioxide liqu. Butanoles Butyraldehydes Acrylic acid ester Tetrahydrofuran Butyrolactone Polyisobutene SB-copolymer Glycole ethers C13-C15-alcohols Diethanol amine Ethanol amine Propanole Polyamides Lutinol E Blankites Rongales Rongalites Separoles Urea-formaldehyde- condensation products Carbon dioxide solid Butylacetate Dispersions Hexanediol Neopentylglykol PBT Trilon-brands Ethylenediamine POM PolyTHF® N-Methylpyrrolidone Pyrrolidone Plurafac-brands Keropur Plasticizers Lutensol-brands Glyoxal Polymin Ethylenimin Propionic acid Air Natural gas Naphtha Phosphate Potassium chloride Vacuum residue Salt Sulfur Benzene Cyclohexane o-Xylene Ethyl benzene Styrene Polystyrene styropor Fertilizers Hydrogen cyanide Acrylic acid Dichlorethan Nitric acid Formaldehyde Butanediol Oxo alcohols Ethylene oxide Propionic aldehyde Vinylethers Nitrogen oxide Methyl amines Hydroxylamine Oxo C4 Formic acid Acetic acid Urea Propylene oxid Na-salts of Sulfuric acid Textil chemicals Ludwigshafen Ethylhexanol Toluene TDI Lupranat brands Verbund is in our DNA and hard to copy!
  39. 39. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 39 Ludwigshafen – the role model Verbund site 2,000buildings 250 production assets** km pipeline2,800 km rail tracks 2,100trucks per day 230 barges per day ~400 ~20 rail cars per day * Including production area Friesenheimer Insel; ** Organized in 120 production plants km² *
  40. 40. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 40 Chemicals global asset footprint: Verbund and major production sites . Kuantan Nanjing Antwerp Ludwigshafen Freeport Geismar Port Arthur Shanghai Yeosu / Ulsan Production site Verbund site Chongqing Schwarzheide Camaҫari
  41. 41. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 41 Global reduction in carbon emissions of 6.1 million metric tons/a and reduction of waste Example Ludwigshafen: avoidance of 7 million metric tons of freight/a = 280,000 fewer truckloads Shared use of on-site facilities: fire department, security, waste water treatment and analytics Verbund generates >€1 billion p.a. global cost savings*, supports sustainability * Savings include only tangible synergies. Additional (intangible) benefits and retained profits are not included.
  42. 42. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 42 Verbund simulator enables  Optimized operations  Efficient utilization of assets  Management of value chains Verbund proved flexible in 2008 / 2009 crisis  Capacity reductions  Flexible placement of people  Retained profitability  Flying start out of crisis Verbund means efficiency and also flexibility – if steered intelligently Verbund does allow for portfolio changes  e.g. fertilizers, styrenics Demand forecast along BASF value chains Optimized production plan management
  43. 43. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 43 Philosophy of transfer pricing  Safe and flexible supply at competitive prices  Transfer prices linked to market prices  No cross-subsidizing  Value driven management in all steps of the value chain Additional Verbund benefits  Flexible planning along value chains  High security of supply, low logistics costs, no sales and sourcing costs  Joint quality management  Joint engineering and process development  Cross-functional knowledge exchange  Additional capacity at Verbund sites dilutes fixed costs Chemicals is at the heart of the BASF Production Verbund Additional Verbund benefits Transfer pricing Downstream divisions Chemicals segment
  44. 44. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 44 Propylene (Steam cracker) Acrylic acid Acrylic dispersions Surfactants Acrylic esters Acrylic resins Superabsorbent polymers Chemicals Performance Products Case study acrylic acid: Value chain contributes cash flow of approx. €1 billion* Each value chain step represents a potential merchant market outlet * 2012
  45. 45. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 45 Case study acrylic acid: Leveraging the BASF Technology Verbund Focused R&D to continuously improve acrylic acid process  Highly selective and efficient process catalysts  Proprietary technology for new process – Higher yield – Lower energy consumption – Lower investment costs In addition, four radically new processes being investigated in research – One based on renewable raw materials
  46. 46. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 46 Case study acrylic acid: Leading technology strengthens profitability Continuous productivity improvements  Smart production increase by run-time extension and higher throughput  All production sites contribute to innovation and improvement ideas  Quick transfer around the world ensured Source: BASF estimate Acrylic acid production technology benchmark Industry average costs = 100; normalized BASF with best-in-class acrylic acid process 80 85 90 95 100 BASF new process BASF classic process Industry average
  47. 47. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 47 Natural Gas Methanol Form- aldehyde 1,4- Butanediol Tetra- hydrofuran PolyTHF® POM*** Glues & Resins gamma- Butyro- lactone N-Methyl- pyrrolidone Pyrroli- dones PBT** Engineering plastics Thermo- plastic PU Personal care products Case study acetylene value chain: cash flow of approx. €500 million* Chemicals Acetylene * 2012 ** Polybutylene terephthalate *** Polyoxymethylene Downstream units Other specialties
  48. 48. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 48 Agenda Trends in the chemicals market Chemicals segment within BASF Chemicals: At the core of the Verbund Chemicals support growth of BASF Shale Gas – An opportunity Chemicals 2020 Capital expenditures drive profit growth Kuantan Nanjing
  49. 49. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 49 Chemicals supplies key raw materials to Performance Products Dispersions & Pigments  Acrylic acid  Acrylates  Butadiene  Hydrochloric acid Nutrition & Health  Isobutene  Diethylketone  Formic acid  Propionic acid Performance Chemicals  Isobutene  Mono ethylene glycol  Acrylates  Amines  Kerocom PIBA Paper Chemicals  Acrylates  Acrylic acid  Butadiene  Sodium hydroxide  Acrylic acid  Ethylene oxide  Propylene oxide  Vinylpyrrolidone  Specialty Amines Care Chemicals Performance Products
  50. 50. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 50 Chemicals supplies key raw materials to Functional Materials & Solutions Construction Chemicals  Acrylic acid  Acrylates  Plasticizers  Vinylethers  TDI Chemicals Segment  Process catalysts Coatings  Acrylates  Plasticizers  MDI  Hexanediol Catalysts  Solvents  Zeolite templates  MDI & TDI  Polyamides  Mono ethylene glycol  PBT  PolyTHF®  Propylene oxide Performance Materials Functional Materials & Solutions
  51. 51. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 51 Chemicals supplies key raw materials to BASF Crop Protection Crop Protection  Solvents  Specialty amines  Ethylene glycol  Nitrotoluene  Alcoholates Agricultural Solutions
  52. 52. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 52 Merchant Market Value chains of the BASF Verbund  Ethylene  Propylene  Butadiene Close to entire cracker output in Ludwigshafen is used within Verbund <5%  Raffinates  Aromatics  … Cracker products Ludwigshafen >95% BASF-YPC Nanjing supply for captive demand: 2006: 60% 2014: 75% BASF SE, Ludwigshafen, GermanyBASF Investor Day Chemicals segment – Key note speech, May 22, 2014 52
  53. 53. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 53 MDI sales to downstream businesses  Polyurethane system houses  Thermoplastic polyurethanes High captive share of MDI for BASF’s polyurethane systems MDI sales split Europe & USA 2013 Global production network (capacity: 1,340 kt)  Antwerp  Geismar  Caojing  Yeosu (Korea) 3rd Party salesCaptive demand
  54. 54. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 54 3rd Party salesCaptive demand MDI global sales split 2013 High captive share of MDI for BASF’s polyurethane systems MDI sales to downstream businesses  Polyurethane system houses  Thermoplastic polyurethanes Global production network (capacity: 1,340 kt)  Antwerp  Geismar  Caojing  Yeosu (Korea)
  55. 55. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 55 Acrylic acid sales to downstream businesses  Superabsorbent polymers  Dispersions  Esters  Resins  Surfactants High captive share of acrylic acid for BASF’s SAP* and dispersions Acrylic acid sales split Europe & USA 2013 Global production network (capacity: 1,350 kt)  Ludwigshafen  Antwerp  Freeport  Nanjing  Kuantan 3rd Party salesCaptive demand * Superabsorbent polymers
  56. 56. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 56 Acrylic acid global sales split 2013 3rd Party salesCaptive demand High captive share of acrylic acid for BASF’s SAP* and dispersions * Superabsorbent polymers Acrylic acid sales to downstream businesses  Superabsorbent polymers  Dispersions  Esters  Resins  Surfactants Global production network (capacity: 1,350 kt)  Ludwigshafen  Antwerp  Freeport  Nanjing  Kuantan
  57. 57. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 57 Caprolactam sales to downstream businesses  Engineering plastics  Polymers for packaging films  Monofilaments Growing captive share of caprolactam for BASF’s downstream polyamide polymers Caprolactam global sales split 2013 Operational excellence in existing plants (capacity: 800 kt)  Ludwigshafen  Antwerp  Freeport 3rd Party salesCaptive demand
  58. 58. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 58 Caprolactam global sales split 2015+ 3rd party salesCaptive demand Growing captive share of caprolactam for BASF’s downstream polyamide polymers Operational excellence in existing plants (capacity: 800 kt)  Ludwigshafen  Antwerp  Freeport Caprolactam sales to downstream businesses  Engineering plastics  Polymers for packaging films  Monofilaments
  59. 59. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 59 Agenda Trends in the chemicals market Chemicals segment within BASF Chemicals: At the core of the Verbund Chemicals support growth of BASF Shale Gas – An opportunity Chemicals 2020 Capital expenditures drive profit growth Freeport Geismar
  60. 60. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 60 High capex intensity commands extraordinary focus on capex allocation and project control  Extensive use of cash-cost benchmarking  Preparation of solid business cases for all projects ensures sound decision-making  Projects approved only if cost of capital is earned even at hypothetical marginal producer price level Capex Chemicals Capex budget 2014-2018 by segment Other 13% Chemicals* 33% Performance Products 15% € 20 billion Agricultural Solutions 7% Oil & Gas 20% Functional Materials & Solutions 12% * Including gas-to-propylene project U.S. Gulf Coast, TDI Ludwigshafen, MDI Chongqing, Isononanol Maoming
  61. 61. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 61 0% 2% 4% 6% 8% 10% 12% 14% 16% 0 50 100 150 200 250 300 350 400 2000 2001 2002 2003 2004 2005 2006* 2007* 2008 2009 2010 2011 2012 2013 2014 2015 2016 restated Consolidated sales indexed (2000 = 100) Capex as % of sales Capex focused on organic growth as well as on bottom-line improving projects Capex as % of sales Chemicals segment Consolidated sales Chemicals segment Capex outlook * Without Catalysts (now part of Functional Materials & Solutions segment)
  62. 62. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 62 Modelling cost curve dynamics Market demand Marginal producer price Cashcosts Plant 1 Plant 2 Plant 3 Plant 4 Margin Cash costs are a function of  Technology position  Degree of integration  Scale  Raw materials source Competitiveness in the market also influenced by  Logistics costs  Sales costs Production capacity
  63. 63. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 63 Continuous process innovation leads to best-in-class technology  Proprietary BASF technology, with best-in-class process  Significant cost synergies due to two parallel projects (Nanjing, Camacari)  Acrylic acid will supply downstream units (superabsorbent polymers; acrylates) Cost curve case study: Acrylic acid China Acrylic Acid cash cost curve, China average cash costs 2015 in US$/kg Cashcosts BASF classicprocess BASF newprocess Source: BASF estimate Production capacity
  64. 64. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 64  Leading single-train technology  New TDI plant strengthens and benefits from Ludwigshafen Verbund  Schwarzheide plant to be closed after start-up of new plant New TDI plant re-balances competitive environment of European TDI market BASFEurope Production capacity Cashcosts Source: BASF estimate TDI cash cost curve, Europe average cash costs 2015 in US$/kg BASFnew Ludwigshafen BASFSchwarzheide New Ludwigshafen TDI plant will provide superior cost structure in Europe Cost curve case study: TDI Europe
  65. 65. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 65 BASF caprolactam production focused on captive demand  BASF plants well positioned on cost curve  Best-in-class cost position in Europe  Constant process improvement ongoing  World-scale caprolactam plants supply downstream demand of polyamide 6 applications  Further cost improvement in North America after start-up of ammonia JV with Yara Caprolactam cash cost curve average cash costs 2015 in US$/kg BASFNorthAmerica BASFEurope Production capacity Cashcosts Cost curve case study: Caprolactam Source: BASF estimate
  66. 66. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 66 Sites with major announced investment projects Camaҫari Korla Production site Verbund site Chemicals investments support growth of downstream units in Emerging Markets Chongqing Nanjing Shanghai Freeport Geismar Port Arthur Antwerp Acrylic acid Acrylic acid Ludwigshafen Kuantan Maoming
  67. 67. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 67 Sites with major announced investment projects Korla Chongqing Production site Verbund site Chemicals investments enable growth in Asia, especially in China Kuantan Nanjing Freeport Geismar Shanghai Maoming Port Arthur MDI Antwerp Isononanol Ludwigshafen Camaҫari Polyamides Butanediol, PolyTHF®
  68. 68. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 68 . Sites with major announced investment projects Korla Production site Verbund site Chemicals investments support growth of the Verbund in Europe Chongqing Barcelona Freeport Geismar Antwerp Ludwigshafen Shanghai Maoming Port Arthur Butadiene extraction KuantanCamaҫari TDI Nanjing
  69. 69. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 69 Agenda Trends in the chemicals market Chemicals segment within BASF Chemicals: At the core of the Verbund Chemicals support growth of BASF Shale Gas – An opportunity Chemicals 2020 Capital expenditures drive profit growth Freeport Geismar
  70. 70. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 70 Price development of oil / natural gas Shale gas in the U.S.: Lower energy and feedstock cost  Increased U.S. shale gas production disconnected crude oil prices from natural gas prices in North America  Increased production of natural gas liquids (NGLs): ethane, propane, butane  NGL price drop drives shift to lighter cracker feed slates – Improved profitability of light feed crackers – Narrow cracker output Game changer shale gas Crude Oil WTI 0 5 10 15 20 0 20 40 60 80 100 120 1990 1995 2000 2005 2010 2015 2020 Source: IHS Inc. The use of this content was authorized in advance by IHS. Any further use or redistribution of this content is strictly prohibited without written permission by IHS. All rights reserved. Natural gas price Germany: Statistisches Bundesamt “Grenzübergabepreis” Germany Natural Gas USA Natural Gas Germany Crude oil in US$/bbl Natural gas in US$/MMBTU
  71. 71. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 71 North American shale gas will only have a limited impact on BASF in Europe North America  Low raw material costs to be kept at chemical producer stage  Impact of low raw material costs to diminish in downstream production Europe  BASF exited polyolefins and PVC more than 10 years ago  BASF is a net purchaser of methanol  Integrated production sites will remain competitive Expected key exports:  Polyolefines  PVC  Methanol
  72. 72. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 72 Natural Gas Liquids  Ethane  Propane  Butane ► Cracker Feed Shale gas is beneficial for methane and ethane based chemistry Methane and ethane to retain their advantageous cost position in North America  Low transportability of ethane ► Shift to ethane crackers  Propane and butane easy to transport ► Export with link to global market  Very limited transportability of methane  Methane to remain an abundant product with low pricing in North America (despite LNG projects) Methane ► Power plants ► Ammonia ► Methanol Composition of shale gas
  73. 73. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 73 Converted Port Arthur cracker with high feed flexibility # 2 chemical producer in the U.S.* BASF Shale gas is a major opportunity for BASF Low energy costs (energy bill dropped by 55% compared to 2007**) Substantial profit improvement BASF will maximize opportunity of low-cost methane Strengthen profitability of the Verbund Grow selected C1 value chains * Based on sales to local customers ** U.S. data only, normalized costs for natural gas for energy productionBASF Investor Day Chemicals segment – Key note speech, May 22, 2014 73
  74. 74. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 74 Port Arthur cracker* has full feed flexibility benefiting from low raw materials costs  Since Q1 2013, full flexibility to switch to most economic feed: naphtha, ethane, propane, butane  Cracker includes splitting unit, which optimizes quality of shale gas feed  Added 10th cracker furnace, increased capacity to 1 million metric tons Improved cash margins through feed flexibility * BASF Total Petrochemicals, LLC; Joint venture BASF 60%, Total 40%
  75. 75. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 75 Ammonia joint venture* enables low raw materials costs for BASF downstreams  World-scale producer economics plant with focus on captive demand only (BASF)  Site: BASF Verbund site Freeport, Texas  Capacity: 750 kt p.a.  Advantages of hydrogen & nitrogen based technology: – Lower capital investment – No greenhouse gas emissions – Faster execution Improved cost position for BASF’s downstream products Caprolactam Isocyanates Amines Yara … Long-term sourcing contracts Yara-BASF joint venture BASF Group Ammonia Nitrogen**Hydrogen** merchant market * Project under evaluation ** Hydrogen and nitrogen are available in the Freeport area
  76. 76. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 76 BASF is currently a net-purchaser of propylene in North America  Port Arthur propylene production insufficient to cover growing captive demand  Additional quantities are purchased from the market Propylene is a key raw material for several value chains Propylene supply North America Acrylic acid Oxo-alcohols Polyols … Flexible feed (NGL’s, Naphtha) Propylene purchase from market Propylene (Port Arthur cracker) Downstream products
  77. 77. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 77 Gas-to-propylene complex* covers internal demand at attractive conditions  U.S. Gulf Coast location  World-scale plant  Start-up: ~2019  Port Arthur cracker and new on-purpose propylene complex to cover entire captive propylene demand  Mid-term no sales to merchant market  Lower cost than alternative PDH technology Cost leading gas-to-propylene technology covers supply gap Propylene supply North America Acrylic acid Oxo-alcohols Polyols … Propylene Propylene (Port Arthur cracker) Downstream products Methanol Methane (from shale gas) Flexible feed (NGL’s, Naphtha) * Project under evaluation
  78. 78. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 78  Cost position of BASF plants in North America will be in top quartile  Shale gas based projects mostly to supply downstreams  Shale gas based projects will drive bottom line growth  Further selected projects under evaluation Shale gas-driven investments will significantly improve BASF’s earnings
  79. 79. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 79 Agenda Trends in the chemicals market Chemicals segment within BASF Chemicals: At the core of the Verbund Chemicals support growth of BASF Shale Gas – An opportunity Chemicals 2020 Capital expenditures drive profit growth Freeport Geismar
  80. 80. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 80  Chemicals enable growth of downstream businesses  Chemicals benefit from downstream growth  Investment projects mainly improve cost positions Key success factors  Operational and commercial excellence  Process innovation  Focused and disciplined capex plan  Further Verbund integration Chemicals will continue to contribute to BASF profit Sales Chemicals in billion € BASF’s Chemicals segment: The success story continues! EBITDA Chemicals in billion € 0 5 10 15 20 25 30 35 2013 Target 2020 Sales to third parties Intersegmental transfers EBITDA Chemicals CAGR 2013-2020 4-5% 0 5 10 15 2013 Target 2020 EBITDA upside range CAGR 2013-2020 6-7.5%
  81. 81. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 81 BASF’s Chemicals segment is a strong cash and earnings contributor We will ► continue to strengthen the Verbund, create synergies and add value ► maintain our high level of profitability through process innovations and stringent cost management ► grow externally with the chemicals market Our strategic focus is to enable and support growth of ► BASF’s downstream segments ► BASF in emerging markets Shale gas is an opportunity for BASF
  82. 82. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 82 Key figures to remember about BASF Chemicals: ► Growth in line with market (until 2020) : ~4.3% p.a. ► Capex budget (2014 – 2018): ~€6.5 billion ► Consolidated sales 2013: €23.4 billion 2020:~€30 billion ► EBITDA: 2013: €3 billion 2020: €4.5 – €5.0 billion
  83. 83. BASF Investor Day Chemicals segment – Keynote speech, May 22, 2014 83
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