BASF Strategy:               We create chemistryLondonNovember 29,2011
Forward-looking statements    This presentation includes forward-looking statements that are subject to risks and    uncer...
What do we want to achieve today? Explain where we stand today and  how this supports our future growth Share our view o...
Our strengths                                                      Portfolio development      Team       Innovation       ...
BASF today        Trends        Purpose and strategic principles        Targets        Strategic levers        BASF tomorr...
Outperformed global chemicalproduction by 4 percentage points p.a.Sales to third partiesin billion €70                    ...
Portfolio development towards moremarket driven and innovative businesses               Acquisitions                      ...
Strong sales and earnings increasein all segments                            Sales                          EBITDA        ...
Strong sales and earnings increasein all segments                            Sales                          EBITDA        ...
Strong sales and earnings increasein all segments                            Sales                          EBITDA        ...
Strong and profitable growth inemerging marketsSales BASF Group excluding Oil & Gas                                EBITDA ...
Strong focus on operational excellenceBASF Group 2001–2010Index                                                           ...
Generating high EBITDA marginsEBITDA marginin %                                                                  20.5     ...
Decade of outperformance in sectormarginsEBITDA marginin %25                                                        BASF G...
Solid track record of earning a premiumon cost of capitalEBIT after cost of capital*in billion €                          ...
Best-in-class asset profitability –Capital turnover improved by 2% p.a.*EBITDA on total assetsin %                        ...
Generating strong EPS growthEarnings per share**in €                                                                      ...
Delivering attractive shareholder returnsDividend per share                                                               ...
Delivering consistent, long-term value –Last 10 yearsLong-term performance November 2001 – October 2011(average annual per...
BASF today The leading chemical company No. 1 – 3 market positions in over 75% of businesses Active management of portf...
BASF today        Trends        Purpose and strategic principles        Targets        Strategic levers        BASF tomorr...
Demographic challenges set the stagefor the future of the chemical industryNine billion people in 2050 but only one earth ...
Key trends for the chemical industryGrowth                                              Innovation gains     Sustainabilit...
Chemicals to outgrow key customerindustries                               in %                              10            ...
BASF Today        Trends        Purpose and strategic principles        Targets        Strategic levers        BASF tomorr...
Our purposeWe create chemistryfor a sustainable future.BASF Strategy: We create chemistry__November 2011   26
Our strategic principles
Our strategic principles                            We add value            We drive                            as one com...
We add value as one company Global                              Transportation          Consumer Goods         Constructio...
BASF today        Trends        Purpose and strategic principles        Targets        Strategic levers        BASF tomorr...
Assumptions 2010 – 2020                                                    Growth 2010 – 2020                         Grow...
Striving for strong profitable growthSales*in billion €                                                                   ...
All regions will deliver profitable growthRegional sales targets 2020 (by location of customers)in billion €              ...
Doubling EBITDA by 2020EBITDA*in billion €                                                                                ...
BASF today        Trends        Purpose and strategic principles        Targets        Strategic levers        BASF tomorr...
Our strategic levers Portfolio development Market approach Innovations for a sustainable future Investments Acquisiti...
BASF today        Trends        Purpose and strategic principles        Targets        Strategic levers                   ...
Successfully managing an integratedcompany                                                                         76 Str...
We expand from chemicals to chemistry       1960             1970            1980           1990        2000   2010    202...
A different look at our current portfolio... Oil & Gas                                          Classical Chemicals     Cu...
...which we will further strengthen                                                    Portfolio strategy                 ...
Moving downstream towards customerindustries                                                                              ...
Oil & Gas business provides significantadvantages for BASF                    Strong                          Hydrocarbon ...
BASF today        Trends        Purpose and strategic principles        Targets        Strategic levers                   ...
Building on our cross-divisionalcustomer industry approach      BASF sales by first                           Bubble Size:...
Combining cross-divisional technologycompetencies with customer know-how                        Smart forvision – joint co...
Significant opportunities in wind energy                                                                         Sales pot...
BASF today        Trends        Purpose and strategic principles        Targets        Strategic levers                   ...
Sustainability will become evenmore important   SUPPLY                                           Earth’s                  ...
Advancement of sustainability:Integration into everyday business                                                          ...
Chemistry as an enabler for many customer industries                              Sustainability in customer industries wi...
Growth field: Batteries for electromobilityBusiness potential 2020 Market size: > €20 billion Sales potential for BASF: ...
Growth field: Water SolutionsBusiness potential 2020 Market size: €20 billion BASF sales potential: > €800 millionExisti...
Growth field: Plant biotechnologyBusiness potential Global trait value in 2020: ~€11 billion Expected gross trait sales ...
AgBalance™ – Manage progress inagriculture sustainability                                  AgBalanceTM                    ...
Sustainability as future growth driver           Enable our customers to develop           more sustainable solutions     ...
Asia will lead in R&D spending in 2020                                                                                    ...
BASF’s global R&D footprint today North America: 1,330                                                Europe: 7,500 employ...
Strengthening our R&D platformin Asia Pacific to accelerate growthInnovation in Asia for Asia 8 R&D sites plus technical ...
Targeted €7 billion of EBITDA frominnovations in 2020Sales and EBITDA from innovationsin billion €                        ...
BASF today        Trends        Purpose and strategic principles        Targets        Strategic levers                   ...
Emerging markets will contribute 60% toglobal chemical production in 2020Global chemical production (excl. pharma)Trillion...
Growth above market with increasingshare from emerging markets                                 Developed markets*         ...
Investments will boost future organicgrowthFuture investments                                                             ...
BASF today        Trends        Purpose and strategic principles        Targets        Strategic levers                   ...
Acquisitions will contribute to profitablegrowth in the futureWe want to acquire businesses which… Generate profitable gr...
BASF today        Trends        Purpose and strategic principles        Targets        Strategic levers                   ...
Annual earnings contribution of ≥€1 billionfrom NEXT will be achieved in 2012Annual earnings contribution                 ...
New operational excellence programSTEP: Earnings contribution ~€1 billionAnnual earnings contribution                     ...
BASF today        Trends        Purpose and strategic principles        Targets        Strategic levers        BASF tomorr...
Key financial targets 2015 / 2020                                            Growth targets         Profitability targets ...
Cash generation enables businessgrowth and shareholder returnsSource of cash (2001-2010)                                  ...
Our financial policies Pursue capital discipline Focus on tight working capital management Support growth with profitab...
Our strategy will create shareholder valueEarnings per sharein €                                                          ...
BASF tomorrow – Roadmap to 2020 We add value as “One company” Continued top and bottom line growth with key focus on eme...
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BASF "We create chemistry" strategy

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BASF plans to strengthen its position as the world’s leading chemical company. In its further developed strategy “We create chemistry”, BASF outlines how it wants to achieve this. This presentation was given at the Investor Day in London on November 29, 2011. For more see http://www.basf.com/group/corporate/en/about-basf/strategy/index

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BASF "We create chemistry" strategy

  1. 1. BASF Strategy: We create chemistryLondonNovember 29,2011
  2. 2. 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 Strategy: We create chemistry__November 2011 2
  3. 3. What do we want to achieve today? Explain where we stand today and how this supports our future growth Share our view on major trends and growth perspectives of the chemical industry Present our new strategic principles and financial targets Show how our strategy will increase shareholder valueBASF Strategy: We create chemistry__November 2011 3
  4. 4. Our strengths Portfolio development Team Innovation Operational excellence Verbund Growth Customer orientation “The Chemical Company” Technology Acquisitions Investments Sustainability Employer attractiveness Diversity & InclusionBASF Strategy: We create chemistry__November 2011 4
  5. 5. BASF today Trends Purpose and strategic principles Targets Strategic levers BASF tomorrow – Board prioritiesBASF Strategy: We create chemistry__November 2011 5
  6. 6. Outperformed global chemicalproduction by 4 percentage points p.a.Sales to third partiesin billion €70 6460 BASF total growth 7.8% p.a. 11 –6 12 BASF volumes + M&A 6.6% p.a.50 BASF volumes 4.1% p.a.40 14 Global chemical 33 3.0% p.a. production3020 2001 Volumes Prices Currencies M&A 2010BASF Strategy: We create chemistry__November 2011 6
  7. 7. 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 (planned)  Plastic additives  Petronas  Styrolution (planned)  Oil & Gas  Shell  Personal care & food  Sinopec  Total €9bn €15bn (Sales excl. planned (Sales) measures)BASF Strategy: We create chemistry__November 2011 7
  8. 8. Strong sales and earnings increasein all segments Sales EBITDA Initiatives for growth by segment in billion € by segment in billion €  New steam cracker in 11.4 Port Arthur 3.0  Start-up of Verbund siteChemicals 5.0 in Nanjing 0.90  Expansion of Antwerp 2001 2010 2001 2010  New technologies (e.g. acrylic acid)  Integrated world-scale 9.8 plants and technology leadership 5.4 1.7Plastics  New plants (MDI/TDI in 0.53 China, HPPO in Antwerp)  Innovations: Ultramid®, 2001 2010 2001 2010 Ultradur®, Neopor®, Ecoflex®BASF Strategy: We create chemistry__November 2011 8
  9. 9. Strong sales and earnings increasein all segments Sales EBITDA Initiatives for growth by segment in billion € by segment in billion € 12.3  Ciba / Cognis  Strong relations with 7.4 2.2 multinational companiesPerformance 0.52  New plants (Citral, SAP,Products surfactants, PIB) 2001 2010 2001 2010  Innovations: Personal care and food ingredients  Engelhard / Degussa Construction Chemicals 9.7  Strong cooperation withFunctional 2.3 0.86 leading OEMsSolutions 0.16  Innovations: Diesel Oxidation 2001 2010 2001 2010 Catalyst, scratch- resistant coatingsBASF Strategy: We create chemistry__November 2011 9
  10. 10. Strong sales and earnings increasein all segments Sales EBITDA Initiatives for growth by segment in billion € by segment in billion €  Innovations: F500®, Boscalid, Kixor® 4.0  Plant Health (AgCelence®)Agricultural 3.5 0.94Solutions 0.51  SeedSolutions 2001 2010 2001 2010  Expansion in emerging markets  E&P expansion in Russia 10.8 and Norway 3.0 4.5  1P reserves 2010:Oil & Gas 1.6 1,123 million boe (R/P ratio = 10 years) 2001 2010 2001 2010  Gas for Europe StrategyBASF Strategy: We create chemistry__November 2011 10
  11. 11. Strong and profitable growth inemerging marketsSales BASF Group excluding Oil & Gas EBITDA BASF Group excluding Oil & Gasin billion € by location of customer in billion € by location of customer60 10 53 8.2 8 34% 34%40 6 28 28% 22% 420 2.5 2 25% 0 0 2001 2010 2001 2010 *BASF definition: Developed markets include EU15, Norway, Emerging markets Developed markets* Switzerland, North America, Japan, Australia, New ZealandBASF Strategy: We create chemistry__November 2011 11
  12. 12. Strong focus on operational excellenceBASF Group 2001–2010Index CAGR300 12 % EBITDA250 8% Sales200 2% Fixed costs150100 50 2001 2004 2007 2010BASF Strategy: We create chemistry__November 2011 12
  13. 13. Generating high EBITDA marginsEBITDA marginin % 20.5 19.3 18.5 17.6 17.4 18 15.8 15.3 15.3 14.6Target range 12.7 14 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010BASF Strategy: We create chemistry__November 2011 13
  14. 14. Decade of outperformance in sectormarginsEBITDA marginin %25 BASF Group EBITDA margin20 European chemical sector Ø* US chemical sector Ø**15 Asian chemical sector Ø***10 * AkzoNobel, Arkema, Clariant, DSM, 5 Evonik (Degussa), Lanxess, Solvay ** Celanese, Dow, DuPont, Huntsman, PPG *** Formosa Plastics, Mitsubishi Chemicals, Mitsui 0 Chemicals, Sinopec Chemicals, Sumitomo Chemicals 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Company reports, Thomson One, ReutersBASF Strategy: We create chemistry__November 2011 14
  15. 15. Solid track record of earning a premiumon cost of capitalEBIT after cost of capital*in billion € Target first 3.5 established 2.9 2.4 2.1 1.8 1.6 –0.2** –0.6 –0.6 –2.6 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 * Cost of capital rate varied from 9% to 13% ** Including Ciba integration costs of €0.8 billionBASF Strategy: We create chemistry__November 2011 15
  16. 16. Best-in-class asset profitability –Capital turnover improved by 2% p.a.*EBITDA on total assetsin % 2001 201025% BASF20% SABIC AkzoNobel Lanxess15% Evonik DSM Bayer DSM SABIC Bayer BASF DuPont10% DuPont Dow Celanese AkzoNobel Dow 5% Degussa Celanese 0% 0 20 40 60 80 0 20 40 60 80 Sales * Capital turnover = sales over total assets in billion € = EBITBASF Strategy: We create chemistry__November 2011 16
  17. 17. Generating strong EPS growthEarnings per share**in € 4.96 4.16 3.19 3.13 2.87 1.83 1.54 1.30 0.81 –0.10* 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 * Excluding extraordinary income ** Adjusted for 2:1 stock split in 2008BASF Strategy: We create chemistry__November 2011 17
  18. 18. Delivering attractive shareholder returnsDividend per share Dividend paymentsin €  From 2001 to 2010, BASF paid dividends in the 2.20 amount of ~€13 billion 1.95 1.95 1.70 1.50 Share buy-backs 1.00 0.85  From 2001 to 2010, BASF 0.65 0.70 0.70 bought back shares in the amount of €8.9 billion  This equaled ~25% of total shares outstanding 2001 2004 2007 2010Yield* 3.1% 3.9% 3.1% 3.2% 3.1% 4.1% 3.8% 7.0% 3.9% 3.7% * Dividend yield based on share price at year-endBASF Strategy: We create chemistry__November 2011 18
  19. 19. Delivering consistent, long-term value –Last 10 yearsLong-term performance November 2001 – October 2011(average annual performance with dividends reinvested) Last 5 years +15.1% BASF 13.7% –1.0% Euro Stoxx 50 –6.9% +3.0% DAX 30 –0.4% +8.2% MSCI World Chemicals 4.0% -1 2 5 8 11 14BASF Strategy: We create chemistry__November 2011 19
  20. 20. BASF today The leading chemical company No. 1 – 3 market positions in over 75% of businesses Active management of portfolio towards higher returns and less cyclicality Focus on innovative products and solutions Benchmark in operational excellence with unique Verbund concept Strong earnings power, high cash flow generation and a strong financial profile Generation of long-term attractive shareholder returnsBASF Strategy: We create chemistry__November 2011 20
  21. 21. BASF today Trends Purpose and strategic principles Targets Strategic levers BASF tomorrow – Board prioritiesBASF Strategy: We create chemistry__November 2011 21
  22. 22. 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 Strategy: We create chemistry__November 2011 22
  23. 23. 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 Chemical  Chemical  Increase resource cornerstone production > GDP products replace efficiency  Emerging markets Emerging markets traditional  Renewables as players grow quickly materials will outgrow raw materials  Raw material players developed  Create innovative  Stakeholder dialog invest further markets sustainable downstream solutions Chemical industry remains an attractive growth industryBASF Strategy: We create chemistry__November 2011 23
  24. 24. Chemicals to outgrow key customerindustries in % 10 Chemicals growth above 9 customer industries 8 142 Chemical production growth CAGR 2010-2020 in % p.a. Electronics 7 148 6 Health & Nutrition Energy & Resources 100 5 23 Consumer Goods 138 4 Transportation 219 127 3 = Market of 2020 Agriculture in bn € (real, 2008) Construction 2 1 Chemicals growth below customer industries 0 0 1 2 3 4 5 6 7 8 9 10 Customer industry growth CAGR 2010-2020 in % p.a. Source: BASFBASF Strategy: We create chemistry__November 2011 24
  25. 25. BASF Today Trends Purpose and strategic principles Targets Strategic levers BASF tomorrow – Board prioritiesBASF Strategy: We create chemistry__November 2011 25
  26. 26. Our purposeWe create chemistryfor a sustainable future.BASF Strategy: We create chemistry__November 2011 26
  27. 27. Our strategic principles
  28. 28. Our strategic principles We add value We drive as one company. sustainable solutions. We innovate to make We form our customers more the best team. successful.BASF Strategy: We create chemistry__November 2011 28
  29. 29. We add value as one company Global Transportation Consumer Goods Construction Operational reach excellence Energy & Agriculture Resources Value chains Health & Nutrition Electronics Financial Hedging strength People Production Technology Customer Verbund Verbund Verbund VerbundBASF Strategy: We create chemistry__November 2011 29
  30. 30. BASF today Trends Purpose and strategic principles Targets Strategic levers BASF tomorrow – Board prioritiesBASF Strategy: We create chemistry__November 2011 30
  31. 31. Assumptions 2010 – 2020 Growth 2010 – 2020 Growth 2001 - 2010 (Forecast*)Global GDP 3.0% p.a. 2.5% p.a.Chemical production 4.0% p.a. 3.0% p.a.(excl. pharma)Industrial production 3.8% p.a. 2.4% p.a. * Assumptions 2010-2020: Exchange rate $/€ Ø 1.40, Oil price Ø $110/bblBASF Strategy: We create chemistry__November 2011 31
  32. 32. Striving for strong profitable growthSales*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 Strategy: We create chemistry__November 2011 32
  33. 33. All 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 Strategy: We create chemistry__November 2011 33
  34. 34. Doubling 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 Strategy: We create chemistry__November 2011 34
  35. 35. BASF today Trends Purpose and strategic principles Targets Strategic levers BASF tomorrow – Board prioritiesBASF Strategy: We create chemistry__November 2011 35
  36. 36. Our strategic levers Portfolio development Market approach Innovations for a sustainable future Investments Acquisitions Operational excellenceBASF Strategy: We create chemistry__November 2011 36
  37. 37. BASF today Trends Purpose and strategic principles Targets Strategic levers – Portfolio development – Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence BASF tomorrow – Board prioritiesBASF Strategy: We create chemistry__November 2011 37
  38. 38. Successfully managing an integratedcompany  76 Strategic Business Units  Majority of businesses in attractive markets due to high active portfolio managementMarket attractiveness  Performance is a weighted score based on operating profitability and competitive position (e.g. market share)  Market attractiveness is a Divested businesses: weighted score based on - Fertilizers (planned) market growth and market - Styrenics (planned) size, innovation low - Polyolefins - Printing inks opportunities and - Fibers competitive environment low high Circle size: Strategic Business Unit sales Performance = €1bn BASF Strategy: We create chemistry__November 2011 38
  39. 39. We expand from chemicals to chemistry 1960 1970 1980 1990 2000 2010 2020  Chemistry as key enabler New for functionalized materials molecules & solutions  Deep understanding of Improved customer value chains applications required Functionalized materials & solutions Batteries, membranes ...BASF Strategy: We create chemistry__November 2011 39
  40. 40. A different look at our current portfolio... Oil & Gas Classical Chemicals Customized Functionalized Products Materials & Solutions Excellent position and Chemical business Customer-oriented Integration of growth opportunities; based on our specialties, backward competencies in synergies with production Verbund integration in Verbund chemistry: R&D, chemical businesses value chains technology, market knowledge and global access to customer industries Exploration & Cracker products, PU systems, vitamins, Battery materials, production of oil and plastizicers, acrylic personal care water solutions, crop gas, gas trading acid, MDI/TDI ingredients protection agents, activities engineering plasticsBASF Strategy: We create chemistry__November 2011 40
  41. 41. ...which we will further strengthen Portfolio strategy Initiatives taken  Expand E&P in core regions  Achimov, Revus Oil & Gas  Grow natural gas business in Europe  Nord Stream, South Stream  Expand market positions outside of  Expansion of Nanjing Classical Chemicals Europe  New chemical  Keep profitable production Verbund complexes in Malaysia businesses and Brazil  Synergies and growth via technology  Cognis Customized Products and customer industry Verbund  Ciba  Expand market position downstream  Strong R&D pipeline in existing and adjacent value chains  Selectively enter materials and  Battery materials Functionalized solutions business where chemical  Crop protection Materials & Solutions competence is growth driver  Water solutionsBASF Strategy: We create chemistry__November 2011 41
  42. 42. 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 Strategy: We create chemistry__November 2011 42
  43. 43. Oil & Gas business provides significantadvantages for BASF Strong Hydrocarbon Significant Technological contributor hedge cash flow synergies to BASF’s and through profitable long-term BASF growth profitability Verbund Oil & GasBASF Strategy: We create chemistry__November 2011 43
  44. 44. BASF today Trends Purpose and strategic principles Targets Strategic levers – Portfolio development – Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence BASF tomorrow – Board prioritiesBASF Strategy: We create chemistry__November 2011 44
  45. 45. 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, Nutrition & Health, Oil & Gas and OtherBASF Strategy: We create chemistry__November 2011 45
  46. 46. 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 Strategy: We create chemistry__November 2011 46
  47. 47. Significant opportunities in wind energy Sales potential by 2020: ~ €300 million Blades  Epoxy systems and adhesives (Intermediates)  Paint (Coatings) Blades  Core foams (Plastics) Nacelle Tower and base  Grouts and admixtures (Construction Chemicals) Tower  Paint (Coatings) and base Nacelle  Hydraulic fluids and gear oils (Performance Chemicals)BASF Strategy: We create chemistry__November 2011 47
  48. 48. BASF today Trends Purpose and strategic principles Targets Strategic levers – Portfolio development – Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence BASF tomorrow – Board prioritiesBASF Strategy: We create chemistry__November 2011 48
  49. 49. Sustainability will become evenmore important SUPPLY Earth’s resources DEMAND + Annual Human beings now regenerative demand more capacity from the Earth than 1976 2010 of the planet can be regenerated Consumption of Earth’s resourcesBASF Strategy: We create chemistry__November 2011 49
  50. 50. Advancement of sustainability:Integration into everyday business + Integration / + Social portfolio responsibility + Climate protection + Emission control Safety 1960s 1970s 1980s 1990s 2000s Beyond 2010 Regulatory Cost Motivation Value generation Sources: Booz & Company; UN World Commission on Environment and Development; Archive company data and reportsBASF Strategy: We create chemistry__November 2011 50
  51. 51. Chemistry as an enabler for many customer industries Sustainability in customer industries will drive our innovative growth fieldsCustomerindustries 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 *Including growth fields still under evaluation BASF Strategy: We create chemistry__November 2011 51
  52. 52. Growth field: Batteries for electromobilityBusiness potential 2020 Market size: > €20 billion Sales potential for BASF: > €500 millionExisting activities Chemicals & materials for lithium-ion batteries Work on battery concepts for Generation IV Intensive collaboration with universities & industry partnersTargets Position BASF as a system supplier for cell manufacturers Utilize technology and business synergies Expand electrolyte activitiesBASF Strategy: We create chemistry__November 2011 52
  53. 53. Growth field: Water SolutionsBusiness potential 2020 Market size: €20 billion BASF sales potential: > €800 millionExisting activities High-performance flocculants, desalination and antifouling chemicals & polymers used in membranes (BASF & Ciba) Acquired know-how on membrane technologies and module systems (inge watertechnologies)Targets Position BASF as the leading supplier of innovative chemical solutions worldwide Forward integration into membrane technologies Leverage synergies to develop improved additives, flocculants and polymersBASF Strategy: We create chemistry__November 2011 53
  54. 54. Growth field: Plant biotechnologyBusiness potential Global trait value in 2020: ~€11 billion Expected gross trait sales potential of plant biotech pipeline before partner share in 2020: €1.9 billionExisting activities Yield & Stress collaboration with Monsanto (corn, soy, cotton, canola and wheat) Further collaborations with Bayer, Cargill, CTC, Embrapa and KWSTargets Position BASF as “The Trait Technology Partner” Achieve more efficient agriculture and healthier nutrition Implement a Plant Biotechnology operating division within the Agricultural Solutions segmentBASF Strategy: We create chemistry__November 2011 54
  55. 55. AgBalance™ – Manage progress inagriculture sustainability AgBalanceTM  Unique and holistic method that assesses sustainability in agriculture  Creates value for customers, stakeholders and BASF:  Helps our customers (e.g. farmers) to differentiate with more sustainable solutions Farm profits  Consumers  Biodiversity  Fosters more rational debate on Variable and  Fair trade  Water Use sustainability in agriculture fixed costs  Future  Soil Subsidies Generations  Emissions  Guides BASF`s own strategy and ...  ...  ... portfolio development with specific focus on sustainable solutions Independent assurance of functionality and coherence received by:BASF Strategy: We create chemistry__November 2011 55
  56. 56. Sustainability as future growth driver Enable our customers to develop more sustainable solutions Creating value Connect – in our team and with society Deliver excellence in our operations Reducing risk We fully integrate sustainability into our strategic decision makingBASF Strategy: We create chemistry__November 2011 56
  57. 57. Asia will lead in R&D spending in 2020 €1bn €3bn €15bn Finland €25bn Sweden Denmark Canada Netherlands U.K. Russia Belgium Poland Ireland Czech Germany Hungry France Serbia China United Austria States Switzerland Japan Spain Italy Israel Egypt India Thailand Mexico Taiwan Vietnam Philippines Malaysia Singapore Brazil Australia ~ €190bn ~ €200bn ~ €240bn ~ 6% CAGR ~ 6% CAGR ~ 9% CAGRBASF Strategy: We create chemistry__November 2011 57
  58. 58. BASF’s global R&D footprint today North America: 1,330 Europe: 7,500 employees in R&D employees in R&D South America: 220 Asia 550 employees employees in R&D in R&D Major R&D siteBASF Strategy: We create chemistry__November 2011 58
  59. 59. Strengthening our R&D platformin Asia Pacific to accelerate growthInnovation in Asia for Asia 8 R&D sites plus technical centers in Asia Pacific R&D experts to increase from 550 to more than 800 by 2020 €55 million investment includes innovation campus and Greater China head office Leverage global R&D capabilities with Competence Centers in Singapore, India and China Co-operations with ~100 institutes and universities BASF‘s new innovation campus in ShanghaiBASF Strategy: We create chemistry__November 2011 59
  60. 60. Targeted €7 billion of EBITDA 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 2020 Targeted spending of ~3% of sales (excluding Oil & Gas) p.a. on R&DBASF Strategy: We create chemistry__November 2011 60
  61. 61. BASF today Trends Purpose and strategic principles Targets Strategic levers – Portfolio development – Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence BASF tomorrow – Board prioritiesBASF Strategy: We create chemistry__November 2011 61
  62. 62. Emerging markets will contribute 60% toglobal chemical production in 2020Global chemical production (excl. pharma)Trillion $ (real 2005)3.0 World ~3.12.5 Developed markets*2.0 ~2.1 ~1.8 Emerging markets1.5 ~1.3 ~1.4 ~1.2 ~1.3 1.1 of which China 0.9 1.01.0 *BASF definition: Developed markets include EU15, Norway, Switzerland, 0.4 ~50% North America, Japan, Australia, New0.5 ~45% Zealand ~40% 0 1995 2010 2015 2020 Source: BASFBASF Strategy: We create chemistry__November 2011 62
  63. 63. Growth above market with increasingshare from emerging markets Developed markets* Emerging markets 2001in % of sales ~ 78% ~ 22% (€28 bn**) 2010in % of sales ~ 66% ~ 34% (€53bn**) 2020 in % of ~55% ~ 45% sales** *BASF definition: Developed markets include EU15, Norway, Switzerland, North America, Japan, Australia, New Zealand ** Sales excluding Oil & GasBASF Strategy: We create chemistry__November 2011 63
  64. 64. Investments will boost future organicgrowthFuture investments Current major projectsin € billlion 15-20  Nanjing expansion ~15  Expansions in Malaysia  MDI plant in Chongqing 10.9  TDI plant in Europe  Acrylic acid complex 35-45% including superabsorbents 30-40% in Brazil  Sodium methylate plants in ~20% South America  Antioxidants in Bahrain 2006 – 2010 2011 – 2015 2016 – 2020  Achimov Blocks IV and V  Battery materials in the Total investments Thereof investments in United States emerging marketsBASF Strategy: We create chemistry__November 2011 64
  65. 65. BASF today Trends Purpose and strategic principles Targets Strategic levers – Portfolio development – Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence BASF tomorrow – Board prioritiesBASF Strategy: We create chemistry__November 2011 65
  66. 66. Acquisitions will contribute to profitablegrowth in the futureWe want to acquire businesses which… Generate profitable growth  Are EPS accretive by year above the industry average three at the latest Are innovation-driven  Provide a minimum return on investment of 8% after tax Offer a special value proposition to customers Reduce earnings cyclicality Strategic acquisition criteria Financial acquisition criteriaBASF Strategy: We create chemistry__November 2011 66
  67. 67. BASF today Trends Purpose and strategic principles Targets Strategic levers – Portfolio development – Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence BASF tomorrow – Board prioritiesBASF Strategy: We create chemistry__November 2011 67
  68. 68. Annual earnings contribution of ≥€1 billionfrom NEXT will be achieved in 2012Annual earnings contribution NEXTin € million New EXcellence Targets  > 500 individual projects to simplify2,500 processes, structures and2,000 production sites in all regions  Project timeline:1,500 2008-2011  Annual earnings contribution of1,000 €600 million in 2010 achieved 500  Annual earnings contribution of more than €1 billion will be 0 achieved in 2012 2003 2005 2007 2009 2012 Completed restructuring Operational excellence programs program NEXTBASF Strategy: We create chemistry__November 2011 68
  69. 69. New operational excellence programSTEP: Earnings contribution ~€1 billionAnnual earnings contribution STEPin € million STrategic Excellence Program3,000  Optimization of processes, structures and production sites in all regions2,000  Measures: – Fixed cost savings – Margin improvement1,000 – Capacity increase – Better sourcing  Project timeline: 2012 - 2015 0 2012 2015  Targeted earnings contribution of about €1 billion by end of 2015 Former cost NEXT STEP saving programsBASF Strategy: We create chemistry__November 2011 69
  70. 70. BASF today Trends Purpose and strategic principles Targets Strategic levers BASF tomorrow – Board prioritiesBASF Strategy: We create chemistry__November 2011 70
  71. 71. 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. 2015  Sales ~€85 billion  EBITDA ~€15 billion  Double EBITDA to ~€23 billion 2020  Sales ~€115 billion (compared with 2010)BASF Strategy: We create chemistry__November 2011 71
  72. 72. Cash generation enables businessgrowth and shareholder returnsSource of cash (2001-2010) Use of cash (2001-2010)in € in €Earnings after tax Depreciation Dividend Capex35% 44% 20% 35% Share buy- back €68 13% €68 billion billion FinancialDivestitures investments CTA* % others15% & Other 8% Acquisitions 1% 19%Cash and financing Working capital5% 5% * Contractual Trust Agreement: transfer of pension obligations to external trustBASF Strategy: We create chemistry__November 2011 72
  73. 73. Our financial policies Pursue capital discipline Focus on tight working capital management Support growth with profitable acquisitions Grow dividend Consider share buy-back program Maintain a solid A credit ratingBASF Strategy: We create chemistry__November 2011 73
  74. 74. Our strategy will create shareholder valueEarnings per sharein € ~7.5 Share buy-back „STEP“ 0.8 4.96 Growth Share 0.5 buy-back 0.9 Tax rate 1.5 Margin Business 1.30 growth 2002 2010 Target 2015BASF Strategy: We create chemistry__November 2011 74
  75. 75. BASF tomorrow – Roadmap to 2020 We add value as “One company” Continued top and bottom line growth with key focus on emerging markets Expansion of portfolio downstream towards functionalized materials and solutions Strong focus on sustainability and innovation Commitment to deliver long-term shareholder valueBASF Strategy: We create chemistry__November 2011 75
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