BASF –                              A sustainable investment                              January 2011BASF SRI Story Janua...
BASF – The Chemical CompanyInvestment Highlights      No 1 chemical company worldwide      Competitive advantage based on ...
BASF today – a well-balanced portfolioTotal sales 2009: €50.7 billion  Percentage of sales 2009    Chemicals              ...
"A business cannot be successful                              in the long term if it does not act                         ...
Sustainability: a board-level responsibility                                  Executive Board BASF SE                     ...
Long-term success through SustainabilityThree pillars of Sustainability                                                   ...
1 | Delivering sustainable returns         2 | Minimizing environmental impact         3 | Providing sustainable solutions...
Business dynamics remained strong in Q3Sales (billion €)                                                             EBIT ...
Strong cash flow generationCash Flow (billion €)     7     6                                                              ...
Delivering long-term valueLong-term performance Jan 2001 – December 2010                                Commitment to(aver...
Outlook: record year 2010  Targets 2010    We expect:               the good business development to continue in the fourt...
1 | Delivering sustainable returns         2 | Minimizing environmental impact         3 | Providing sustainable solutions...
Clear targets to reduce emissionsGlobal Goals 2020 (baseline 2002)Reduction of emissions to air of     Greenhouse gases pe...
Solid track record – GHG emissions                                                                              Important ...
Emissions to waterReduction in emissions to water                                         Most important measuresOrganic s...
Clear target to improve energy efficiencyGlobal Goals 2020 (baseline 2002)Improve specific energy efficiencyof production ...
Example: Energy Verbund in AntwerpEnergy efficiency through the Verbund(Steam in average ton/h)                           ...
Clear targets for safety andproduct stewardshipGlobal Goals 2020      Reduction in transportation accidents      - 70%    ...
Commitment beyond complianceProduct stewardship      We ensure that our products pose no danger to people      or the envi...
Solid track record – SafetyTransportation accidents per 10,000 shipments                    Most important measures(Goal 2...
Setting same standards worldwideBASF Verbund sites in Asia      Study conducted by GTZ (German Technical      Cooperation)...
1 | Delivering sustainable returns         2 | Minimizing environmental impact         3 | Providing sustainable solutions...
Providing solutions for thechallenges of the future       Mobility &               Construction &                         ...
Solutions for more efficient carsMegatrend MobilityInnovative system supplier to the automotive industry                  ...
Solutions for more efficient carsExamplesLight-weight plastics              Eco-efficient coatings         Three-way-catal...
Solutions for more efficient housingMegatrend Construction & Housing Innovative system supplier to the construction indust...
Solutions for more efficient housingExamplesInsulation materials                 Pigments for solar heat        Concrete a...
Solutions for future nutritionMegatrend Health & NutritionBusiness case Plant Biotechnology      Agricultural production t...
Solutions for sustainable use of waterMegatrend Health & NutritionBusiness case water  Global water consumption will almos...
Solutions for climate protectionMegatrend Energy & ClimateBASF’s corporate carbon footprint                               ...
1 | Delivering sustainable returns         2 | Minimizing environmental impact         3 | Providing sustainable solutions...
Competition for the best employeesGlobal Goals 2020      Increase the proportion of non-      German senior executives wor...
Our employees – key to our successTaking responsibility for our employees      More than 86,000 employees participated in ...
Creating value through social commitmentTaking responsibility for our communities      Supporting education and science: K...
BASF’s engagement for sustainabilityis highly recognized                                 Member 2010          Constituent ...
BASF – a sustainable investment      Delivering long-term sustainable returns      Operating to minimize environmental imp...
Disclaimer This presentation includes forward-looking statements that are subject to risks and uncertainties, including th...
BASF SRI Story January 2011   38
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BASF - A sustainable investment

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Delivering sustainable returns, minimizing environmental impact, providing sustainable solutions and taking responsibility for employees and society

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BASF - A sustainable investment

  1. 1. BASF – A sustainable investment January 2011BASF SRI Story January 2011 1
  2. 2. BASF – The Chemical CompanyInvestment Highlights No 1 chemical company worldwide Competitive advantage based on unique Verbund concept with approx. 380 production sites Superior growth opportunities through strong positioning in growth markets, acquisitions in core businesses and excellent innovation platform Sustainable shareholder returns For 2010, we expect sales of ~€63 billion and EBIT before special items of more than €8 billionBASF SRI Story January 2011 2
  3. 3. BASF today – a well-balanced portfolioTotal sales 2009: €50.7 billion Percentage of sales 2009 Chemicals Plastics* Performance Functional Agricultural Oil & Gas Products Solutions Solutions 15% 14% 18% 14% 7% 22% Inorganics Performance Dispersions & Catalysts Crop Exploration & Polymers Pigments Protection Production and Petrochemicals Polyurethanes Care Construction Natural Gas Chemicals Chemicals Trading Intermediates Paper Coatings Chemicals Performance Chemicals * Styrenics reported under ‘Other’BASF SRI Story January 2011 3
  4. 4. "A business cannot be successful in the long term if it does not act responsibly toward the environment and society. That is why sustainability is an integral part to our strategy." Dr. Jürgen Hambrecht Chairman of the Board of Executive DirectorsBASF SRI Story January 2011 4
  5. 5. Sustainability: a board-level responsibility Executive Board BASF SE Executive Board BASF SE Sustainability Council Sustainability Council Headed by Dr. Harald Schwager Headed by Dr. Harald Schwager Sustainability Sustainability Center Center Central Units Central Units Functional Units Functional Units Operating Units Operating Units Regions RegionsBASF SRI Story January 2011 5
  6. 6. Long-term success through SustainabilityThree pillars of Sustainability Social Economy Environment Responsibility % + $€ Create value Provide solutions Generate trustBASF SRI Story January 2011 6
  7. 7. 1 | Delivering sustainable returns 2 | Minimizing environmental impact 3 | Providing sustainable solutions for the future 4 | Taking responsibility for employees and societyBASF SRI Story January 2011 7
  8. 8. Business dynamics remained strong in Q3Sales (billion €) EBIT before special items (billion €)20 2.5 2.2 2.2 15.5 16.2 15.8 2.016 2.0 12.8 13.2 1.512 1.5 1.2 8 1.0 4 0.5 0 0.0 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 2009 2010 2009 2010Sales development Period Volumes Prices Portfolio Currencies Q3’10 vs. Q2’10 (3)%* 0% 0% 0% Q3’10 vs. Q3’09 5% 10% 0% 8% 1-9 ’10 vs. 1-9 ’09 14% 6% 2% 4% * +4% volume growth w/o Oil & GasBASF SRI Story January 2011 8
  9. 9. Strong cash flow generationCash Flow (billion €) 7 6 5.3 5 4 3.8 3 2 1 0 *** 2001* 2002* 2003* 2004 2005** 2006 2007 2008 2009 2010 -1 Q1-Q3 * According to German GAAP Cash provided by operating activities ** Cash provided by operating activities less capex (in 2005 before CTA) *** 2009 adjusted for re-classification of settlement payments for currency Free cash flow** derivativesBASF SRI Story January 2011 9
  10. 10. Delivering long-term valueLong-term performance Jan 2001 – December 2010 Commitment to(average annual performance with dividends reinvested) shareholder value BASF total return well above benchmark levels +13.9% BASF Dividend increase of 12.8% p.a. (2001-2009) -2.7% Euro Stoxx 50 Attractive dividend yield of 3.9% in 2009, based on share +0.4 +0.7% DAX 30 price at year-end Dividend policy: +7.1% MSCI World Chemicals Increase dividend each year, or at least maintain it at the -5 0 5 10 15 previous year‘s levelBASF SRI Story January 2011 10
  11. 11. Outlook: record year 2010 Targets 2010 We expect: the good business development to continue in the fourth quarter of 2010 sales of ~€ 63 billion and EBIT before special items of more than € 8 billion in 2010 to earn a high premium on our cost of capital to increase the dividend Medium-term targets We aim to grow sales on average by two percentage points per year above chemical market growth. We strive to grow our earnings further year by year and to achieve an EBITDA margin of 18% until 2012. Dividend policy We aim to continuously increase the annual dividend, or at least maintain it at the level of the previous year.BASF SRI Story January 2011 11
  12. 12. 1 | Delivering sustainable returns 2 | Minimizing environmental impact 3 | Providing sustainable solutions for the future 4 | Taking responsibility for employees and societyBASF SRI Story January 2011 12
  13. 13. Clear targets to reduce emissionsGlobal Goals 2020 (baseline 2002)Reduction of emissions to air of Greenhouse gases per metric ton of sales product - 25% Air pollutants - 70%Reduction of emissions to water of Organic substances - 80% Nitrogen - 80% Heavy metals - 60%BASF SRI Story January 2011 13
  14. 14. Solid track record – GHG emissions Important measures Energy efficiency: +86% Highly efficient power plants es using low-emission gas nv olum du ctio Energy-efficient processes Pro Logistics optimizationKyoto Absolu Installation of proprietary te GHG GHG emissio nitrous oxide decomposition ns emis catalysts sion -27% s pe r pro duct Use of waste flows as raw volu me -61% material for other production processes 1990* 2009* Index = 100BASF SRI Story January 2011 14
  15. 15. Emissions to waterReduction in emissions to water Most important measuresOrganic substances (in %) Water protection concepts to 2005 2006 2007 2008 2009 protect natural water reservoirs 2002 baseline Technical improvements in wastewater treatment plants, -51.7 e.g. in Nanjing, China -64.2 -65.9 2020 Goal -80% -77.5 -79.7 Improvements in methods such as neutralization, precipitationHeavy metals (in %) or flocculation 2005 2006 2007 2008 2009 2002 Structural changes baseline -26.2 -42.6 -44.3 2020 Goal -60% -55.9 -61.4BASF SRI Story January 2011 15
  16. 16. Clear target to improve energy efficiencyGlobal Goals 2020 (baseline 2002)Improve specific energy efficiencyof production processes + 25%BASF‘s Verbund concept: Integration of production plants, energy and waste flows, logistics and site infrastructure In 2009, BASF generated 45% of its global steam requirements from waste heat Primary energy savings for BASF Group: 2.6 million toe/a equals almost USD 1 billionBASF SRI Story January 2011 16
  17. 17. Example: Energy Verbund in AntwerpEnergy efficiency through the Verbund(Steam in average ton/h) Trough intelligent combination of production processes, the Steam consumption Steam production additional need for energy at our Antwerp site is minimal Total heat consuming chemical production processes Heat generating in 2009: chemical processes 1,000 ton/h steam Heat consuming Own energy Total heat producing chemical chemical processes power station production processes in 2009: 775 ton/h steam Additional energy supply by own energy power station: 225 ton/h steam -1000 -500 0 500 1000BASF SRI Story January 2011 17
  18. 18. Clear targets for safety andproduct stewardshipGlobal Goals 2020 Reduction in transportation accidents - 70% (baseline 2003) Reduction in lost time injury rate per million working hours (baseline 2002) - 80% Review of all products that are sold worldwide by BASF in quantities of more than 1 metric ton per year, based on a risk assessment >99%BASF SRI Story January 2011 18
  19. 19. Commitment beyond complianceProduct stewardship We ensure that our products pose no danger to people or the environment when they are used responsibly and in the manner intended. Support of the ICCA Global Product Strategy (GPS), aiming to harmonize global safety standards First stage of REACH* registration now underway Estimated costs of €50 million annually until 2018*REACH = Registration, Evaluation, Authorization and Restriction of ChemicalsBASF SRI Story January 2011 19
  20. 20. Solid track record – SafetyTransportation accidents per 10,000 shipments Most important measures(Goal 2020: -70%) xx Implementation of consistent standards and guidelines for transportation and storage of 0.56 -57% chemical products Continuous monitoring of transportation partners with regards to safety and quality in all regions 0.24 Joint safety initiatives with our service providers 2003 2005 2006 2007 2008 2009 2020 baseline GoalBASF SRI Story January 2011 20
  21. 21. Setting same standards worldwideBASF Verbund sites in Asia Study conducted by GTZ (German Technical Cooperation) shows that Nanjing site exceeds international standards in the area of health and safety and creates and secures local jobs Systematic safety training ensures a high safety standard of our own employees and our contractors Asian Verbund sites being served by state-of-the-art utilities, such as gas-fired power plants In 2009, BASF published first sustainability report in China with disclosure of emission dataBASF SRI Story January 2011 21
  22. 22. 1 | Delivering sustainable returns 2 | Minimizing environmental impact 3 | Providing sustainable solutions for the future 4 | Taking responsibility for employees and societyBASF SRI Story January 2011 22
  23. 23. Providing solutions for thechallenges of the future Mobility & Construction & Health & Nutrition Energy & Climate Communication Housing 2 billion cars 60% of the world 8 billion people 40% more primary will drive on earth population will live will live on earth energy will be by 2030 in cities by 2030 by 2030 needed in 2030 How can we Which materials How can we How can we reduce are needed to ensure food and contribute to emissions and fuel make energy water supply for climate protection consumption ? consumption everyone? and energy more efficient? supply?BASF SRI Story January 2011 23
  24. 24. Solutions for more efficient carsMegatrend MobilityInnovative system supplier to the automotive industry Business case plastics BASF’s sales 2009* to the Terblend N® and Terluran® automotive industry: €5 billion for high-quality plastic components Ultramid® Sales of plastics to the UV cured coatings Astacin® leather for light-weight finishes high environmental compatibility, rapid motor parts environment-friendly automotive industry: coating processes approx. €1.4 billion Growth drivers Share of plastics in medium- sized cars expected to grow Catalysts from today’s ~15% to over 25% Neopolen® Lumogen® Black for purification of in 2020 driven by stricter and Sicopal ® Black Keropur® exhaust fumes for absorption of collision energy for heat reduction of Fuel additives and reduction of regulatory requirements dashboards help reduce air pollutants fuel consumption Global automotive market expected to grow by 5.0-7.5% p.a. mid-term *by first customer industry in 2009BASF SRI Story January 2011 24
  25. 25. Solutions for more efficient carsExamplesLight-weight plastics Eco-efficient coatings Three-way-catalysts (TWC) Value for the environment: Value for the environment: Value for the environment: Up to 50% weight reduction Savings of primary energy: Capable of destroying over Every 100 kg weight 15-20% in the production 90% of hydrocarbons, reduction cuts fuel process carbon monoxide and consumption by Reduction of VOC and CO2 nitrogen oxides produced 0.4 l/100 km and CO2 emissions: 15-20% in the by gasoline engines emissions by 1 kg/100 km production processBASF SRI Story January 2011 25
  26. 26. Solutions for more efficient housingMegatrend Construction & Housing Innovative system supplier to the construction industry Business case insulation BASF’s sales 2009* to the Lumogen®, Paliogen® construction industry: and Sicopal® COLO-FAST® black pigments for €3.8 billion for solar panel frames cool surfaces Micronal® PCM Sales of insulating foams to the Elastopor® H latent-heat for insulation of construction industry: storage system ceilings, roofs and walls approx. €1 billion in 2009 Neopor® and Rheocell® for heat insulation HECK® MultiTherm Growth drivers systems for Walltite® insulation of walls Sprayfoam for (inside and outside) Market potential of innovativeinsulation of walls refurbishing of more than Styrodur® C X-SEED® €400 billion in Germany for insulation of concrete hardener walls and floors alone Market growth for insulating foams expected to outpace construction industry growth *by first customer industry in 2009BASF SRI Story January 2011 26
  27. 27. Solutions for more efficient housingExamplesInsulation materials Pigments for solar heat Concrete admixtures management Value for the environment: Value for the environment: Value for the environment: Savings of up to 50% of Solar heat buildup of dark 5% of global CO2 heating oil equivalents construction elements cut emissions attributable Savings through product by 50% to cement production sold in 2008 for old Reduced need for cooling Savings through super- buildings: 208 million t CO2 and air conditioning plasticizers sold in 2008: equivalents 22 million t CO2 equivalentsBASF SRI Story January 2011 27
  28. 28. Solutions for future nutritionMegatrend Health & NutritionBusiness case Plant Biotechnology Agricultural production to double in next 20-30 years, food for 8 billion people needed in 2030 Use of grain for fuel growing by ~ 20% per year Estimated market value in 2025: $50 billion BASF pipeline value €1.9 billion*Value for the environment and society: Improvement of global food supply in terms of quality and quantity Conservation tillage, reduction of soil erosion Improvement of land-use efficiency and better use of available water *Expected gross trait sales before partner share in 2020BASF SRI Story January 2011 28
  29. 29. Solutions for sustainable use of waterMegatrend Health & NutritionBusiness case water Global water consumption will almost double by 2025 Major challenges: water scarcity, water qualityFilter membrane made of Ultrason® The filter membrane provides ultra filtration and removes viruses as well as bacteria from dirty surface water It is portable and able to purify at least 18,000 liters of water reliably without the need for batteriesTrilon® M A dishwashing tab based on Trilon® M produces 80% less wastewater load compared with phosphate- based formulations Trilon® M has a market potential of €300 millionBASF SRI Story January 2011 29
  30. 30. Solutions for climate protectionMegatrend Energy & ClimateBASF’s corporate carbon footprint Climate protection products Savings: already account for 10% of 287 million t/a BASF’s sales Total savings of CO2 emissions through use of Results: BASF products BASF products save threeover the lifecycle times more GHG emissions Housing 248 than are released in the Automobile 14 production and disposal of all Industry 13 products Agriculture Additional Products 6 6 3 : 1 BASF wants to maintain or even improve this factor of 3:1 thereof 27 million t/a from BASF Emissions for raw in the long term materials, production and disposal of all BASF products Savings of CO2 equivalents 90 million t/a Emissions of CO2 equivalentsBASF SRI Story January 2011 30
  31. 31. 1 | Delivering sustainable returns 2 | Minimizing environmental impact 3 | Providing sustainable solutions for the future 4 | Taking responsibility for employees and societyBASF SRI Story January 2011 31
  32. 32. Competition for the best employeesGlobal Goals 2020 Increase the proportion of non- German senior executives worldwide Increase the proportion of female senior executives Proportion of senior executives with international experience >70% Mandatory leadership feedback for senior executives worldwide 80%BASF SRI Story January 2011 32
  33. 33. Our employees – key to our successTaking responsibility for our employees More than 86,000 employees participated in training programs worldwide in 2009 2,401 apprentices in over 50 occupations in 2009 Competitive advantages through diversity: Diversity + Inclusion initiative to recruit and support employees with different cultural backgrounds, experiences and ways of thinking Addressing demographic change with the Generations@Work program Balancing career and family: 488 BASF SE employees on parental leave in 2009 (thereof 5.3% fathers)BASF SRI Story January 2011 33
  34. 34. Creating value through social commitmentTaking responsibility for our communities Supporting education and science: Kids’ Labs in 15 countries, Knowledge Factory reaching 120,000 children, “Action on Education” initiative International donations of more than €48 million in 2009Combining business sense with social needs Grameen Social Business: giving people in Bangladesh access to better healthcare and provide them with entrepreneurial opportunities Samruddhi business model: coaching soybean farmers to help them select the best agricultural practicesBASF SRI Story January 2011 34
  35. 35. BASF’s engagement for sustainabilityis highly recognized Member 2010 Constituent of ECPI Ethical Index €uro ASPI Eurozone Leader in Materials sector Member from the start Leader in Chemicals sectorBASF SRI Story January 2011 35
  36. 36. BASF – a sustainable investment Delivering long-term sustainable returns Operating to minimize environmental impact and maximize energy efficiency Providing solutions for global challenges in housing, mobility, energy and nutrition Adding to the opportunities and well-being of our employees and the communities in which we operateBASF SRI Story January 2011 36
  37. 37. Disclaimer 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. 37
  38. 38. BASF SRI Story January 2011 38

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