BASF Investor Day Asia-Pacific Nanjing Day 2

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The presentation covers the positioning, expansion and business development of BASF's 50/50 joint venture with Sinopec, and it addresses future expansion plans. In the second part of the slide deck, wholly-owned BASF Specialty Chemicals Nanjing Co., Ltd. is introduced, illustrated by product and application examples.
Additional info: http://www.basf.com/group/corporate/en/investor-relations/calendar/130605

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BASF Investor Day Asia-Pacific Nanjing Day 2

  1. 1. BASF Investor Day Asia Pacific, June 5-6, 2013 1BASF Investor Day Asia PacificPresentations of Day 2 (Nanjing)
  2. 2. BASF Investor Day Asia Pacific, June 5-6, 2013 2Cautionary note regardingforward-looking statementsThis presentation may contain forward-looking statements that are subject to risks anduncertainties, including those pertaining to the anticipated benefits to be realized from theproposals described herein. Forward-looking statements may include, in particular, statementsabout 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 financialperformance. Actual financial performance could differ materially from that projected in theforward-looking statements due to the inherent uncertainty of estimates, forecasts andprojections, and financial performance may be better or worse than anticipated. Given theseuncertainties, readers should not put undue reliance on any forward-looking statements. Theinformation contained in this presentation is subject to change without notice and BASF doesnot undertake any duty to update the forward-looking statements, and the estimates andassumptions associated with them, except to the extent required by applicable laws andregulations.
  3. 3. BASF in China –A continuing growth storyDr. Albert HeuserPresident Greater China & Functions Asia PacificInvestor DayAsia PacificNanjing, June 6, 2013
  4. 4. 4BASF Investor Day Asia Pacific, June 5-6, 20131 | Trends in the Chinese chemical market2 | BASF business performance in China3 | Strategy implementation in China
  5. 5. BASF Investor Day Asia Pacific, June 5-6, 2013 52010CAGR4.8%7%8%7%11%33%34%Real GDP(in US$ trillion)8%6%7%14%41%24%13.6 21.82020Greater ChinaJapan South AsiaSouth Korea ASEAN ANZClockwise from top: China real GDP 2012:5.2 trillion US$ = 35% of Asianreal GDP Chinese per-capita income todouble by 2020 vs. 2010 12th 5-year plan (2011-2015)focuses on three mainpriorities:– sustainable growth– industrial upgrading– promotion of domesticconsumptionGreater China will increase share of theregional GDP to more than 40% in 2020
  6. 6. BASF Investor Day Asia Pacific, June 5-6, 2013 6HebeiBeijingHeilongjiangLiaoningSichuanHenanAnhuiJiangsuHubeiHunanFujianJiangxiTianjinManufacturing is extended inland towardsWestern provincesShandongZhejiangGuangdongChongqing 31 mn refrigerators (2011) 16 mn washers (2011) 28 mn air conditioners (2011) 818 ktons syntheticdetergents (2011)Anhui 1.72 mn vehicles, thereof0.9 mn cars (2011) 40 mn laptops (2012)ChongqingFujian Chemical fiber, cottonspinning and apparel 400 mn sport shoes,20% of world output (2012)Shanghai12 Emerging Provinces: 25% of total land area 47% of China population 2011 41% of China GDP 2011
  7. 7. BASF Investor Day Asia Pacific, June 5-6, 2013 7CAGR6.2%8%9%8%54%19%8%64%12%7%8%2020Real chemical production ex. pharma(in US$ trillion)2010Greater China will represent 64% ofchemical market in Asia Pacific in 2020 China chemical production2012: US$ 0.6 trillion = 60% ofAsian real chemicalproduction Sustainability becomesdifferentiating factor Innovations in chemistry willenable innovations indownstream industries Chemical markets becomemore competitiveGreater ChinaJapan South AsiaSouth Korea ASEAN ANZClockwise from top:0.8 1.52%1%
  8. 8. BASF Investor Day Asia Pacific, June 5-6, 2013 8Strategic relevant market in Greater Chinagrows in line with chemical marketStrategic relevant market (SRM) Greater China(in billion €) The SRM in China grows by~7% p.a. (2010 – 2020), inline with chemical production All industries will contribute toSRM growth BASF´s key customerindustries:– Chemicals and plastics– Consumer goods– Construction– Health and nutrition– TransportationOthersTransportationEnergy & ResourcesHealth & NutritionChemicals & PlasticsConstructionConsumer GoodsAgricultureElectronics0204060801001201401602010 2020~8015510%19%14%39%18%13%40%10%7%CAGR+ 7% p.a.
  9. 9. BASF Investor Day Asia Pacific, June 5-6, 2013 9BASF is well positioned in China in anincreasingly competitive environmentSinopec ~ €27.2 bnAnnual report 2012:chemical segment salesPetrochina €13.7 bnAnnual report 2012:external sales of „chemicalsand refinery“ChemChina ~ €10.0 bnAnnual report 2012:including oil and equipmentbusinessBASF €6.7 bn China sales 2012; restatedsales 2012:€4.5 billionFormosa Chemicals €4.8 bnChina sales 2012,company reportDow Greater China ~ €4.0 bnPress releases / BASFestimate: China sales 2012Bayer Greater China ~ €3.6 bnChina sales 2012,company reportSinofert Holdings Ltd. €2.8 bn 2012 Fortune DataMitsui Chemicals €1.8 bnChina sales 2011,company reportHengyi Chemical €0.2 bnChina sales 2011,company reportSales in Mainland Chinain 2011/2012Major chemical producers in Mainland China
  10. 10. 10BASF Investor Day Asia Pacific, June 5-6, 20131 | Trends in the Chinese chemical market2 | BASF business performance in China3 | Strategy implementation in China
  11. 11. BASF Investor Day Asia Pacific, June 5-6, 2013 11BASF’s extensive Greater China networkguarantees access to major local markets* One dot may represent more than one site 21 major wholly-owned companies 10 major jointventures 32 production sites 32 sales offices ~ 7,300 employees***,thereof approximately1,000 people inmarketing & salesBASF in Greater China**Asia Pacific headquartersVerbund siteChemical production siteSales officeGreater China headquartersInnovation CampusLegend*JiangsuTaiwanLiaoningJilinShandongGuangdongBeijingZhejiangHunanHubeiChongqingGuangxiYunnanTianjinHong KongShanghaiNanjingSichuan AnhuiFujian** incl. JV‘s; as of December 31, 2012 *** adjusted to changes in IFRS 10 & 11
  12. 12. BASF Investor Day Asia Pacific, June 5-6, 2013 12BASF – top provider to international andlocal Chinese leaders** Logos only represent examples out of wide list of varying customers
  13. 13. BASF Investor Day Asia Pacific, June 5-6, 2013 13* Sales to third parties in China (incl. Hong Kong and Taiwan) by location of customer BASF has been acommitted partner to Chinasince 1885. Since 2004, BASF’s salesmore than tripled China is third largest marketfor BASF globally (afterGermany and the US) Business in China is profitcontributor to BASF Group EBITDA growing atCAGR of 30%Our Chinese business is a powerfulgrowth engine012345672004200520062007200820092010201120122012r***02004006008001.0001.2001.400Sales* and EBITDA** in ChinaSalesinbillion€EBITDAindexed(2004=100)CAGR+17% p.a.*** 2012r figures restated according to changes in IFRS 10 & 11,,,** by location of company
  14. 14. BASF Investor Day Asia Pacific, June 5-6, 2013 14„China GreenCompanies Top 100“China Entrepreneur Club(CEC) - 2012BASF is a well recognized corporatecitizen in China
  15. 15. 15BASF Investor Day Asia Pacific, June 5-6, 20131 | Trends in the Chinese chemical market2 | BASF business performance in China3 | Strategy implementation in China
  16. 16. BASF Investor Day Asia Pacific, June 5-6, 2013 16 Grow business by ~11% p.a. Capture market driven growth– Accompany customers‘growth– Develop business inemerging provinces Strengthen local R&D Increase operationalefficiencies Increase local productionfootprint by implementingambitious investment planStrategy for 2020Grow smartly in ChinaSales in Greater China*(in billion €)0510152012 2012 restated Target 20206.7CAGR~11% p.a.5.1~12* Sales to third parties in China (incl. Hong Kong and Taiwan) by location of customer
  17. 17. BASF Investor Day Asia Pacific, June 5-6, 2013 17Seize new business opportunities viaindustry teamsIndustry teams foster cooperation across BASF’s operating divisionsto provide customers with industry specific solutions.Industry Teams in ChinaConstruction AutomotivePaint &CoatingsPackagingWindEnergyFood &AgricultureElectrical &ElectronicsPharmaMiningTextiles
  18. 18. BASF Investor Day Asia Pacific, June 5-6, 2013 18Seize new business opportunities viaindustry teamsIndustry teams foster cooperation across BASF’s operating divisionsto provide customers with industry specific solutions.Industry Teams in ChinaConstruction AutomotivePaint &CoatingsPackagingWindEnergyFood &AgricultureElectrical &ElectronicsPharmaMiningTextiles
  19. 19. BASF Investor Day Asia Pacific, June 5-6, 2013 19Production of passenger cars and LCVs*(in million units)North AmericaEMEAJapan1318 2330810Production 2011; global production 77 million unitsTotal production in 2020; global production 122 million units3.7% p.a.South America476.4% p.a.3.0% p.a.China17337.6% p.a.other Asia**12242.5% p.a.8.0% p.a.* Light commercial vehiclesChina is the largest automotive market,outperforming global market growth** comprises South Korea, India, Indonesia, Thailand, Vietnam, Malaysia, Philippines. Source: LMCAGrowth rate p.a.
  20. 20. BASF Investor Day Asia Pacific, June 5-6, 2013 20East RegionNorthwest Region Northeast RegionNumber of plants: 14Production 2012: ~3.5 mn unitsNumber of plants: 12Production 2012: ~ 2.5 mn unitsNumber of plants: 22Production 2012: ~4.5 mn unitsNumber of plants: 7Production 2012: ~0.6 mn unitsMiddle West RegionNumber of plants: 26Production 2012: ~3.6 mn unitsSouth RegionNumber of plants: 13Production 2012: ~2.6 mn unitsExpected automotive OEM landscape in China 2015Automotive production in China will beconcentrated in 6 clustersSource: LMCNorth Region
  21. 21. BASF Investor Day Asia Pacific, June 5-6, 2013 21North RegionBASF is a global leader, partnering withauto producers in ChinaBASF sites supporting the automotive industry Automotive applicationcenter Engineering plastics Coolants Polyurethanes Catalysts Coatings Coatings system supplyShanghaiGuilin CatalystsChongqing (2014) Polyurethanes Polyurethanes Coatings system supplyGuangzhouTianjin PolyurethanesChangchun Coatings system supply Coatings system supplyFoshanNanjing Coatings system supply
  22. 22. BASF Investor Day Asia Pacific, June 5-6, 2013 22Global growth targets(in billion €)0246810121416182011 202017.05.012.09.53.56.0+ 8.0%+ 4.0% BASF well positioned in China– fastest growing automotivemarket Focus on international OEMsand important local producers Increased R&D partnershipswith customers at InnovationCampus in Shanghai ~250 BASF people dedicatedto automotive industry in China+ 6.7%BASF precious metal sales (trading and mobile emissions catalyst production)BASF Automotive chemical sales globalIndication BASF Automotive chemical sales ChinaChinese automotive customers contributestrongly to 2020 growth targets
  23. 23. BASF Investor Day Asia Pacific, June 5-6, 2013 23801001201401601802002202009 2010 2011 2012BASF sales* growth in emerging provinces** in China(2009 = 100) Sales in emerging provincesalmost doubled since 2009 Emerging provinces accountfor ~15% of BASF GreaterChina sales (2012) Share of business contributedby emerging provinces to grow More business opportunitiesby moving closer to customers 6 sales offices in emergingprovinces Close to 100 sales people inemerging provinces* including sales out of Joint VenturesBASF has outstanding record in growingbusiness in emerging provinces in ChinaCAGRGr. China~10% p.a.** Emerging provinces are: Sichuan, Chongqing, Hubei, Hunan, Hebei, Henan, Jiangxi, Anhui, Fujian, Heilongjiang, Liaoning, Tianjin
  24. 24. BASF Investor Day Asia Pacific, June 5-6, 2013 24Chongqing area – strongly growingindustrial and consumer market Approx. 30 million people livein Chongqing GDP 2012: ~ USD 185 billion GDP 2008: ~ USD 83 billion GDP growth ’08-’12: 22.2% p.a.(9.2% for China) Key industries− Electronics and computers− Automotive− Engineering− RoboticsChongqing
  25. 25. BASF Investor Day Asia Pacific, June 5-6, 2013 25MDI investment project in Chongqing MDI market in China to growby ~10% p.a. within nextdecade up to 3.3 million metrictons per year (2020) New world-scale plant withcapacity of 400,000 metrictons MDI per year Investment: €860 million Plant 100% owned by BASF Part of integrated complex First units to start up by theend of 2014
  26. 26. BASF Investor Day Asia Pacific, June 5-6, 2013 26Xinjiang province holds the largestnatural gas resources in China Xinjiang Uyghur autonomousregion Area: 1,660,000 km2 GDP 2012: ~ USD 120 billion GDP growth 2012: 12.0% Tarim basin is largest Chinesenatural gas field Recoverable resources close to6 trillion cubic meters (source:International Energy Agency) Major West-to-East pipelinesfrom Turkmenistan and Russiawill go through XinjiangXinjiangJanggarBasinTarimBasin
  27. 27. BASF Investor Day Asia Pacific, June 5-6, 2013 27Securing competitive natural gas forBDO / PolyTHF production BASF and Xinjiang MarkorChemical Industry Co., Ltd.plan two joint ventures (JV):JV1: 100,000 mt* ButanediolJV2: 50,000 mt* PolyTHF Location: Korla, Xinjiang Uygurautonomous region Cooperation with partner todevelop chemical productionbased on local natural gas Benefits for BASF: reliable andcompetitive raw materialsupply Start-up planned for 2015* metric tons
  28. 28. BASF Investor Day Asia Pacific, June 5-6, 2013 28KorlaTibetQinghaiInner MongoliaHeilongjiangShandongLiaoningHebeiSichuanHenanAnhuiNanjingJilinGansuNingxiaShaanxiShanxiHubeiHunanZhejiangFujianJiangxiGuangxiYunnanGuizhouTaiwanHainanBeijingTianjinShanghaiMaomingCurrent investment projects  Since 1992 BASF and partnersinvested ~€5 billion in China Until 2020 BASF and partnerswill invest €4 - 5 billion in China Major current projects:– Nanjing: Acrylic acid(BASF-YPC) SAP– Chongqing: MDI– Korla: Butanediol,PolyTHF– Shanghai: Coatings– Shanghai: Catalysts– Maoming: Isononanol– Kaohsiung: Catamold®– Rudong: AgrochemicalsProduction clustersSelected production sitesImplement €4 - 5 billion investment planto move closer to the customersChongqingRudongKaohsiung
  29. 29. BASF Investor Day Asia Pacific, June 5-6, 2013 290510152012 restated Growth fromannouncedprojectsGrowth fromprojects underconsiderationNew businesses Target 2020* Sales to third parties in China (incl. Hong Kong and Taiwan) by location of customer Grow business by ~11% p.a. Capture market driven growth Strengthen local R&D Increase operationalefficiencies Increase local productionfootprint by implementingambitious investment plan Continue to scout for profitableinvestment opportunities Continue to grow profitsStrategy for 2020Sales in China*(in billion €)Grow smartly in China5.1~12
  30. 30. BASF Investor Day Asia Pacific, June 5-6, 2013 3030 BASF is strong local player in China:– local production for the Chinese market– close to customer– strong local marketing and sales organization Powerful assets in place: world-class production facilities, strong R&Dpresence Unparalleled partnerships and customer base Excellent sustainability record and know-how: a competitive edgeSales of ~€12 billion by 2020;Consistent increase in profitsChina: Key to BASF’s success inAsia Pacific
  31. 31. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 1Stephan KothradePresident BASF-YPC Company Ltd.June 06, 2013Creating competitive advantageswith a Verbund in China
  32. 32. 2BASF Investor Day Asia Pacific, June 5-6, 2013 Ι1 | Building a world-scale Verbund site3 | Success factors4 | Further growth plans2 | Business performance
  33. 33. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 3NanjingShanghai 5th largest population in China(79 million people/2012) Highly developed infrastructure Manufacturing accountsfor >50% of GDP Among top 3 in nominal GDP:5.4 trillion RMB/2012,17% CAGR 2006-2012 China’s #1 in Foreign DirectInvestments since 2006 #1 in per capita incomeJiangsu ProvinceJiangsuProvinceNanjing in Jiangsu provinceOne of the industry clusters in China
  34. 34. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 4BASF Investor Day Asia Pacific, June 5-6, 2013 Ι Closeness to customers in oneof the major industry clusters Nanjing represents ~5% of theChemical Sector in China Second largest refining andethylene capacities in China 400 chemical companies,thereof 120 in NanjingChemical Industry Park Lower labor cost than in Tier-1cities Shanghai and BeijingChemical Cluster NanjingNanjing in Jiangsu provinceThe 2nd largest chemical cluster in ChinaNanjingDowntownNaphtha PipelineNanjing ChemicalIndustry ParkNatural GasStationBASF-YPC
  35. 35. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 5BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 50/50 JV with partner Sinopec,~US$4.5 bn. (~€3.5 bn.) jointtotal investment until 2012 Capacity: ~ 3 million metrictons of total production/year Steam cracker, 16 plantclusters, ~2000 employees Commercial start-up in 2005,first expansion in 2011 BASF representative holds theBASF-YPC President position,Sinopec representative holdsthe Chairman positionBASF-YPC, heart of our Verbund network in ChinaThe Nanjing Verbund site covers ~340 soccer fields
  36. 36. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 6C3C2Ethylene GlycolAcrylatesMethylaminesC1 DimethylformamideFormic AcidEthylene OxideAcrylic AcidOxo-alcoholsPropionic AcidPropyleneEthyleneBASF-YPC covers all relevant BASF value chainsWave 1: Laying the petrochemical foundationWave 1(completed 2005)
  37. 37. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 7C3C2Ethylene GlycolMethylaminesC1 DimethylformamideFormic AcidEthylene OxideAcrylic AcidOxo-alcoholsPropionic AcidButadieneC42-PropylheptanolPolyisobuteneButenesIsobuteneEthanolaminesDMA 3EthyleneaminesDimethylethanolamineWave 2(completed 2011)AcrylatesPropyleneEthyleneNon-Ionic SurfactantsBASF-YPC covers all relevant BASF value chainsWave 2: Downstream expansionWave 1
  38. 38. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 8C3C2Ethylene GlycolC1Ethylene OxideAcrylic AcidOxo-alcoholsPropionic AcidC42-PropylheptanolPolyisobuteneNon-Ionic SurfactantsEthanolaminesDMA 3EthyleneaminesDimethylethanolamineWave 1AcrylatesGlacial Acrylic Acid SuperabsorbentsButadieneButenesIsobutenePropyleneEthyleneMethylaminesDimethylformamideFormic AcidBASF-YPC covers all relevant BASF value chainsWave 3: Bringing Verbund to full potentialWave 3(under construction)Wave 2
  39. 39. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 9BASF-YPC: ~€3.5 billion total joint capex until 2012Capital Expenditures(in million €)IPS 1 NASAIPS 2 Others01002003004005006007002001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
  40. 40. 10BASF Investor Day Asia Pacific, June 5-6, 2013 Ι1 | Building a world-scale Verbund site3 | Success factors4 | Further growth plans2 | Business performance
  41. 41. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 11Business Performance of BASF-YPCSales(in billion €)1.721.361.932.762.8300.511.522.532008 2009 2010 2011 2012100%167%238%292%200%EBITDA(indexed)0%50%100%150%200%250%300%
  42. 42. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 12 Continuous improvement ofoperational excellence Local project team screens allproduction plants, alsoinfrastructure & services BASF delegates infuse toolsand methodology from otherVerbund sites– technical processes– automation– work processes– organization– contractor managementOptimization of operational excellenceProductionPlants
  43. 43. 13BASF Investor Day Asia Pacific, June 5-6, 2013 Ι1 | Building a world-scale Verbund site3 | Success factors4 | Further growth plans2 | Business performance
  44. 44. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 14 Synergies with localSinopec subsidiaries Sinopec suppliesnaphtha andtechnical gases toBASF-YPC Sinopec support inpermissions andgovernment relations BASF technologies Verbund knowledgefrom other BASF sites Expertise in optimizingoperational excellence BASF-YPC providesraw materials, utilitiesand services to BSNJ(100% BASF)BASF-YPCCompany Limited扬子石化-巴斯夫有限责任公司BASF-YPC is a grown partnership
  45. 45. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 15BASF-YPC provides raw materials, utilities and servicesOrganicFlocculantsCationic PolyacrylamideCationic MonomerDMA 3C3C2DimethylamineC1MethylacrylateBASF-YPCAcrylic AcidPropyleneDimethylethanolamineEthylene Ethylene Oxide DMA 3BASF-YPCBackbone for BASF’s downstream activitiesUtilitiesServicesDMA 3BASF SpecialtiesNanjing
  46. 46. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 16 Geographic proximity:80% of customers within400 km around Nanjing Enhanced market accessthrough BASF China andSinopec sales network BASF-YPC’s supplies tolocal champions and toBASF’s global key accountsMultiple synergiesCustomer proximity of BASF-YPC**** Global BASF key account
  47. 47. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 17Recruitment and retention Perceived as top employer inNanjing; attrition rate only ~2% Cooperation with localuniversities and colleges Successful recruitment fromnationally renowned universities Access to qualified personneland local talent pool Talent development for BASFin Greater China and beyondBASF-YPC is perceived as a top employer
  48. 48. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 18BASF-YPC is a role model for EHS in ChinaLost Time Injuries – Contractors, Employees(per million working hours)1.900.5 0.450.280.30.50.40.2 0.200.511.522008 2009 2010 2011 2012 BASF-YPC is a benchmark foroccupational & process safety Outstanding reputation inenvironmental protection Participation in BASF’soccupational health campaigns LTI rate at BASF-YPC is lowerthan for BASF Group Won ‘National Safety CultureModel Enterprise Award’High focus on EHSContractors Employees
  49. 49. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 19 BASF-YPC sets new standardsfor distribution safety; pushingfor double-hull tankers for rivertransportation BASF-YPC coaches customersin product stewardship concepts Active stakeholder dialogue:– Annual EHS Report– Town hall meetings– Donations(schools, hospitals)Looking beyond the fenceBASF-YPC: Frontrunner in stakeholder engagement
  50. 50. 20BASF Investor Day Asia Pacific, June 5-6, 2013 Ι1 | Building a world-scale Verbund site3 | Success factors4 | Further growth plans2 | Business performance
  51. 51. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 213rd wave of projects under way MOU signed with Sinopec inDecember 2010; up to~US$1 billion joint investment Individual feasibility studies Projects already in execution:– New 60 kt SAP plant– New acrylic acid and butylacrylate plants Projects under consideration:– HPPO– New neopentyl glycol plant– Expansions of ethyleneoxide, 2-propylheptanoland non-ionic surfactantsFurther expansion at BASF-YPC
  52. 52. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 22 China is projected to remainthe world’s fastest growingacrylics market: >8% CAGR BASF-YPC’s acrylicsexpansion will strengthen ourmarket leadership position Cost leadership throughproprietary BASF technologyShare of global Acrylics demandExample: Highly Attractive Acrylics Value ChainChina will become the global #1 acrylics market by 2020China will climb to #1 in acrylicsNorthAmericaChinaEurope RoAsiaJapan RoW26%6% 6.3 mn t2.8 mn t2000 2020
  53. 53. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 23Source: BASF Market IntelligenceBaby78%Others2%1,700 ktExample: Highly Attractive Acrylics Value ChainSAP is the biggest growth story in acrylicsGrowth in SAPAdultIncontinence17%* Emerging MarketsFeminine Care3%SAP application split (2012) Global SAP market ~1,700 kt Global growth rate: ~5% p.a.:– Increasing wealth in EM’s*– Next-generation baby diapers– Ageing population (>6% p.a.in Adult Incontinence segment,driven by Western markets) SAP market in China: Highsingle-digit growth rate expected BASF’s Global Key Accountsin China gain access to locallyproduced SAP with globallyconsistent quality
  54. 54. BASF-YPC Company Limited扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 24BASF-YPC: Verbund Strength In China Nanjing site is a benchmark: World-scale, integrated, low-cost, consistentlyprofitable Customer portfolio includes regional players, national champions, globalBASF key accounts – and wholly-owned BASF Specialties Nanjing Growth driven by stepwise capacity expansion and downstream extensionof value chains Top employer with low attrition rate Frontrunner in Environment, Health & SafetyPowerful platform for further success
  55. 55. 25BASF Investor Day Asia Pacific, June 5-6, 2013 ΙBASF-YPC Company Limited扬子石化-巴斯夫有限责任公司
  56. 56. BASF Investor Day Asia Pacific, June 5-6, 2013 31
  57. 57. BASF Specialty ChemicalsMingwei QIN, General ManagerBASF Specialty Chemicals (Nanjing) Co., Ltd.Investor DayAsia PacificNanjing, June 6, 2013
  58. 58. BASF Investor Day Asia Pacific, June 5-6 2013 21 | Building a best-in-class specialty site2 | Business and customers
  59. 59. 3BASF Investor Day Asia Pacific, June 5-6 2013 Wholly-owned by BASF Composed of Henghai andSunrise areas, part of NanjingChemical Industry Park Close to BASF-YPC Total area: ~ 37 ha Available for expansion: 18 ha 6 plants with total investment:approx. US$ 200 million First production in June 2012BASF Specialty Chemicals CompanyNanjingBASF-YPCHenghaiareaBASF-YPCHenghaiarea(reserved land)
  60. 60. 4BASF Investor Day Asia Pacific, June 5-6 2013Multi-functionbuildingWorkshop PigmentsplantPigmentsplantAdditivesplantWarehouseAdministrationbuildingKey products in Sunrise area:Pigments and paint additives
  61. 61. 5BASF Investor Day Asia Pacific, June 5-6 2013Key products in Henghai area:Flocculants and tertiary-Butylamine (t-Ba)Start-up: June / October 2012DMA3quat and flocculants plant tertiary-Butylamine plantStart-up: May 2013
  62. 62. 6BASF Investor Day Asia Pacific, June 5-6 2013Fast and cost efficient project execution 18 months from piling to start Project costs under budget Excellent EHS (environment,health and safety) recordHow has this been achieved? Local engineering Local procurement ofcapital goods Closely working project team► BASF Specialty Chemicalsis a benchmark for successfulproject implementation in China
  63. 63. 7BASF Investor Day Asia Pacific, June 5-6 2013BASF-YPC provides raw materials, utilities and services to Henghai areaProductionWaterNitrogen SteamPlant tBA Plant DMA3QAmmonia Isobutene DMA3FuelGasDemin.WaterInstrument Air/Plant AirPotableWaterService35kV MonitorBASF Specialty Chemicals benefits fromBASF-YPC Verbund
  64. 64. 8BASF Investor Day Asia Pacific, June 5-6 2013Implementing BASF global standardsFull compliance with all BASFEHS and quality standards Full compliance with localregulations Implementation of responsiblecare system No compromise onenvironmental protection,health and safety Successfully gained ISO 9001certificate Implementation of integratedquality management system
  65. 65. BASF Investor Day Asia Pacific, June 5-6 2013 91 | Building a best-in-class specialty site2 | Business and customers
  66. 66. 10BASF Investor Day Asia Pacific, June 5-6 2013BASF Specialty Chemicals servesgrowing downstream specialty marketsCationicFlocculants (Zetag® )Waste water treatment /paper plantstertiary-Butylamine (t-Ba)Vulcanization accelerators forrubber and tire productionPigments /AdditivesIndustrial andAutomotive coatings,Decorative paintsFlocculants tertiary-Butylamine Pigments & Coating Additives 10
  67. 67. 11BASF Investor Day Asia Pacific, June 5-6 2013Water Stress Health ProtectionSustainableEnergy GrowthDemand for water treatment solutionsgrows rapidly in ChinaGrowing industrialproductionSocio-economic megatrends in ChinaFlocculants tertiary-Butylamine Pigments & Coating Additives 11
  68. 68. 12BASF Investor Day Asia Pacific, June 5-6 2013 Zetag® cationic polyacrylamideflocculants used to efficientlyseparate solids (sludge)/liquidsin water treatment processes Dry sludge can be used as fuelto generate energy Chinese flocculants market> €150 million, growing by 8%p.a. First backward integratedpolyacrylamide value chain viaBASF-YPC Improved supply reliability andcost efficiency for Asian marketZetag® flocculants for waste watertreatment solutionsFlocculants Tertiary-Butylamine Pigments & Coating Additives 12
  69. 69. 13BASF Investor Day Asia Pacific, June 5-6 2013 Tire production in China drivenby light vehicle production,replacement tire market andtire exports Tire production to grow by ~7%p.a., reaching ~500 million unitsby 2015 Tire production drives demandfor vulcanization accelerators01002003004005006002001 2005 2009 2013 2015335410Tire production in China(in million units)Increased need for mobility drives tireproduction in ChinaCAGR~7% p.a.Flocculants tertiary-Butylamine Pigments & Coating Additives 13~50019090
  70. 70. 14BASF Investor Day Asia Pacific, June 5-6 2013 Market size of t-Ba:~ US$ 50 million (2011) New plant serves ~15 growingcustomers in China Switch from import to localproduction shortens lead time by6 weeks Cost efficient production processbased on backward integrationand proprietary technology t-Ba process free of waste water► low environmental impact BASF: leading t-Ba supplierin ChinaLocal production enables BASF to growChinese tertiary-Butylamine businesstertiary-ButylamineMercapto-benzotriazoleVulcanizationaccelerator TBBSTireproductionotherraw materialsRubbert-Ba-based vulcanization accelerators reduce cycle timeand energy consumption in tire productionFlocculants tertiary-Butylamine Pigments & Coating Additives 14
  71. 71. 15BASF Investor Day Asia Pacific, June 5-6 20130246810121416182005 2010 2015Paint and coatings consumption in China(in million mt) Chinese coatings and paintmarket will continue to growabove GDP Fastest growing marketsegments:– Architectural coatings– Industrial coatings– Automotive coatings Main drivers:– Growth in emerging provinces– Investments in infrastructure– Automotive growth– Environmentally friendlyproductsBASF participates in growing Chinesecoatings marketCAGR12% p.a.5916Flocculants tertiary-Butylamine Pigments & Coating Additives 15
  72. 72. 16BASF Investor Day Asia Pacific, June 5-6 2013BASF participates in growing Chinesecoatings market Pigments and additives addvalue (color, properties) to paintand coating systems Production at BASF SpecialtyChemicals reduces lead-timeand improves supply security toAsian customers Local plant with proximity to R&Dcenter in Shanghai reduces timeto market for new products Flexible production set-up allowsBASF to adapt to changingmarket conditionsVarnishPigmentsAdditivesBindersFlocculants tertiary-Butylamine Pigments & Coating Additives 16
  73. 73. 17BASF Investor Day Asia Pacific, June 5-6 2013 Independent, wholly-owned specialty chemicals producer World-class site Site development is a model for other projects in Asia Pacific Focused on high-growth downstream markets:water treatment, transportation, coatings, … Proximity to BASF-YPC: Synergies and lower costsBASF Specialty Chemicals NanjingPowerful local presence: Room to grow

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