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BASF Q3-2010 Speech

BASF
BASF

Charts and Speech accompanying the 3Q2010 Conference Call for investors and analysts on October 28, 2010.

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BASF 3rd Quarter 2010 Analyst Conference Call
October 28, 2010, 2:30 p.m. (CEST)
Ludwigshafen




Dr. Jürgen Hambrecht
Dr. Kurt Bock
Dr. John Feldmann
Page 2
BASF 3rd Quarter 2010 Analyst Conference Call                                                                                                                                                                            October 28, 2010




                                                                     Third Quarter 2010
                                                                                                                                  Forward-looking statements
                                                                     Financial Highlights
                                                                                                                                  This presentation includes forward-looking statements that are subject to risks and
                                                                     On track                                                     uncertainties, including those pertaining to the anticipated benefits to be realized from the
                                                                                                                                  proposals described herein. This presentation contains a number of forward-looking
                                                                     for a record year                                            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 w ith 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
                                                                     October 28, 2010                                             applicable laws and regulations.

3rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010                                                               1     3 rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010                                    2




  Business dynamics remained strong in Q3

   Sales (billion €)                                                                                                       EBIT before special items (billion €)

    20                                                                                                                     2.5                                                                           2.2       2.2
                                                                           15.5          16.2         15.8                                                                                         2.0
    16                                                                                                                     2.0
                           12.8                             13.2
                                                                                                                                                                           1.5
    12                                                                                                                     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                                             2010

  Sales development
     Perio d                                                                           Vol umes                       Pri ces                                              Portfoli o                      Cu rrencies

     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%
                                                                                 * + 2% volume grow th w/o Agricultural solutions and Oil & Gas
   3 rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010                                                                                                                                                        3
Page 3
BASF 3rd Quarter 2010 Analyst Conference Call                       October 28, 2010



[Chart 3: Business dynamics remained strong in Q3]

   As already announced last week, BASF again performed significantly better
   than expected.

   In the third quarter, the global economy continued to recover and business
   dynamics remained strong.

   Tight supplies of certain products further contributed to our excellent third
   quarter performance.
Page 4
BASF 3rd Quarter 2010 Analyst Conference Call                                                             October 28, 2010




 Third quarter 2010 highlights
 Strong business dynamics in all segments

   Q3 2010 business development
       Volume growth in Chemical Activities
       Agricultural Solutions started successfully into the season in South America
       Oil & Gas earnings were above previous year due to higher oil price
       Very strong operating cash flow of €5.3 billion in the first three quarters

   Q3 2010 performance                                                            vs. Q2’10   vs. Q3’09

        Sales                                                     €15.8 billion     - 3%       +23%
        EBITDA                                                    €2.9 billion      +2%        +47%
        EBITDA margin                                             18.6%             17.7%      15.6%
        EBIT before special items                                 €2.2 billion        -        +77%
        EBIT                                                      €2.16 billion     +4%        +122%
        Net income                                                €1.25 billion     +5%        +425%
        Adjusted EPS                                              €1.52             +1%        +149%
 3 rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010                                           4
Page 5
BASF 3rd Quarter 2010 Analyst Conference Call                      October 28, 2010



[Chart 4: Third quarter 2010 highlights]

   With 15.8 billion Euros, BASF generated record sales for a third quarter.
   Sales were 23 percent above Q3 2009 and only slightly below the second
   quarter 2010 due to the seasonal effects.

   In our Chemical Activities (Chemicals, Plastics, Performance Products and
   Functional Solutions), capacity utilization remained on a high level. Strong
   momentum came from Asia and partly North America.

   In Agricultural Solutions, we had a very successful start into the season in
   South America.

   In Oil & Gas, business developed as expected and earnings were slightly
   above the previous year due to higher oil prices more than compensating for
   lower volumes in E&P.

   EBITDA increased by 941 million Euros to 2.9 billion Euros versus Q3 2009
   and by 67 million Euros versus Q2 2010.

   Third-quarter EBIT before special items amounted to 2.2 billion Euros, up
   more than 75 percent versus last year and matched the excellent result of
   the last quarter.

   Net income jumped by 1 billion Euros to 1.25 billion Euros in Q3 2010.
   Versus Q2 2010, the increase was 62 million Euros.

   Adjusted earnings per share amounted to 1.52 Euros, an increase of 91
   Euro cents versus last year’s quarter and up 2 Euro cents versus Q2 2010.
Page 6
BASF 3rd Quarter 2010 Analyst Conference Call                                                                                     October 28, 2010




 Important operational developments

    STYROLUTION                                                   Construction Chemicals           Oil and Gas




       Carve-out of Styrenics                                      BASF admixtures used in the     Five North Sea oil discoveries in
       activities into STYROLUTION                                 construction of Gotthard Base   2010:
       Effective: January 1, 2011                                  Tunnel – World’s longest          – Norway: Beta and Maria;
                                                                   railway tunnel
       Sales 2009: €2.5 billion                                                                      – UK: Catcher, Blakeney,
                                                                   Special admixtures for long         Cladhan
       Employees 2009: 1,460                                       distance and high temperature
                                                                                                   New discoveries with growth
                                                                                                   potential
                                                                                                   Appraisal phase starts asap


 3 rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010                                                                        5

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BASF Q3-2010 Speech

  • 1. F BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010, 2:30 p.m. (CEST) Ludwigshafen Dr. Jürgen Hambrecht Dr. Kurt Bock Dr. John Feldmann
  • 2. Page 2 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 Third Quarter 2010 Forward-looking statements Financial Highlights This presentation includes forward-looking statements that are subject to risks and On track uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. This presentation contains a number of forward-looking for a record year 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 w ith 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 October 28, 2010 applicable laws and regulations. 3rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010 1 3 rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010 2 Business dynamics remained strong in Q3 Sales (billion €) EBIT before special items (billion €) 20 2.5 2.2 2.2 15.5 16.2 15.8 2.0 16 2.0 12.8 13.2 1.5 12 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 2010 Sales development Perio d Vol umes Pri ces Portfoli o Cu rrencies 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% * + 2% volume grow th w/o Agricultural solutions and Oil & Gas 3 rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010 3
  • 3. Page 3 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 [Chart 3: Business dynamics remained strong in Q3] As already announced last week, BASF again performed significantly better than expected. In the third quarter, the global economy continued to recover and business dynamics remained strong. Tight supplies of certain products further contributed to our excellent third quarter performance.
  • 4. Page 4 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 Third quarter 2010 highlights Strong business dynamics in all segments Q3 2010 business development Volume growth in Chemical Activities Agricultural Solutions started successfully into the season in South America Oil & Gas earnings were above previous year due to higher oil price Very strong operating cash flow of €5.3 billion in the first three quarters Q3 2010 performance vs. Q2’10 vs. Q3’09 Sales €15.8 billion - 3% +23% EBITDA €2.9 billion +2% +47% EBITDA margin 18.6% 17.7% 15.6% EBIT before special items €2.2 billion - +77% EBIT €2.16 billion +4% +122% Net income €1.25 billion +5% +425% Adjusted EPS €1.52 +1% +149% 3 rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010 4
  • 5. Page 5 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 [Chart 4: Third quarter 2010 highlights] With 15.8 billion Euros, BASF generated record sales for a third quarter. Sales were 23 percent above Q3 2009 and only slightly below the second quarter 2010 due to the seasonal effects. In our Chemical Activities (Chemicals, Plastics, Performance Products and Functional Solutions), capacity utilization remained on a high level. Strong momentum came from Asia and partly North America. In Agricultural Solutions, we had a very successful start into the season in South America. In Oil & Gas, business developed as expected and earnings were slightly above the previous year due to higher oil prices more than compensating for lower volumes in E&P. EBITDA increased by 941 million Euros to 2.9 billion Euros versus Q3 2009 and by 67 million Euros versus Q2 2010. Third-quarter EBIT before special items amounted to 2.2 billion Euros, up more than 75 percent versus last year and matched the excellent result of the last quarter. Net income jumped by 1 billion Euros to 1.25 billion Euros in Q3 2010. Versus Q2 2010, the increase was 62 million Euros. Adjusted earnings per share amounted to 1.52 Euros, an increase of 91 Euro cents versus last year’s quarter and up 2 Euro cents versus Q2 2010.
  • 6. Page 6 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 Important operational developments STYROLUTION Construction Chemicals Oil and Gas Carve-out of Styrenics BASF admixtures used in the Five North Sea oil discoveries in activities into STYROLUTION construction of Gotthard Base 2010: Effective: January 1, 2011 Tunnel – World’s longest – Norway: Beta and Maria; railway tunnel Sales 2009: €2.5 billion – UK: Catcher, Blakeney, Special admixtures for long Cladhan Employees 2009: 1,460 distance and high temperature New discoveries with growth potential Appraisal phase starts asap 3 rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010 5
  • 7. Page 7 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 [Chart 5: Important operational developments] At the beginning of October, we announced the plan to carve-out our Styrenics business into separate companies under the name of STYROLUTION. The carve-out is to be completed by January 1, 2011. STYROLUTION will become a clear leader in the Styrenics market combining top technology and an efficient production base that will bring business excellence to all its customers. In parallel, we continue to look for the best strategic options for the business and its employees. On October 15, 2010, we saw the main breakthrough of the new Gotthard base tunnel, the world’s largest railway tunnel. During the construction, the use of BASF’s construction chemicals was essential to ensure efficiency, durability, safety and a sustainable approach to construction. In order to meet the challenges of this mega project, BASF developed special admixture solutions for long distance and high temperatures. This year we already announced the discovery of five new oil fields in our core region North Sea. All coming from the acquisition of Revus. Two of them are in Norway and three in the UK. These excellent new discoveries increase the growth potential of our portfolio in the North Sea considerably.
  • 8. Page 8 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 Chemicals Continued strong demand Q3’10 segment sales (million €) vs. Q2’10 EBIT before special items (million €) Intermediates Inorganics 687 322 617 643 600 (1)% (1)% 461 €2,874 400 364 315 (3)% 200 Petrochemicals 1,909 0 (4)% Q3 Q4 Q1 Q2 Q3 2009 2010 Sales development Period Volumes Prices Portfolio Currencies Q3’10 vs. Q2’10 0% (2)% 0% (1)% Q3’10 vs. Q3’09 10% 25% 0% 9% 1-9 ’10 vs. 1-9 ’09 22% 31% 0% 4% 3 rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010 6
  • 9. Page 9 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 In the Chemical Activities (Chemicals, Plastics, Performance Products and Functional Solutions), we focus on a sequential comparison of Q3 2010 versus Q2 2010, which should help you to better understand the business dynamics in the last three months. [Chart 6: Chemicals] In Chemicals, we posted again very strong figures. Sales, however, decreased slightly by 3 percent and earnings by 10 percent compared to the record level of the previous quarter, mainly due to Petrochemicals. In Q3 2010, strong demand for Petrochemicals continued. Many products like acrylics, solvents and plasticizers remained tight in all regions as a result of high demand as well as planned and unplanned outages at competitors. Following the turnaround of the Nanjing site in Q2, our capacity utilization increased. Softer olefin prices in North America and Asia triggered a 4 percent decline in sales. Earnings remained strong, but weaker cracker margins in Asia and North America had a negative impact. In Inorganics, sales were almost flat. The margin for ammonia stayed high but declined over the strong previous quarter as a result of the end of the fertilizer season. Earnings decreased due to higher fixed costs resulting from planned maintenance measures and lower ammonia margins. In Intermediates, sales continued at the strong level of the second quarter driven by ongoing solid demand from key customer industries in all regions. Supply of butanediol and derivatives, some polyalcohols and several amines did not meet actual customer demand. Earnings improved accordingly.
  • 10. Page 10 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 Plastics Earnings up again thanks to high capacity utilization Q3’10 segment sales (million €) vs. Q2’10 EBIT before special items (million €) Polyurethanes 400 371 349 1,458 +4% 279 251 216 €2,598 200 +1% Performance Polymers 1,140 0 (4)% Q3 Q4 Q1 Q2 Q3 2009 2010 Sales development Period Volumes Prices Portfolio Currencies Q3’10 vs. Q2’10 1% 0% 0% 0% Q3’10 vs. Q3’09 14% 7% 0% 11% 1-9 ’10 vs. 1-9 ’09 27% 10% 0% 5% 3 rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010 7
  • 11. Page 11 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 [Chart 7: Plastics] In Plastics, strong demand from key customer industries continued in the third quarter. The typical seasonal slowdown in automotive and construction during the summer months was almost not observed in this year’s third quarter. Capacity utilization of our plants was high. Earnings improved by 6 percent to 371 million Euros, mainly due to higher volumes. In Performance Polymers, sales decreased by 4 percent due to the seasonal slowdown in Europe and Asia, which was less pronounced than usual. Ongoing strong demand and tight supply for polyamides and engineering plastics resulted in continued healthy margins. Earnings matched the excellent level of the previous quarter. Stronger sales volumes, especially for MDI and TDI, price increases and positive currency effects lifted Polyurethanes sales by 4 percent. Our specialties business performed also well thanks to the strong demand from the automotive industry. Price increases coupled with softening benzene feedstock costs led to improved MDI margins. TDI margins came down from the high level achieved in the first half year 2010. Earnings further improved due to a combination of higher sales volumes and better MDI margins.
  • 12. Page 12 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 Performance Products Solid earnings despite one-off costs Q3’10 segment sales (million €) vs. Q2’10 EBIT before special items (million €) Care Chemicals 50 0 471 682 Performance 419 +1% Chemicals 40 0 370* 832 Nutrition 286 €3,206 +3% 30 0 & Health 209 357 +2% 20 0 (4)% 10 0 Paper Chemicals Dispersions & Pigments 0 448 887 Q3 Q4 Q1 Q2 Q3 +2% +4% 2009 2010 Sales development Period Volumes Prices Portfolio Currencies Q3’10 vs. Q2’10 1% 1% 0% 0% Q3’10 vs. Q3’09 7% 7% 0% 7% 1-9 ’10 vs. 1-9 ’09 15% 3% 13% 4% 3 rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010 * Reduction in EBIT before special items due to one-time charges 8
  • 13. Page 13 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 [Chart 8: Performance Products] The Performance Products segment continued to perform strongly. Sales increased by 2 percent, but earnings declined by 21 percent due to one- time charges in the Performance Chemicals division. To prepare for the integration of Cognis, the former Care Chemicals division was split into two divisions: Care Chemicals and Nutrition & Health. We now published for the first time the figures according to the new segment structure. Sales in Dispersions & Pigments rose by 4 percent reflecting ongoing strong demand in all businesses and regions. Certain raw materials and key products remained tight. Earnings were stable. Sales in Care Chemicals increased slightly driven by higher volumes for detergents and formulators and a continuously tight hygiene market. Consequently, plant utilization further increased. At stable margins, earnings again reached a very high level. In our new division Nutrition & Health, demand continued on a healthy level. In aroma chemicals, we were not able to fully meet the strong customer demand. On the other hand, we experienced seasonally lower volumes in our pharma business and softening prices at nutrition. This led to a 4% reduction in sales. As a result of lower sales and higher fixed costs related to planned shutdowns, earnings declined.
  • 14. Page 14 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 Performance Products Solid earnings despite one-off costs Q3’10 segment sales (million €) vs. Q2’10 EBIT before special items (million €) Care Chemicals 50 0 471 682 Performance 419 +1% Chemicals 40 0 370* 832 Nutrition 286 €3,206 +3% 30 0 & Health 209 357 +2% 20 0 (4)% 10 0 Paper Chemicals Dispersions & Pigments 0 448 887 Q3 Q4 Q1 Q2 Q3 +2% +4% 2009 2010 Sales development Period Volumes Prices Portfolio Currencies Q3’10 vs. Q2’10 1% 1% 0% 0% Q3’10 vs. Q3’09 7% 7% 0% 7% 1-9 ’10 vs. 1-9 ’09 15% 3% 13% 4% 3 rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010 * Reduction in EBIT before special items due to one-time charges 8
  • 15. Page 15 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 Good demand in Europe and North America supported the sales growth of 2% in Paper Chemicals. Margin pressure continued as raw material costs could only partly be recovered from the market. In Performance Chemicals, sales rose by 3 percent driven by a continued recovery of major customer industries as well as some stock replenishment along the value chain. The market for plastic additives was still tight. Earnings were negatively impacted by significant one-time charges for write- downs of receivables related to long-term supply agreements. Finally, a short update on the proposed acquisition of Cognis, which we announced on June 23rd. The closing of the transaction is subject to clearance by the competent merger control authorities. We have filed with all responsible merger control authorities and expect approval for the transaction end of November 2010.
  • 16. Page 16 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 Functional Solutions Increased volumes drive topline growth Q3’10 segment sales (million €) vs. Q2’10 EBIT before special items (million €) Catalysts Construction Chemicals 165 158 1,347 599 150 +10% +4% 111 106 101 €2,591 100 +6% 50 Coatings 645 0 (1)% Q3 Q4 Q1 Q2 Q3 2009 2010 Sales development Period Volumes Prices Portfolio Currencies Q3’10 vs. Q2’10 7% (1)% 0% 0% Q3’10 vs. Q3’09 15% 9% 1% 12% 1-9 ’10 vs. 1-9 ’09 18% 11% 1% 7% 3 rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010 9
  • 17. Page 17 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 [Chart 9: Functional Solutions] In Functional Solutions, sales increased by 6 percent compared to the previous quarter mainly driven by stronger volumes from customers in the automotive industries. Earnings matched the level of the previous quarter. In Catalysts, sales rose by 10 percent due to a significant increase in volumes. Demand for heavy duty diesel catalysts and for chemical catalysts picked up considerably. On the back of improved volumes, earnings rose significantly. In Construction Chemicals, sales increased by 4 percent. The majority of this increase is attributable to improved demand in Asia and North America. Raw material costs trended upwards resulting in slightly weaker margins. Given the higher volumes earnings still matched the level of the previous quarter. Coatings sales were flat. While demand from automotive OEMs declined – mainly due to seasonally lower production volumes in Europe – the decorative paints business improved significantly. Earnings decreased as a result of the seasonally lower demand from the automotive industry and higher raw material costs.
  • 18. Page 18 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 Agricultural Solutions Successful start to new season in South America Q3’10 segment sales (million €) vs. Q3’09 EBIT before special items (million €) 1,000 832 80 % 66 +3 4 800 623 % 600 14 +2 40 400 21 200 0 0 Q3 Q3 Q3 Q3 2009 2010 2009 2010 Sales development Period Volumes Prices Portfolio Currencies Q3’10 vs. Q2’10 (31)% (1)% 0% 1% Q3 ’10 vs. Q3 ’09 29% (6)% 0% 11% 1-9 ’10 vs. 1-9 ’09 7% (3)% 0% 4% 3 rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010 10
  • 19. Page 19 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 Due to the seasonal nature of the businesses, we switched to a year-over-year comparison (Q3 2010 vs. Q3 2009) for Agricultural Solutions and Oil & Gas. [Chart 10: Agricultural Solutions] In Q3 2010, sales of Agricultural Solutions grew by more than 30 percent versus Q3 2009 as a result of a strong volume growth in all regions and positive currency effects. In South America, we had a successful start into the new planting season. Thanks to our capacity expansion of F 500®, we were able to satisfy the increased demand for soybean fungicides in South America. The newly launched seed treatment product Standak® Top further contributed to the strong sales growth in Brazil. The autumn season in Europe started off equally well. Favorable growing conditions led to high demand for oilseed rape and cereal herbicides in Central Europe. Earnings in the third quarter amounted to 66 million Euros, significantly up from 21 million Euros in Q3 of last year. For the full year 2010, we aim to reach the prior year’s record level of EBIT before special items.
  • 20. Page 20 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 Oil & Gas Improved earnings despite lower volumes Q3’10 segment sales (million €) vs. Q3’09 EBIT before special item s / Net income (million €) Exploration & 800 Production 573 881 600 550 (1)% 70 83 €2,228 400 (7)% 503 Natural Gas 200 467 272 Trading 186 1,347 0 (10)% Q3 Q3 2009 2010 EBIT bSI Natural G as Trading Net inc ome Sales development EBIT bSI Explorat ion & Production Period Volumes Prices/Currencies Portfolio Q3’10 vs. Q2’10 (12)% 6% 0% Q3’10 vs. Q3’09 (23)% 16% 0% 1-9 ’10 vs. 1-9 ’09 3% (13)% 0% 3 rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010 11
  • 21. Page 21 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 [Chart 11: Oil & Gas] In Q3 2010, sales of Oil & Gas reached 2.2 billion Euros and EBIT before special items 573 million Euros, respectively. In Exploration & Production, sales were nearly stable versus Q3 2009. The substantial increase in the oil price of 9 US dollars to 77 US dollars per barrel compensated for a roughly 20 percent lower oil production given the OPEC restrictions in Libya as well as lower gas prices. Earnings increased by 8 percent to 503 million Euros as a result of the higher oil price. Sales in Natural Gas Trading declined by 10 percent to 1.3 billion Euros. Please note: Q3 2010 sales compare with unusually high sales levels in Q3 2009. Last year, customers shifted orders from the second to the third quarter caused by lower prices. As a result, earnings decreased by 16 percent to 70 million Euros. Net income after minority interests increased by 86 million Euros to 272 million Euros.
  • 22. Page 22 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 Review of “Other” Million € Q3 2010 Q3 2009 Sales 1,452 1,280 thereof Styrenics 815 696 EBIT before special items 58 (295) thereof Group Corporate Costs (54) (54) Corporate Research (67) (81) Currency results, hedges and other 104 (92) valuation effects Styrenics, fertilizers, other businesses 77 43 Special items (68) (96) EBIT (10) (391) 3 rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010 12
  • 23. Page 23 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 [Chart 12: Other] Sales in ‘Other’ increased by 13 percent year-on-year – mainly due to the improved Styrenics performance. Despite the scheduled turnaround of our Styrenics’ plants in Antwerp, Styrenics sales increased by 17%. Polymer demand was high in all regions, especially in Europe, where both commodities and specialty copolymers were tight in supply. Earnings in ‘Other’ increased significantly from minus 295 million Euros in Q3 2009 to plus 58 million Euros in Q3 of this year. This strong improvement was mainly attributable to gains from hedges against foreign currency risks and the reversal of provisions for BASF’s option program.
  • 24. Page 24 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 Cash flow of €5.3 billion Very strong cash flow generation in Q3 Million € Jan – Sept 2010 Jan - Sept 2009 Cash provided by operating activities 5,307 4,959* thereof Changes in net working capital (783) 1,558 Cash used in investing activities (1,175) (3,418) thereof Payments related to tangible / intangible assets (1,518) (1,828) Cash used in financing activities (3,814) (1,372)* thereof Changes in financial liabilities (2,003) 789 Dividends (1,811) (2,027) * 2009 adjusted for r eclassification of settlement payments for currency derivatives Third quarter 2010 Q3 operating cash flow at €2.6 billion Free cash flow at €2.0 billion again on a high level Net debt reduced by €2.1 billion to €11.4 billion compared with the end of the second quarter 2010 3 rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010 13
  • 25. Page 25 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 [Chart 13: Cash flow of €5.3 billion] The significantly improved business activity lifted cash flow from operating activities to 5.3 billion Euros in the first nine months of this year. Despite ongoing strong sales, we were able to decrease net working capital by 572 million Euros since the end of the second quarter. Cash used in investing activities amounted to minus 1.2 billion Euros in the first three quarters. Last year’s figure of 3.4 billion Euros reflects the Ciba acquisition. Free cash flow in the first nine months was 3.8 billion Euros, with 2.0 billion Euros generated in the third quarter. We were able to reduce net debt by roughly 2.1 billion Euros to 11.4 billion Euros in the last three months. Settlement payments from currency deviations in 2010 were re-classified from operating cash flow to cash flow from financing activities. In connection with hedging activities for the financing of our North American business, we exchange Euro for U.S. dollars at banks. The regular renewal of these hedging transactions can result in inflows or outflows in Euro depending on the development of the U.S. dollar exchange rate. Since 2010, these payments have been reported as changes in financial liabilities under cash used in financing activities; previously they were reported under cash provided by operating activities. In line with this change, the figures from the previous year have been adjusted accordingly (roughly 400 million Euros in first nine months of 2009).
  • 26. Page 26 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 Introducing the next leading technologies CO 2 scrubbing Standak ® Top NaphthaMax® III High-efficiency capture of SeedSolutions® innovation for Catalyst for Fluid Catalytic carbon dioxide (CO2 ) from soybean growers in Brazil Cracking (FCC) units combustion gases in coal-fired Ready-to-use insecticidal and Increased zeolite activity and power plants fungicidal seed protection with coke selectivity as well as Development of new Plant Health characteristics improved hydrothermal stability processes and solvents Attractive and fast growing Increased gasoline yield from the market driven by high value FCC unit seed Translating to higher refinery margins 3 rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010 14
  • 27. Page 27 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 [Chart 14: Introducing the next leading technologies] BASF is introducing new leading technologies developed in our own research labs or in collaboration with strong industry partners or with world-leading Universities almost every day. The following innovations were introduced during the last months: Together with RWE Power and Linde Group, we develop new processes and solvents for high-efficiency capture of carbon dioxide (CO2) from combustion gases in coal-fired power plants. This technology is used already in more than 200 plants all over the world for purifying natural and synthesis gases. With Standak® Top we successfully launched an innovative product for soybean growers in Brazil. Standak® Top combines soy seed protection against insects and fungicidal diseases as well as Plant Health characteristics in one product. Standak® Top includes key active ingredients like our insecticide Fipronil as well as our state of the art fungicide F 500®. BASF will further grow this interesting and fast growing SeedSolutions® business by leveraging its Verbund technologies through innovative product offers and formulations. BASF’s NaphthaMax® III catalyst for Fluid Catalytic Cracking Units in the refining industry sets a new standard in the current operating environment allowing refiners to expand their window of operability by offering greater flexibility. NaphthaMax® III based on BASF’s award winning Distributed Matrix Structures (DMS) delivers unparalleled hydrothermal stability, coke selectivity and product yields translating to increased value to the refiner.
  • 28. Page 28 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 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. 3 rd Quarter 2010 F inanci al Highl ights ___ October 28, 2010 15
  • 29. Page 29 BASF 3rd Quarter 2010 Analyst Conference Call October 28, 2010 [Chart 15: Outlook record year 2010] As already communicated last week, we expect 2010 to be a record year for BASF. This reflects the strong dynamics in our businesses, our improved portfolio and operational excellence. For the fourth quarter, we expect the good business development to continue. We, therefore, have raised our outlook for the current year. For 2010, we expect sales of around 63 billion Euros and EBIT before special items of more than 8 billion Euros. This exceeds the peak earnings level of 2007. We expect to earn a high premium on our cost of capital And, we expect to increase the dividend.