Speech BASF Analyst Conference Call Q2 2011

1,279 views

Published on

Speech accompanying the 2Q2011 Conference Call for investors and analysts on July 28, 2011

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
1,279
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
12
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Speech BASF Analyst Conference Call Q2 2011

  1. 1. BASF 2nd Quarter 2011 Analyst Conference CallJuly 28, 2011, 14:00 (CEST), Ludwigshafen BASF posts strong results Second Quarter 2011 Financial highlights July 28, 2011 BASF 2nd Quarter 2011 Analyst Conference Call 1Analyst Conference Call ScriptDr. Kurt BockDr. Hans-Ulrich EngelThe spoken word applies.
  2. 2. Page 2BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011 Forward-looking statements This presentation includes forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. This presentation contains a number of forward-looking statements including, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand. BASF has based these forward-looking statements on its views with respect to future events and financial performance. Actual financial performance of the entities described herein could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. Forward-looking statements represent estimates and assumptions only as of the date that they were made. The information contained in this presentation is subject to change without notice and BASF does not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations. BASF 2nd Quarter 2011 Analyst Conference Call 2 BASF posts strong results Second quarter 2011 highlights Business performance Q2’11 vs. Q2’10 Sales €18.5 billion +14% EBITDA €3.0 billion +5% EBITDA margin 16.3% 17.7% EBIT before special items (bSI) €2.2 billion +1% EBIT bSI adjusted for non-comp. oil taxes €2.2 billion +12% EBIT €2.2 billion +7% Net income €1.5 billion +23% EPS €1.59 +23% Adjusted EPS €1.75 +17% Robust sales and earnings growth in the chemicals business with volumes up 5% Excellent performance of the acquired former Cognis business Earnings in Agricultural Solutions increased despite adverse weather conditions Sales growth in Oil & Gas was price driven. Net income rose by 74% BASF 2nd Quarter 2011 Analyst Conference Call 3
  3. 3. Page 3BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011Dr. Kurt BockLadies and Gentlemen, good afternoon and thank you for joining us.[Chart 3: BASF posts strong results] After a powerful start into the year we had another good and very solid quarter. Sales grew by 14 percent to 18.5 billion Euros compared to 2010. More importantly, we succeeded to grow volumes in our chemical business by 5 percent. For the first time in 2011 the weakening of the US Dollar led to a negative sales effect of 6 percent, which however, was largely compensated by the excellent performance of the acquired former Cognis business. In Oil and Gas, growth was purely price driven due to the shutdown of our operations in Libya. The missing sales and earnings from Libya – and we do not see our operations being restarted in 2011 – also affected the year over year earnings comparison. Adjusted for Libya, EBIT before special items increased by 16 percent to 2.2 billion Euros. Adjusted earnings per share grew by 17 percent to 1.75 Euro. What we saw in Q2 was a continued upward trend in raw material costs. Our sales prices rose by 13 percent in total and 12 percent in the chemicals business. However, we were able to pass on the cost increases to a very large degree. We also had planned and unplanned plant outages which affected earnings negatively, most notably, the turnaround of a cracker as well as the disruption of our acetylene plant in Ludwigshafen which impacted our butanediol value chain.
  4. 4. Page 4BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
  5. 5. Page 5BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011 At the end of the second quarter, we saw some inventory destocking at our customers, above all in Asia. We interpret this as a sign that the exceptionally high growth rates of the last couple of quarters are going to normalize as expected. We therefore reiterate our guidance for full year sales and earnings.
  6. 6. Page 6BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011 Important milestones in Q2 2011 Styrolution New TDI plant in Europe Joint venture of BASF and INEOS to form TDI is a key component for polyurethane the global market leader in styrenics foams with growth rates above GDP Joint venture contract signed BASF to expand its leading position in TDI FTC and EU antitrust approval received with a new 300kt/a plant in Europe Closing subject to remaining approvals from The world‘s largest single-train TDI plant antitrust authorities in other countries Superior technology and unique Verbund Closing of joint venture expected in Q4 2011 concept provide industry leading cost structure Start-up of production in 2014 BASF 2nd Quarter 2011 Analyst Conference Call 4
  7. 7. Page 7BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011[Chart 4: Important milestones in Q2 2011]In the second quarter, we also achieved important milestones: As you all know, BASF and INEOS plan to combine major parts of their global styrene monomer, polymer and copolymer business activities into a new joint venture called Styrolution. In the second quarter, we took important steps towards the establishment of the joint venture Styrolution. In May, the companies signed the joint venture contract. Meanwhile, the new joint venture has already been approved by the U.S. Federal Trade Commission and the EU Commission. We are still awaiting approvals from antitrust authorities in a few countries and expect closing in the fourth quarter. In May, we announced our plans to build the world’s largest- single train TDI plant in Europe. TDI is a key component for the polyurethanes industry. It is widely used in the automotive industry, for example in seating cushions and interior applications, as well as in the furniture segment, for example in flexible foams for mattresses and cushions. We expect the global TDI market to grow faster than GDP in the coming years, with strong contributions from Central and Eastern Europe, Middle East and Africa. Our excellent technology and unique Verbund concept will ensure an industry-leading cost structure. We aim to start up this fully integrated plant in 2014. This investment supports our growth strategy and underlines our leading position as the largest TDI producer.
  8. 8. Page 8BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011 Focus on future markets BASF intensifying R&D around electromobility Market trends Sustainable electromobility is key to climate friendly mobility High-performance batteries and innovative solutions for weight reduction and heat management are essential for efficient electromobility BASF activities Investment of three-digit million euro sum over the next five years for R&D and production of battery materials • Current investment in innovative cathode materials plant in Elyria, Ohio to start up in mid-2012 Portfolio expansion by entering electrolytes and positioning BASF as future system supplier for high performance batteries Lightweight construction solutions and heat management systems further help to reduce energy consumption Electromobility – leveraging BASF’s R&D and business platforms BASF 2nd Quarter 2011 Analyst Conference Call 5
  9. 9. Page 9BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011 [Chart 5: Focus on future markets] We are further intensifying our efforts in the field of electro- mobility and will bring BASF’s innovation strength to function here. Energy efficient electric cars are becoming key to the climate friendly transformation of individual mobility. Improved batteries as well as innovative solutions for weight reduction and heat management are major challenges electromobility faces today. We see new chemical solutions as a major contributor to overcoming these challenges. BASF is therefore committed to leveraging its research and business platforms on this future market. In battery materials, for example, BASF will be investing a three- digit million euro sum in research, development and production over the next five years. Part of the investment is being channeled into the construction of a production plant for advanced cathode materials in Elyria, Ohio. This new facility is scheduled to supply the market with innovative cathode materials for the production of high-performance lithium-ion batteries from mid-2012 onwards. In addition, we are expanding our activities in the field of high-quality tailored electrolytes to position ourselves as a future systems supplier in this market. Furthermore, in order to reduce the energy consumption of electric vehicles we are working on resin-based solutions for fiber reinforced composites to reduce vehicle weight as well as heat management solutions.
  10. 10. Page 10BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011 Outlook 2011 Assumptions We forecast Brent oil price of $110/bbl (from $100/bbl) and US$/€ of $1.40 (from $1.35) We assume that oil production in Libya will not restart during 2011 → EBIT before special items from our Libyan oil production for the full year 2011 will be about €1 billion lower compared with 2010 (thereof about €700 million of non-compensable oil taxes) Targets 2011 We expect to generate significantly higher sales We aim to significantly exceed the 2010 EBIT before special items adjusted for non-compensable oil taxes (2010: €7.2 billion) We expect to achieve a high premium on our cost of capital Medium-term targets We aim to grow sales on average by two percentage points per year faster than chemical production growth We strive to grow our earnings further year by year, and to achieve an EBITDA margin of 18% by 2012 BASF 2nd Quarter 2011 Analyst Conference Call 6
  11. 11. Page 11BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011[Chart 6: Outlook 2011]Now let’s come to the outlook for 2011. To put it in a nutshell, weconfirm our strong outlook for 2011. We will continue to focus ourattention on protecting our margins and optimizing our fixed costsas well as keeping working capital at a minimum level.With the further weakening of the US Dollar and the high oil pricevolatility we see the need to adjust the assumptions for our full yearoutlook: We are increasing our Brent oil price forecast from 100 Dollars per barrel to 110 Dollars per barrel and we are expecting a Dollar/Euro exchange rate of 1.40, up from 1.35. Our assumptions for the growth of GDP, industrial and chemical production remain unchanged. We are still assuming that the oil production in Libya will not resume during 2011. For the full year 2011, we expect to generate significantly higher sales than in 2010. As already explained during our first quarter conference call, EBIT before special items excluding non- compensable oil taxes provides a much more meaningful guidance for 2011. We therefore confirm, that we aim to significantly exceed the 2010 EBIT before special items excluding non-compensable oil taxes which amounted to 7.2 billion Euros.Finally, we remain committed to our target of achieving a highpremium on our cost of capital in 2011.With this I’ll hand over to Hans.
  12. 12. Page 12BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011 Chemicals Robust sales and earnings supported by price increases Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items (million €) Intermediates Inorganics 800 765 351 687 674 693 617 +7% +8% 600 537 €3,392 400 +14% 200 Petrochemicals 2,348 0 +18% Q2 Q3 Q4 Q1 Q2 2010 2011 Sales development Period Volumes Prices Portfolio Currencies Q2’11 vs. Q2’10 2% 20% 0% (8)% BASF 2nd Quarter 2011 Analyst Conference Call 7
  13. 13. Page 13BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011Dr. Hans-Ulrich EngelGood afternoon ladies and gentlemen.I will highlight the financial performance of each segment in moredetail and focus on the respective business developments incomparison to the second quarter of 2010.[Chart 7: Chemicals – Robust sales and earnings supported byprice increases]Ongoing solid demand in the Chemicals segment drove up salessignificantly. We successfully increased prices in many product linesin order to offset higher raw material costs. Planned and unplannedplant shutdowns negatively impacted our EBIT. Nevertheless,earnings remained almost on the strong level of the previous year’squarter. In Petrochemicals, the strong demand for our products led to significant sales growth in all regions, but we witnessed a declining momentum in Asia, specifically in China, towards the end of the quarter. The performance in the acrylics business was excellent as a result of ongoing tight markets. Plasticizers, on the other hand, were weaker as demand from the construction and housing industries remained subdued, especially in North America. Earnings came in at a very high level, albeit below the extremely high previous year’s quarter. This was due to the turnaround at our larger cracker in Ludwigshafen. In Inorganics, continued strong demand, particularly for inorganic chemicals, glues and impregnating resins, led to an
  14. 14. Page 14BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
  15. 15. Page 15BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011 increase in sales. Lower margins in ammonia and methanol as well as higher costs triggered by major planned turnarounds of our ammonia and sulphuric acid plants resulted in lower earnings. Higher sales in Intermediates were driven particularly by customers from the plastics, coatings and textile fiber industries. The strong demand for our products could not be fully met in all product lines. The unplanned shutdown of the acetylene plant in Ludwigshafen due to a fire significantly impacted our butanediol value chain. As a consequence we had to declare force majeure for butanediol and several downstream products in Europe. Nevertheless, earnings were up overall given higher volumes and improved margins.
  16. 16. Page 16BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011 Plastics Strong demand in all product lines resulted in increased earnings Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items (million €) Polyurethanes 400 371 393 383 349 1,498 +7% 285 €2,828 200 +9% Performance Polymers 0 1,330 +12% Q2 Q3 Q4 Q1 Q2 2010 2011 Sales development Period Volumes Prices Portfolio Currencies Q2’11 vs. Q2’10 4% 12% 0% (7)% BASF 2nd Quarter 2011 Analyst Conference Call 8
  17. 17. Page 17BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011[Chart 8: Plastics – Strong demand in all product lines resultedin increased earnings]In Plastics, we experienced strong demand in all product lines andwe increased sales and earnings compared to the previous year’squarter in both divisions. In Performance Polymers, positive pricing momentum drove sales growth. Demand for polyamides and intermediates remained at a high level. The Engineering Plastics business benefitted from strong demand from the automotive industry, especially in Europe and North America. Fierce competition from Asia adversely affected demand for expandable polystyrene from the construction industry in Asia and Europe. Sales of our biodegradable plastics were temporarily impacted by limited raw material availability, but still increased substantially. EBIT before special items rose significantly as a result of higher volumes and improved margins, especially in the polyamide and intermediates businesses. In Polyurethanes, sales were driven by higher volumes and prices in all regions, most pronounced in Europe. Demand from the automotive and construction industries increased compared with the previous year’s quarter. We were able to increase prices for MDI, polyurethane systems and polyols, while TDI prices were slightly lower. Despite several turnarounds, earnings were up mainly because of higher volumes.
  18. 18. Page 18BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011 Performance Products Strong earnings contributions from acquired Cognis business Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items (million €) Care Chemicals Performance 600 554 513 1,353 Chemicals 500 471 +100% 908 370 400 +13% Nutrition €4,095 300 294 & Health 480 +30% 200 +29% 100 Dispersions Paper Chemicals & Pigments 0 417 937 Q2 Q3 Q4 Q1 Q2 (5)% +9% 2010 2011 Sales development Period Volumes Prices Portfolio Currencies Q2’11 vs. Q2’10 2% 6% 27% (5)% BASF 2nd Quarter 2011 Analyst Conference Call 9
  19. 19. Page 19BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011[Chart 9: Performance Products – Strong earningscontributions from acquired Cognis business]Sales and EBIT before special items in the Performance Productssegment increased due to the acquired Cognis business, highervolumes as well as the successful repositioning of the combinedbusinesses following the Ciba integration. In Dispersions & Pigments, we could increase sales in all product lines and regions, except for North America where we faced negative currency effects. Margin levels could be largely maintained since successful price increases helped to offset higher raw material costs. Thanks to higher volumes and the successful repositioning of the combined businesses following the Ciba integration we were able to improve earnings. In Care Chemicals, sales doubled and earnings were up significantly due to Cognis. Volumes went up despite the limited availability of precursors for hygiene and cosmetics. We experienced strong demand, especially for detergents and formulators. We successfully maintained our margins despite significantly higher input costs. As a result, earnings were up substantially. In Nutrition & Health, net sales grew strongly mainly due to the inclusion of Cognis. Demand was very good in all regions and in all businesses. In vitamins, we continued to face some price pressure but we see prices stabilizing at present. Earnings could not be maintained at the previous year’s level as a result of higher raw material costs, lower vitamin margins and a weaker US- Dollar.
  20. 20. Page 20BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011
  21. 21. Page 21BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011 In an ongoing challenging business environment, sales in Paper Chemicals decreased slightly. Sales were impacted by divestments and portfolio optimizations as well as our “value over volume” strategy. Earnings were below the previous year’s quarter as we were not able to fully pass on higher raw material costs. In Performance Chemicals, sales increased substantially thanks to price increases and the inclusion of the Cognis businesses. Weaker order volumes from Japan could not be compensated by the overall strong demand from the automotive and refinery industries. EBIT before special items decreased slightly, mainly due to lower volumes and higher raw material costs, which could only partially be compensated by price increases.
  22. 22. Page 22BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011 Functional Solutions Strong demand from automotive drove earnings growth Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items (million €) Catalysts Construction 165 158 167 1,500 Chemicals 150 142 +22% 577 0% €2,766 100 +13% 50 33 Coatings 689 0 +6% Q2 Q3 Q4 Q1 Q2 2010 2011 Sales development Period Volumes Prices Portfolio Currencies Q2’11 vs. Q2’10 12% 8% 0% (7)% BASF 2nd Quarter 2011 Analyst Conference Call 10
  23. 23. Page 23BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011[Chart 10: Functional Solutions – Strong demand fromautomotive drove earnings growth]Volumes in the Functional Solutions segment were significantlyhigher, reflecting the strong global demand for mobile emissionscatalysts and OEM coatings from the automotive industry. Demandfrom the construction industry rose slightly in Northern, Central andEastern Europe. EBIT before special items improved slightly thanksto strong volume growth in Catalysts. Catalysts’ sales rose sharply. Mobile emission catalysts showed strong growth in Europe, Asia and North America. Moreover, we realized higher volumes in refinery and chemical catalysts. As a result, EBIT before special items came in far above the level of the prior year. Sales in Construction Chemicals were at the previous year’s level reflecting a volume improvement at stable prices as well as negative currency effects. Volumes increased in all major regions except for Southern Europe. Volumes in North America improved despite the ongoing challenging market environment. EBIT before special items did not match the previous year’s level due to higher raw material costs, which we could not pass on to our customers. In Coatings, the positive trend in demand continued for all product lines, especially in automotive OEM coatings and decorative paints. However, raw material prices could not be fully passed on. As a result, EBIT before special items was below the very good level of the previous year.
  24. 24. Page 24BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011 Agricultural Solutions High global demand for agricultural products drove volume growth Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items (million €) 1,400 1,211 0% 1,205 400 1,200 320 331 1,000 300 800 600 200 400 100 200 0 0 Q2 Q2 Q2 Q2 2010 2011 2010 2011 Sales development Period Volumes Prices Portfolio Currencies Q2’11 vs. Q2’10 6% 0% 0% (6)% BASF 2nd Quarter 2011 Analyst Conference Call 11
  25. 25. Page 25BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011[Chart 11: Agricultural Solutions – High global demand foragricultural products drove volume growth ]In Agricultural Solutions, high global demand for agriculturalproducts drove volume growth, especially in fungicides. Thisdevelopment, however, was offset by negative currency effects fromthe devaluation of the US-Dollar, resulting in sales at the previousyear’s level.EBIT before special items was slightly above the prior year leveldespite significantly negative currency effects.In Europe, we increased sales thanks to higher demand for ourproducts in Eastern Europe which could more than offset the impactof dry weather conditions in Western Europe.In North America, sales declined as a result of a weaker US-Dollaras well as weather related acreage reductions and a compressedseason, which led to a reduced number of herbicide applications.Our Plant Health business performed strongly.We improved sales in South America, mainly based on higherdemand for Clearfield®, our herbicide tolerance technology. Furthersales growth came from insecticides for sugarcane and seedtreatment products.In Asia, sales were significantly above the previous year’s quarterdriven by our herbicide business.
  26. 26. Page 26BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011 Oil & Gas Higher oil and gas prices compensated for lower volumes Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items/ Net income (million €) Exploration & 600 515 Production 563 Non-compensable (34)% 400 oil taxes 209 €2,461 332 420 +4% 200 269 Natural Gas 257 Trading 95 148 0 63 1,898 +25% Q2 Q2 2010 2011 EBIT bSI Exploration & Production Net income EBIT bSI Natural Gas Trading Sales development Period Volumes Prices/Currencies Portfolio Q2’11 vs. Q2’10 (19)% 23% 0% BASF 2nd Quarter 2011 Analyst Conference Call 12
  27. 27. Page 27BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011[Chart 12: Oil & Gas – Higher oil and gas prices compensatedfor lower volumes]Despite the production stoppage in Libya, sales in Oil & Gasincreased slightly, as a result of higher oil and gas prices.Consequently, EBIT before special items adjusted for non-compensable income taxes on oil increased. In Exploration & Production sales decreased considerably due to the discontinuation of our oil production in Libya. Nevertheless, earnings adjusted for non-compensable oil taxes increased substantially due to the higher oil and gas prices. Sales in Natural Gas Trading were up significantly, reflecting higher gas prices. Earnings, on the other hand, decreased as a result of slightly lower volumes and negative time-lag effects.A look at the income statement shows that net income rose by animpressive 74 percent to 257 million Euros. This was related tosignificantly higher oil and gas prices as well as a substantially lowertax rate because of the production stoppage in Libya.
  28. 28. Page 28BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011 Review of “Other” Million € Q2 2011 Q2 2010 Sales 1,714 1,471 thereof Styrenics 811 785* EBIT before special items (163) (301) thereof Corporate research (87) (78) Group corporate costs (59) (55) Currency results, hedges and other (118) (198) valuation effects Styrenics, fertilizers, other businesses 76 67 Special items 27** (106) EBIT (136) (407) * Since January 1, 2011, Styrenics only includes the carved-out styrenics businesses; the previous year’s values were adjusted accordingly ** Incl. €68 million from repeal of fine imposed by the EU on Ciba in 2009 BASF 2nd Quarter 2011 Analyst Conference Call 13
  29. 29. Page 29BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011[Chart 13: Review of “Other”]In “Other”, sales grew in styrenics, fertilizers and other businesses.EBIT before special items improved by 138 million Euros to minus163 million Euros mainly due to better operating results as well asfavorable currency and valuation effects.Special items in “Other” amounted to plus 27 million Euros. Theycontained 68 million Euros of income resulting from the repeal ofthe fine imposed by the EU on Ciba in 2009 in relation to heatstabilizers.
  30. 30. Page 30BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011 Operating cash flow in H1 2011 Million € H1 2011 H1 2010 Cash provided by operating activities 3,038 2,721 thereof Changes in net working capital (1,178) (1,355) Cash provided by investing activities 81 (599) thereof Payments related to tangible / intangible assets (1,265) (889) Cash used in financing activities (2,764) (2,054) thereof Changes in financial liabilities (486) (292) Dividends (2,278) (1,762) First half 2011 Operating cash flow at €3.0 billion despite reclassification of €887 million gain from the sale of K+S stake Free cash flow at €1.8 billion Net debt amounted to €12.3 billion, a reduction of €1.3 billion since end of 2010 BASF 2nd Quarter 2011 Analyst Conference Call 14
  31. 31. Page 31BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011[Chart 14: Operating cash flow in H1 2011]Let me now briefly conclude with our cash flow.Cash provided by operating activities at around 3.0 billion Euros inthe first half of 2011 was 317 million Euros higher than in the sameperiod of the previous year. This can primarily be attributed toincreased earnings. Working capital rose between January andJune 2011 reflecting the growth in our business, higher raw materialcosts as well as higher natural gas injection in our storage facilities.Cash provided by investing activities amounted to 81 million Euros.In March, the sale of shares in K+S resulted in a cash inflow of 972million Euros with a net gain of 887 million Euros. CAPEX amountedto 1.3 billion Euros including the investments in the OPAL-pipeline,the capacity expansion of Ecoflex/Ecovio and the ongoing extensionof our Verbund site in Nanjing.Financing activities led to a cash outflow of 2.8 billion Euros, mainlydue to a 486 million Euros reduction in financial liabilities and 2.3billion Euros of dividend payments to shareholders of BASF SE andminority shareholders in Group companies.Since the end of 2010, we reduced net debt by 1.3 billion Euros to12.3 billion Euros.Thank you for your attention. We are now happy to take yourquestions. BASF 4Q/FY’2010 Conference | February 24th, 2011 40
  32. 32. Page 32BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011 Back-Up BASF 2nd Quarter 2011 Analyst Conference Call 16 Financial highlights Million € Q2 2011 Q2 2010 Δ% Q1 2011 Δ% Sales 18,461 16,214 +14% 19,361 (5)% changes due to - volumes +2% - prices +13% - portfolio +5% - currencies (6)% EBITDA 3,015 2,867 +5% 3,365 (10)% EBIT before special items 2,237 2,206 +1% 2,732 (18)% EBIT before special items 2,237 1,997 +12% 2,452 (9)% adjusted for non-compensable oil taxes Special items (20) (127) (84)% (182) (89)% EBIT 2,217 2,079 +7% 2,550 (13)% Net income 1,454 1,183 +23% 2,411 (40)% EPS (€) 1,59 1,29 +23% 2,62 (39)% Adjusted EPS (€) 1,75 1,50 +17% 1,94 (10)% BASF 2nd Quarter 2011 Analyst Conference Call 17
  33. 33. Page 33BASF 2nd Quarter 2011 Analyst Conference Call July 28, 2011 Balance sheet review Balance sheet June 30, 2011 vs. end of 2010 (billion €) Long-term assets decreased by 59.3 59.3 59.4 €2.0 billion amongst others due 59.4 to the sale of shares in K+S Stock- Inventories increased by €0.8 23.0 22.7 holders’ Long-term billion reflecting the expansion Equity assets 32.5 34.5 of our business and raw material inflation Financial 14.1 15.0 Net debt decreased by €1.3 debt Inventories 9.5 8.7 billion to €12.3 billion Accounts 22.2 Accounts receivable were up by receivable 10.9 10.2 21.7 Other liabilities €0.7 billion as a result of the Other assets 4.6 4.5 1.5 expansion of our business Liquid funds 1.8 Jun 31 Dec 31 Jun 31 Dec 31 Equity ratio at 39% 2011 2010 2011 2010 (up 1 percentage point) BASF 2nd Quarter 2011 Analyst Conference Call 18 Cognis – integration objectives Targets Achieve 20% EBITDA margin in the Performance Products segment by 2012 Acquisition accretive as of 2012 Costs One-time integration costs of €290 million until end of 2013 Inventory step-up of €120 million Costs already incurred: − 2010: €80 million (thereof €60 million inventory step-up) − H1/2011: €210 million (thereof €60 million inventory step-up) Synergies Generate €275 million of additional EBIT − €135 million growth synergies by the end of 2015 − €140 million cost synergies by the end of 2013 BASF 2nd Quarter 2011 Analyst Conference Call 19

×