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1 July 28, 2023 | BASF Analyst Conference Call Q2 2023
Analyst Conference Call Q2 2023
July 28, 2023
2 July 28, 2023 | BASF Analyst Conference Call Q2 2023
Cautionary note regarding
forward-looking statements
This presentation contains forward-looking statements. These statements are based on current
estimates and projections of the Board of Executive Directors and currently available information.
Forward-looking statements are not guarantees of the future developments and results outlined
therein. These are dependent on a number of factors; they involve various risks and uncertainties; and
they are based on assumptions that may not prove to be accurate. Such risk factors include those
discussed in Opportunities and Risks on pages 157 to 167 of the BASF Report 2022. BASF does not
assume any obligation to update the forward-looking statements contained in this presentation above
and beyond the legal requirements.
3 July 28, 2023 | BASF Analyst Conference Call Q2 2023
Global chemical production stagnated compared with the
prior-year quarter
% Q2 2023 Q2 2022
Global GDP 2.5 3.0
Global industrial production 0.5 2.7
Global chemical production 0.3 1.5
Growth rates
Chemical production compared with prior-year quarter1
%
North America EU Asia excl. mainland China
Mainland China
1.2
-2.6
Q2 2022 Q2 2023
-3.1
-10.8
Q2 2022 Q2 2023
3.7
7.1
Q2 2022 Q2 2023 -0.9
-9.8
Q2 2022 Q2 2023
1 Source: BASF, Q2 2023 partly based on estimates. Data sources: S&P Global, NBS China, Feri, Fed, Eurostat, METI,
ONS. All data subject to statistical revision. Growth rates for regional aggregates might differ from official data releases
due to different country coverage and weights.
4 July 28, 2023 | BASF Analyst Conference Call Q2 2023
Stock levels in manufacturing below average and within range of
past inflection points in Western Europe and North America
1 Source: S&P Global (part of Purchasing Managers’ Index), BASF; time intervals based on available data;
value of 50 indicates no restocking/destocking
30
35
40
45
50
55
60
30
35
40
45
50
55
60
30
35
40
45
50
55
60
Stocks of purchases per region1
Stocks of purchases Long-term average Turning zone
North America Asia Pacific
Western Europe
5 July 28, 2023 | BASF Analyst Conference Call Q2 2023
Q2 2023: Compared with the strong prior-year quarter,
BASF’s earnings declined in a tough market environment
 In Q2 2023, BASF faced low demand from key customer
industries, except for automotive
 As a result, sales in Q2 2023 declined by 24.7% to 17.3 billion,
mainly due to lower prices and volumes
 In Q2 2023, EBIT before special items declined by €1.3 billion
and amounted to €1.0 billion. The decline was particularly
driven by the upstream segments
2,339
1,348
373
1,931
1,007
0
1,000
2,000
3,000
Q2
2022
Q3
2022
Q4
2022
Q1
2023
Q2
2023
EBIT before special items
Million €
-57.0%
Sales development Volumes Prices Portfolio Currency
Q2 2023 vs. Q2 2022 -9.9% -11.8% -0.3% -2.7%
 
 
6 July 28, 2023 | BASF Analyst Conference Call Q2 2023
Preparing for the future: BASF’s new Verbund site project
in Zhanjiang is progressing well
Project execution on track
 First downstream plant (engineering plastics) started up in
August 2022; first “made in Zhanjiang” products delivered
to customers in H2 2022
 Next downstream plant (TPU) scheduled to start up
in Q3 2023
 As of 2025: Startup phase 1 – “Heart of the Verbund”
including steam cracker
 As of 2028: Startup phase 2 – “Verbund expansion
and diversification”
A lighthouse site for sustainability
 100% renewable electricity targeted for startup of phase 1 in 2025, leading to a significantly reduced CO2 footprint
 Equity participation in a 500-megawatt offshore wind park in Zhanjiang: Joint venture agreement with Mingyang
Smart Energy signed in July 2023
June 2023
June 2022
7 July 28, 2023 | BASF Analyst Conference Call Q2 2023
Third and final phase of the MDI expansion project at the Verbund site in
Geismar, Louisiana, is fully on track
 Additional upstream units and a splitter to increase production capacity to
approximately 600,000 metric tons per year by 2026
 Investment of $780 million in final expansion phase (2022–2025)
 Including the first and second phases, the MDI expansion project is BASF’s
largest wholly owned investment in the United States
BASF and Yara evaluate low-carbon blue ammonia project
 Joint study to develop and construct a world-scale low-carbon blue ammonia
production facility with carbon capture in the U.S. Gulf Coast region
 Feasibility study of a plant with a total annual capacity of 1.2 to 1.4 million tons
 Approximately 95% of the CO2 generated from the production process is aimed to
be captured and permanently stored in the ground
 Project underlines BASF’s commitment to drive the sustainable transformation of
the chemical industry
Preparing for the future: BASF’s major projects in the United States
8 July 28, 2023 | BASF Analyst Conference Call Q2 2023
Preparing for the future: BASF is the first company to establish
a co-located battery materials and recycling center in Europe
 BASF is the first company to establish a co-located battery
materials and recycling center and close the loop in the
European battery value chain
 New plant is first production facility for high-performance
cathode active materials (CAM) in Germany and first fully
automated large-scale CAM production facility in Europe
 Supply of products tailored to the specific needs of cell
manufacturers and automotive OEMs in Europe; plant
fully sold out for the next years
 Construction of a world-class battery recycling plant to
produce black mass already started; production expected
to begin in 2024
 With these investments, BASF is supporting the European
market and at the same time enabling faster growth for its
global business
9 July 28, 2023 | BASF Analyst Conference Call Q2 2023
BASF Group Q2 2023: Key financial figures
Sales
Q2 2023 vs. Q2 2022
€17,305 million
-24.7%
EBIT before special items
Q2 2023 vs. Q2 2022
€1,007 million
-57.0%
Net income
Q2 2023 vs. Q2 2022
€499 million
-76.1%
EBITDA before special items
Q2 2023 vs. Q2 2022
€1,944 million
-41.0%
Equity ratio
June 30, 2023, vs. Dec. 31, 2022
47.1%
48.4%
Operating cash flow
Q2 2023 vs. Q2 2022
€2,178 million
+77.4%
10 July 28, 2023 | BASF Analyst Conference Call Q2 2023
BASF
Group Chemicals Materials
Industrial
Solutions
Surface
Technologies
Nutrition
& Care
Agricultural
Solutions Other
BASF
Group
EBIT before
special items
Q2 2023 vs.
Q2 2022
Million €
Q2 2023: Earnings declined, mainly due to lower contributions from
upstream businesses compared with a strong prior-year quarter
202 265 124 230 33 213 -60
EBIT before special
items by segment
Million €
11 July 28, 2023 | BASF Analyst Conference Call Q2 2023
Cash flow development in Q2 2023 and H1 2023
Q2 2023 vs. Q2 2022
 Cash flows from operating activities
increased by +€950 million to €2.2 billion;
changes in net working capital led to
a cash inflow of €797 million
 Payments made for property, plant and
equipment and intangible assets rose by
43% to €1.3 billion
 Free cash flow increased by €569 million
to €905 million
Q2 2023
Million €
2,178
-1,273
905
0
500
1,000
1,500
2,000
2,500
Cash flows from
operating
activities
Payments made
for property, plant
and equipment
and intangible
assets
Free cash flow
Q2 2023
H1 2023
Million €
1,163
-2,140 -977
-1,500
-1,000
-500
0
500
1,000
1,500
2,000
2,500
Cash flows from
operating
activities
Payments made
for property, plant
and equipment
and intangible
assets
Free cash flow
H1 2023
12 July 28, 2023 | BASF Analyst Conference Call Q2 2023
Strong balance sheet
Balance sheet June 30, 2023, vs. Dec. 31, 2022
Billion €
Liquid funds
Accounts
receivable, trade
Noncurrent
assets
Inventories
Other assets
2.7 2.7
5.7 6.6
12.8 12.1
15.4 16.0
46.9 47.1
June 30, 2023 Dec. 31, 2022
84.5
83.5
Other
liabilities
Financial
debt
Equity
21.3
24.6
22.9 19.0
39.3 40.9
June 30, 2023 Dec. 31, 2022
84.5
83.5
 Total assets decreased by
€1.0 billion to €83.5 billion
 Noncurrent assets almost
unchanged at €46.9 billion
 Current assets decreased by
€807 million to €36.6 billion
 Net debt increased by €4.0 billion
to €20.2 billion
 Equity ratio: 47.1%
(Dec. 31, 2022: 48.4%)
13 July 28, 2023 | BASF Analyst Conference Call Q2 2023
Increasing competitiveness: Focus on costs and cash
 Cost savings program with focus on Europe:
Expected annual cost savings of >€500 million by the end of 2024 confirmed;
annual run rate of >€300 million expected to be achieved by the end of 2023
 Adaptation of Verbund structures in Ludwigshafen:
Expected annual cost savings of >€200 million by the end of 2026 confirmed
 Increased focus on reducing inventory levels
 Rigorous fixed cost control and avoidance of discretionary costs
 Capital discipline: Capex for 2023 reduced by €0.6 billion to
~€5.7 billion – down from €6.3 billion announced end of February 2023
Adaption
of Verbund
structures
in Ludwigshafen
Cost savings
program
with focus
on Europe
Program details presented in February 2023
Global focus on cash management
14 July 28, 2023 | BASF Analyst Conference Call Q2 2023
Optimizing structures: Carve-out of mobile emissions catalysts and
precious metals services businesses successfully completed
 New standalone entity named BASF Environmental Catalyst and
Metal Solutions (ECMS), headquartered in Iselin, New Jersey
 As a global leader in catalysis and precious metals, ECMS
offers a wide range of products and services, creating full-loop
solutions
 Global operations in 15 countries with >4,500 employees and
20 production sites; ECMS operates in its own legal entities with
a dedicated IT system landscape and services
 Carve-out completed in 18 months while achieving strong
business performance versus prior year, winning new platforms,
and maintaining business continuity for customers, partners and
employees
 In the new setup, ECMS will focus on market opportunities in
step with the more stringent light- and heavy-duty emissions
regulations and will further pursue growth areas in circular
solutions and the hydrogen economy
15 July 28, 2023 | BASF Analyst Conference Call Q2 2023
Outlook 2023 for BASF Group
Underlying assumptions (previous assumptions in parentheses)
 Growth in gross domestic product: 2.0% (1.6%)
 Growth in industrial production: 1.0% (1.8%)
 Growth in chemical production: 0.0% (2.0%)
 Average euro/dollar exchange rate: $1.10 per euro ($1.05 per euro)
 Average annual oil price (Brent crude): $80 per barrel ($90 per barrel)
Outlook 2023 Adjusted forecast Previous forecast
Sales €73 billion – €76 billion €84 billion – €87 billion
EBIT before special items €4.0 billion – €4.4 billion €4.8 billion – €5.4 billion
ROCE 6.5% – 7.1% 7.2% – 8.0%
CO2 emissions 17.0 – 17.6 million metric tons 18.1 – 19.1 million metric tons
Presentation Analyst Conference BASF Q2 2023.pdf

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Presentation Analyst Conference BASF Q2 2023.pdf

  • 1. 1 July 28, 2023 | BASF Analyst Conference Call Q2 2023 Analyst Conference Call Q2 2023 July 28, 2023
  • 2. 2 July 28, 2023 | BASF Analyst Conference Call Q2 2023 Cautionary note regarding forward-looking statements This presentation contains forward-looking statements. These statements are based on current estimates and projections of the Board of Executive Directors and currently available information. Forward-looking statements are not guarantees of the future developments and results outlined therein. These are dependent on a number of factors; they involve various risks and uncertainties; and they are based on assumptions that may not prove to be accurate. Such risk factors include those discussed in Opportunities and Risks on pages 157 to 167 of the BASF Report 2022. BASF does not assume any obligation to update the forward-looking statements contained in this presentation above and beyond the legal requirements.
  • 3. 3 July 28, 2023 | BASF Analyst Conference Call Q2 2023 Global chemical production stagnated compared with the prior-year quarter % Q2 2023 Q2 2022 Global GDP 2.5 3.0 Global industrial production 0.5 2.7 Global chemical production 0.3 1.5 Growth rates Chemical production compared with prior-year quarter1 % North America EU Asia excl. mainland China Mainland China 1.2 -2.6 Q2 2022 Q2 2023 -3.1 -10.8 Q2 2022 Q2 2023 3.7 7.1 Q2 2022 Q2 2023 -0.9 -9.8 Q2 2022 Q2 2023 1 Source: BASF, Q2 2023 partly based on estimates. Data sources: S&P Global, NBS China, Feri, Fed, Eurostat, METI, ONS. All data subject to statistical revision. Growth rates for regional aggregates might differ from official data releases due to different country coverage and weights.
  • 4. 4 July 28, 2023 | BASF Analyst Conference Call Q2 2023 Stock levels in manufacturing below average and within range of past inflection points in Western Europe and North America 1 Source: S&P Global (part of Purchasing Managers’ Index), BASF; time intervals based on available data; value of 50 indicates no restocking/destocking 30 35 40 45 50 55 60 30 35 40 45 50 55 60 30 35 40 45 50 55 60 Stocks of purchases per region1 Stocks of purchases Long-term average Turning zone North America Asia Pacific Western Europe
  • 5. 5 July 28, 2023 | BASF Analyst Conference Call Q2 2023 Q2 2023: Compared with the strong prior-year quarter, BASF’s earnings declined in a tough market environment  In Q2 2023, BASF faced low demand from key customer industries, except for automotive  As a result, sales in Q2 2023 declined by 24.7% to 17.3 billion, mainly due to lower prices and volumes  In Q2 2023, EBIT before special items declined by €1.3 billion and amounted to €1.0 billion. The decline was particularly driven by the upstream segments 2,339 1,348 373 1,931 1,007 0 1,000 2,000 3,000 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 EBIT before special items Million € -57.0% Sales development Volumes Prices Portfolio Currency Q2 2023 vs. Q2 2022 -9.9% -11.8% -0.3% -2.7%    
  • 6. 6 July 28, 2023 | BASF Analyst Conference Call Q2 2023 Preparing for the future: BASF’s new Verbund site project in Zhanjiang is progressing well Project execution on track  First downstream plant (engineering plastics) started up in August 2022; first “made in Zhanjiang” products delivered to customers in H2 2022  Next downstream plant (TPU) scheduled to start up in Q3 2023  As of 2025: Startup phase 1 – “Heart of the Verbund” including steam cracker  As of 2028: Startup phase 2 – “Verbund expansion and diversification” A lighthouse site for sustainability  100% renewable electricity targeted for startup of phase 1 in 2025, leading to a significantly reduced CO2 footprint  Equity participation in a 500-megawatt offshore wind park in Zhanjiang: Joint venture agreement with Mingyang Smart Energy signed in July 2023 June 2023 June 2022
  • 7. 7 July 28, 2023 | BASF Analyst Conference Call Q2 2023 Third and final phase of the MDI expansion project at the Verbund site in Geismar, Louisiana, is fully on track  Additional upstream units and a splitter to increase production capacity to approximately 600,000 metric tons per year by 2026  Investment of $780 million in final expansion phase (2022–2025)  Including the first and second phases, the MDI expansion project is BASF’s largest wholly owned investment in the United States BASF and Yara evaluate low-carbon blue ammonia project  Joint study to develop and construct a world-scale low-carbon blue ammonia production facility with carbon capture in the U.S. Gulf Coast region  Feasibility study of a plant with a total annual capacity of 1.2 to 1.4 million tons  Approximately 95% of the CO2 generated from the production process is aimed to be captured and permanently stored in the ground  Project underlines BASF’s commitment to drive the sustainable transformation of the chemical industry Preparing for the future: BASF’s major projects in the United States
  • 8. 8 July 28, 2023 | BASF Analyst Conference Call Q2 2023 Preparing for the future: BASF is the first company to establish a co-located battery materials and recycling center in Europe  BASF is the first company to establish a co-located battery materials and recycling center and close the loop in the European battery value chain  New plant is first production facility for high-performance cathode active materials (CAM) in Germany and first fully automated large-scale CAM production facility in Europe  Supply of products tailored to the specific needs of cell manufacturers and automotive OEMs in Europe; plant fully sold out for the next years  Construction of a world-class battery recycling plant to produce black mass already started; production expected to begin in 2024  With these investments, BASF is supporting the European market and at the same time enabling faster growth for its global business
  • 9. 9 July 28, 2023 | BASF Analyst Conference Call Q2 2023 BASF Group Q2 2023: Key financial figures Sales Q2 2023 vs. Q2 2022 €17,305 million -24.7% EBIT before special items Q2 2023 vs. Q2 2022 €1,007 million -57.0% Net income Q2 2023 vs. Q2 2022 €499 million -76.1% EBITDA before special items Q2 2023 vs. Q2 2022 €1,944 million -41.0% Equity ratio June 30, 2023, vs. Dec. 31, 2022 47.1% 48.4% Operating cash flow Q2 2023 vs. Q2 2022 €2,178 million +77.4%
  • 10. 10 July 28, 2023 | BASF Analyst Conference Call Q2 2023 BASF Group Chemicals Materials Industrial Solutions Surface Technologies Nutrition & Care Agricultural Solutions Other BASF Group EBIT before special items Q2 2023 vs. Q2 2022 Million € Q2 2023: Earnings declined, mainly due to lower contributions from upstream businesses compared with a strong prior-year quarter 202 265 124 230 33 213 -60 EBIT before special items by segment Million €
  • 11. 11 July 28, 2023 | BASF Analyst Conference Call Q2 2023 Cash flow development in Q2 2023 and H1 2023 Q2 2023 vs. Q2 2022  Cash flows from operating activities increased by +€950 million to €2.2 billion; changes in net working capital led to a cash inflow of €797 million  Payments made for property, plant and equipment and intangible assets rose by 43% to €1.3 billion  Free cash flow increased by €569 million to €905 million Q2 2023 Million € 2,178 -1,273 905 0 500 1,000 1,500 2,000 2,500 Cash flows from operating activities Payments made for property, plant and equipment and intangible assets Free cash flow Q2 2023 H1 2023 Million € 1,163 -2,140 -977 -1,500 -1,000 -500 0 500 1,000 1,500 2,000 2,500 Cash flows from operating activities Payments made for property, plant and equipment and intangible assets Free cash flow H1 2023
  • 12. 12 July 28, 2023 | BASF Analyst Conference Call Q2 2023 Strong balance sheet Balance sheet June 30, 2023, vs. Dec. 31, 2022 Billion € Liquid funds Accounts receivable, trade Noncurrent assets Inventories Other assets 2.7 2.7 5.7 6.6 12.8 12.1 15.4 16.0 46.9 47.1 June 30, 2023 Dec. 31, 2022 84.5 83.5 Other liabilities Financial debt Equity 21.3 24.6 22.9 19.0 39.3 40.9 June 30, 2023 Dec. 31, 2022 84.5 83.5  Total assets decreased by €1.0 billion to €83.5 billion  Noncurrent assets almost unchanged at €46.9 billion  Current assets decreased by €807 million to €36.6 billion  Net debt increased by €4.0 billion to €20.2 billion  Equity ratio: 47.1% (Dec. 31, 2022: 48.4%)
  • 13. 13 July 28, 2023 | BASF Analyst Conference Call Q2 2023 Increasing competitiveness: Focus on costs and cash  Cost savings program with focus on Europe: Expected annual cost savings of >€500 million by the end of 2024 confirmed; annual run rate of >€300 million expected to be achieved by the end of 2023  Adaptation of Verbund structures in Ludwigshafen: Expected annual cost savings of >€200 million by the end of 2026 confirmed  Increased focus on reducing inventory levels  Rigorous fixed cost control and avoidance of discretionary costs  Capital discipline: Capex for 2023 reduced by €0.6 billion to ~€5.7 billion – down from €6.3 billion announced end of February 2023 Adaption of Verbund structures in Ludwigshafen Cost savings program with focus on Europe Program details presented in February 2023 Global focus on cash management
  • 14. 14 July 28, 2023 | BASF Analyst Conference Call Q2 2023 Optimizing structures: Carve-out of mobile emissions catalysts and precious metals services businesses successfully completed  New standalone entity named BASF Environmental Catalyst and Metal Solutions (ECMS), headquartered in Iselin, New Jersey  As a global leader in catalysis and precious metals, ECMS offers a wide range of products and services, creating full-loop solutions  Global operations in 15 countries with >4,500 employees and 20 production sites; ECMS operates in its own legal entities with a dedicated IT system landscape and services  Carve-out completed in 18 months while achieving strong business performance versus prior year, winning new platforms, and maintaining business continuity for customers, partners and employees  In the new setup, ECMS will focus on market opportunities in step with the more stringent light- and heavy-duty emissions regulations and will further pursue growth areas in circular solutions and the hydrogen economy
  • 15. 15 July 28, 2023 | BASF Analyst Conference Call Q2 2023 Outlook 2023 for BASF Group Underlying assumptions (previous assumptions in parentheses)  Growth in gross domestic product: 2.0% (1.6%)  Growth in industrial production: 1.0% (1.8%)  Growth in chemical production: 0.0% (2.0%)  Average euro/dollar exchange rate: $1.10 per euro ($1.05 per euro)  Average annual oil price (Brent crude): $80 per barrel ($90 per barrel) Outlook 2023 Adjusted forecast Previous forecast Sales €73 billion – €76 billion €84 billion – €87 billion EBIT before special items €4.0 billion – €4.4 billion €4.8 billion – €5.4 billion ROCE 6.5% – 7.1% 7.2% – 8.0% CO2 emissions 17.0 – 17.6 million metric tons 18.1 – 19.1 million metric tons