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Analyst Conference Call Q3 2022
October 26, 2022
October 26, 2022
2 | BASF Analyst Conference Call Q3 2022
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 151 to 160 of the BASF Report 2021. BASF does not
assume any obligation to update the forward-looking statements contained in this presentation above
and beyond the legal requirements.
October 26, 2022
3 | BASF Analyst Conference Call Q3 2022
Challenging market environment
 Global macroeconomic environment significantly weakened; short-term
macroeconomic expectations dampened
 High inflation and sharp increases in energy prices led to a slowdown in consumer
demand, particularly in Europe
 China continued to grow, but is still restricted by COVID containment measures
 Higher than expected global automotive production, mainly driven by China
 Central banks further raised interest rates to combat inflation, in turn dampening
construction and consumer spending
October 26, 2022
4 | BASF Analyst Conference Call Q3 2022
Global chemical production grew by 2.0% in Q3 2022
Chemical production Q3 2022 compared with prior-year quarter1
%
North America EU 27 Asia excl. mainland China
3.3 2.7
Q3 2021 Q3 2022
6.6
-6.7
Q3 2021 Q3 2022
6.6
-6.0
Q3 2021 Q3 2022
% Q3 2022 Q3 2021
Global GDP 2.2 4.6
Global industrial production 3.2 4.7
Global chemical production 2.0 4.2
Growth rates
1 Source: BASF, Q3 2022 based on estimates. Data sources: IHS, Oxford Economics, NBS China, Feri, Fed, Eurostat,
METI, ONS. All data subject to statistical revision.
Mainland China
3.1
6.9
Q3 2021 Q3 2022
October 26, 2022
5 | BASF Analyst Conference Call Q3 2022
Moderate demand growth in key customer industries in Q3 2022
Chemicals and plastics Transportation Agriculture Consumer goods
Construction
Electronics
Health and nutrition Energy and resources
− Global production hardly
growing; decline in Europe
due to high energy costs;
growth in the U.S. and China
− Global production strongly
above last year; recovery in
China; base effects in North
America and the E.U.
− Solid demand for
consumables (care)
− Negative impact of high
inflation on durable
consumer goods
− Softening demand in
consumer electronics;
industrial demand solid;
supply chain pressure easing
− Oil production above prior
year; natural gas
production declining
− Moderate growth in mining,
excluding oil and gas
− Negative impact of
increasing interest rates in
North America and Europe
− In China, ongoing weakness
of residential construction
− Food production
dampened by high energy
costs and weaker global
demand; pharma stable
− Solid demand
environment; yields
impacted by dry weather in
several regions
October 26, 2022
6 | BASF Analyst Conference Call Q3 2022
Q3 2022: BASF achieved solid EBIT before special items
despite continued high raw materials and energy prices
 In Q3 2022, EBIT before special items declined by €0.5 billion
and amounted to €1.3 billion; additional costs for natural gas in
Europe are one major reason for this decline
 BASF’s downstream segments considerably improved earnings,
mainly due to higher prices
 As forecasted, earnings of upstream segments declined
considerably from very high levels
1,865
1,227
2,818
2,339
1,348
0
1,000
2,000
3,000
Q3
2021
Q4
2021
Q1
2022
Q2
2022
Q3
2022
EBIT before special items
Million €
-27.7%
October 26, 2022
7 | BASF Analyst Conference Call Q3 2022
Natural gas prices in Europe increased further compared with
already elevated levels in Q3 2021
Incremental natural gas spend in Europe
Million €
-
100
200
300
400
500
0
Costs 2020 Additional costs 2021 Additional costs Q1, Q2 and Q3 2022
 Natural gas price burden for European BASF sites
− Additional costs of ~€2.2 billion in first nine months
of 2022 compared with the same period of 2021
 Ludwigshafen site
− Largest gas consumer in BASF (2021: ~37 TWh)
− Half of the natural gas is used for producing
electricity and steam, the other half as raw material
− Technical optimization projects initiated
− Partial substitution of natural gas by fuel oil in the
power plants
October 26, 2022
8 | BASF Analyst Conference Call Q3 2022
Operational earnings in region Europe and in Germany
under pressure due to various challenges
 Weak average growth of the European
chemical market in the past decade
 Structurally higher natural gas prices in
Europe to be expected in the longer term
 Regulatory uncertainty (e.g., E.U. Green Deal
and Chemical Strategy for Sustainability) puts
parts of the portfolio at risk and, together with
CO2 price increases, leads to higher costs
33%
7% 10% 5%
-10%
32%
25%
25%
28%
30%
35%
69% 65% 67%
80%
2015 2021 Q1 2022 Q2 2022 Q3 2022
EBIT before special items of BASF Group1
Germany
Europe
excluding Germany
Other regions
1 Data excluding oil & gas business and construction chemicals business
October 26, 2022
9 | BASF Analyst Conference Call Q3 2022
BASF takes decisive action with focus on Europe
and Germany in particular
The significantly weaker earnings in Europe, especially in Germany, as well as the deteriorating framework
conditions in the region make permanent cost reduction and structural adjustments necessary.
 Cost savings program in non-production areas focusing on Europe and Germany in particular
− Implementation starts immediately and should be completed by the end of 2024
− Employee representatives are involved in the relevant bodies
− When completed, the program is expected to generate annual cost savings of €500 million
− Streamlining of operating, service and research & development divisions as well as the corporate center
 Further structural measures to adjust BASF’s production Verbund in Europe in the medium and long term
are necessary
− Detailed analysis of value chains ongoing
− Measures will be communicated in the first quarter of 2023
October 26, 2022
10 | BASF Analyst Conference Call Q3 2022
Q3 2022: Sales increase mainly driven by higher prices and
positive currency effects
Sales bridge Q3 2022 vs. Q3 2021
Million €
Sales development
Q3 2022 vs. Q3 2021 -7.2% 9.6% 0.9% 8.3%

19,669
21,946
-1,425
1,883 180
1,638
0
5,000
10,000
15,000
20,000
25,000
Q3 2021 Volumes Prices Portfolio Currencies Q3 2022

 Sales increased by 11.6% to €21,946 million
 Volumes declined by 7.2%
− Agricultural Solutions increased volumes,
all other segments recorded lower volumes
 Prices increased by 9.6%
− All divisions increased prices, except for Catalysts
due to lower precious metal prices
 Portfolio effects of plus 0.9% were related to
BASF Shanshan Battery Materials
 Currency effects of 8.3% were mainly from the U.S. dollar
 
October 26, 2022
11 | BASF Analyst Conference Call Q3 2022
Q3 2022: BASF’s downstream segments considerably improved
earnings, while earnings in upstream segments declined considerably
323 277 299 239 180 7 22
EBIT before special
items by segment
Million €
BASF
Group Chemicals Materials
Industrial
Solutions
Surface
Technologies
Nutrition
& Care
Agricultural
Solutions Other
BASF
Group
EBIT before
special items
Q3 2022 vs.
Q3 2021
Million €
October 26, 2022
12 | BASF Analyst Conference Call Q3 2022
BASF Group Q3 2022 and Q1–Q3 2022: Financial figures
Financial figures Q3 2022 Change Q1–Q3 2022 Change
Million € % Million € %
Sales 21,946 11.6 68,003 15.6
EBITDA before special items 2,325 -16.1 9,361 2.1
EBITDA 2,255 -17.4 9,359 2.8
EBIT before special items 1,348 -27.7 6,505 -0.6
EBIT 1,294 -29.0 6,429 -0.3
Net income from
shareholdings
102 18.1 -262 .
Net income 909 -27.5 4,220 -8.8
October 26, 2022
13 | BASF Analyst Conference Call Q3 2022
Cash flow development in Q3 2022 and Q1–Q3 2022
Q3 2022 vs. Q3 2021
 Cash flows from operating activities
increased by €405 million to €2.3 billion
 Changes in net working capital led to
a cash inflow of €670 million
 Cash flows from investing activities
amounted to -€680 million compared with
-€1.8 billion
 Payments made for property, plant and
equipment and intangible assets rose by
23% to €1.0 billion
 Free cash flow increased by €218 million
to €1.3 billion
1 Free cash flow: cash flows from operating activities minus payments made
for property, plant and equipment and intangible assets
Q3 2022
Million €
2,301
-1,006
1,295
0
500
1,000
1,500
2,000
2,500
Cash flows from
operating
activities
Capex Free cash flow
Q3 2022
1
Q1–Q3 2022
Million €
1
3,239
-2,501
738
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Cash flows from
operating
activities
Capex Free cash flow
Q1-Q3 2022
October 26, 2022
14 | BASF Analyst Conference Call Q3 2022
Strong balance sheet
Balance sheet September 30, 2022, vs. December 31, 2021
Billion €
Liquid funds
Accounts
receivable, trade
Noncurrent
assets
Inventories
Other assets
3.4 2.8
7.4 6.5
14.5
11.9
17.1
13.9
54.6
52.3
Sept. 30, 2022 Dec. 31, 2021
87.4
97.0
Other
liabilities
Financial
debt
Equity
25.6 28.1
22.3 17.2
49.1
42.1
Sept. 30, 2022 Dec. 31, 2021
87.4
97.0
 Total assets increased by €9.6 billion
to €97.0 billion
 Noncurrent assets amounted to
€54.6 billion, an increase of €2.3 billion
 Current assets increased by €7.4 billion
to €42.4 billion, mainly due to higher
inventories and increased trade accounts
receivable
 Net debt increased by €4.6 billion to
€18.9 billion
 Equity ratio: 50.6%
(December 31, 2021: 48.2%)
October 26, 2022
15 | BASF Analyst Conference Call Q3 2022
Outlook 2022 for BASF Group unchanged
Underlying assumptions (previous assumptions in parentheses)
 Growth in gross domestic product: +2.5% (unchanged)
 Growth in industrial production: +2.5% (+3.0%)
 Growth in chemical production: +2.0% (+2.5%)
 Average euro/dollar exchange rate: $1.05 per euro ($1.07 per euro)
 Average annual oil price (Brent crude): $100 per barrel ($110 per barrel)
Outlook 2022
Sales €86 billion – €89 billion
EBIT before special items €6.8 billion – €7.2 billion
ROCE 10.5% – 11.0%
CO2 emissions 18.4 – 19.4 million metric tons
Presentation Analyst Conference Q3 2022.pdf

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Presentation Analyst Conference Q3 2022.pdf

  • 1. Analyst Conference Call Q3 2022 October 26, 2022
  • 2. October 26, 2022 2 | BASF Analyst Conference Call Q3 2022 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 151 to 160 of the BASF Report 2021. BASF does not assume any obligation to update the forward-looking statements contained in this presentation above and beyond the legal requirements.
  • 3. October 26, 2022 3 | BASF Analyst Conference Call Q3 2022 Challenging market environment  Global macroeconomic environment significantly weakened; short-term macroeconomic expectations dampened  High inflation and sharp increases in energy prices led to a slowdown in consumer demand, particularly in Europe  China continued to grow, but is still restricted by COVID containment measures  Higher than expected global automotive production, mainly driven by China  Central banks further raised interest rates to combat inflation, in turn dampening construction and consumer spending
  • 4. October 26, 2022 4 | BASF Analyst Conference Call Q3 2022 Global chemical production grew by 2.0% in Q3 2022 Chemical production Q3 2022 compared with prior-year quarter1 % North America EU 27 Asia excl. mainland China 3.3 2.7 Q3 2021 Q3 2022 6.6 -6.7 Q3 2021 Q3 2022 6.6 -6.0 Q3 2021 Q3 2022 % Q3 2022 Q3 2021 Global GDP 2.2 4.6 Global industrial production 3.2 4.7 Global chemical production 2.0 4.2 Growth rates 1 Source: BASF, Q3 2022 based on estimates. Data sources: IHS, Oxford Economics, NBS China, Feri, Fed, Eurostat, METI, ONS. All data subject to statistical revision. Mainland China 3.1 6.9 Q3 2021 Q3 2022
  • 5. October 26, 2022 5 | BASF Analyst Conference Call Q3 2022 Moderate demand growth in key customer industries in Q3 2022 Chemicals and plastics Transportation Agriculture Consumer goods Construction Electronics Health and nutrition Energy and resources − Global production hardly growing; decline in Europe due to high energy costs; growth in the U.S. and China − Global production strongly above last year; recovery in China; base effects in North America and the E.U. − Solid demand for consumables (care) − Negative impact of high inflation on durable consumer goods − Softening demand in consumer electronics; industrial demand solid; supply chain pressure easing − Oil production above prior year; natural gas production declining − Moderate growth in mining, excluding oil and gas − Negative impact of increasing interest rates in North America and Europe − In China, ongoing weakness of residential construction − Food production dampened by high energy costs and weaker global demand; pharma stable − Solid demand environment; yields impacted by dry weather in several regions
  • 6. October 26, 2022 6 | BASF Analyst Conference Call Q3 2022 Q3 2022: BASF achieved solid EBIT before special items despite continued high raw materials and energy prices  In Q3 2022, EBIT before special items declined by €0.5 billion and amounted to €1.3 billion; additional costs for natural gas in Europe are one major reason for this decline  BASF’s downstream segments considerably improved earnings, mainly due to higher prices  As forecasted, earnings of upstream segments declined considerably from very high levels 1,865 1,227 2,818 2,339 1,348 0 1,000 2,000 3,000 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 EBIT before special items Million € -27.7%
  • 7. October 26, 2022 7 | BASF Analyst Conference Call Q3 2022 Natural gas prices in Europe increased further compared with already elevated levels in Q3 2021 Incremental natural gas spend in Europe Million € - 100 200 300 400 500 0 Costs 2020 Additional costs 2021 Additional costs Q1, Q2 and Q3 2022  Natural gas price burden for European BASF sites − Additional costs of ~€2.2 billion in first nine months of 2022 compared with the same period of 2021  Ludwigshafen site − Largest gas consumer in BASF (2021: ~37 TWh) − Half of the natural gas is used for producing electricity and steam, the other half as raw material − Technical optimization projects initiated − Partial substitution of natural gas by fuel oil in the power plants
  • 8. October 26, 2022 8 | BASF Analyst Conference Call Q3 2022 Operational earnings in region Europe and in Germany under pressure due to various challenges  Weak average growth of the European chemical market in the past decade  Structurally higher natural gas prices in Europe to be expected in the longer term  Regulatory uncertainty (e.g., E.U. Green Deal and Chemical Strategy for Sustainability) puts parts of the portfolio at risk and, together with CO2 price increases, leads to higher costs 33% 7% 10% 5% -10% 32% 25% 25% 28% 30% 35% 69% 65% 67% 80% 2015 2021 Q1 2022 Q2 2022 Q3 2022 EBIT before special items of BASF Group1 Germany Europe excluding Germany Other regions 1 Data excluding oil & gas business and construction chemicals business
  • 9. October 26, 2022 9 | BASF Analyst Conference Call Q3 2022 BASF takes decisive action with focus on Europe and Germany in particular The significantly weaker earnings in Europe, especially in Germany, as well as the deteriorating framework conditions in the region make permanent cost reduction and structural adjustments necessary.  Cost savings program in non-production areas focusing on Europe and Germany in particular − Implementation starts immediately and should be completed by the end of 2024 − Employee representatives are involved in the relevant bodies − When completed, the program is expected to generate annual cost savings of €500 million − Streamlining of operating, service and research & development divisions as well as the corporate center  Further structural measures to adjust BASF’s production Verbund in Europe in the medium and long term are necessary − Detailed analysis of value chains ongoing − Measures will be communicated in the first quarter of 2023
  • 10. October 26, 2022 10 | BASF Analyst Conference Call Q3 2022 Q3 2022: Sales increase mainly driven by higher prices and positive currency effects Sales bridge Q3 2022 vs. Q3 2021 Million € Sales development Q3 2022 vs. Q3 2021 -7.2% 9.6% 0.9% 8.3%  19,669 21,946 -1,425 1,883 180 1,638 0 5,000 10,000 15,000 20,000 25,000 Q3 2021 Volumes Prices Portfolio Currencies Q3 2022   Sales increased by 11.6% to €21,946 million  Volumes declined by 7.2% − Agricultural Solutions increased volumes, all other segments recorded lower volumes  Prices increased by 9.6% − All divisions increased prices, except for Catalysts due to lower precious metal prices  Portfolio effects of plus 0.9% were related to BASF Shanshan Battery Materials  Currency effects of 8.3% were mainly from the U.S. dollar  
  • 11. October 26, 2022 11 | BASF Analyst Conference Call Q3 2022 Q3 2022: BASF’s downstream segments considerably improved earnings, while earnings in upstream segments declined considerably 323 277 299 239 180 7 22 EBIT before special items by segment Million € BASF Group Chemicals Materials Industrial Solutions Surface Technologies Nutrition & Care Agricultural Solutions Other BASF Group EBIT before special items Q3 2022 vs. Q3 2021 Million €
  • 12. October 26, 2022 12 | BASF Analyst Conference Call Q3 2022 BASF Group Q3 2022 and Q1–Q3 2022: Financial figures Financial figures Q3 2022 Change Q1–Q3 2022 Change Million € % Million € % Sales 21,946 11.6 68,003 15.6 EBITDA before special items 2,325 -16.1 9,361 2.1 EBITDA 2,255 -17.4 9,359 2.8 EBIT before special items 1,348 -27.7 6,505 -0.6 EBIT 1,294 -29.0 6,429 -0.3 Net income from shareholdings 102 18.1 -262 . Net income 909 -27.5 4,220 -8.8
  • 13. October 26, 2022 13 | BASF Analyst Conference Call Q3 2022 Cash flow development in Q3 2022 and Q1–Q3 2022 Q3 2022 vs. Q3 2021  Cash flows from operating activities increased by €405 million to €2.3 billion  Changes in net working capital led to a cash inflow of €670 million  Cash flows from investing activities amounted to -€680 million compared with -€1.8 billion  Payments made for property, plant and equipment and intangible assets rose by 23% to €1.0 billion  Free cash flow increased by €218 million to €1.3 billion 1 Free cash flow: cash flows from operating activities minus payments made for property, plant and equipment and intangible assets Q3 2022 Million € 2,301 -1,006 1,295 0 500 1,000 1,500 2,000 2,500 Cash flows from operating activities Capex Free cash flow Q3 2022 1 Q1–Q3 2022 Million € 1 3,239 -2,501 738 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Cash flows from operating activities Capex Free cash flow Q1-Q3 2022
  • 14. October 26, 2022 14 | BASF Analyst Conference Call Q3 2022 Strong balance sheet Balance sheet September 30, 2022, vs. December 31, 2021 Billion € Liquid funds Accounts receivable, trade Noncurrent assets Inventories Other assets 3.4 2.8 7.4 6.5 14.5 11.9 17.1 13.9 54.6 52.3 Sept. 30, 2022 Dec. 31, 2021 87.4 97.0 Other liabilities Financial debt Equity 25.6 28.1 22.3 17.2 49.1 42.1 Sept. 30, 2022 Dec. 31, 2021 87.4 97.0  Total assets increased by €9.6 billion to €97.0 billion  Noncurrent assets amounted to €54.6 billion, an increase of €2.3 billion  Current assets increased by €7.4 billion to €42.4 billion, mainly due to higher inventories and increased trade accounts receivable  Net debt increased by €4.6 billion to €18.9 billion  Equity ratio: 50.6% (December 31, 2021: 48.2%)
  • 15. October 26, 2022 15 | BASF Analyst Conference Call Q3 2022 Outlook 2022 for BASF Group unchanged Underlying assumptions (previous assumptions in parentheses)  Growth in gross domestic product: +2.5% (unchanged)  Growth in industrial production: +2.5% (+3.0%)  Growth in chemical production: +2.0% (+2.5%)  Average euro/dollar exchange rate: $1.05 per euro ($1.07 per euro)  Average annual oil price (Brent crude): $100 per barrel ($110 per barrel) Outlook 2022 Sales €86 billion – €89 billion EBIT before special items €6.8 billion – €7.2 billion ROCE 10.5% – 11.0% CO2 emissions 18.4 – 19.4 million metric tons