ceo roadshow london - basf...this presentation may contain forward-looking statements that are...

We add value as one company

Oil & Gas

Agricultural Solutions

Functional Materials

& Solutions

Performance Products

Chemicals

Value CEO Roadshow Kurt Bock BASF SE London March 11, 2013

BASF Capital Market Story March 2013

Cautionary note regarding forward-looking statements

2

This presentation may contain 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. Forward-looking statements may include, 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 and assumptions with respect to future events and financial performance. Actual financial performance 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. 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.


Chemistry as an enabler BASF has superior growth

opportunities: - sustainable innovations - investments - emerging markets

Ambitious financial targets

The #1 chemical company €78.7 billion sales, €8.9

billion EBIT bSI in 2012 #1-3 in >75% of businesses,

present in >200 countries 6 integrated Verbund sites,

production in 41 countries

10 years of strong sales and earnings growth

20% average annual total shareholder return*

16% average annual dividend increase, >3% yield in every single year**

Performance

We create chemistry for a sustainable future

Perspective

* March 2003 – Feb. 2013 ** for 2003-2012

Ludwigshafen, Germany

Antwerp, Belgium

Nanjing, China

Kuantan, Malaysia Geismar,

USA Freeport, USA

Verbund site

Positioning

3


Dispersions & Pigments Performance Chemicals Care Chemicals Nutrition & Health Paper Chemicals

Crop Protection

Inorganics Petrochemicals Intermediates

Catalysts Construction Chemicals Coatings

Chemicals

Functional Solutions Performance Products

Agricultural Solutions Oil & Gas Exploration & Production and

Natural Gas Trading

Percentage of sales 2012*

BASF today – a well-balanced portfolio Total sales 2012: €78.7 billion

Performance Polymers Polyurethanes

Plastics

* Not depicted here: ~6% of Group sales reported as ‘Other‘ 4


Business review BASF Today Trends Purpose and strategic principles Targets Strategic levers BASF Tomorrow – Board priorities

BASF Strategy: We create chemistry__November 2011

Business review

BASF strategy & growth targets

Strategic levers


BASF increased sales and earnings

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Business performance Q4’12 vs. Q4’11 FY’12 vs. FY’11 Sales €19.6 billion +9% €78.7 billion +7% EBITDA €2.7 billion (8%) €12.5 billion +4% EBIT before special items €1.8 billion +18% €8.9 billion +5% EBIT €1.6 billion (16%) €9.0 billion +5% Net income €1.0 billion (13%) €4.9 billion (21%) Reported EPS €1.06 (14%) €5.31 (21%) Adjusted EPS €1.35 +29% €5.71 (9%) Operating cash flow €1.6 billion (24%) €6.7 billion (5%)

Sales development Period Volumes Prices Portfolio Currencies

Q4’12 vs. Q4’11 6% 1% 0% 2%

FY’12 vs. FY’11 3% 1% (1%) 4%


Balance sheet remains strong Balance sheet 2012 vs. 2011 (billion €)

Liquid funds

Accounts receivable

Long-term assets

25.8

13.4

22.9

34.1

10.9

2.0

Other liabilities

Financial debt

Stockholders’ Equity

Dec 31 2011

Dec 31 2011

Dec 31 2012

Dec 31 2012

61.2

25.4

13.0

22.8

Inventories

Other assets

10.1

4.1

61.2

Highlights 2012 Increase of long-term assets

by €1.5 billion, mainly due to acquisitions

Creation of disposal group for natural gas trading leads to lower inventories, receivables and payables

Higher provisions for pension obligations due to reduced discount rates

Equity ratio: 40% Net debt: €11.6 billion Net debt/EBITDA ratio: 0.9

35.5

10.1

1.8

9.9

3.6

64.3

3.4

64.3

Disposal group 2.2

Disposal group

7


Strong free cash flow generation

* Cash provided by operating activities less capex (in 2005 before CTA) ** 2009 adjusted for re-classification of settlement payments for currency derivatives

2.8 2.6

3.3 3.5 3.2

2.53.2

2003 2004 2005 2006 2007 2008 2009** 2010 2011 2012

Free cash flow* in billion €

3.9 3.7

8

2.6


Delivering attractive shareholder returns

Dividend proposal of €2.60 per share for 2012 (+4%)

2003-2012: Average annual dividend increase of 16%

Attractive dividend yield of 3.7% in 2012**

Dividend yield above 3% in any given year since 2002, total payout almost €17 billion

* Dividend yield based on share price at year-end

Dividend payments

3.7% 3.2% 3.1% 4.1% 3.8% 7.0% 3.9%

Dividend yield* 4.6% 3.1%

2.50

0.70 0.85 1.00

1.50

1.95 1.951.70

2.20

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

9

2.60

Dividend per share in €

3.7% ** Based on BASF share price of €71.15 on Dec 28, 2012

Proposal:


Delivering consistent, long-term value

Average annual performance with dividends reinvested

0 3 6 9 12 15 18 21 24

Euro Stoxx 50

DAX 30

MSCI World Chemicals

+11.7%

Last 5 years March 2008 – February 2013

+16.4%

-3.4%

+2.8%

+4.0%

Last 10 years March 2003 – February 2013

BASF

+12.5%

+5.2%

+20.1%

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BASF Capital Market Story March 2013 11

Outlook 2013 Expectations for the global economy

2012

GDP 2.2%

Chemicals (excl. pharma) 2.6%

Industrial production 2.4%

US$ / Euro 1.28

Oil price: Brent (US$ / bbl) 112

Forecast 2013

2.4%

3.6%

3.4%

1.30

110


Outlook 2013 by region Chemical production (excl. pharma)

EU-27

USA

Asia (excl. Japan)

Japan

South America

3.6%

0.3%

1.9%

8.1%

-0.6%

3.7%

World 2.6%

-1.4%

2.5%

7.7%

-4.5%

1.9%

2012 Forecast 2013


Outlook BASF Group 2013*

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Excluding the effects of acquisitions and divestitures, we strive to increase our sales volumes in 2013.

We want to exceed the 2012 levels in sales and EBIT before special items.

The expected increase in demand, together with our measures to improve operational excellence and raise efficiency, will contribute to this.

We aim to earn a high premium on cost of capital once again in 2013.

* In our forecast, we have applied the previous consolidation method in order to ensure comparability with the prior year. Changes due to IFRS 10 and 11 are not considered yet. However, the qualitative statements made in our forecast remain valid.




Business review


Strategic levers


Demographic challenges … set the stage for the future of the chemical industry

Nine billion people in 2050 but only one earth

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Resources, Environment & Climate Food & Nutrition Quality of Life

Chemistry as enabler


Key financial targets 2015 / 2020*

Grow at least 2 percentage points above chemical production

Earn a premium on cost of capital of at least €2.5 billion on average p.a.

Profitability targets Growth targets

2015

2020

Sales ~€85 billion

Sales ~€115 billion

EBITDA ~€15 billion EPS ~€7.50

Double EBITDA to ~€23 billion (compared with 2010)

16 * Published on November 29, 2011


Striving for strong profitable growth All regions will deliver profitable growth

17

Regional sales targets 2020* (by location of customers) in billion €

North America

2010 2020

13

~5.5% p.a. ~22

South America, Africa, Middle East

~8% p.a.

5 ~11

Europe

~4.5% p.a.

33

~53

Asia Pacific

~8% p.a.

13 ~29

2010 2020

2010 2020 2010 2020

19%** 20%** 46%** 52%**

25%** 20%** 10%** 8%**

* Published on November 29, 2011 ** Percentage of total sales




Business review


Strategic levers – Portfolio development

– Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence


Portfolio development We expand from chemicals to chemistry

Chemistry as key enabler for functionalized materials & solutions

Deep understanding of customer value chains required

New molecules

Improved applications

Functionalized materials & solutions

1960 1970 1980 1990 2000 2010 2020

Batteries, membranes ...

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Portfolio development Moving downstream towards customer industries

* Agriculture, Construction, Consumer Goods, Health & Nutrition, Electronics, Energy & Resources, Transportation ** Sales excluding Oil & Gas

Functionalized Materials & Solutions Customized Products Classical Chemicals

2020 in % of sales**

Chemical Industry First customer industries*


~ 40%

~ 30% ~ 70%


~ 50%

~ 60%

~ 50%

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Engineering plastics Electronic chemicals Catalysts Construction chemicals Water-based resins Pigments Plastic additives Oil & Gas Personal care & food Battery materials Functional crop care Omega-3 fatty acids

BASF core business

Strong partnerships

Gazprom Monsanto Petronas Shell Sinopec Total

Selected transactions 2001 − today*

Acquisitions

~ €15bn sales ~ €10bn sales**

Divestitures

Pharma Fibers Printing systems Polyolefins Polystyrene Americas Agro generics Vitamins premix Fertilizers Styrenics (transferred into

Styrolution JV on Oct. 1, 2011)

** without Styrenics

Portfolio development Towards more market driven and innovative businesses

21 * only closed deals have been considered


Ongoing portfolio development Upstream Downstream

Transaction with Statoil

Gazprom asset swap Pronova BioPharma

Becker Underwood

22


BASF sales by first customer industry*

Bubble Size: BASF divisional sales by first customer industry (2010)**

> 15 %

< 10 %

< 10 %

> 15 %

Inorganics Petro- chemicals

Construction Chemicals

Dispersions & Pigments

Catalysts Intermediates Coatings Care Chemicals

Performance Polymers

Poly- urethanes

Performance Chemicals

Paper Chemicals

Consumer goods

Transportation

Construction

Energy & Resources

Market approach Cross-divisional customer industry approach

* Excluding Oil & Gas and Other ** Excluding Agricultural Solutions, Health & Nutrition, Oil & Gas and Other

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E-textiles

Solar roof with transparent organic solar panels and OLED modules

Multifunctional seat

Infrared-reflective coating

Infrared-reflective film

High performance foams

Lightweight tridion cell

All-plastic wheel

Cross-divisional approach: ‘Smartforvision’ Technology competencies combined with customer know-how

Daimler & BASF concept car ‘Smartforvison’

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1.4 1.4 1.5 1.6

1.7

0,0

0,5

1,0

1,5

2,0

2008 2009 2010 2011 2012

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€1.7 billion R&D expenditures in 2012

Increase of R&D spending planned for 2013

~10,500 employees in R&D

~3,000 projects

Research Verbund: About 1,950 partnerships with universities, start-ups and industry partners

Target 2015 and 2020: - €10 billion in sales from innovations younger 5 years; - €30 billion in sales from innovations younger 10 years

Strong commitment to R&D

Key facts R&D expenditures (billion €)


Sustainability in customer industries will drive our innovative growth fields

* Including growth fields still under evaluation

Health & Nutrition

Consumer Goods Construction Transportation Electronics Energy &

Resources Agriculture

Customer industries

Energy management

Water solutions

Wind energy

Rare earth metals

recycling

Heat management

Enzymes Plant biotechnology

Batteries for mobility

Lightweight composites

Heat management

Functional crop care

Medical Organic electronics

Growth Fields*

Ongoing inflow of new growth fields

Chemistry as an enabler: Growth Fields Innovations for a sustainable future

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Joint development with adidas, illustrating our customer focus

Revolutionary BOOST™ cushioning material, provides highest energy return in the running industry

Solid granular material* is ‘blown up’, turned into 1000’s of small energy capsules

With their unique cell structure, these energy capsules store and unleash energy more efficiently in every stride

New shoe is available in stores since February, 2013

Innovation with adidas: BOOST™ Technology competencies combined with customer know-how

Key facts

Photo: adidas * TPU (Thermoplastic polyurethane)


Future investments in € billlion

Thereof investments in emerging markets

Total investments

35-45%

15-20

30-40%

~15

2006 – 2010 2011 – 2015 2016 – 2020

10.9

~20%

Investments … will boost future organic growth

28


Expansion Verbund site Nanjing, China*

MDI plant Chongqing, China

* Memorandum of Understanding signed

TDI plant Ludwigshafen, Germany

Investments Major projects

29

Expansion oil & gas activities

Fungicide production Germany, USA

Acrylic acid complex Camacari, Brazil


Acquisitions … will contribute to profitable growth in the future

Provide a minimum return on investment of 8% after tax

Are EPS accretive by year three at the latest

Financial acquisition criteria

Generate profitable growth above the industry average

Are innovation-driven

Offer a special value proposition to customers

Reduce earnings cyclicality

Strategic acquisition criteria

We want to acquire businesses which …

30


Operational excellence Strong track record

BASF Group 2002–2012 Index

50

100

150

200

250

300

2002 2006 2009 2012

CAGR 2002 – 2012

10 %

10 %

4 %

EBITDA

Sales

Fixed costs

31


Operational excellence STEP program on track: ~€1 billion earnings contribution by 2015

Annual earnings contribution (€ million)

0

1,000

2,000

3,000

2012 2015

Former cost saving programs NEXT STEP

Targeted annual earnings contribution of ~€1 billion by end of 2015

Project timeline: 2012–2015 Program is on track Measures to optimize processes and

structures in all regions, e.g. − manufacturing, maintenance − supply chain − engineering, best-cost country sourcing

One-time costs & investments: ~€1 billion

NEXT Program

STrategic Excellence Program ‘STEP’

NEXT program successfully completed Annual earnings contribution of

~€1 billion achieved in 2012

32


Appendix

a | Business development Q4 2012

b | Other


Chemicals Lower margins and plant shutdowns

34

Intermediates 697 +10%

Inorganics 470

+32%

Petrochemicals 2,269 +6%

€3,436 +10%

381 355

0

200

400

600

Q4 '11 Q4 '12

Q4’12 segment sales (million €) vs. Q4’11 EBIT before special items (million €)

1,717

2,441

0

1,000

2,000

FY '11 FY '12


Q4’12 vs. Q4’11 2% 3% 3% 2%

FY’12 vs. FY’11 (3%) (2%) 8% 4%


Plastics Polyurethanes drive earnings

35

Polyurethanes 1,648 +18%


1,229 +4%

€2,877+12%

Q4’12 segment sales (million €) vs. Q4’11

110

180

0

100

200

300

Q4 '11 Q4 '12

873

1,203

0

400

800

1,200

FY '11 FY '12


Q4’12 vs. Q4’11 4% 5% 0% 3%

FY’12 vs. FY’11 (3%) 2% 1% 4%

EBIT before special items (million €)


Performance Products Lower margins and higher fixed costs impact earnings

36


867 +5%

Care Chemicals 1,204 +2%

€3,735 +3%

Paper Chemicals 387 (1%)


Nutrition & Health 482 +9%


795 +0%

220183

0

100

200

300

Q4 '11 Q4 '12

1,428

1,727

0

500

1,000

1,500

2,000

FY '11 FY '12


Q4’12 vs. Q4’11 4% (2%) (1%) 2%

FY’12 vs. FY’11 (2%) 0% 0% 3%



Functional Solutions Strong automotive demand drives earnings

37

Catalysts 1,488 (7%)


558 +4%

Coatings 748

+1%

€2,794(3%)


88

141

0

30

60

90

120

150

Q4 '11 Q4 '12

559 561

0

200

400

600

FY '11 FY '12


Q4’12 vs. Q4’11 (5%) (1%) 2% 1%

FY’12 vs. FY’11 (3%) (2%) 2% 4%



Agricultural Solutions Record year with earnings above the €1 billion mark

38


0

200

400

600

800

1,000

Q4 Q42012 2011

822 877 41

33

0

10

20

30

40

50

Q4 '11 Q4 '12

810

1,037

0

200

400

600

800

1000

FY '11 FY '12


Q4’12 vs. Q4’11 2% (1%) 2% 4%

FY’12 vs. FY’11 6% 1% 0% 5%



Oil & Gas Significantly higher production

39

Exploration & Production 1,383 +36%

Natural Gas Trading

3,385 +16%

€4,768 +21%

Q4’12 segment sales (million €) vs. Q4’11 EBIT before special items / Net income (million €)

564

121 276 96 250

564903

Natural Gas Trading Exploration & Production Net income Non-compensable oil taxes:

Q4 2011: €159 million Q4 2012: €492 million FY 2011: €439 million FY 2012: €1,880 million

4251,064

4821,201

1,686

3,622

Q4 '11 Q4 '12 FY 2011 FY 2012 0

500

1,000

0

1,000

2,000

3,000

4,000

Sales development Period Volumes Price/Currencies Portfolio

Q4’12 vs. Q4’11 18% 3% 0%

FY’12 vs. FY’11 29% 10% 0%


Review of ’Other’ Million € Q4 2012 Q4 2011 2012 2011

Sales 1,161 1,112 4,793 6,275

thereof Styrenics — — — 2,393

EBIT before special items (102) (11) (839) (404) thereof Corporate research Group corporate costs Currency results, hedges and other valuation effects Styrenics, fertilizers, other businesses

(105) (73) (92)

18

(92) (74)

(107)

65

(391) (255) (460)

183

(348) (246) (199)

408

Special items 154 623 572 582

EBIT 52 612 (267) 178


0

2

4

6

8

10

2.0

(0.3)

(4.1)

(2.6)

6.7

(2.6)

1.8

* Payments related to intangible assets and property, plant and equipment

Cash 12/31/11

Operating CF

Capex* Acquisitions & Divestitures

Dividends Cash 12/31/12

Strong operating cash flow in 2012 Full year 2012 (billion €)


Appendix

a | Business development Q4 2012

b | Other


PU systems Engineering

plastics Thermoplastic PU Cellasto Biopolymers Functional foams POM High temperature

polymers Styropor

Styrodur Neopor

Epoxy systems

Petrochemicals Intermediates

Ethylene Ethylene oxide Propylene Propylene oxide Butenes &

butadiene Acrylic acid Butylacrylate Butanol Isononanol Plasticizers (incl.

Hexamoll DINCH)

Monomers Performance Materials

Ammonia & nitric acid

Sulfur products Chlorine products Caprolactam &

adipic acid Polyamide 6 & 6.6 Isocyanates Melamine, glues &

resins Electronic

materials

Amines Butanediol and

derivates (incl. PBT resins)

Polyalcohols Organic acids &

specialities Methanol &

formaldehyde Life science

intermediates Gas treatment

solutions

Important product groups in the four realigned divisions (as of January 1, 2013)

Chemicals Functional Materials & Solutions

43


Industry focus Product focus Classical

Chemicals Customized

Products Functionalized Materials

& Solutions

Operational and technology excellence

Scale, integration and raw material conditions

Reliable, low cost logistics

Complexity reduction

Deep understanding of customer value chain and multi-disciplinary know-how enable constant innovation

Customized services and solutions supported by industry and application experts

Tailored offerings for markets and industries

Customer proximity and application know-how

44

Competencies for successful management of diverse portfolio


Janu

ary

2013

Intermediates

e.g. Amines

e.g. TDI

e.g. Monomers

e.g. Epoxy Systems

e.g. PU Systems

e.g. Ultramid

Monomers

Petrochemicals

toda

y

Petrochemicals

Intermediates

Classical Chemicals Functionalized Materials & Solutions

Performance Materials

Polyurethanes


Inorganics

45

New organization of divisional activities



Chemicals Functional Materials& Solutions

Performance Products

Petro- chemicals

Intermediates

Paper Chemicals

Coatings


Performance Materials

Monomers

Crop Protection


Oil & Gas

Oil & Gas

Catalysts

Care Chemicals

Nutrition & Health


46

New segment structure As of January 1, 2013



Chemicals

Performance

Products

Intermediates

Inorganics

Paper Chemicals

Coatings


Petrochemicals


Oil & Gas

Care Chemicals

Nutrition & Health


Plastics


Polyurethanes

Crop

Protection

Oil & Gas

Catalysts

Functional Solutions

BASF segment structure until December 31, 2012

47


Cross-divisional approach Biopolymer for enhanced oil recovery

Potential Increased incremental oil recovery of up to 10% on

waterflooding. Sales potential to be defined after completion of trials

Approach Leverage BASF’s Verbund knowhow in white

biotechnology for Oil & Gas production Proprietary biopolymer from Schizophyllum fungus

allows for enhanced oil recovery due to its high viscosifying efficiency

Biopolymer is stable in high temperature and high- salinity reservoirs

Current activities Schizophyllan biopolymer to be produced at BASF

Ludwigshafen via fermentation. First trial in mature Wintershall oil field from 2012 (Bockstedt, Germany)

Schizophyllan biopolymer

Schizophyllum commune

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ceo roadshow london - basf...this presentation may contain forward-looking statements that are...

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