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BASF Strategy: We
create
chemistry__November
2011 1
BASF: Fit for 2012 and beyond
Dr. Stefan MarcinowskiMember of the Board
of Executive Directors
Paris
December 08, 2011
2
Business review BASF Today Trends Targets Strategic levers BASF Tomorrow – Board priorities
3
Sales €17.6 billion +12%EBITDA €2.7 billion (8%)EBITDA margin 15.4% 18.6%EBIT before special items (bSI) €2.0 billion (11%)EBIT bSI adjusted for non-comp. oil taxes €2.0 billion (1%)EBIT €1.9 billion (13%)Net income €1.2 billion (4%)EPS €1.30 (4%)Adjusted EPS €1.52 0%
Business performance Q3’11 vs. Q3’10
Further sales growth in chemical activities mainly due to successful price increasesAcquired Cognis business continues to perform strongly; synergy targets increasedAgricultural Solutions on track for record year in sales and earningsEBIT before special items amounted to €2 billion. Adjusted for Libya, which contributed €355 million in last year’s quarter, EBIT before special items increased by 6% compared to Q3 2010.
BASF with good earnings in Q3Highlights Q3 2011
4
We expect to generate significantly higher salesWe aim to significantly exceed the 2010 EBIT before special itemsadjusted for non-compensable oil taxes (2010: €7.2 billion)We will earn a high premium on our cost of capital
Outlook 2011
Outlook 2011 confirmed
We aim to continuously increase the annual dividend, or at least maintain it at the level of the previous year.
Dividend policy
5
Business review BASF Today Trends Targets Strategic levers BASF Tomorrow – Board priorities
6
Outperformed global chemical production by 4 percentage points p.a.
Sales to third parties in billion €
BASF total growth 7.8% p.a.
BASF volumes + M&A 6.6% p.a.
BASF volumes 4.1% p.a.
Global chemical production 3.0% p.a.
30
60
20
50
40
Prices
12
33
Volumes
14
64
M&A
11
Currencies
–6
70
2001 2010
7
€9bn(Sales excl. planned
measures)
Portfolio development towards more market driven and innovative businesses
Acquisitions
Crop protectionEngineering plastics Electronic chemicalsCustom synthesisCatalystsConstruction chemicalsWater-based coatingsPigmentsPlastic additivesOil & Gas Personal care & food
€15bn(Sales)
BASF core business
Strong partnerships
GazpromMonsantoPetronasShellSinopecTotal
Divestitures
PharmaFibersPrinting systems PolyolefinsPolystyrene Americas Agro generics Vitamins premixFertilizers (planned)Styrolution (planned)
Selected transactions 2001 −
today
0
2
4
6
8
10
0
20
40
60
8
Strong and profitable growth in emerging markets
2001
CAGR 5.4%28%
34%CAGR 13%
2010
53
28
Developed markets*Emerging markets * BASF definition: Developed
markets
include
EU15, Norway,
Switzerland, North America, Japan, Australia, New Zealand
22%
2001
CAGR 12%
34%
CAGR 18%
2010
8.2
2.5
25%
Sales BASF Group excluding Oil & Gas in billion €
by location of customerEBITDA BASF Group excluding Oil & Gas
in billion €
by location of customer
9
Strong focus on operational excellence
BASF Group 2001–2010 Index
2001 2004 2007 2010
CAGR
12 %
8 %
EBITDA
Sales
Fixed costs2 %
50
100
150
200
250
300
1010
*
Cash provided by operating activities less capex
(in 2005 before CTA)** 2009 adjusted for re-classification of settlement payments for currency derivatives
Continuous strong free cash flow generation
Free cash flow in billion €
-0.5
2.8 2.6
3.3 3.5 3.22.5
-0.1
3.23.9
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
-1 2 5 8 11 14
11BASF Strategy: We
create
chemistry__November
2011 11
Delivering consistent, long-term value – Last 10 years
Long-term performance December 2001 – November 2011 (average annual performance with dividends reinvested)
BASF
Euro Stoxx 50
DAX 30
MSCI World Chemicals
+2.0%
+13.8%
Last 5 years
+7.1%
–1.7%
+13.9%
–7.2%
–0.7%
+3.5%
12
Business review BASF Today Trends Targets Strategic levers BASF Tomorrow – Board priorities
13
Demographic challenges set the stage for the future of the chemical industry
Nine billion people in 2050 but only one earth
Resources, Environment & Climate
Food & Nutrition Quality of life
Chemistry as enabler
14
Key trends for the chemical industry
Integrated chemical companies remain cornerstone
Emerging markets players grow quickly
Raw material players invest further downstream
Competitive landscape will change
Use opportunities from sustainability
Increase resource efficiency
Renewables as raw materials
Stakeholder dialogue
Sustainability as strategic driver
Chemistry as enabler
Chemical products replace traditional materials
Create innovative sustainable solutions
Innovation gains importance
Growth will accelerate
Industrial production > GDP
Chemicalproduction > GDP
Emerging markets will outgrow developed markets
Chemical industry remains an attractive growth industry
100
142
138219
23
127
0
1
2
3
4
5
6
7
8
9
10
0 1 2 3 4 5 6 7 8 9 10
15
Chemicals to outgrow key customer industries
Transportation
in %
ConstructionAgriculture
Customer industry growth CAGR 2010-2020 in % p.a.
Energy & Resources
Electronics
Health & Nutrition
Consumer Goods
Che
mic
al p
rodu
ctio
n gr
owth
C
AGR
201
0-20
20 in
% p
.a.
= Market of 2020
in bn
€
(real, 2008)
148
Chemicals growth above customer industries
Chemicals growth below customer industries
Chemicals growth =
customer industrie
s growth
Source: BASF
16
Business review BASF Today Trends Targets Strategic levers BASF Tomorrow – Board priorities
17
Striving for strong profitable growth
Sales* in billion €
64
2010 Target 2020
Target 2015
Investments
Acquisitions
CAGR ~6%
Innovations
Investments
AcquisitionsInnovations
~85
~115
We will outperform chemical production by 2 percentage points p.a.* Potential impact of IFRS changes not included
18
All regions will deliver profitable growth
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 20202010 2020
19%*20%*46%*52%*
25%*20%*10%*8%*
* Percentage of total sales
19
Doubling EBITDA by 2020
EBITDA* in billion €
2010 Target 2020
Target 2015
11.1
CAGR ~7.5%~23
~15Op. Excellence
Growth
Acquisitions
Op. Excellence
Growth
Acquisitions
* Assumptions 2010-2020: Exchange rate $/€
Ø
1.40, Oil price Ø
$110/bbl
20
Business review BASF Today Trends Targets Strategic levers
–
Portfolio development–
Market approach
–
Innovations for a sustainable future–
Investments
–
Operational excellence
BASF Tomorrow – Board priorities
21
Portfolio Development We expand from chemicals to chemistry
Chemistry as key enabler for functionalized materials & solutionsDeep understanding of customer value chains required
New molecules
Improved applications
Functionalized materials & solutions
1960 1970 1980 1990 2000 2010 2020
Batteries, membranes ...
22BASF Strategy: We
create
chemistry__November
2011 22
Portfolio Development A different look at our current portfolio...
Excellent position and growth opportunities; synergies with chemical businesses
Chemical business based on our production Verbund
Customer-oriented specialties, backward integration in Verbund
value chains
Integration of competencies in chemistry: R&D, technology, market knowledge and global access to customer industries
Functionalized Materials & Solutions
Classical Chemicals Customized Products
Oil & Gas
Exploration & production
of oil
and gas, gas trading
activities
Cracker products, plastizicers, acrylic acid, MDI/TDI
PU systems, vitamins, personal care
ingredients
Battery materials, water solutions, crop protection agents, engineering plastics
23
Oil & Gas
Strong contributor to BASF’sprofitable
growth
Significant cash flow
and long-term
profitability
Hydrocarbonhedge
Technologicalsynergies through BASF
Verbund
Portfolio Development Oil & Gas: significant advantages for BASF
24
Portfolio Development Moving downstream towards customer industries
* Agriculture, Construction, Consumer Goods, Health & Nutrition, Electronics, Energy & Resources, Transportation
** Sales excluding Oil & Gas
Functionalized Materials & SolutionsCustomized ProductsClassical Chemicals
2020in % of sales**
Chemical Industry First customer industries*
2010 in % of sales**
~ 40%
~30% ~ 70%
2001 in % of sales**
~ 50%
~ 60%
~ 50%
25
Market Approach Cross-divisional customer industry approach
BASF sales by first customer industry*
Bubble Size: BASF divisional sales by first customer industry (2010)**
* Excluding
Oil & Gas and Other
** Excluding Agricultural Solutions, Health & Nutrition, Oil & Gas and Other
> 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
26
Innovations for a sustainable future Combining cross-divisional technology competencies with customer know-how
Smart forvision – joint concept car of Daimler and BASF
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
27BASF Strategy: We
create
chemistry__November
2011 27
Innovations for a sustainable future Strengthening our R&D platform in Asia Pacific
Innovation in Asia for Asia
8 R&D sites plus technical centersin Asia PacificR&D experts to increase from 550 to more than 800 by 2020€55 million investment includes innovation campus and Greater China head officeLeverage global R&D capabilities with Competence Centers in Singapore, India and ChinaCo-operations with ~100 institutes and universities
BASF‘s new innovation campus in Shanghai
28
Innovations for a sustainable future Target EBITDA from innovations: €7 billion in 2020
Sales and EBITDA from innovations in billion €
2015 2020
~10
~30
Targeted spending of ~3% of sales (w/o Oil & Gas) p.a. on R&D
Sales from innovations launched within last 5 years
Sales from innovations launched within last 10 years
~2.5
~7EBITDA from innovations launched within last 5 years
EBITDA from innovations launched within last
10 years
29
Investments Investments will boost future organic growth
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%
30
MDI plant Chongqing, China Expansion Verbund
site Nanjing*
Expansion Verbund
site Kuantan*
Acrylic acid complex, Brazil Expanding gas production, Russia* 15% Stake in South Stream
* Memoranda of Understanding signedEmerging market sales target 2020: 45 %
Investments Major projects in emerging markets
31
Operational Excellence New program “STEP”: Earnings contribution ~€1 billion
31
Annual earnings contribution in €
million
Optimization of processes, structures and production sites in all regionsMeasures:–
Fixed cost savings–
Margin improvement–
Capacity increase–
Better sourcingProject timeline: 2012 - 2015Targeted earnings contribution of about €1 billion by end of 2015
NEXT Program
Former cost saving programs NEXT STEP
STEPSTrategic
Excellence
Program
Annual earnings contribution of more than €1 billion will be achieved in 2012
0
1,000
2,000
3,000
2012 2015
32
Business review BASF Today Trends Purpose and strategic principles Targets Strategic levers BASF Tomorrow – Board priorities
33
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 targetsGrowth targets
2015
2020
Sales ~€85 billion
Sales ~€115 billion
EBITDA ~€15 billion
Double EBITDA to ~€23 billion (compared with 2010)
Our strategy will create shareholder value
Earnings per share* in €
Business
growth1.30
4.96
2002 2010
0.5
0.9
0.8
1.5 Margin
Tax rate
Share buy-back
Target 2015
~7.5
„STEP“
Share buy-back
Growth
CAGR ~9%
* Reported EPS; adjusted for 2:1 stock split in 2008
35
BASF Tomorrow Roadmap to 2020
We add value as “One company”
Continued top and bottom line growth with key focus on emerging markets
Expansion of portfolio downstream towards functionalized materials and solutions
Strong focus on sustainability and innovation
Commitment to deliver long-term shareholder value
36
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.
Forward-looking statements
We create chemistry
38BASF Strategy: We
create
chemistry__November
2011 3838
BackupBASF track record 2001-2010
0
5
10
15
20
25
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
39BASF Strategy: We
create
chemistry__November
2011 39
Decade of outperformance in sector margins
EBITDA margin in %
BASF Group EBITDA margin
European chemical sector Ø*
US chemical sector Ø**
Asian chemical sector Ø***
* AkzoNobel, Arkema, Clariant, DSM,
Evonik
(Degussa), Lanxess, Solvay** Celanese, Dow, DuPont, Huntsman, PPG
*** Formosa Plastics, Mitsubishi Chemicals, Mitsui Chemicals, Sinopec Chemicals, Sumitomo Chemicals
Source: Company reports, Thomson One, Reuters
4040
Generating high EBITDA
4.15.1
7.7 8.29.7 10.2
9.6
5.1
7.4
11.1
EBITDA in billion €
CAGR (2001-2010) 12%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
41BASF Strategy: We
create
chemistry__November
2011 41
Generating strong EPS growth
-0.10**0.81
1.83
2.87 3.19
4.16
3.13
1.30 1.54
4.96
Earnings per share* in €
CAGR (2002-2010) 18%
* Reported EPS; adjusted for 2:1 stock split in 2008
** Excluding extraordinary income
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
4242
Delivering attractive shareholder returns
From 2001 to 2010, BASF paid dividends in the amount of ~€13 billion
Dividend per share in €
* Dividend yield based on share price at year-end
CAGR 14.5%
Dividend payments
3.9%3.1% 3.2% 3.1% 4.1% 3.8% 7.0%Yield* 3.7%3.1% 3.9%
From 2001 to 2010, BASF bought back shares in the amount of €8.9 billion This equaled ~25% of total shares outstanding
Share buy-backs
0.65 0.70 0.700.85
1.00
1.50
1.95 1.951.70
2.20
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
43BASF Strategy: We
create
chemistry__November
2011 43
Solid track record of earning a premium on cost of capital
EBIT after cost of capital* in billion €
20102001 2002 2003 2004 2005 2006 2007 2008 2009
–0.2**
1.6
2.92.12.4
1.8
–0.6–0.6
–2.6
3.5
Target first established
* Cost of capital rate varied from 9% to 13%
** Including Ciba integration costs of €0.8 billion
44BASF Strategy: We
create
chemistry__November
2011 44
Best-in-class asset profitability – Capital turnover improved by 2% p.a.*
EBITDA on total assets in %
2001
DuPont
DSM
Dow
Celanese
Bayer
AkzoNobel
25%
20%
15%
10%
5%
0%806040200
BASFSABIC
Degussa
Sales in billion
€
2010
806040200
BASF
SABICLanxess
EvonikDuPontDSM
DowCelanese
Bayer
AkzoNobel
= EBIT* Capital turnover = sales over total assets
45
Strong sales and earnings increase in all segmentsChemicals
2001 2010
5.0
11.4
2001 2010
0.90
3.0
Plastics
2001 2010
5.49.8
2001 2010
0.531.7
7% p.a.10% p.a.14% p.a.
14% p.a.
Performance Products
2001 2010
7.4
12.3
2001 2010
0.522.2
6% p.a.
17% p.a.
Functional Solutions
2001 2010
2.3
9.7
2001 2010
0.160.86
17% p.a.20% p.a.
Agricultural Solutions
2001 2010
3.5 4.0
2001 2010
0.51 0.94
Oil & Gas
2001 2010
4.5
10.8
2001 2010
1.63.0
10% p.a.1.5% p.a. 7% p.a.
7% p.a.
Sales in billion € EBITDA in billion € Growth rate p.a.
46BASF Strategy: We
create
chemistry__November
2011 4646
BackupMacro-economic assumptions
47
Assumptions 2010 – 2020
Growth 2001 - 2010
Global GDP 2.5% p.a.
Chemical production (excl. Pharma) 3.0% p.a.
Industrial production 2.4% p.a.
Growth 2010 – 2020 (Forecast*)
3.0% p.a.
4.0% p.a.
3.8% p.a.
* Assumptions 2010-2020: US$/€
Ø
1.40. oil price Ø
US$110/bbl
48BASF Strategy: We
create
chemistry__November
2011 4848
BackupAcquisition Criteria
4949
Acquisitions will contribute to profitable growth in the future
Are EPS accretive by year three at the latest
Provide a minimum return on investment of 8% after tax
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…
50BASF Strategy: We
create
chemistry__November
2011 5050
BackupEmerging Markets
51
Growth above market with increasing share from emerging markets
*BASF definition: Developed markets include EU15, Norway,
Switzerland, North America, Japan, Australia, New Zealand
** Sales without Oil & Gas
2020in % of sales**
2010 in % of sales
(€53bn**)
2001 in % of sales
(€28 bn**)
Emerging marketsDeveloped markets*
~ 66%
~55% ~ 45%
~ 78%
~ 34%
~ 22%
52BASF Strategy: We
create
chemistry__November
2011 5252
BackupInnovation
53
Innovations for a sustainable future Chemistry as an enabler
Sustainability in customer industries will drive our innovative growth fields
Health & Nutrition
Consumer GoodsConstructionTransportation Electronics Energy &
ResourcesAgriculture
Customerindustries
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 OrganicElectronics
GrowthFields*
*including growth fields still under evaluation
Ongoing inflow of new growth fields
54BASF Strategy: We
create
chemistry__November
2011 54
BASF’s global R&D footprint todayNorth America: 1,330 employees in R&D
Europe: 7,500 employees in R&D
Major R&D site
Asia 550 employees in R&D
South America: 220 employees in R&D
55BASF Strategy: We
create
chemistry__November
2011 5555
BackupBusiness development Q3 2011
617537
765674
621
0
200
400
600
800
Q3 Q4 Q1 Q2 Q3
56
Chemicals Significant sales growth driven by strong price increases
Intermediates671+4%
Inorganics356
+11%
Petrochemicals2,141+12%
€3,168+10%
Sales development
Period Volumes Prices Portfolio Currencies
Q3’11 vs. Q3’10 (3)% 18% 0% (5)%
Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €)
2010 2011
371
285
393 383
317
0
200
400
Q3 Q4 Q1 Q2 Q3
57
Plastics Sales up mainly due to a strong Performance Polymers business
Polyurethanes1,480+2%
Performance Polymers
1,321+16%
€2,801 +8%
Sales development Period Volumes Prices Portfolio Currencies
Q3’11 vs. Q3’10 2% 10% 0% (4)%
Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €)
2010 2011
370294
554513
440
0
100
200
300
400
500
600
Q3 Q4 Q1 Q2 Q3
58
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q3’11 vs. Q3’10 (2%) 7% 23% (4)%
Performance Products Strong contributions from acquired Cognis businesses
PerformanceChemicals
904+9%
Care Chemicals1,265+85%
€3,991+24%
Paper Chemicals423-6%
Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €)
Nutrition & Health471+32% Dispersions
& Pigments 928
+5% 2010 2011
158142
167 162
0
50
100
150
Q3 Q4 Q1 Q2 Q3
33
59
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q3’11 vs. Q3’10 4% 11% 3% (6)%
Functional Solutions Strong performance of Catalysts
Catalysts1,608+19%
ConstructionChemicals
5990%
Coatings700
+9%
€2,907+12%
Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €)
2010 2011
66
95
0
50
100
150
Q3 Q3
0
200
400
600
800
1.000
Q3 Q3
60
Agricultural Solutions On track for record year in sales and earnings
Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €)
2011201020112010
+9%
+44%
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q3’11 vs. Q3’10 12% 3% 0% (6)%
832908
272 225
0
200
400
600
Q3 Q3
61
Exploration & Production534-39%
Natural Gas Trading
1,661+23%
€2,195 -1%
Sales developmentPeriod Volumes Prices/Currencies Portfolio
Q3’11 vs. Q3’10 (25)% 24% 0%
EBIT bSI
Natural Gas TradingEBIT bSI
Exploration & Production Net income
Q3’11 segment sales (million €) vs. Q3’10 EBIT before
special
items/ Net income
(million
€)
20112010
503227
573
350Non-compensable
oil
taxes
224
70 123
Oil & Gas EBIT before SI on last year’s level (adjusted for non-compensable oil taxes)