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BASF in excellent shape, optimistic for 2011
2BASF Capital Market Story March 2011
1 | Record year 2010
2 | Focus on operational excellence
3 | Well positioned for profitable growth
4 | Outlook
3BASF Capital Market Story March 2011
Sales €63.9 billion +26%EBITDA €11.1 billion +51%EBITDA margin 17.4% 14.6%EBIT before special items €8.1 billion +68%EBIT €7.8 billion +111%Net income €4.6 billion +223%Adjusted EPS €5.73 +90%
Business performance
2010
vs. 2009
Record year 2010
Record sales and record EBIT before special itemsChemical businesses take advantage of strong economic recoveryConsistent long term value generation
4BASF Capital Market Story March 2011
Excellent segment performance 2010
Segment€
million
Sales Δvs. 2009
EBIT before special
items
Δvs. 2009
Chemicals 11,377 51% 2,302 126%
Plastics 9,830 38% 1,284 123%
Performance Products 12,288 31% 1,554 123%
Functional Solutions 9,703 36% 467 123%
Agricultural Solutions 4,033 11% 749 (4%)
Oil & Gas 10,791 (5%) 2,430 6%
5BASF Capital Market Story March 2011
*
Cash provided by operating activities less capex
(in 2005 before CTA)** 2009 adjusted for re-classification of settlement payments for currency
derivatives
Continuous strong cash flow
Cash Flow (billion €)
Cash provided by operating activitiesFree cash flow*
-1
0
1
2
3
4
5
6
7
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
6.5
3.9
**
6BASF Capital Market Story March 2011
Average annual dividend increase of 14.5%(2001-2010)
Dividend yield above 3% in any given year since 2001
Attractive dividend yield of 3.7% in 2010**
3.9%
Key factsDividend per share (€)
2.20
0.65 0.70 0.700.85
1.00
1.50
1.95 1.951.70
0.0
0.5
1.0
1.5
2.0
2.5
2001 2004 2007 2010
0.50
1.00
1.50
2.00
3.1%
* Dividend yield based on share price at year-end
3.2% 3.1% 4.1% 3.8% 7.0%Yield*
** With dividends reinvested
Proposal:
3.7%
2.50
3.1% 3.9%
Attractive shareholder returns Record dividend
7BASF Capital Market Story March 2011
Long-term performance January 2001 –
December 2010 (average annual performance with dividends reinvested)
+13.9%
-2.7%
+7.1%
-3 0 3 6 9 12 15
BASF
Euro Stoxx
50
DAX 30
MSCI World Chemicals
+0.7%
Delivering consistent, long-term value
8BASF Capital Market Story March 2011
1 | Record year 2010
2 | Focus on operational excellence
3 | Well positioned for profitable growth
4 | Outlook
9BASF Capital Market Story March 2011
Vertical and horizontal integration of production plants, energy and waste flows, logistics and site infrastructure
Know-how Verbund
Energy Verbund and combined heat and power plants lead to-
Savings of ∼2.6 million tons oil equivalent p.a.
-
Reduction of CO2
-emissions of ~6 million tons p.a.
9
Unique ‘Verbund’
concept Cost savings of >€500 million p.a. in Ludwigshafen alone
BASF site Ludwigshafen, Germany Verbund Concept
10BASF Capital Market Story March 2011
Fixed costs represent around 30% of total costs
Only slightly higher fixed costs, despite major acquisitions(Engelhard, Degussa Construction Chemicals, Ciba and Cognis)
Ciba and Cognis synergies as well as NEXT program will drive fixed costs down–
Cost synergies Ciba:>€450 million by 2012
–
Cost synergies Cognis:
at least €130 million by 2013
Stringent fixed cost management
Key facts
Fixed costs indexed EBITDA indexedSales indexed
BASF Group development 2001-2010
50
100
150
200
250
300
2001 2003 2005 2007 2009
Index
~270%
~200%
~20%
Δ
11BASF Capital Market Story March 2011
> 500 individual projects to simplify processes, structures and production sites in all regions
Project timeline:2008-2011
Annual earnings contribution of €600 million in 2010 achieved
Targeted earnings contribution by 2012: ≥€1 billion
Completed restructuring programs
New efficiency program NEXT
Sustainable improvement of cost base Efficiency program NEXT on track
New
EXcellence
Targets
(NEXT)Annual earnings contribution (million €)
0
500
1,000
1,500
2,000
2,500
2003 2005 2007 2009 2012
12BASF Capital Market Story March 2011
1 | Record year 2010
2 | Focus on operational excellence
3 | Well positioned for profitable growth
4 | Outlook
13BASF Capital Market Story March 2011
Leading positions in growth industries
and emerging markets
Ongoing portfolio
optimization
Excellent innovation platform
We strive to outperform global chemical production growth by at least 2 percentage points p.a.
Well positioned for profitable growth
Continue expansion in emerging markets, especially AsiaTranslate megatrends into business growth
Continue with active portfolio managementDrive portfolio closer to end customer
Product and system innovation as growth driversMegatrend innovations for long-term growth
Growth target:
14BASF Capital Market Story March 2011
Leading positions in growth industries and
emerging markets
14
15BASF Capital Market Story March 2011
Emerging markets Significant sales growth in emerging markets
Sales 2010 in emerging markets: €14.5 billion (27%)
Investments in emerging markets 2005-2010:€3 billion
Ongoing increase of - sales force- regional R&D
Emerging markets definition, according to Dow Jones:35 countries *
* Bahrain, Brazil, Bulgaria, Chile, China, Colombia, Czech Republic, Egypt, Estonia, Hungary, India, Indonesia, Jordan, Latvia, Kuwait, Lithuania, Malaysia, Mauritius, Mexico, Morocco, Oman, Pakistan, Peru, Philippines, Poland, Qatar, Romania, Russia, Slovakia, Sri Lanka, South Africa, South Korea, Taiwan, Thailand, Turkey, United Arab Emirates
Emerging MarketsNet sales in billion €BASF Group (w/o Oil & Gas)
0
10
20
30
40
50
60
2005 2010
CAGR 7%22%
27%CAGR 13%
Emerging Markets (Dow Jones definition)
Developed Markets
16BASF Capital Market Story March 2011
6.5
12.5
20
0
5
10
15
20
2005 2010* 2020
BASF’s profitable growth path in Asia Pacific
Sales by location of customers (in billion €)
* excluding Cognis
14% p.a.
Achievements 2005-2010
Sales growth 14% p.a.(vs. Asian market growth 10.5% p.a.)Record EBITDA of €1.8 billion in 2010, resulting in an EBITDA margin of 14%
Target 2011-2020
Well on track to double sales by 2020(based on sales of €9 bn in 2008)Outgrowing Asian Pacific chemical market by 2 percentage points p.a. through
–
Innovations out of Asia–
Investments 2011-2015: €2.3 billion–
Generating 70% of sales based on local manufacturing
–
Strengthening market focus through industry and customer target groups
17BASF Capital Market Story March 2011
Ongoing portfolio optimization
17
18BASF Capital Market Story March 2011
BASFcore
businesses
Powerful partnerships
Major acquisitions Major divestitures
Pharmaceuticals
Fibers
Printing systems
Polyolefins (Basell)
Polystyrene North America
Agchem generics
Premix
Crop protectionOil & Gas (Revus)Engineering Plastics Electronic ChemicalsCustom synthesisCatalysts (Engelhard)Construction Chem.Water-based resinsPigments (Ciba)Plastic additives (Ciba)Care Chem. (Cognis)Nutrition & Health (Cognis)
15 billion Euro(Sales)
9 billion Euro*
(Sales)
GazpromMonsantoPetronasShellSinopecTotal
* Not including Styrenics business
Selected transactions 2001
to date
Styrenics (Styrolution)(LoI for JV announced)
Pro-active portfolio management
19BASF Capital Market Story March 2011
Cognis
–
integrating a global leader in value-added products
Pro forma business performance FY’2010
Sales: ~ €3 billionEBITDA: ~ €550 millionEBITDA margin: ~18%Closing on December 9, 2010
Integration objectives
Growing >2% points faster than the relevant market
Achieve 20% EBITDA margin in the Performance Products segment by 2012
Acquisition accretive as of 2012
Integration costs of €200-250 million until end of 2012
Annual cost synergies of at least 5% of 2009 net sales (i.e. ~€130 million) fully achieved by 2013 and substantial top line synergies
20BASF Capital Market Story March 2011
BASF + Cognis Improved market positions
PreviousBASF position
Today‘sBASF position
Personal care ingredients 3 1Home care ingredients 1 1
Functional nutritioningredients 6 3
Coating additives 7 3Heavy-duty driveline lubricants >
10 3
Mining chemicals 3 2
21BASF Capital Market Story March 2011
Styrolution Planning a 50/50 joint venture with INEOS
ScopeGlobal No.1 in styrenicsSales of about €5 billion*, thereof
–
48% Europe, 32% Americas, 20% Asia Pacific–
34% SM, 34% PS, 21% ABS, 11% Copolymer Specialties
Customers in more than 110 countries29 production facilities across 11 countriesMore than 3,000 employees
MilestonesNov 29, 2010: LoI signed by BASF and INEOSJan 1, 2011: Carve-out of BASF‘s Styrenics activities into separate legal entitiesSecond half of 2011: Start of planned JV Styrolution
* Pro-forma figures, based on BASF‘s and INEOS‘
sales in 2009
Styrolux
T/S shrink filmValue creating divestiture process
22BASF Capital Market Story March 2011
Active portfolio management pays off
Chemical activities
Agricultural Solutions
Oil & Gas, including non-deductible oil taxes
EBITDA by activity (in billion €, excluding Other)
0
2
4
6
8
10
12
2001* 2004 2007** 2010
Recent acquisitions reshaped portfolio–
Closer to end customers–
Innovation-driven–
Profitable growth above industry average
BASF’s EBITDA in 2010 (excluding Other) amounted to €11.7 billion
* Based on German GAAP**
As of 2007 according to new segment structure (excl. Styrenics and corporate costs)
Our diversified portfolio is a key strength
23BASF Capital Market Story March 2011
Excellent innovation platform
23
24BASF Capital Market Story March 2011
NaphthaMax®
III
Xemium®Kaurit®
Light
CypoSol®
Elastopave®
Ecovio®
Natugrain®
TS X-SEED® PCI Geofug®
25BASF Capital Market Story March 2011
Xemium® BASF’s next-generation fungicide for broad use
Key facts
Xemium® complements BASF‘s outstanding fungicide portfolio
Our 1st carboxamide fungicide for all market segments
BASF is carboxamide pioneer,Xemium®
strengthens lead
Launch planned in >50 countries and >100 crops
World-wide data submissionprocess underway
Market launch from 2012 onwards
* Source: Philips McDougall, own estimation
Untreated
Xemium®
global peak sales potential: >€200 million
26BASF Capital Market Story March 2011
0,0 0,00
5
10
15
20
4.53.5
Innovation pipeline worth €21 billion
* New or improved products or new applications, max. 5 years on market, including Growth Clusters
The pipeline NPV of €21 billion is a bottom-up aggregation of all R&D projects
High success rate due to stringent R&D controlling via Phasegate process
Expected Commercial Value:~50% of NPV (probability-weighted)
In 2010, sales of new products (5 years or younger) exceeded the target of €6 billion
Target 2015: up to €8 billion sales with new products
R&D contributes significantly to earnings growth
14% Performance Products7% Plastics3% Chemicals
8% Functional Solutions
46% Agricultural Solutions
2% Oil & Gas20% Corporate Research
2009 2010
€19 bn€21 bn
Net present value by segments (billion €)
27BASF Capital Market Story March 2011
Further increase in R&D spending planned for 2011
Innovation will spur further growth
Total R&D expenditures 2010 (billion €)
€1.5 bn R&D expenditures in 2010 (vs. €1.4 bn in 2009)
~ 9,600 employees in R&D
~ 3,000 projects and topics
Research Verbund: About 1,900 partnerships with universities, start-ups and industry partners
Strong commitment to R&D
24%
1%
Corporate Research22%
Agricultural Solutions
26%
Functional
Solutions12%
Performance
Products19%
Chemicals9%
Plastics10%
€1.5 billion
Other2%
28BASF Capital Market Story March 2011
1 | Record year 2010
2 | Focus on operational excellence
3 | Well positioned for profitable growth
4 | Outlook
29BASF Capital Market Story March 2011
Outlook BASF Group 2011 Expectations for global economy
2010
GDP 3.9%
Chemicals (excl. Pharma) 9.3%
Industrial production 8.9%
US$ / Euro 1.33
Oil price (US$ / bbl) 79.50
Forecast
2011
3.3%
5.2%
5.0%
1.35
90
30BASF Capital Market Story March 2011
Outlook 2011 by regionChemicals (excl. Pharma)
EU-27
USA
Asia (excl. Japan)
Japan
South America
Industrial production
5.2%
2.9%
3.3%
9.6%
1.9%
5.0%
3.0%
3.9%
10.0%
2.3%
4.3%4.6%
World 9.3%
10.1%
5.0%
13.0%
8.8%
6.4%
8.9%
6.0%
5.7%
14.5%
15.8%
6.2%
2010 2011 2010 2011
31BASF Capital Market Story March 2011
Outlook 2011 for our key customer industries*
Key customer industries of BASF
2009 (World)
2010 (World)
Growth forecast 2011
(World)Industries total (8.1) 8.9 5.0Construction (5.8) (1.3) 3.6
Automotive (per-unit-base) (11.3) 21.5 6.1Electronics (11.1) 12.0 5.9
Information & Communications (11.9) 16.6 9.2
Textiles (8.7) 8.8 5.6Paper (3.3) 7.9 5.7
Nutrition (0.7) 3.9 3.4
Agriculture 0.9 4.2 2.3*
Growth Production Index in % p.a.; change compared with previous
year
32BASF Capital Market Story March 2011
Outlook 2011 by segments
Segments EBIT before special items 2011
Chemicals
Plastics
Performance Products
Functional Solutions
Agricultural Solutions
Oil & Gas
BASF Group
(incl. Other)
33BASF Capital Market Story March 2011
We aim to grow sales on average by two percentage points per year faster than chemical market growth.We strive to grow our earnings further year by year, and to achieve an EBITDA margin of 18% by 2012.
We expect to achieve in 2011:-
Significant increase in sales and EBIT before special items.-
A high premium on our cost of capital. -
Significantly higher sales and earnings in the 1st
quarter 2011 vs. previous year’s quarter.
Targets 2011
Medium-term targets
Outlook 2011
We aim to continuously increase the annual dividend, or at least maintain it at the level of the previous year.
Dividend policy
34BASF Capital Market Story March 2011
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
35BASF Capital Market Story March 2011
36BASF Capital Market Story March 2011
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q4’10 vs. Q4’09 4%* 13% 2% 6%
FY’10 vs. FY’09 11% 8% 2% 5%
* Volumes +8% (without Oil & Gas)
1.5
2.02.2 2.2
1.8
0.0
0.5
1.0
1.5
2.0
2.5
Q4 Q1 Q2 Q3 Q4
EBIT before special items (billion €)
13.215.5 16.2 15.8 16.4
0
4
8
12
16
20
Q4 Q1 Q2 Q3 Q4
Sales (billion €)
20102009 20102009
BASF Group Q4 2010 Record sales and strong earnings increase vs. PYQ
37BASF Capital Market Story March 2011
Chemicals Strong earnings improvement vs. PYQ due to higher demand
Intermediates655+32%
Inorganics326
+24%
Petrochemicals1,964+41%
€2,945 +37%
315
461
687617
537
0
200
400
600
Q4 Q1 Q2 Q3 Q4
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q4’10 vs. Q4’09 9% 20% 0% 8%
FY’10 vs. FY’09 18% 28% 0% 5%
Q4’10 segment sales
(million €) vs. Q4’09 EBIT before special items (million €)
20102009
38BASF Capital Market Story March 2011
Plastics High demand and price increases lifted sales significantly
Polyurethanes1,363+20%
Performance
Polymers
1,088+34%
€2,451 +26%
251279
349 371
285
0
200
400
Q4 Q1 Q2 Q3 Q4
Sales development Period Volumes Prices Portfolio Currencies
Q4’10 vs. Q4’09 10% 9% 0% 7%
FY’10 vs. FY’09 22% 10% 0% 6%
Q4’10 segment sales
(million €) vs. Q4’09 EBIT before special items (million €)
20102009
39BASF Capital Market Story March 2011
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q4’10 vs. Q4’09 3% 4% 6% 5%
FY’10 vs. FY’09 12% 4% 11% 4%
Performance Products Earnings significantly up vs. previous year despite one-off costs
209
419471
370294
0
100
200
300
400
500
Q4 Q1 Q2 Q3 Q4
PerformanceChemicals
778+15%
Care Chemicals763+42%
€3,060 +18%
Paper Chemicals405+2%
Q4’10 segment sales
(million €) vs. Q4’09 EBIT before special items (million €)
Nutrition & Health384+10%
20102009
Dispersions
& Pigments
730
+17%
40BASF Capital Market Story March 2011
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q4’10 vs. Q4’09 15% 10% 1% 9%
FY’10 vs. FY’09 17% 10% 1% 8%
Functional Solutions Earnings declined considerably due to one-time operating costs
Catalysts1,369+62%
Construction Chemicals514
+11%
Coatings686
+15%
€2,569 +35%
101 111
165 158
33
0
50
100
150
Q4 Q1 Q2 Q3 Q4
Q4’10 segment sales
(million €) vs. Q4’09 EBIT before special items (million €)
20102009
41BASF Capital Market Story March 2011
Agricultural Solutions South America drove strong sales growth
44 42
0
10
20
30
40
50
Q4 Q4
Q4’10 segment sales
(million €) vs. Q4’09 EBIT before special items (million €)
20102009
0
200
400
600
800
1,000
Q4 Q420102009
+20% (5)%
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q4’10 vs. Q4’09 18% (4)% 0% 6%
FY’10 vs. FY’09 9% (3)% 0% 5%
703845
42BASF Capital Market Story March 2011
132230
0
200
400
600
800
Q4 Q4
Oil & Gas Earnings grew substantially y-o-y
as a result of higher oil prices
Exploration &
Production1,059+9%
Natural Gas
Trading
1,905+16%
€2,964 +13%
Sales developmentPeriod Volumes Prices/Currencies Portfolio
Q4’10 vs. Q4’09 (15)% 28% 0%
FY’10 vs. FY’09 (2)% (3)% 0%
106
EBIT bSI
Natural Gas TradingEBIT bSI
Exploration & ProductionNet income
Q4’10 segment sales
(million €) vs. Q4’09 EBIT before
special
items
/ Net income
(million
€)
20102009
374607
508
713
134
43BASF Capital Market Story March 2011
Review of “Other”
Million € Q4 2010 Q4 2009 2010 2009Sales 1,590 1,263 5,851 4,577thereof Styrenics 857 685 3,401 2,502
EBIT before special items (139) 51 (648) (717)thereof Corporate research
Group corporate costs Currency results, hedges and other valuation effects Styrenics, fertilizers, other businesses
(96) (66)
(229)
142
(79) (45)
9
80
(323) (226) (460)
387
(319) (209) (512)
339
Special items 149 293 (59) 90
EBIT 10 344 (707) (627)
44BASF Capital Market Story March 2011
0
1
2
3
4
5
6
7
8
9
1.8
(0.6)
(2.5)
(1.8)
6.5
(1.9)
1.5
* Payments related to intangible assets and property, plant and equipment
Cash
12/31/09
Operating
CF
Capex* Acquisitions Dividends Other cash
inflows
Cash
12/31/10
Excellent operating cash flow in 2010
thereof €1.6 bn
dividends to BASF SE shareholders
Net cash-out for purchase of Cognis: €0.6 bn
Excellent operating cash flow despite €1.7 bn
increase in net working capital
Capex* on last year´s level
Full Year 2010 (billion €)
Debt
repayment
(2.3)0.5
45BASF Capital Market Story March 2011
Balance sheet remains strong
Balance sheet 2010 vs. 2009 (billion €)
Liquid funds
Accounts
receivable
Long-term
assets
22.7
15.0
21.7
31.7
7.7
1.8
Other
liabilities
Financial
debt
Stock-
holders’
Equity
Dec 31
2010
Dec 31
2009
Dec 31
2009
Dec 31
2010
59.4
34.5
10.2
1.5
51.3
18.6
14.8
17.9
Inventories
Other assets
8.7
4.5
6.8
3.3
59.4
51.3
Impact of Cognis
acquisitionAs of December
31, 2010:
Increase in long-term assets by €2.9 billion, thereof
–
Goodwill: €0.6 billion–
Other intangible assets:
€1.3 billion–
Property, plant and equipment: €0.8
billion
Addition of–
€0.5 billion of inventories–
€0.4 billion of receivables
Financial debt: €2.6 billion(incl. purchase price of €0.7 billion)
46BASF Capital Market Story March 2011
BackupFinancial Highlights Agricultural Solutions
46
47BASF Capital Market Story March 2011
Agricultural Solutions Performance Q4 and FY2010
Million € Q4 2010 Q4 2009 Δ% FY 2010 FY 2009 Δ%
Sales* 845 703 20 4,033 3,646 11
EBITDA** 88 100 (12) 938 980 (4)
EBITDA** margin 10.4% 14.2% - 23.3% 26.9% -
EBIT** 42 44 (5) 749 776 (4)
EBIT** margin 5.0% 6.3% - 18.6% 21.3% -
Assets (as of Dec. 31) - - - 5,063 4,681 8
*
Sales increase at constant exchange rates in Q4: +15% (FY: +6%)**
before special items
48BASF Capital Market Story March 2011
Agricultural Solutions Sales by region
Million € FY 2010 FY 2009 Δ% Δ% (CER)*
Europe 1,566 1,520 +3 +1
North America 999 932** +7 +2
South America 1,030 816** +26 +20
Asia / Pacific 438 378 +16 +7
Total 4,033 3,646 +11 +6
* constant exchange rates
** restated figures due to new definition of regions
49BASF Capital Market Story March 2011
Agricultural Solutions Sales by indication
Million € FY 2010 FY 2009 Δ% Δ% (CER)*
Fungicides 1,739 1,708 +2 -2
Herbicides 1,410 1,165 +21 +16
Insecticides / Others 884 773 +14 +9
Total 4,033 3,646 +11 +6
* constant exchange rates