We add value as€¦ · Shared use of on-site facilities: fire department, security, waste water treatment and analytics Verbund generates >€1 billion p.a. global cost savings*,

We add value as one company

Tobias Dratt Senior Vice President

Treasury

London

October 7, 2014

BASF Credit Story October 2014 2

Cautionary note regarding

forward-looking statements

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

€74 billion sales, €7.2 billion

EBIT bSI in 2013

#1-3 in >75% of businesses,

present in >200 countries

6 integrated Verbund sites,

production in 60 countries

A track record of strong

sales and earnings growth

14% average annual

dividend increase, >3%

yield in every single year*

~€70 billion market

capitalization in Sept. 2014

Performance Perspective

* For 2004-2013

Ludwigshafen,

Germany

Antwerp,

Belgium

Nanjing,

China

Kuantan,

Malaysia Geismar,

USA

Freeport,

USA

Verbund site

Positioning

We create chemistry for a sustainable

future


Percentage of sales 2013*

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

BASF today – a well-balanced portfolio Total sales 2013: €74 billion


Global reduction in carbon

emissions of 6.1 million metric

tons/a. and reduction of waste

Example Ludwigshafen:

avoidance of 7 million metric

tons of freight/a.

= 280,000 fewer truckloads

Shared use of on-site facilities:

fire department, security, waste

water treatment and analytics

Verbund generates >€1 billion p.a. global

cost savings*, supports sustainability

* Savings include only tangible synergies. Additional (intangible) benefits and retained profits are not included.


Business review

Credit strengths

BASF strategy & growth targets

Strategic levers


BASF outperformed global chemical

production by ~3 percentage points p.a.

Sales to third parties billion €

33

79

72

74

16.6

20.7 -4.8

13.7

-6.6 3.7 -0.5 -2.0 0.6

20

40

60

80

2001 2012 2012 restated

2013

Volumes

Prices

Currencies M&A

Volumes Prices Currencies M&A

IFRS

Impact


Operational excellence Strong track record

BASF Group* 2001–2013 Index

50

100

150

200

250

300

350

2001 2006 2009 2012

CAGR 2001 – 2013

10 %

8 %

3 %

EBITDA

Sales

Fixed costs

* Excluding companies with major IFRS 10/11 restatements, i.e. BASF YPC Nanjing, Libya onshore, other Oil & Gas and Catalysts companies

2013


We aim to increase our sales volumes excluding the effects of acquisitions and divestitures.

Nonetheless, sales will decline slightly compared with 2013 due to the divestiture of the gas

trading and storage business planned for autumn 2014 and negative currency effects.

We expect a slight increase in EBIT before special items, especially as a result of

considerably higher contributions from the Performance Products and Functional Materials &

Solutions segments.

We aim to earn a high premium on our cost of capital once again in 2014.

Outlook 2014

GDP: +2.5%

Industrial production: +3.7%

Chemical production: +4.4%

US$ / Euro: 1.35

Oil price (US$ / bbl): 110

Assumptions 2014

Outlook 2014


Business review

Credit strengths


Strategic levers


Highlights of BASF’s credit

1. Solid business development in the first half of 2014

3. Strong commitment to keep a solid A rating

4. Diversified financing strategy with broad access to capital markets

Free cash flow of at least €2.5 billion in every single year for the last ten years

Focus on operational excellence

Advantageous cost position due to unique Verbund concept

Focus on cost management

6. Well positioned for profitable growth

Leading positions in growth industries and emerging markets

Ongoing portfolio optimization

Excellent platform for sustainable innovations

2.

5.


* Cash provided by operating activities less capex (in 2005 before CTA) ** 2009 adjusted for re-classification of settlement payments for currency derivatives *** Figures for 2013 in accordance with changes in IFRS and new segment structure as of January 1, 2013

Cash provided by operating activities

Free cash flow*

2.6 3.2

0.5

0

1

2

3

4

5

6

7

8

2004 2005 2006 2007 2008 2009** 2010 2011 2012 2013*** H1 2014

Continuous strong free cash flow

generation

Free cash flow in billion €

7.9


Diversified Debt Financing Instruments As of June 30, 2014

Ensures solvency at all times

Limits financial risks

Optimizes cost of capital

Provides broad access to

capital markets

USD 12.5 bn commercial

paper program backed by two

broadly syndicated €3bn

backup-lines, maturing in 2018

and 2019

Funding Strategy Highlights

Commercial Papers

7%

Bank Loans

16%

EUR-denominated

Bonds

64%

€17.0 billion

Financing strategy

Keep a solid A rating (current ratings* S&P A+ / Moody’s A1) Our target:

* Last Confirmation Moody’s: April 8, 2014 Last Confirmation S&P: May 13, 2014

Other Bonds

13%


1.3

2.2

1.1 1.1

1.8

0.8

0.3

0.7

1.0

0.5

2.1

0.0

0.5

1.0

1.5

2.0

2.5

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 >2024

* Excluding industrial revenue and pollution control bonds from BASF Corporation Group.

Profile as of June 30, 2014 (billion €)*

Well balanced bond maturity profile


Global ESG Leaders Indices

Worldwide public

recognition for

sustainability and

transparency

15

Worldwide public recognition for

sustainability and transparency


Business review

Credit strengths


Strategic levers


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


Grow at least 2 percentage

points above chemical

production

Earn a premium on cost of

capital of at least €2.0 billion

on average p.a.

Profitability targets Growth targets

2015

2020

Sales ~€80 billion

Sales ~€110 billion

EBITDA ~€14 billion

EPS ~€7.50

EBITDA ~€22 billion

Key financial targets 2015 / 2020

are ambitious


Business review

Credit strengths


Strategic levers

– Portfolio development

– Market approach

– Innovations for a sustainable future

– Investments

– Acquisitions

– Operational excellence


Portfolio development Moving downstream towards customer industries

ture, Construction, Consumer Goods, Health & Nutrition, Electronics, Energy & Resources, Transportation

** Sales excluding Oil & Gas. Targets were published on November 29, 2011.


Catalysts

Construction chemicals

Water-based resins

Pigments, plastic additives

Oil & Gas

Personal care & food

Battery materials

Functional crop care

Omega-3 fatty acids

Enzymes

…

BASF

core business

Strong partnerships

Gazprom

Monsanto

Petronas

Shell

Sinopec

Statoil

Total

Selected transactions

2004 − today

Acquisitions

~ €14 billion sales

Divestitures

Printing systems

Agro generics

Vitamin premixes

Styrenics

Fertilizers

Construction equipment, flooring and wall systems

Natural gas trading and storage business

…

~ €16 billion sales*

Portfolio development Towards more market driven and innovative businesses

* Without styrenics (transferred into Styrolution JV on Oct. 1, 2011). Natural Gas Trading: Closing expected in autumn 2014


Monomers

Intermediates

Dispersions &

Pigments

Performance

Chemicals

Care

Chemicals

Paper

Chemicals

Coatings

Catalysts

Construction

Chemicals

BASF sales by first customer industry*

> 15 %

> 10 %

< 10 %

> 15 %

Consumer goods

Transportation

Construction

Energy & Resources

Market approach Cross-divisional customer industry approach

* Excluding Oil & Gas, Crop Protection and Other. 2012 numbers

Petro-

chemicals

Performance

Materials

Bubble Size: BASF divisional sales by first customer industry*/**

** Nutrition & Health sales predominantly into Health & Nutrition market


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 BASF’s technology Verbund combined with customer know-how

Daimler & BASF concept car ‘Smartforvision’


Customer Verbund - adidas and BASF Working together for disruptive innovation: Infinergy™


Strong commitment to innovation Innovations for a sustainable future

1.4 1.5

1.6 1.7

1.8

0.0

0.5

1.0

1.5

2.0

2009 2010 2011 2012 2013

€1.8 billion R&D expenditure in

2013, further increase of R&D

spending planned in 2014

~10,650 employees in R&D

~3,000 projects

Research Verbund:

Cooperations with ~600

excellent partners from

universities, start-ups

and industry

Target 2015 and 2020:

– €10 billion in sales from

innovations younger 5 years

– €30 billion in sales from

innovations younger 10 years

R&D expenditures

in € billion

Chemicals

10%

Performance Products

20%

Functional Mat. & Sol.

20%

Agricultural Solutions

26%

Oil & Gas

3%

Corporate Research

21%

Key facts

2.0

1.5

1.0

0.5

0


Chemistry-based innovations Growth and technology fields

Growth fields

Resources,

Environment

& Climate

Food &

Nutrition

Quality of Life White

Biotechnology

Materials,

Systems &

Nanotechnology

Raw Material

Change

Key customer industries

Health & Nutrition

Consumer Goods

Transportation

Energy & Resources

Electronics

Agriculture

Construction

Technology fields Global needs

...

Batteries for Mobility

Enzymes

Heat Management for Construction

Organic Electronics

Functional Crop Care

Plant Biotechnology

E-Power Management

Wind Energy

Lightweight Composites

Water Solutions


Growth field example: Enzymes Innovation-driven specialties for various markets

Become a major player in enzyme technology; sales target of >€400million (2020)

Textile /

Leather

Oilfield Water

Biofuels

Detergents

Processed

food Beverages

Bakery Feed

Existing business mainly with

enzymes for animal nutrition

Acquired Henkel's detergent

enzyme technology

Entered into research and

license agreement with Dyadic

to access C1-host technology

Successfully acquired enzyme

biotechnology company

Verenium

R&D pipeline is reinforced with

several new projects

Enzymes know-how leveraged

with chemical ingredients

Pulp &

Paper

The fungus Aspergillus niger is a powerful

production host for feed enzymes.


Performance

Products

15%

Oil & Gas

20%

€20

billion

Functional

Materials &

Solutions

12%

Capex budget 2014-2018

Other

13%

Chemicals

33%

Capex budget 2014-2018

Asia Pacific

18%

€20

billion

South

America

4%

North America

25%

Europe

49%

Agricultural

Solutions

7%

Other

4%

by segment by region

Investments Capex budget 2014-2018 by segment and region*


Expansion oil & gas activities

Aroma Ingredients Kuantan, Malaysia

Investments Major projects

Ammonia and gas-to-propylene in USA*

MDI plant Chongqing, China

Acrylic acid complex Camacari, Brazil

TDI plant Ludwigshafen, Germany

* Under evaluation


Acquisitions … will contribute to profitable growth in the future

Provide a minimum return on

investment of 8% p.a. 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 …


0

1,000

2,000

3,000

2013 2015

Former cost saving programs

NEXT STEP

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

Annual earnings contribution

in € million Targeted annual earnings

contribution of ~€1 billion by

end of 2015

Optimization of processes and

structures in all regions, e.g.

manufacturing, maintenance

supply chain

engineering, best-cost country

sourcing

Project timeline: 2012–2015

Program is on track

Total of ~€600 million achieved

by the end of 2013

One-time cost & investments:

~€1 billion

STEP program


Appendix:

Additional information


Overview of bonds (1/2) as of March 31, 2014

Bond Term Issuer Volume ISIN Code

EUR Floating Rate Note 2014/2017 BASF SE € 300 million XS1043167433

2.5% Euro Bond 2014/2024 BASF SE € 500 million XS1017833242

1.375% Euro Bond 2014/2019 BASF SE € 750 million XS1017828911

3.89% USPP Series A 2013/2025 BASF SE USD 250 million N/A

4.09% USPP Series B 2013/2028 BASF SE USD 700 million N/A

4.43% USPP Series C 2013/2034 BASF SE USD 300 million N/A


3.675% NOK Bond 2013/2025 BASF SE NOK 1.45 billion XS0932079717


2.875% EUR Bond 2013/2033 BASF SE € 200 million XS0932307100



3% EUR Bond 2013/2033 BASF SE € 500 million XS0885399583



Overview of bonds (2/2) as of March 31, 2014

1 Guaranteed by BASF SE

Bond Term Issuer Volume ISIN Code

2.0% EUR Bond 2012/2022 BASF SE € 1 billion DE000A1R0XG3




5.875% GBP Bond 2009/2017 BASF SE GBP 400 million XS0420401779

5.125% EUR Bond 2009/2015 BASF Finance Europe N.V. 1 € 2 billion XS0412154378

4.5% EUR Bond 2009/2016 BASF Finance Europe N.V. 1 € 150 million XS0414672070

3.625% CHF Bond 2008/2015 BASF Finance Europe N.V. 1 CHF 200 million CH0039943292

4.5% EUR Bond 2006/2016 BASF SE € 500 million DE 000 A0JRFB0

4.875% EUR Bond 2003/2018 Ciba Specialty Chemicals

Finance Luxembourg S.A. € 500 million XS0170386998


BASF Creditor Relations Team

Frank Wilhelmi

Head of Capital Market Financing

Hannes Koske

IR Manager Creditor Relations

Contact Details:

Email: [email protected]

Hotline: +49 621 60 48230

Websites: www.basf.com/bonds

www.basf.com/anleihen

Juliane Beckmann

Senior Specialist

Capital Market Financing

Lüthje Brandt

Specialist

Capital Market Financing


Documents

We add value as€¦ · Shared use of on-site facilities: fire department, security, waste water treatment and analytics Verbund generates >€1 billion p.a. global cost savings*,