basf capital market story august 2013

We add value as one company

Oil & Gas

Agricultural Solutions

Functional Materials

& Solutions

Performance Products

Chemicals

Value Capital Market Story

August 2013

BASF Capital Market Story August 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

€72.1 billion sales, €6.6

billion EBIT bSI in 2012*

#1-3 in >75% of businesses,

present in >200 countries

6 integrated Verbund sites,

production in 60 countries

10 years of strong sales

and earnings growth

16.5% 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

** August 2003 – July 2013 *** for 2003-2012

Ludwigshafen,

Germany

Antwerp,

Belgium

Nanjing,

China

Kuantan,

Malaysia Geismar,

USA

Freeport,

USA

Verbund site

Positioning

3

* restated numbers, reflecting IFRS 10/11 changes


BASF today – a well-balanced portfolio Total sales 2012: €72.1 billion*

Percentage of sales 2012**

** Not depicted here: ~5% of Group sales reported as ‘Other‘

* Restated numbers, reflecting IFRS 10/11 changes, new segment structure effective Jan. 1, 2013 4


Ongoing portfolio development Recent examples

Crop protection investments (China, BR)

Aroma ingredients investment, Kuantan

Transactions with Statoil and Gazprom*

Restructuring in Performance Products

Photo: Øyvind Hagen

5 * Gazprom deal not closed yet.


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


Q2 2013: BASF maneuvers well

through challenging environment

Business performance Q2’13 Q2’12 vs. Q2’12

Sales €18.4 billion €17.8 billion +3%

EBITDA €2.5 billion €2.5 billion (1%)

EBIT before special items €1.8 billion €1.9 billion (5%)

EBIT €1.8 billion €1.7 billion +6%

Net income €1.2 billion €1.2 billion (4%)

Reported EPS €1.26 €1.32 (4%)

Adjusted EPS €1.40 €1.59 (12%)

Operating cash flow €2.0 billion €1.9 billion +6%

Sales development

Period Volumes Prices Portfolio Currencies

Q2’13 vs. Q2’12 5% 0% 0% (2%)

7


2003 2004 2005 2006 2007 2008 2009** 2010 2011 2012 H1 2013

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

Free cash flow* in billion €

2.8 2.6

3.3 3.5

3.2

2.5

3.2

3.9 3.7

2.6

2.1

8


Delivering attractive shareholder returns

Dividend of €2.60 per share

for 2012

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

0.700.85

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


Delivering consistent, long-term value

Average annual performance with dividends reinvested

0 3 6 9 12 15 18

Euro Stoxx 50

DAX 30

MSCI World Chemicals

+9.0%

Last 5 years August 2008 – July 2013

+15.1%

-0.5%

+5.0%

+3.8%

Last 10 years August 2003 – July 2013

BASF

+10.4%

+4.0%

+16.5%

10


We do not expect that global economic growth will accelerate in the second half of 2013

Nevertheless, BASF is targeting for 2013 to exceed the 2012 levels in sales and EBIT before

special items in a volatile economic environment

Our focus on growth markets and innovation, in combination 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 in 2013

Outlook 2013

GDP: +2.0% (reduced from 2.4%)

Industrial production: +2.7% (reduced from 3.4%)

Chemical production: +3.1% (reduced from 3.6%)

US$ / Euro: 1.30 (unchanged)

Oil price (US$ / bbl): 105 (reduced from 110)

Assumptions 2013

Outlook 2013

11


Business review

BASF Today

Trends


Targets

Strategic levers



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

Resources, Environment & Climate

Food & Nutrition Quality of Life

Chemistry as enabler

13


Key financial targets 2015 / 2020

Grow at least 2 percentage

points above chemical

production

Earn a premium on cost of

capital of at least €2.0 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

14


Business review

BASF Today

Trends


Targets

Strategic levers



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 ...

16


Portfolio development Moving downstream towards customer industries

* Agriculture, Construction, Consumer Goods, Health & Nutrition, Electronics, Energy & Resources, Transportation

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

Functionalized Materials

& Solutions Customized Products Classical Chemicals

2020 in % of sales**

Chemical Industry First customer industries*


~ 40%

~ 30% ~ 70%


~ 50%

~ 60%

~ 50%

17


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

Statoil

Monsanto

Petronas

Shell

Sinopec

Total

Selected transactions

2001 − today*

Acquisitions

~ €16bn 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)

Construction equipment, flooring systems

** without Styrenics

Portfolio development Towards more market driven and innovative businesses

* only closed deals have been considered 18


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

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

Petro-

chemicals

Performance

Materials

Bubble Size: BASF divisional sales by first customer industry (2012)*/**

19


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’

20


Joint development with adidas,

illustrating our customer focus

New 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: Infinergy™ Technology competencies combined with customer know-how

Key facts

Photo: adidas

* TPU (Thermoplastic polyurethane) 21


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

€1.7 billion R&D expenditures

in 2012, further increase

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 Innovations for a sustainable future

Key facts R&D expenditures

(billion €)

Chemicals

10%

Performance Products

20%

Functional Mat. & Sol.

20%

Agricultural Solutions

25%

Oil & Gas

2%

Corporate Research

23%

22


Ongoing inflow of new growth fields

Health & Nutrition

Consumer Goods

Construction Transportation Electronics Energy &

Resources Agriculture

Customer

industries

Water solutions

Heat management

Enzymes Plant biotechnology

Batteries for mobility

Lightweight composites

Functional crop care

Medical Organic electronics

Growth

Fields

E-Power management

Wind energy

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

23


Battery materials will play a key role in

advancing electromobility of the future

Focus and Target

Advanced cathodes and electrolytes development for lithium-

ion batteries, as well as next-generation battery systems

Position BASF as a leading global solution provider for battery

and cell manufacturers

Business potential 2020

Overall market size: >€20 bn. globally (~€16 bn. Asia Pacific)

SRM size: >€5 bn. globally (~€4 bn. in Asia Pacific)

BASF sales potential: >€500 M globally (~€350 M Asia Pacif.)

Activities

Acquisition of Novolyte Technologies, incl. production facility,

Application Technology Center in Suzhou, China (April 2012)

New electrolytes R&D laboratory and Application Technology

Center for Battery Materials in Amagasaki, Japan (2013)

Ongoing collaboration with leading universities, institutes and

industry partners, as well as battery producers and OEMs 24


Future investments (€ 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

25


Expansion Verbund site Nanjing, China*

MDI plant Chongqing, China

* Memorandum of Understanding signed

TDI plant Ludwigshafen, Germany

Investments Major projects

Expansion oil & gas activities

Aroma Ingredients Kuantan, Malaysia

Acrylic acid complex Camacari, Brazil

26


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 …

27


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

28


Appendix

Business development Q2 2013


Chemicals Lower earnings due to weaker demand

Intermediates

716

(5%)

Monomers

1,618

(1%)

Petrochemicals

1,849

(6%)

€4,183

(4%)

Q2’13 segment sales (million €) vs. Q2’12

Sales development


Q2’13 vs. Q2’12 1% (4)% 0% (1%)

EBIT before special items (million €)

601 569

445

650

495

0

200

400

600

800

Q2 Q3 Q4 Q1 Q2

2013 2012

30


Performance Products Restructuring measures ongoing

Performance

Chemicals

923

(2%)

Care Chemicals

1,232

+1%

€4,032

(1%)

Paper Chemicals

370

(9%)


Nutrition

& Health

544

+7% Dispersions

& Pigments

963

(4%)


Sales development


Q2’13 vs. Q2’12 2% (2%) 1% (2%)

2013 2012

442

344

183

379 394

0

200

400

600

Q2 Q3 Q4 Q1 Q2

31


Functional Materials & Solutions Continued good demand from the automotive industry

Catalysts

1,463

0%

Construction

Chemicals

589

(5%)

Coatings

752

+3%

€4,503

+2%


Sales development


Q2’13 vs. Q2’12 3% 2% (1%) (2%)

Performance

Materials

1,699

+7%

216 231 228 239293

0

200

400

600

Q2 Q3 Q4 Q1 Q2


2013 2012

32


Agricultural Solutions Attractive offering meets strong demand


Sales development


Q2’13 vs. Q2’12 14% 3% 3% (2%)

0

200

400

600

Q2 Q2

0

500

1.000

1.500

2.000

Q2 Q2

1,727 485

414 1,467


2013 2012 2013 2012

33


88

208

59

280

0

100

200

300

400

Q2/2012 Net Income Q2/2013 Net Income

Oil & Gas Higher production volumes drive earnings

Exploration &

Production

525

(10%)

Natural Gas

Trading

2,311

+17% €2,836

+10%

Q2’13 segment sales (million €) vs. Q2’12 EBIT bSI/Net income (million €)

Natural Gas Trading

Exploration & Production

Net income

Sales development

Period Volumes Prices/Currencies Portfolio

Q2’13 vs. Q2’12 10% 0% 0%

330

242 323

382

34


Review of “Other”

Million € Q2’13 Q2’12

Sales 1,072 968

EBIT before special items (217) (66)

thereof Corporate research

Group corporate costs

Currency results, hedges and other

valuation effects

Other business

(97)

(58)

(63)

37

(94)

(61)

92

25

Special items 3 (117)

EBIT (214) (183)

35


Strong operating cash flow in H1 2013

Million € H1’13 H1’12

Cash provided by operating activities 4,030 3,411

thereof Changes in net working capital

Miscellaneous items

(633)

646

(633)

(407)

Cash provided by investing activities (2,582) (1,035)

thereof Payments related to tangible / intangible assets (1,884) (1,616)

Acquisitions / divestitures (516) 430

Cash used in financing activities (823) (2,246)

thereof Changes in financial liabilities

Dividends

1,762

(2,585)

205

(2,446)

Net working capital impacted by lower inventories and higher accounts receivables

Strong free cash flow of €2.1 billion, despite higher capex (+€268 million)

Dividend payments to BASF SE shareholders amounted to €2.4 billion

Net debt increased by €1.3 billion to €12.5 billion; equity ratio of 41%

First half 2013

36


Appendix

Additional information from Investor Day Asia Pacific

(June 5-6, 2013)


Innovation ~3,500 R&D staff

Market €25 billion sales

Portfolio >€2 billion sales from

new biz and acquisitions

People ~9,000 new jobs

Investment 75% OMP ratio

Excellence €1 billion cost savings

We create chemistry in Asia Pacific:

2020 targets

38


2020 2012

restated

New Business &

Acquisitions

Organic

Growth

Sales contributions

€ Billion

Asia Pacific Organic growth drives top line growth

2012 restated = adjusted to changes in IFRS 10 & 11

New

Sales Target:

€25 billion

€12.5 billion

CAGR

~9%

>€2 billion

>€10 billion

39

BASF Capital Market Story August 2013 40