basf we create chemistry...basf –we create chemistry saori dubourg, member of the board of...

BASF – We create chemistry

Saori Dubourg, Member of the Board of Executive Directors

Roadshow Munich, Berenberg, November 22, 2017

BASF Capital Market Story, November 2017 2

Cautionary note regarding

forward-looking statements

This presentation contains forward-looking statements. These forward-looking statements are based

on current estimates and projections of the Board of Executive Directors and on currently available

information. These forward-looking statements are not guarantees of the future developments and

results outlined therein. Rather, they depend on a number of factors, involve various risks and

uncertainties, and are based on assumptions that may not prove to be accurate. Such risk factors

particularly include those discussed on pages 111 to 118 of the BASF Report 2016. The BASF

Report is available online at basf.com/report. BASF does not assume any obligation to update the

forward-looking statements contained in this presentation.


Agenda

At a glance1

Strategic levers2

Delivering consistent, long-term value3


Chemicals – a growth industryGlobal annual growth rate of ~3.6%*

…more food needed

by 2050

…more primary energy

consumption by 2050

…of the world population

will live in cities by 2050

Agriculture Health & Nutrition

Energy & Resources

TransportationConstruction &Housing

Consumer Goods

…people by 2050

Electrical & Electronics

Chemistry as enabler to meet current and future needs

70% 50%~10 bn 30%

* Forecast average annual real change 2017 – 2019; BASF Report 2016, p. 121


Broad and resilient portfolio2016: Sales of €57.6 billion; EBITDA of €10.5 billion

Percentage of sales 2016*

* Not depicted here: ‘Other’ 3% of Group sales and EBITDA €(1.0) billion


Verbund – unique competitive advantageActively managed in line with market requirements

▪ Annual cost savings of more than €1 billion through integrated production

▪ Verbund concept supports sustainability, reduces waste and avoids CO2 emissions of 6 million tons p.a.

Energy savings

>€300 million p.a.

People, Customers, Technology, Production


Global market access through regional presence

Kuantan

Hong Kong

Nanjing

Freeport

Florham Park

Geismar

Ludwigshafen

Antwerp

São Paulo

Regional centersSelected sites

Verbund sites

Selected research

and development sites

Asia Pacific

Europe

South America, Africa, Middle East

North America

Sales €14,042 million

EBIT €1,113 million

Employees 17,583



Employees 70,784



Employees 18,156


EBIT €432 million

Employees 7,307

2016: Sales by location of customer; EBIT by location of company


BASF Group Q3 2017Considerably higher sales and earnings

Financial figures Q3 2017 Q3 2016 Change

Sales €15.3 billion €14.0 billion 9%

EBITDA before special items €2.8 billion €2.5 billion 12%

EBITDA €3.0 billion €2.4 billion 23%

EBIT before special items €1.8 billion €1.5 billion 16%

EBIT €2.0 billion €1.5 billion 34%

Net income €1.3 billion €0.9 billion 50%

Reported EPS €1.45 €0.97 49%

Adjusted EPS €1.40 €1.10 27%

Operating cash flow €3.8 billion €2.5 billion 52%

Sales development Volumes Prices Portfolio Currencies

Q3 2017 vs. Q3 2016 4% 7% 1% (3%)


▪ Sales growth – slightly faster than global chemical production

▪ Deliver attractive returns – earn a significant premium on cost of capital

▪ EBITDA growth – well above global chemical production

▪ Remain a strong cash provider – continuously generate high levels of free cash flow

▪ Progressive dividend policy – grow or at least maintain dividend at previous year’s level

Financial targets for the coming years


Agenda

Strategic levers2


At a glance1


▪ Portfolio development

▪ Investments in organic growth

▪ Innovations for a sustainable future

Our priorities

▪ Operational excellence

We aim to grow sales and earnings faster than global chemical production

in the coming years, driven by


Continuous global portfolio development

target(in % of sales*)~50% ~50%

Maintaining a balanced portfolio

Divestment of

businesses,

e.g., due to loss

of differentiation

Divestment of

businesses,

e.g., due to lower

market attractiveness

Commoditization leads to

restructuring

Growth fields

Innovation

pipeline

Acquisitions

Specialties and solutions Differentiated commodities

▪ Attractive markets

▪ Differentiation by process

technologies and integration

▪ Attractive markets

▪ Differentiation by customer

proximity and innovations

* Excluding Oil & Gas sales


Portfolio development towards more market-driven and

innovative businesses

Strong Partnerships

▪ Gazprom

▪ PETRONAS

▪ Sinopec

▪ Total

Selected transactions

2010−today

BASF

core business

~€5.5 billion sales

in emerging and

innovation-driven businesses

Acquisitions

▪ Functional crop care

▪ Personal care & food

▪ Omega-3 fatty acids

▪ Enzymes

▪ Battery materials

▪ Specialty plastics

▪ Selected assets in Oil & Gas

▪ Refinish coatings

▪ Surface treatment

Divestitures

~€21.0 billion sales

in businesses with limited fit

and differentiation potential

▪ Styrenics

▪ Fertilizers

▪ Selected assets in Oil & Gas

▪ Natural gas trading & storage

▪ Custom synthesis business

▪ Textile chemicals

▪ Polyolefin catalysts

▪ Industrial coatings

▪ Leather chemicals


Clear acquisition criteria

We want to acquire businesses which …

▪ provide a return on investment above

the WACC

▪ are EPS accretive by year three at the

latest

We want to acquire businesses which …

▪ generate profitable growth above the industry

average

▪ are innovation-driven

▪ offer a special value proposition to customers

▪ reduce earnings cyclicality

Acquisition

criteria

Strategic acquisition criteria Financial acquisition criteria


Complementary acquisitions to strengthen the portfolio

of BASF Group

Solvayʼs integrated global

polyamide business

▪ Purchase price: ~€1.6 billion

▪ Sales 2016: ~€1.3 billion

▪ EBITDA 2016: ~€200 million

▪ Market CAGR: >3.5%

▪ Closing expected in Q3 2018

Significant parts of Bayerʼs seed and

non-selective herbicide businesses

▪ Purchase price: ~€5.9 billion

▪ Sales 2016: ~€1.3 billion

▪ EBITDA 2016: ~€385 million

▪ Sales CAGR: ~15% (2014–2016)

▪ Closing expected in Q1 2018

Chemetall

Surface treatment business

▪ Purchase price: ~US$3.1 billion

▪ Sales 2015: ~US$845 million

▪ EBITDA 2015: ~US$200 million

▪ Sales CAGR: ~7% (2007–2015)

▪ Closed in December 2016


BASF signed agreement to acquire significant parts of

Bayer’s seed and non-selective herbicide businesses

Fully enabled seed and trait businesses

▪ Attractive and sizeable seed portfolio for canola/oilseed

rape, soybean and cotton in the Americas and Europe

▪ Excellent trait research for canola, soybean and cotton

▪ LibertyLink® technology for herbicide tolerance and

related trademarks

Complementary crop protection business

▪ Global glufosinate-ammonium-based non-selective herbicide

business

▪ State-of-the-art production facilities in the U.S., Canada

and Germany


BASF to acquire Solvay’s global polyamide business

* Application examples

Broader global scope

▪ Enhanced presence, especially in Asia and South America

▪ Stronger capabilities to serve global and regional

customers

Wider range of engineering plastics

▪ Technyl®, Ultramid®, Ultradur®, Ultraform®, Ultracom®

Broadening technical skills and innovation capabilities*

▪ Heat-resistant and high-voltage electrical and electronic parts

▪ Tailor-made solutions for components in automotive

▪ Mechanically strong and thermally stable consumer goods

Improved reliability of supply

▪ Backward integration into all key raw materials for polyamide 6.6

▪ Fully integrated engineering plastics value chain


Investments in organic growthInvestments of ~€3.9 billion planned for 2017

Performance

Products

21%

Oil & Gas

23% €19.0 billion

Capex budget 2017–2021

by segment

Other

13%

Chemicals

24%

Capex budget 2017–2021

by region

Asia Pacific

16%

North America

22%

Agricultural

Solutions

4%

Other**

3%

Functional Materials

& Solutions

15%

€19.0 billion

South America*

10%

* Including Africa and Middle East, ** Alternative sites currently being investigated

Europe

49%

Oil & Gas Europe


Oil & Gas

2%

Innovation will drive future growth

Agricultural

Solutions

26%

Chemicals

10%

Performance Products

20%

Corporate Research

21%

Key facts

€1.86 billion R&D expenditures in 2016

R&D expense to sales ratio ~3%

~10,000 employees in R&D

~3,000 projects

~850 new patents in 2016

Research Verbund:

Cooperations with more than 600

excellent partners from universities,

startups and industry

In 2016, sales of >€10 billion from

innovations on the market since 2011

R&D expenditures 2016

€1.86 billion

Functional Materials

& Solutions

21%


At BASF, we contribute to a lot of the products you use

around the clock

Luquafleece®

Tinosorb®

Infinergy®

Nutrilan®

Sokalan®

Cellasto®

Coatings

Tinuvin®

Superabsorbents

Ultramid®

Trilon® M

ecoflex® /

ecovio®

Omega-3


Sustainable Solution Steering®

Novel methodology to screen and steer our portfolio

4.2% 0.3%

▪ >60,000 product applications analyzed

▪ 27.2% Accelerators

– Strong growth in their markets

– deliver margins above the average

– represent majority of BASF’s R&D

pipeline

▪ 68.3% Performers

▪ <1% Challenged products

Increase the share of Accelerators from 23% in 2014 to 28% by 2020

27.2%

68.3%

Substantial sustainability

contribution in the value chain

Meets basic sustainability

standards on the market

Specific sustainability issues

which are being actively addressed

Significant sustainability concern,

action plan developed

Sustainable

Solution

Steering

Percentage of

sales 2016


BASF’s Value-to-Society 2016Net positive contribution to sustainable growth in each step of the assessed value chain

Net income

Taxes

Wages & benefits

Human capital

Health & safety

Air pollution

GHGs

Land use

Waste

Water consumption

Water pollution

Amortization

Value contribution from BASF procurement Value contribution from BASF operations

-10 0 10 20 30 -10 0 10 20 30 -10 0 10 20 30

Value contribution from BASF sales

Full external supply chain1 Own operations Customer industries2

1 Indirect suppliers, direct suppliers 2 Customers in industries supplied by BASF

billion €


0

0,.001

Earnings contribution 2016 2017–2018 Total

Operational excellenceDrivE with ~€1 billion targeted earnings contribution

DrivE program

▪ Targeted annual earnings contribution of

€1 billion from end of 2018 on

▪ Optimization of processes and structures

in all regions, including

– manufacturing

– incremental capacities

– productivity increase

▪ Project timeline: 2016–2018

€350 million

€650 million

Goal €1 billion

Annual earnings contribution DrivE

million €

1,000


Digitalization will support BASF’s growth and efficiency

Digital Business Models

Smart Innovation

Smart Supply Chain

Smart Manu-facturing

Growth

▪ Digital business models

▪ Customer connectivity

▪ Digitalization in R&D

New revenue streams

Increased supply share

Higher innovation output

▪ Predictive maintenance

▪ Augmented reality in production

▪ Smart supply chain

Increased capacity

Increased work efficiency

Reduced working capital

Efficiency


Agenda

At a glance1

Strategic levers2



Attractive dividendWe want to grow or at least maintain dividend at the previous year’s level

* Dividend yield based on share price at year-end

Dividend per share

€

0.65 0.70 0.700.85

1.00

1.50

1.95 1.95

1.70

2.20

2.502.60

2.702.80

2.90

0

1

2

3

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Yield* 3.1% 3.9% 3.1% 3.2% 3.1% 4.1% 3.8% 7.0% 3.9% 3.7% 4.6% 3.7% 3.5% 4.0% 4.1% 3.4%

3.00


Delivering consistent, long-term valueCurrent market capitalization: €86 billion*

Average annual performance

(with dividends reinvested)

0 2 4 6 8 10 12 14

Euro Stoxx 50

DAX 30

MSCI World

Chemicals

+5.1%

BASF

+6.9%

+1.1%

+11.2%

Last 10 years

November 2007 – October 2017

0 2 4 6 8 10 12 14

Last 3 years

November 2014 – October 2017

+14.0%

+8.5%

+12.3%

+12.2%

* As of October 31, 2017


▪ Growth above chemical industry average

▪ Broad and resilient portfolio

▪ Unique Verbund concept

▪ Earnings growth and strong cash flow generation

▪ Long-term value creation with progressive

dividend policy

BASF shares – an attractive investment

BASF Capital Market Story, November 2017 29BASF Investor Day 2015 – Keynote speech 29


Intermediates

728

+10%

Monomers

1,770

+41%

Petrochemicals

1,525

+16%

€4,023

+25%

Sales Q3 2017 vs. Q3 2016*

million €

EBIT before special items*

million €

488

629

958

1,120 1,102

0

400

800

1,200

Q3 Q4 Q1 Q2 Q3


Q3 2017 vs. Q3 2016 6% 22% 0% (3%)

2017

* Effective January 1, 2017, the Monomers and Dispersions & Pigments divisions’ activities for the electronics industry were combined into the global Electronic Materials business unit

and allocated to the Dispersions & Pigments division in the Performance Products segment. The 2016 figures have been adjusted accordingly.

2016

ChemicalsHigher earnings driven by increased margins and higher volumes


Performance ProductsEBIT before special items declined, EBIT increased due to special income

from transfer of leather chemicals business

Performance Chemicals

980

+4%

Nutrition & Health

451

(11%)

Care Chemicals

1,213

+3%

€3,983

+2%

EBIT before special items*

million €

Sales Q3 2017 vs. Q3 2016*

million €

Dispersions & Pigments

1,339

+3%


Q3 2017 vs. Q3 2016 6% 0% (1%) (3%)

473

237

515

405 385

0

200

400

600

800

Q3 Q4 Q1 Q2 Q3

20172016

* Effective January 1, 2017, the Monomers and Dispersions & Pigments divisions’ activities for the electronics industry were combined into the global Electronic Materials business unit

and allocated to the Dispersions & Pigments division in the Performance Products segment. The 2016 figures have been adjusted accordingly.


Functional Materials & Solutions Sales increased on good demand from automotive and construction, earnings declined

Coatings

951

+20%

Catalysts

1,506

(3%)

Construction

Chemicals

618

+2%

Performance Materials

1,900

+11%

€4,975

+7%

497458

531

422 397

0

200

400

600

800

Q3 Q4 Q1 Q2 Q3

EBIT before special items

million €

Sales Q3 2017 vs. Q3 2016

million €


Q3 2017 vs. Q3 2016 0% 6% 4% (3%)

20172016


Agricultural SolutionsEarnings decreased, primarily due to the difficult market situation in Brazil

1,049 987

0

1,000

2,000

Q3 2016 Q3 2017

Sales Q3 2017 vs. Q3 2016

million €


Q3 2017 vs. Q3 2016 5% (8%) 0% (3%)

EBIT before special items

million €

97

21

0

100

200

300

Q3 2016 Q3 2017

(6%)

(78%)


Oil & GasHigher oil and gas prices and volumes, EBIT before special items lower due to one-time

earnings effects in the prior-year quarter

Sales Q3 2017 vs. Q3 2016

million €

194180

33

139

0

100

200

300

Q3 2016 Q3 2017

Sales development Volumes Prices/Currencies Portfolio

Q3 2017 vs. Q3 2016 9% 11% 0%

EBIT before special items Net income

618

739

0

500

1,000

Q3 2016 Q3 2017

EBIT before special items, net income

million €

+20%


Review of “Other”

million € Q3 2017 Q3 2016

Sales 548 538

EBIT before special items (325) (233)

Thereof Costs of corporate research (93) (77)

Costs of corporate headquarters (57) (54)

Foreign currency results, hedging and other measurement effects (116) (101)

Other businesses 13 15

Special items (5) (23)

EBIT (330) (256)


Cash flow development Q1 – Q3 2017

million € Q1 – Q3 2017 Q1 – Q3 2016

Cash provided by operating activities 7,597 5,840

Thereof Changes in net working capital 94 (393)

Miscellaneous items (190) (172)

Cash used in investing activities (3,413) (2,776)

Thereof Payments made for tangible / intangible assets (2,606) (2,915)

Acquisitions / divestitures (44) 212

Cash used in financing activities (1,546) (1,898)

Thereof Changes in financial liabilities 1,276 837

Dividends (2,841) (2,753)

Free cash flow 4,991 2,925


Balance sheet remains strong

▪ Total assets decreased slightly to

€76.0 billion

▪ Provisions for pension obligations

decreased by €1.4 billion to €6.8 billion

▪ Net debt at €12.3 billion

(December 31, 2016: €14.4 billion)

▪ Equity ratio at 43.9%

(December 31, 2016: 42.6%)

Balance sheet September 30, 2017 vs. December 31, 2016

billion €

Liquid funds*

Accountsreceivable

Long-termassets

Inventories

Other assets

Otherliabilities

Financialdebt

Equity

27.6 26.5

16.3 16.2

32.6 33.3

Dec 31, 2016 Sep 30, 2017

1.9 3.93.03.9

11.010.6

10.010.0

50.6 47.6

Dec 31, 2016 Sep 30, 2017

76.5 76.0

* Including marketable securities

76.5 76.0

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