we add value as one company · 2018-11-17 · roadshow paris / london november 4 & 5, 2015....

BASF Capital Market Story November 2015 1

150 years150 years

We add value as one company

150 years

Hans-Ulrich EngelChief Financial Officer

Roadshow

Paris / London

November 4 & 5, 2015


150 years150 years

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.


150 years150 years

Chemistry as an enabler

BASF has superior growth

opportunities:

– sustainable innovations

– investments

– emerging markets

The #1 chemical company

€74 billion sales, €7.4 billion

EBIT bSI in 2014

#1-3 in ~70% of businesses,

in almost all countries

6 integrated Verbund sites,

production in 60 countries

A track record of strong

sales and earnings growth

12% average annual

dividend increase, >3%

yield in every single year*

~€63 billion market

capitalization Sept. 2015

Perspective

* For 2004-2014

Ludwigshafen,

Germany

Antwerp,

Belgium

Nanjing,

China

Kuantan,

MalaysiaGeismar,

USA

Freeport,

USA

Verbund site

Positioning

We create chemistry for a sustainable

future

Performance

20

30

40

50

60

70

80

90

2008 2009 2010 2011 2012 20142013 2015


150 years150 years

Percentage of sales 2014*

* Not depicted here: ~5% of Group sales reported as ‘Other‘. Paper Chemicals results have been incl. in Performance Products

until the end of 2014. Thereafter Paper Chemicals has been dissolved; ** Natural Gas Trading has been sold Sep. 30, 2015 to Gazprom.

BASF today – a well-balanced portfolioTotal sales 2014: €74 billion


150 years150 years

Third-quarter sales and EBIT bSI down in a

difficult economic environment

Sales development

Period Volumes Prices Portfolio Currencies

Q3´15 vs. Q3´14 (1%) (8%) 0% 4%

Business performance Q3’15 Q3’14* vs. Q3’14*

Sales €17.4 billion €18.3 billion (5%)

EBITDA €2.9 billion €2.5 billion +14%

EBIT before special items €1.6 billion €1.8 billion (10%)

EBIT €1.9 billion €1.7 billion +8%

Net income €1.2 billion €1.0 billion +19%

Reported EPS €1.31 €1.11 +18%

Adjusted EPS €1.07 €1.24 (14%)

Operating cash flow €3.4 billion €2.2 billion +51%

* Previous year values restated due to dissolution of disposal group “Natural Gas Trading“


150 years150 years

0

1

2

3

4

5

2005 2006 2007 2008 2009** 2010 2011 2012 2013 2014 Q1-Q32015

Strong free cash development Q1-Q3 2015

* 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 €)

3.33.5

3.2

2.5

3.2

3.93.7

2.6

3.2

1.7

4.1


150 years150 years

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

Due to the divestment of the gas trading and storage business as part of the asset swap with

Gazprom and the lower oil price we expect sales to be slightly lower than in 2014.

EBIT before special items is expected to be slightly below the level of 2014. The chemicals business

is expected to provide a larger contribution than in 2014. Earnings from crop protection will most

likely come in slightly below the level of 2014. In Oil & Gas, results will decline significantly caused

by the lower oil price and the divestment of the gas trading and storage business.

We aim to earn a substantial premium on our cost of capital, but on a lower level

than in 2014.

Outlook 2015

GDP: +2.3% (+2.4%)

Industrial production: +2.0% (+2.9%)

Chemical production (excl. pharma): +3.5% (+3.8%)

US$ / Euro: 1.12 (1.15)

Brent oil price (US$ / bbl): 55 (60-70)

Assumptions 2015

Revised Outlook 2015


150 years150 years

Steady earnings growth

* 2010, 2011 indicative, adjusted by IFRS 10 & 11; 2001 – 2009 as reported, without non-compensable foreign income taxes on oil production

EBIT and EBITDA*

(in billion €, 2001 - 2014)

3.7

4.7 4.6

7.0 7.2

8.48.9

7.7

6.5

9.9

11.2

10.010.4

11.0

8.8

0

2

4

6

8

10

12

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1 - 32015

EBITEBITDA

0.7

2.2 2.2

4.5 4.8

5.56.0

4.6

2.8

6.7

8.0

6.7 7.27.6

5.9

CAGREBITDA

8.9 %CAGREBIT

19.8 %


150 years150 years

50

100

150

200

250

300

350

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

Strong track record in operational

excellence

EBITDA

Sales

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

BASF Group* 2001–2014

(Index; CAGR 2001–2014)

Fixed Costs

CAGREBITDA

9%

CAGRSales

7%

CAGRFixed Costs

3%


150 years150 years

CAGR 2015 - 2020 2011 view today’s view

Global GDP 3.2% 3.0%

Industrial production 3.7% 3.5%

Chemical production (excl. pharma) 4.0% 3.9%

► thereof growth contribution of

emerging markets89% 82%

Fundamental trends intact; chemical

production growing faster than GDP


150 years150 years

Grow sales and earnings faster than global chemical production,

driven by

– Continued focus on innovations

– Capital expenditures

– Acquisitions

– Operational excellence and Verbund advantages

Focus on cash generation / conversion

Continue with our progressive dividend policy

Focus on pruning our portfolio

Maintain industry-leading position in sustainability

The way forward:

Our priorities


150 years150 years

Strategic lever:

Continuous portfolio development

Specialties and

solutions

Differentiated

commodities

target(in % of sales*)

~ 50% ~ 50%

Keep 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

* Excluding Oil & Gas sales

Attractive markets

Differentiation by process

technologies and integration

Attractive markets

Differentiation by customer

proximity and innovations


150 years150 years

Strategic lever:

Capital expenditures – our philosophy

Differentiated commodities

With proprietary technology and/or Verbund advantages

Focus on:

– emerging markets

– backward integration in the US

– upgrading our asset base in Europe

Specialties and solutions

Incremental investments for new products

Regional expansion of businesses

Oil & Gas

Focus investment budget by active portfolio optimization to secure free cash flow

Keep reserve-to-production ratio of approx. 10 years


150 years150 years

Selected major capex projects

Implementation of increased capex

program will drive profitable growth

Temporarily increased

capex is necessary

– to build the base for

further growth

– to strengthen our value

chains

– to increase our footprint

in emerging markets

Capex peaked in 2014

with €5.4 billion**

Capex spending

* W/o China; ** Investments in property, plant and equipment (without acquisitions)

.

Care chemicals

Polymer dispersions

Polyurethane specialties

Specialty plastics

North America

Cracker flexibilization

and expansion

Battery materials

Dispersion polymers Asia Pacific*

South America

Automotive coatings

Crop protection products

Oil & Gas

Europe

Aroma chemicals

SAP


Automotive catalysts

Butadiene

Admixture systems

Specialty plastics

Oil & Gas

China

Cracker expansion

Amines

Surfactants

Acrylic acid & SAP

Resins

Specialty plastics

Crop protection

products

Innovation Campus

Start-ups 2011 - 2014 Start-ups planned for 2015 - 2017

TDI complex

Precious metal

recycling

Specialty amines

Crop protection

products

Oil & Gas

Acrylic acid & SAP

Acrylates


Oil & Gas

Chelating agents

Polyurethane systems

Formic acid

Butanediol expansion


Ammonia

MDI

Polyamides

Butanediol / PolyTHF®

Neopentylglycol

Specialty amines

Ethylene oxide

Isononanol

Coating resins


Process catalysts


Polymer dispersions

Specialty plastics

Aroma chemicals

2-Ethylhexanoic acid

Polyisobutene

Innovation Campus


150 years150 years

2.6% 0.3%

Novel methodology to screen

and steer our portfolio*

23% Accelerators:

– outgrow their markets

by 2-10%

– deliver margins >10%

above the average

– represent >60% of BASF’s

R&D pipeline

74% Performers

<1% Challenged products

* 60,000 product applications analyzed; covering 98.3% of the relevant portfolio or €66.3bn. in sales (2014 data)

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

Strategic lever: Sustainability

Sustainable Solution Steering

23%

74.1%

Substantial sustainability

contribution in the value chain

Meets basic sustainability

standards in the market

Specific sustainability issue

which is actively addressed

Significant sustainability concern,

action plan in development

Sustainable

Solution

Steering


150 years150 years

0

1,000

2,000

3,000

4,000

5,000

2015 2018

Annual earnings contribution

(in million €) Targeted annual earnings

contribution of €1 billion by end

of 2018

Optimization of processes and

structures in all regions, e.g.

– manufacturing

– incremental capacities

– productivity increase

Project timeline: 2016–2018

DrivE program

Strategic lever: Operational excellence

DrivE with ~€1 bn earnings contribution

Former cost saving programs pre- 2008

NEXT 2008-2011 DrivE 2016-2018

STEP 2012-2015


150 years150 years

Profitability of BASF will grow faster than

global chemical production

Sales growth*

Slightly faster than the global chemical production

EBITDA growth

Well above global chemical production

Remain a strong cash provider

Continuously generate high levels of free cash flow

Financial targets for next years

Deliver attractive returns

Earn a significant premium on cost of capital

* Without considering Natural Gas Trading and Storage business

Progressive dividend policy

We want to grow or at least maintain our dividend


150 years150 years

150 years


150 years150 years

* incl. Gas Marketing Company ** Economic interest of BASF

Oil & GasImpact of projects with Gazprom on BASF’s P&L

Oil & Gas EBIT

Financial results

= Income before taxes

and minority interests

./. Income taxes

./. Minority interests

= Net income

OPAL

50.02%

At-equity consolidation

(share of net income shown in the EBIT)

Achimgaz

(Achimov area IA)Wintershall AG

(Libya)

51%

Nord Stream (I)

(offshore)

15.5%

GASCADE

50.02%

Planned

Nord Stream (II)

(offshore)

10%

NEL

Planned

Achimov

area IV/V*

25% + 1 share

Wintershall

Noordzee

(Netherlands)

50% 50%

Yuzhno

Russkoye

(SNGP)

35%**

Yuzhno

Russkoye

Gas Mktg C.

Upstream

Natural Gas Transport

100%

100%

49.98% entitled to Gazprom

Upstream

Natural Gas Transport

50.02%

50.02% entitled to BASF

Proportionally/

fully consolidated

we add value as one company · 2018-11-17 · roadshow paris / london november 4 & 5, 2015....

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