basf: fit for 2012 and beyond...1 basf: fit for 2012 and beyond dr. andreas kreimeyer member of the...
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BASF: Fit for 2012 and beyond
Dr. Andreas Kreimeyer Member of the Board of Executive Directors Bank of America Merrill Lynch Conference, London December 07, 2011
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Facts & figures Worldwide leading chemical company
- Sales 2010: €64 billion
- EBIT before special items 2010: €8.1 billion
Customers in more than 200 countries and in virtually all industries
No 1-3 market position in over 75% of our businesses
Unique Verbund concept for integrated production
- Six Verbund sites in all major regions
- Production sites in 41 countries
High-quality management team
- Senior executives from 36 countries
International, interdisciplinary R&D network
BASF – The Chemical Company
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1 | Business review
2 | BASF’s strategy ‘we create chemistry’
3 | Financial targets 2015 / 2020
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Sales €55.4 billion +16.8% EBITDA €9.1 billion 7.8% EBITDA margin 16.4% 17.8% EBIT before special items (bSI) €6.9 billion 8.8% EBIT bSI adjusted for Libya €6.6 billion 21% EBIT €6.6 billion 9.5% Net income €5.1 billion 46.3% EPS €5.5 46.3% Adjusted EPS €5.2 20%
Business performance Jan - Sept’11 vs. Jan - Sept’10
Highlights January – September 2011
Volume in Chemicals activities grew by 4% Acquired Cognis business continues to perform strongly; synergy targets increased Agricultural Solutions on track for record year in sales and earnings EBIT before special items amounted to €6.9 billion. Excluding Libya, which contributed €938
million from Jan-Sept 2010, EBIT before special items increased by 21% to €6.6 billion
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We expect to generate significantly higher sales We aim to significantly exceed the 2010 EBIT before special items
adjusted for non-compensable oil taxes (2010: €7.2 billion) We will earn a high premium on our cost of capital
Outlook 2011
Outlook 2011 confirmed
We aim to continuously increase the annual dividend, or at least maintain it at the level of the previous year.
Dividend policy
as of October 27, 2011; 3rd Quarter 2011 Reporting
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1 | Business review
2 | BASF’s strategy ‘we create chemistry’
3 | Financial targets 2015 / 2020
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BASF Today The leading chemical company
BASF outperformed global chemical production in growth by > 4 percentage points p.a. from 2001 to 2010
Active management of portfolio towards higher returns and less cyclicality
Strong and profitable growth in emerging markets
Focus on innovative products and solutions
Benchmark in operational excellence with unique Verbund concept
Strong earnings power, high cash flow generation and a strong financial profile
Generation of long-term attractive shareholder returns
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Key trends for the chemical industry
Integrated chemical companies remain cornerstone
Emerging markets players grow quickly
Raw material players invest further downstream
Competitive landscape will change
Use opportunities from sustainability
Increase resource efficiency
Renewables as raw materials
Stakeholder dialogue
Sustainability as strategic driver
Chemistry as enabler
Chemical products replace traditional materials
Create innovative sustainable solutions
Innovation gains importance
Growth will accelerate
Industrial production > GDP
Chemical production > GDP
Emerging markets will outgrow developed markets
Chemical industry remains an attractive growth industry
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Assumptions 2010 – 2020
Growth 2001 - 2010
Global GDP 2.5% p.a.
Chemical production (excl. Pharma) 3.0% p.a.
Industrial production 2.4% p.a.
Growth 2010 – 2020 (Forecast*)
3.0% p.a.
4.0% p.a.
3.8% p.a.
* Assumptions 2010-2020: US$/€ Ø 1.40. oil price Ø US$110/bbl
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Striving for strong profitable growth
Sales* in billion €
64
2010 Target 2020
Target 2015
Investments
Acquisitions Innovations
Investments
Acquisitions Innovations
~85
~115
We will outperform chemical production by 2 percentage points p.a. * Potential impact of IFRS changes not included
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All regions will deliver profitable growth
Regional sales targets 2020 (by location of customers) in billion €
North America
2010 2020
13
~5.5% p.a. ~22
South America, Africa, Middle East
~8% p.a.
5 ~11
Europe
~4.5% p.a.
33
~53
Asia Pacific
~8% p.a.
13 ~29
2010 2020
2010 2020 2010 2020
19%* 20%* 46%* 52%*
25%* 20%* 10%* 8%*
* Percentage of total sales
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Doubling EBITDA by 2020
EBITDA in billion €
2010 Target 2020
Target 2015
* Assumptions 2010-2020: US$/€ Ø 1.40. oil price Ø US$110/bbl
11.1
~23
~15 Op. Excellence
Growth
Acquisitions
Op. Excellence
Growth
Acquisitions
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Strategic levers
– Portfolio development
– Market approach
– Innovations for a sustainable future
– Investments
– Operational excellence
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Moving downstream towards customer industries
Functionalized Materials & Solutions Customized Products Classical Chemicals
2020 in % of sales
Chemical Industry First customer industries*
2010 in % of sales
~ 40%
~30% ~ 70%
2001 in % of sales
~ 50%
~ 60%
~ 50%
* Agriculture, Construction, Consumer Goods, Health & Nutrition, Electronics, Energy & Resources, Transportation ** Sales without Oil & Gas
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Building on our cross-divisional customer industry approach
BASF sales by first customer industry*
Bubble Size: BASF divisional sales by first customer industry (2010)**
* Excluding Oil & Gas and Other ** Excluding Agricultural Solutions, Health & Nutrition, Oil & Gas and Other
> 15 %
< 10 %
< 10 %
> 15 %
Inorganics Petro- Chemicals
Construction Chemicals
Dispersions & Pigments
Catalysts Intermediates Coatings Care Chemicals
Performance Polymers
Poly- urethanes
Performance Chemicals
Paper Chemicals
Consumer goods
Transportation
Construction
Energy & Resources
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Combining cross-divisional technology competencies with customer know-how
Smart forvision – joint concept car of Daimler and BASF
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
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Chemistry as an enabler for many customer industries
Sustainability in customer industries will drive our innovative growth fields
Health & Nutrition
Consumer Goods Construction Transportation Electronics Energy &
Resources Agriculture
Customer industries
Energy management
Water solutions
Wind energy
Rare earth metals
recycling
Heat management
Enzymes Plant biotechnology
Batteries for mobility
Lightweight composites
Heat management
Functional crop care
Medical Organic Electronics
Growth Fields*
*including growth fields still under evaluation
Ongoing inflow of new growth fields
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Targeted €7 billion of EBITDA from innovations in 2020
Sales and EBITDA from innovations in billion €
2015 2020
~10
~30
Targeted spending of ~3% of sales (w/o Oil & Gas) p.a. on R&D
Sales from innovations launched within last 5 years
Sales from innovations launched within last 10 years
~2.5
~7 EBITDA from innovations launched within last 5 years
EBITDA from innovations launched within last 10 years
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Investments will boost future organic growth
Future investments in € billlion
Thereof investments in emerging markets
Total investments
35-45%
15-20
30-40%
~15
2006 – 2010 2011 – 2015 2016 – 2020
10.9
~20%
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Emerging markets: 45% sales target 2020 Recently announced major projects
MDI plant Chongqing, China Expansion Verbund site Nanjing* Expansion Verbund site Kuantan*
Acrylic acid complex, Brazil Expanding gas production, Russia* 15% Stake in South Stream * Memoranda of Understanding signed
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New operational excellence program “STEP”: Earnings contribution ~€1 billion
Annual earnings contribution in € million
Optimization of processes, structures and production sites in all regions
Measures: – Fixed cost savings – Margin improvement – Capacity increase – Better sourcing
Project timeline: 2012 - 2015 Targeted earnings contribution of
about €1 billion by end of 2015
STrategic Excellence Program
Former cost saving programs NEXT STEP
Annual earnings contribution of more than €1 billion in 2012 will be achieved
New EXcellence Targets
0
1,000
2,000
3,000
2012 2015
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1 | Business review
2 | BASF’s strategy ‘we create chemistry’
3 | Financial targets 2015 / 2020
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Key financial targets 2015 / 2020
Grow at least 2 percentage points above chemical production
Earn a premium on cost of capital of at least €2.5 billion on average p.a.
Profitability targets Growth targets
2015
2020
Sales ~€85 billion
Sales ~€115 billion
EBITDA ~€15 billion
Double EBITDA to ~€23 billion (compared with 2010)
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Our strategy will create shareholder value
Earnings per share in €
Business growth 1.30
4.96
2002 2010
0.5
0.9
0.8
1.5 Margin
Tax rate
Share buy-back
Target 2015
~7.5
„STEP“
Share buy-back
Growth
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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
We create chemistry
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Backup BASF Today
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Outperformed global chemical production by 4 percentage points p.a.
Sales to third parties in billion €
BASF total growth 7.8% p.a.
BASF volumes + M&A 6.6% p.a.
BASF volumes 4.1% p.a.
Global chemical production 3.0% p.a.
30
60
20
50
40
Prices
12
33
Volumes
14
64
M&A
11
Currencies
–6
70
2001 2010
29 29
€9bn (Sales excl. planned
measures)
Portfolio development towards more market driven and innovative businesses
Acquisitions
Crop protection Engineering plastics Electronic chemicals Custom synthesis Catalysts Construction chemicals Water-based coatings Pigments Plastic additives Oil & Gas Personal care & food
€15bn (Sales)
BASF core business
Strong partnerships
Gazprom Monsanto Petronas Shell Sinopec Total
Divestitures
Pharma Fibers Printing systems Polyolefins Polystyrene Americas Agro generics Vitamins premix Fertilizers (planned) Styrolution (planned)
Selected transactions 2001 − today
30 30
Strong and profitable growth in emerging markets
2001
28%
34%
2010
53
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Developed markets* Emerging markets *BASF definition: Developed markets include EU15, Norway, Switzerland, North America, Japan, Australia, New Zealand
22%
2001
34%
2010
8.2
2.5
25%
Sales BASF Group excluding Oil & Gas in billion € by location of customer
EBITDA BASF Group excluding Oil & Gas in billion € by location of customer
0
20
40
60
0
2
4
6
8
10
31 31
Strong focus on operational excellence
BASF Group 2001–2010 Index
2001 2004 2007 2010
CAGR
12 %
8 %
2 %
EBITDA
Sales
Fixed costs
50
100
150
200
250
300
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*Cash provided by operating activities less capex
**Before external financing of pension obligations
Continuous strong free cash flow generation
Free cash flow* in billion €
-0.5
2.8 2.6
3.3** 3.5 3.2 2.5
-0.1
3.2 3.9
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
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Backup Business development Q3 2011
34
Chemicals Significant sales growth driven by strong price increases
Intermediates 671 +4%
Inorganics 356
+11%
Petrochemicals 2,141 +12%
€3,168 +10%
617537
765674
621
0
200
400
600
800
Q3 Q4 Q1 Q2 Q3
Sales development Period Volumes Prices Portfolio Currencies
Q3’11 vs. Q3’10 (3)% 18% 0% (5)%
Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €)
2010 2011
35
Plastics Sales up mainly due to a strong Performance Polymers business
Polyurethanes 1,480 +2%
Performance Polymers
1,321 +16%
€2,801+8%
371
285
393 383
317
0
200
400
Q3 Q4 Q1 Q2 Q3
Sales development Period Volumes Prices Portfolio Currencies
Q3’11 vs. Q3’10 2% 10% 0% (4)%
Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €)
2010 2011
36
Sales development Period Volumes Prices Portfolio Currencies
Q3’11 vs. Q3’10 (2%) 7% 23% (4)%
Performance Products Strong contributions from acquired Cognis businesses
370294
554513
440
0
100
200
300
400
500
600
Q3 Q4 Q1 Q2 Q3
Performance Chemicals
904 +9%
Care Chemicals 1,265 +85%
€3,991 +24%
Paper Chemicals 423 -6%
Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €)
Nutrition & Health 471 +32% Dispersions
& Pigments 928
+5%
2010 2011
37
Sales development Period Volumes Prices Portfolio Currencies
Q3’11 vs. Q3’10 4% 11% 3% (6)%
Functional Solutions Strong performance of Catalysts
Catalysts 1,608 +19%
Construction Chemicals
599 0%
Coatings 700
+9%
€2,907 +12%
158
33
142167 162
0
50
100
150
Q3 Q4 Q1 Q2 Q3
Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €)
2010 2011
38
Agricultural Solutions On track for record year in sales and earnings
66
95
0
50
100
150
Q3 Q3
Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €)
2011 2010
0
200
400
600
800
1.000
Q3 Q32011 2010
Sales development Period Volumes Prices Portfolio Currencies
Q3’11 vs. Q3’10 12% 3% 0% (6)%
832 908
39
272 225
0
200
400
600
Q3 Q3
Exploration & Production 534 -39%
Natural Gas Trading
1,661 +23%
€2,195-1%
Sales development Period Volumes Prices/Currencies Portfolio
Q3’11 vs. Q3’10 (25)% 24% 0%
EBIT bSI Natural Gas Trading EBIT bSI Exploration & Production Net income
Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items/ Net income (million €)
2011 2010
503 227
573
350
Non-compensable oil taxes 224
70 123
Oil & Gas EBIT before SI on last year’s level (adjusted for non-compensable oil taxes)