basf fy2010 speech

BASF Full Year 2010 Analyst Conference February 24, 2011, 4 p.m. (CET)

Ludwigshafen

Analyst Conference Script

Dr. Jürgen Hambrecht Dr. Kurt Bock

The spoken word applies.

BASF Full Year 2010 Analyst Conference February 24, 2011

BASF in excellent shape, optimistic for 2011

4Q/FY’2010 ConferenceLudwigshafen, February 24, 2011

2BASF 4Q/FY’2010 Con ference | February 24th, 2011

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 part icular, 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


Sales €63.9 billion +26%EBITDA €11.1 billion +51%EBITDA margin 17.4% 14.6%EBIT before special items €8.1 billion +68%EBIT €7.8 billion +111%Net income €4.6 billion +223%Adjusted EPS €5.73 +90%

Business performance 2010 vs. 2009

Full year results 2010

Record sales and record EBIT before special itemsChemical businesses take advantage of strong economic recoveryConsistent long term value generation


Dr. Jürgen Hambrecht

Ladies and Gentlemen,

Good afternoon and thank you for joining us today at our

headquarters in Ludwigshafen and via webcast.

[Chart 3: Full year results 2010]

The title of our presentation puts it in a nutshell:

BASF is in excellent shape!

We reached record sales of almost 64 billion euros, up 26 percent

compared with full year 2009.

EBITDA at 11.1 billion euros and EBIT before special items at

8.1 billion euros also reached new record levels.

The EBITDA margin in 2010 climbed to 17.4 percent, and is well

on track to reach the EBITDA margin target of 18 percent by

2012.

Besides the strong recovery of the world economy, the excellent

business performance in 2010 is also attributable to our strict cost

reduction efforts. Our efficiency program NEXT is running at full

speed and had contributed about 600 million euros to earnings by

the end of 2010.

We increased net income by 223 percent to 4.6 billion euros and

reached an adjusted EPS of 5.73 euros.

In 2011, we will continue on our path for profitable growth and

strive to significantly exceed the record earnings level of 2010

based on the assumption that operating in Libya will be restarted

in a short period of time.



Sales €16.4 billion +25%EBITDA €2.7 billion +21%EBITDA margin 16.5% 16.9%EBIT before special items €1.8 billion +19%EBIT €1.7 billion +68%Net income €1.1 billion +142%Adjusted EPS €1.39 +31%

Business performance Q4’10 vs. Q4’09

Fourth quarter 2010 highlights

Record sales boosted by ongoing strong demandStrong earnings growth despite signif icant one-off costs not recurring in 2011Highest net income ever in a fourth quarter


[Chart 4: Fourth quarter 2010 highlights]

The fourth quarter supported the strong performance of the year

2010. I will briefly highlight a few points, Kurt will give you more

details on the business development of each segment later.

Sales in Q4 increased by 25 percent to 16.4 billion euros

compared with the previous year’s quarter.

BASF achieved record EBITDA in a fourth quarter of 2.7 billion

euros.

Despite one-off costs of more than 200 million euros not recurring

in 2011, EBIT before special items increased by 19 percent to

1.8 billion euros. However, significantly higher fixed costs were

caused by the long-term incentive plan and an extra employee

bonus for the extraordinary management of the crisis.

In addition we used the strong margin momentum into 2011 to

intensify clean-up work towards year-end by accelerating

maintenance, restructuring and other non-recurring items.

Net income climbed to 1.1 billion euros, up 142 percent compared

with the same quarter in 2009.

Adjusted earnings per share were at 1.39 euros, 33 euro-cents

higher than in Q4 2009.



Average annual dividend increase of 14.5%(2001-2010)

Dividend yield above 3% in any given year since 2001

Attractive dividend yield of 3.7% in 2010**

3.9%

Attractive shareholder returns

Key factsDividend per share (€)

0.65 0.70 0.700.85

1.00

1.50

1.95 1.951.70

0.0

0.5

1.0

1.5

2.0

2.5

2001 2004 2007 2010

0.50

1.00

1.50

2.00

3.1%

* Dividend yield based on share price at year-end

3.2% 3.1% 4.1% 3.8% 7.0%Yield*

** With dividends reinvested

Proposal:2.20

3.7%

2.50

3.1% 3.9%


[Chart 5: Attractive shareholder returns]


As you know shareholder return is of utmost importance to us!

The Board proposed this morning to pay out a dividend of

2.20 euros per share, an increase of 50 euro-cents.

This reflects an attractive dividend yield of 3.7 percent, based on

the share price of 59.70 euros on December 31st, 2010.



Delivering consistent, long-term value

Long-term performance January 2001 – December 2010 (average annual performance with dividends reinvested)

+13.9%

-2.7%

+7.1%

-3 0 3 6 9 12 15

BASF

Euro Stoxx 50

DAX 30

MSCI World Chemicals

+0.7%


[Chart 6: Delivering consistent, long-term value]

Moreover, BASF is delivering consistent long-term value for its

shareholders:

Over the past ten years, the average annual return on BASF’s stock

was almost 14 percent, clearly outperforming the German and

European stock markets as well as the MSCI World Chemicals

index.



Successful value creating strategy

7


Leading positions in growth industries

and emerging markets

Ongoing portfolio

optimization

Excellent innovation platform

We strive to outperform global chemical production growth by at least 2 percentage points p.a.

Well positioned for profitable growth

Continue expansion in emerging markets, especially AsiaTranslate megatrends into business growth

Continue with active portfolio managementDrive portfolio closer to end customer

Product and system innovation as growth driversMegatrend innovations for long-term growth

Growth target:


[Chart 7 + 8: Well positioned for profitable growth]

2010 was a record year for BASF due to our operational excellence,

the successful execution of our long-term value creating strategy

and the extraordinary performance of the BASF team.

Looking into the future, I am confident that we are well positioned

for further solid profitable growth. As you know, our growth strategy

builds on three pillars:

We have leading positions in growth industries and emerging

markets and we intend to strengthen these further,

We will continue with our active portfolio management, driving the

portfolio even closer to the end customer, and

We will grow organically via numerous product and system

innovations as well as innovations for megatrends.

Overall, our target is to outperform global chemical production

growth by at least two percentage points per annum and achieve

an EBITDA margin of 18 percent by 2012.

As already shown in the past, we deliver on this promise:

Between 2001 and 2010 we outpaced the growth in global

chemical production by roughly 3 percentage points. With an

EBITDA margin of 17.4 percent in 2010, we are well on track to

achieving our 18% EBITDA margin target.

On the next slides I will highlight important developments for each

one of the three pillars.



Leading positions in growth industries and

emerging markets

9


Emerging marketsSignificant sales growth in emerging markets

Sales 2010 in emerging markets: €14.5 billion (27%)

Investments in emerging markets 2005-2010:€3 billion

Ongoing increase of - sales force- regional R&D

Emerging markets definition, according to Dow Jones:35 countries *

* Bahrain, Brazil, Bulgaria, Chile, China, Colombia, Czech Republic, Egypt, Estonia, Hungary, India , Indonesia, Jor dan, Latvia, Kuwait, Lithuania, Malaysia, Mauritius, Mexico, Morocco, Oman, Pakistan, Peru, Phil ippines, Poland, Qatar, Roman ia, Russia, Slovakia, Sri Lanka, South Africa, South Korea, Taiwan, Thailand, Turkey, United Arab Emirates

Emerging MarketsNet sales in billion €BASF Group (w/o Oil & Gas)

0

10

20

30

40

50

60

2005 2010

CAGR 7%22%

27%CAGR 13%

Emerging Markets (Dow Jones definition)Developed Markets


[Chart 9: Leading positions in growth industries and emerging

markets]

BASF already has leading positions and fast growing businesses

in the emerging markets and we will continue to build on these.

[Chart 10: Emerging Markets]

Our strong presence in emerging markets will further contribute to

BASF’s growth. (We use the term “emerging markets” as defined

by Dow Jones, thus including 35 countries.)

BASF’s sales in these emerging markets almost doubled in

absolute terms during the last five years to 14.5 billion euros,

which is about 27 percent of total sales in 2010, excluding the Oil

& Gas segment.

We will further spur organic growth in these countries by

increasing our sales forces, strengthening regional R&D, and

investing in new production capacities.

From 2005 to 2010, investments in emerging markets amounted

to 3 billion euros. From 2011 to 2015, we will invest a further

2.6 billion euros in new capacities in emerging markets.



6.5

12.5

20

0

5

10

15

20

2005 2010* 2020

BASF’s profitable growth pathin Asia Pacific

Sales by location of customers (in billion €)

* excluding Cognis

14%

p.a.

Achievements 2005-2010

Sales growth 14% p.a.(vs. Asian market growth 10.5% p.a.)Record EBITDA of €1.8 billion in 2010, resulting in an EBITDA margin of 14%

Target 2011-2020

Well on track to double sales by 2020(based on sales of €9 bn in 2008)Outgrowing Asian Pacific chemical market by 2 percentage points p.a. through

– Innovations out of Asia– Investments 2011-2015: €2.3 billion– Generating 70% of sales based on

local manufacturing – Strengthening market focus through

industry and customer target groups


[Chart 11: Strong sales and earnings growth in Asia Pacific]

Special focus of our growth strategy will be on Asia Pacific as almost two

thirds of future growth in the chemical industry will come from this region.

Between 2005 and 2010, we increased our sales on average by 14 percent

per year, 3.5 percentage points more than the market average of

10.5 percent in Asia Pacific.

In 2010, we achieved sales of 12.5 billion euros, well above the pre-crisis

level, generating already roughly a quarter of BASF Group sales, excluding

Oil & Gas, in Asia Pacific.

Over the years, we have significantly increased profit contribution out of Asia.

In 2010 we reached an EBITDA margin of 14 percent in this region, based on

about 60 percent local manufacturing content.

In our Strategy 2020, we aim to grow sales on average two percentage points

per year faster than the chemical market in Asia Pacific by

Developing and marketing innovations in Asia for Asia,

Investing 2.3 billion euros over the next five years in Asia to generate

70 percent of sales through local production:

The major upcoming investment projects are the ongoing 1.4 billion dollar

expansion of our Verbund site in Nanjing, the upcoming MDI facility in

Chongqing, the announced second expansion of Nanjing and the new

investment into specialties together with Petronas in Malaysia.

Strengthening market focus through industry and customer target groups.

By 2020, we project sales of more than 20 billion euros and substantially higher

earnings contributions from this region.



Ongoing portfolio optimization

12


Cognis – integrating a global leader in value-added products

Pro forma business performance FY’2010

Sales: ~ €3 billionEBITDA: ~ €550 millionEBITDA margin: ~18%Closing on December 9, 2010

Integration objectives

Growing >2% points faster than the relevant market

Achieve 20% EBITDA margin in the Performance Products segment by 2012

Acquisition accretive as of 2012

Integration costs of €200-250 million until end of 2012

Annual cost synergies of at least 5% of 2009 net sales (i.e. ~€130 million) fully achieved by 2013 and substantial top line synergies


[Chart 12: Ongoing portfolio optimization]

The second pillar of our growth strategy is our proactive portfolio

optimization. Here are two examples:

[Chart 13: Cognis – integrating a global leader in value added

products]

After Ciba, Cognis is now a further step in moving our portfolio

closer to end customers.

At December 9, 2010, we successfully closed the acquisition of

Cognis.

Cognis performed very well in 2010: On a pro forma basis,

Cognis would have contributed sales of about 3 billion euros, an

EBITDA of 550 million euros and an EBITDA margin of

approximately 18 percent.

Given the attractive enterprise value of 3.1 billion euros at closing,

we are confident that this acquisition will generate substantial

value.

Currently we are fully on track with the integration process. At the

end of March we will be able to give you a more detailed overview

of the planned integration process, the costs and the substantial

top line synergies related to it.



BASF + CognisImproved market positions

CurrentBASF position

FutureBASF position

Personal care ingredients 3 1Home care ingredients 1 1

Functional nutritioningredients 6 3

Coating additives 7 3Heavy-duty driveline lubricants >10 3

Mining chemicals 3 2


[Chart 14: BASF + Cognis: improved market positions]

With Cognis, we have significantly improved our market position

in many attractive business areas.

As a leading supplier in these markets, we will be able to define

market standards in close cooperation with our customers. We

will operate more efficiently and effectively and finally reach more

customers all over the world, generating top line growth and

synergies.



StyrolutionPlanning a 50/50 joint venture with INEOS

ScopeGlobal No.1 in styrenicsSales of about €5 billion*, thereof

– 48% Europe, 32% Americas, 20% Asia Pacific– 34% SM, 34% PS, 21% ABS, 11% Copolymer Specialties

Customers in more than 110 countries

29 production facilities across 11 countriesMore than 3,000 employees

MilestonesNov 29, 2010: LoI signed by BASF and INEOSJan 1, 2011: Carve-out of BASF‘s Styrenics activit ies into separate legal entitiesSecond half of 2011: Start of planned JV Styrolution

* Pro-f orma figures, based on BASF‘s and INEOS‘ sales in 2009

Styrolux T/S shrink filmValue creating divestiture process


[Chart 15: Styrolution]

Second example: Styrolution

At the end of November 2010, we announced the plan to form this

50-50 joint venture with INEOS.

The new company will be the global No.1 in styrenics.

Styrolution will have sales of about 5 billion euros and more than

3,000 employees.

The joint venture will offer the broadest product portfolio and it will

have a strong footprint in all major regions.

The carve-out of BASF’s styrenics activities into separate legal

entities was already completed as of January 1, 2011.

Establishment of the planned joint venture, which is subject to

approval by the appropriate antitrust authorities, is expected in

the second half of 2011.

Styrolution represents the first step in our value creating

divestiture process.



Active portfolio management pays off

Chemical act ivities

Agricultural Solut ions

Oil & Gas, including non-deductible oil taxes

EBITDA by activity (in billion €, excluding Other)

0

2

4

6

8

10

12

2001* 2004 2007** 2010

Recent acquisitions reshaped portfolio– Closer to end customers– Innovation-driven– Profitable growth above

industry average

BASF’s EBITDA in 2010 (excluding Other) amounted to €11.7 billion

* Based on German GAAP** As of 2007 according to new segm ent structure

(excl. Styrenics and corporate costs)

Our diversified portfolio is a key strength


[Chart 16: Active portfolio management pays off]

Our active portfolio management is clearly paying off as

demonstrated by the EBITDA development over the last 10 years.

EBITDA, excluding Other, reached 11.7 billion euros in 2010,

up 49 percent compared to the full year figure 2009, clearly above

last pre-crisis levels and well above the crisis level of 2001.

We achieved this excellent result due to

– the continuous optimization of our portfolio as well as

– our sustained and relentless efforts to increase operational

excellence and to reduce costs.

Today, we are clearly on a new level of performance with

substantially reduced earnings volatility!



Excellent innovation platform

17


NaphthaMax® III

Xemium®Kaurit® Light

CypoSol®

Elastopave®

Ecovio®

Natugrain® TS X-SEED® PCI Geofug®


[Chart 17 + 18: Excellent innovation platform]

Innovation is the third important cornerstone for the continued

profitable growth of the BASF Group. And here I’m not talking about

abstract ideas in our labs – it’s all about marketable solutions which

meet the needs of our customers today and tomorrow! Let me

demonstrate this by introducing to you an important innovation

example from our Agricultural Solutions segment: Xemium®.



Xemium®

BASF’s next-generation fungicide for broad use

Key facts

Xemium® complements BASF‘s outstanding fungicide portfolio

Our 1st carboxamide fungicide for all market segments

BASF is carboxamide pioneer,Xemium® strengthens lead

Launch planned in >50 countries and >100 crops

World-wide data submissionprocess underway

Market launch from 2012 onwards

* Source: Phili ps McDougall, own estimation

Untreated

Xemium® global peak sales potential: >€200 million


[Chart 19: Xemium®]

A year ago, I talked about Kixor®, a new herbicide which was

successfully launched in 2010 and continues to thrive with

unprecedented success.

Today, I would like to introduce to you a new product that nicely

complements our strong fungicide portfolio: Xemium, a next-

generation carboxamide with blockbuster potential.

As a pioneer in this product class, we are proud to launch a new

carboxamide which can be used for all fungicide segments:

We will help our customers with Xemium-based products for field

crops, and we also will offer products for specialty crops such as

vegetables and fruits.

Xemium products can be marketed to a wide customer basis due

to its broad range of application and efficient and long-lasting

disease control.

The data submission process is underway, and we expect

regulatory approval in time for a market launch from 2012

onwards.

Xemium will be a global active ingredient which we plan to

gradually introduce in more than 50 countries and for more than

100 crops.

Thus, we are optimistic that Xemium will play out its blockbuster

potential and generate peak sales in excess of 200 million euros.



0,0 0,00

5

10

15

20

4.53.5

Innovation pipeline worth €21 billion

* New or improved products or new applic ations, max. 5 years on market, including Growth Clusters

The pipeline NPV of €21 billion is a bottom-up aggregation of all R&D projects

High success rate due to stringent R&D controlling via Phasegate process

Expected Commercial Value:~50% of NPV (probability-

weighted)

In 2010, sales of new products (5 years or younger) exceeded the target of €6 billion

Target 2015: up to €8 billion sales with new products

R&D contributes significantly to earnings growth

14% Performance Products7% Plastics3% Chemicals

8% Functional Solutions

46% Agricultural Solutions

2% Oil & Gas20% Corporate Research

2009 2010

€19 bn€21 bn

Net present value by segments (billion €)


[Chart 20: Innovation pipeline worth 21 billion euros]

Through innovation we see significant growth and value creation

potential. Today, we value our innovation pipeline with a net present

value of 21 billion euros.

The Net Present Value of a project represents the discounted

earnings after deduction of discounted expenditures. This is the

return after a certain period of time if the project is successful.

The total NPV of all projects at a given time is the net present

value of our R&D pipeline.

The biggest value contribution stems from R&D projects in

Agricultural Solutions, Performance Products and Corporate

Research.

Thanks to rigorous R&D controlling we generate a high success

rate.

The expected commercial value of our pipeline is about

50 percent of NPV.

In 2010, sales with new products (on the market for five years or

less) exceeded our target of 6 billion euros. By 2015, we target

annual sales of up to 8 billion euros from product innovations.

And now to Kurt Bock who will provide more details from Q4 2010.



Financial highlights Q4 2010

21


6%2%13%4%*Q4’10 vs. Q4’09

Sales development

5%2%8% 11%FY’10 vs. FY’09

CurrenciesPortfolioPricesVolumesPeriod

BASF Group Q4 2010Record sales and strong earnings increase vs. PYQ

* Volumes +8% (without Oil & Gas)

1.5

2.02.2 2.2

1.8

0.0

0.5

1.0

1.5

2.0

2.5

Q4 Q1 Q2 Q3 Q4

EBIT before special items (billion €)

13.215.5 16.2 15.8 16.4

0

4

8

12

16

20

Q4 Q1 Q2 Q3 Q4

Sales (billion €)

20102009 20102009


Dr. Kurt Bock


Good afternoon and thank you for joining us.

[Chart 22: BASF Group Q4 2010]

As Juergen already mentioned, 2010 was a record year for the

BASF Group. And also in the fourth quarter, we posted new

record numbers. At 16.4 billion euros, sales reached a record

level for a fourth quarter, and were up 25 percent versus the

fourth quarter of 2009. Volumes were up 4 percent. Volumes

excluding Oil & Gas grew by 8 percent. We continued to raise

prices, also compared with the third quarter of 2010, in order to

protect our margins in view of rising feedstock costs.

EBIT before special items was the second highest ever in a fourth

quarter. It was burdened by several one-off costs at year-end due

to intensified maintenance, accelerated restructuring and other

non recurring items. Significantly higher fixed costs have been

caused by our long-term incentive plan and a special employee

bonus.

On top, harsh weather conditions towards year-end impacted all

construction related businesses.

Net income at 1.1 billion euros is a new record for a fourth

quarter. This was partly due to a tax rate well below the annual

average given tax credits in Asia, tax refunds and deferred tax

income. Adjusted EPS were 1.39 euros, up 31 percent compared

to Q4 2009.


On the next slides, I will highlight the financial development in the

fourth quarter in more detail. After many unusual quarters due to

the crisis, seasonality is now dominating the development in most

businesses again. Therefore, I will mainly focus on the

comparison of the fourth quarter 2010 with the same period of last

year.


ChemicalsStrong earnings improvement vs. PYQ due to higher demand

Intermediates655+32%

Inorganics326

+24%

Petrochemicals1,964+41%

€2,945+37%

315

461

687617

537

0

200

400

600

Q4 Q1 Q2 Q3 Q4

8%0%20%9%Q4’10 vs. Q4’09

Sales development

5%0%28%18%FY’10 vs. FY’09


Q4’10 segment sales (million €) vs. Q4’09 EBIT before special items (million €)

20102009

[Chart 23: Chemicals]

In our Chemicals segment, increases in volumes and prices as

well as positive currency effects led to strong sales growth in all

divisions. EBIT before special items rose significantly compared

with the fourth quarter of 2009. This was due to higher capacity

utilization as well as increased margins for basic products.

Demand also remained strong toward the end of the year, but we

incurred one-off items especially from accelerated maintenance.


In Inorganics, sales grew compared with the previous fourth

quarter mainly as a result of higher volumes and prices. The

business environment was favorable, particularly in the electronic

chemicals and inorganic salts businesses. Earnings reached the

level of the fourth quarter of 2009.

In Petrochemicals, demand rose for all products. Prices rose

considerably as higher raw material costs were passed on; this

contributed to the strong sales growth. There continued to be

some supply bottlenecks, particularly for acrylic acid, solvents and

plasticizers. Following an improved availability of cracker products

in the third quarter in Asia and North America, supplies also

increased in Europe. Thanks to high demand, our plants were

operating at high capacity utilization rates. Earnings significantly

surpassed the level of the previous fourth quarter.

Sales in Intermediates improved considerably year-on-year

thanks to higher demand and prices. Our capacities were fully

utilized for products in the butanediol value-adding chain,

polyalcohols and numerous amines. The increase in volumes was

a major factor in our strong earnings growth.



PlasticsHigh demand and price increases lifted sales significantly

Polyurethanes1,363+20%

PerformancePolymers

1,088+34%

€2,451+26%

251279

349 371

285

0

200

400

Q4 Q1 Q2 Q3 Q4

7%0%9%10%Q4’10 vs. Q4’09

Sales development

6%0%10%22%FY’10 vs. FY’09



20102009

[Chart 24: Plastics]

In Plastics, demand for our products continued to be high. Sales

grew substantially compared with the previous fourth quarter. We

were able to pass on higher raw material costs to customers,

particularly in Performance Polymers. Positive currency effects

contributed to sales growth. However, our business with

customers from the construction sector weakened due to harsh

weather conditions. Thanks to higher volumes and despite higher

feedstock costs, income from operations before special items

improved compared with the prior-year period.

In Performance Polymers, the positive trend continued into the

fourth quarter. However, we saw a significant decline in demand

for foams for the construction industry. Sales growth was driven

by strong volumes, price increases resulting from higher raw

material costs and positive currency effects. Despite higher


expenses resulting from plant shutdowns, earnings increased

substantially.

While prices remained stable, sales in Polyurethanes rose

mainly due to increasing volumes and positive currency effects.

Sales volumes increased in all business areas. In particular,

demand for specialties such as TPU and Cellasto was good.

Higher raw material costs, particularly for benzene, negatively

impacted our margins and earnings were below the level of the

fourth quarter of 2009.



5%6%4%3%Q4’10 vs. Q4’09

Sales development

4%11%4%12%FY’10 vs. FY’09


Performance ProductsEarnings significantly up vs. previous year despite one-off costs

209

419471

370294

0

100

200

300

400

500

Q4 Q1 Q2 Q3 Q4

PerformanceChemicals

778+15%

Care Chemicals763+42%

€3,060+18%

Paper Chemicals405+2%


Nutrition & Health384+10%

Dispersions& Pigments

730+17%

2009 2010


[Chart 25: Performance Products]

All divisions in the Performance Products segment posted a rise

in sales thanks to higher volumes, positive currency effects or

increased prices. Additional sales growth of 6 percent resulted

from the inclusion of the Cognis businesses as of December 9,

2010. We saw a bit of a seasonal slowdown, but the business

environment remained favorable overall with strong momentum in

all product lines.

In Q4 2010, earnings were up more than forty percent compared

with the previous year but lower than in the third quarter of 2010.

Toward the end of 2010, we intensified our restructuring

measures, accelerated maintenance projects and incurred higher

costs for employee bonuses. To cope with higher raw material

costs, we continued to raise prices. Finally, synergies from the

Ciba integration were realized as planned and contributed

positively to earnings.

Special charges of 117 million euros resulted primarily from the

Cognis acquisition and accelerated site restructuring in the paper

chemicals business.

In January and February 2011, we have seen strong sales and

earnings momentum. Looking ahead to the first quarter 2011, we

are confident to top the level of earnings of the strong first quarter

of 2010.


In Dispersions & Pigments, we posted significant sales growth

thanks to the ongoing high demand for our products. Higher raw

material costs could not yet be fully offset by price increases.

Furthermore, earnings were negatively impacted by integration

and restructuring measures. Moreover, earnings decreased

compared to the third quarter 2010 due to seasonal effects in a

fourth quarter.

Sales in Care Chemicals increased substantially thanks to a

continued favorable business environment as well as the

acquisition of Cognis. Demand for hygiene products as well as

detergents and cleaners was at levels not seen before. Earnings

were well above the level of the fourth quarter of 2009 but below

the previous quarter due to seasonal effects. Special charges

were primarily related to an inventory step up following the Cognis

acquisition.

In Nutrition & Health, sales were higher than in the fourth quarter

of 2009. Strong demand and the inclusion of the acquired Cognis

businesses contributed to the increase in sales. Earnings did not

match the excellent level of 2009 due to higher raw material costs

and higher fixed costs mostly due to bonus packages. Special

charges were related to the Cognis inventory step-up.


In Paper Chemicals, volumes were below the level of the fourth

quarter of 2009. Higher raw material costs could be largely offset

by price increases. Earnings improved compared with the fourth

quarter of the previous year. In addition, we continued with our

restructuring efforts: Following the divestiture of the European

starch business, we announced the closure of our production of

optical brighteners in Grenzach, Germany, planned for 2011.

Volumes and sales rose in Performance Chemicals. Demand

was particularly dynamic from the automotive and the plastics

processing industries, especially for plastic additives. Earnings

were far above the level of the previous fourth quarter.



9%1%10%15%Q4’10 vs. Q4’09

Sales development

8%1%10%17%FY’10 vs. FY’09


Functional SolutionsEarnings declined considerably due to one-time operating costs

Catalysts1,369+62%

Construction Chemicals514

+11%

Coatings686

+15%

€2,569+35%

101 111

165 158

33

0

50

100

150

Q4 Q1 Q2 Q3 Q4


20102009

[Chart 26: Functional Solutions]

Volumes in the Functional Solutions segment were significantly

higher than in the same quarter of 2009 reflecting the global

recovery of our automotive customers. Demand from the

construction industry increased slightly, primarily owing to the

robust building activity in Asia. Nevertheless, harsh weather

conditions towards year-end had a strong negative impact on our

Construction Chemicals business. The price increase of 10

percent also reflects higher precious metal prices.

EBIT before special items was lower than in the fourth quarter of

2009 and much lower compared to Q3 2010. As mentioned

before, higher bonuses, accelerated maintenance as well as

higher raw material costs contributed to this. In addition, precious

metals trading generated lower earnings.


After the holiday slowdown, we started into 2011 with very good

momentum and for Q1 2011 we expect to exceed the earnings

level of the first quarter 2010.

Catalysts’ sales increased substantially, mainly due to higher

sales volumes of mobile emissions and chemical catalysts. In

addition, sales from precious metals trading almost doubled to

654 million euros. Earnings, however, decreased due to the

above mentioned factors.

Our Construction Chemicals business in Europe and North

America experienced a seasonal slowdown with unusually harsh

weather conditions towards year-end. Nevertheless, we were able

to increase sales year-on-year, especially in Asia and other

emerging markets. Earnings did not match the level of the

previous fourth quarter, mainly as a result of personnel-related

provisions, intensified maintenance and restructuring.

Volumes and sales in Coatings increased year-on-year in all

business areas. The positive trend seen in previous quarters

continued for automotive OEM coatings, automotive refinish

coatings and architectural coatings. We have not yet been able to

fully pass on substantially increased raw material costs. Earnings

therefore declined despite higher volumes.



Agricultural SolutionsSouth America drove strong sales growth

44 42

0

10

20

30

40

50

Q4 Q4


20102009

0

200

400

600

800

1,000

Q4 Q420102009

+20% (5)%

6%0%(4)%18%Q4’10 vs. Q4’09

Sales development

5%0%(3)% 9%FY’10 vs. FY’09


703845

[Chart 27: Agricultural Solutions]

In Agricultural Solutions, sales in the fourth quarter significantly

exceeded the level of the same period of 2009. Lower prices for

certain products, particularly fungicides, were offset by

significantly higher demand for our products across all indications.

Sales in Europe were slightly below the level of Q4 2009. In the

traditionally strong year-end business in France, demand for crop

protection products declined. Sales in North America rose, mainly

due to higher volumes in herbicides. In South America, we had a

good start into the growing season. Increasing prices for soft

commodities led to higher demand for soybean fungicides in

Brazil and Argentina. In Asia, our sales increased thanks to

higher demand from growth markets such as India and China. In

particular, business with products based on our fungicide F500®

was very successful.


Due to higher expenses for research and development as well as

the expansion of our business activities in growth markets, EBIT

before special items was only slightly below the previous fourth

quarter.



132230

0

200

400

600

800

Q4 Q4

Oil & GasEarnings grew substantially y-o-y as a result of higher oil prices

Exploration &Production1,059+9%

Natural GasTrading

1,905+16%

€2,964+13%

0%28%(15)%Q4’10 vs. Q4’09

Sales development

0%(3)%(2)%FY’10 vs. FY’09

PortfolioPrices/CurrenciesVolumesPeriod

106

EBIT bSI Natural Gas T radingEBIT bSI Explorat ion & Production

Net income

Q4’10 segment sales (million €) vs. Q4’09 EBIT b efore special items / Net income (million €)

20102009

374607

508

713

134


[Chart 28: Oil & Gas]

In Oil & Gas, sales increased in comparison with the previous fourth quarter.

Lower sales volumes in Natural Gas Trading were more than offset by higher

selling prices for natural gas and higher crude oil prices. EBIT before special

items and net income after minority interests were significantly higher as a

result of higher oil prices. Valuation adjustments on oil and gas licenses in

the North Sea resulted in special items.

In Exploration & Production, production volumes of oil and gas matched

the level of the fourth quarter of 2009. Sales rose due to higher crude oil

prices. The average price for Brent crude oil was 86 dollars per barrel,

compared with 75 dollars per barrel in the fourth quarter of 2009. In euro

terms, crude oil prices climbed to 64 euros per barrel (+26 percent). As a

result of higher prices, earnings exceeded the level of the previous fourth

quarter.

Sales volumes in Natural Gas Trading did not match the level of the strong

fourth quarter of 2009. Overall, sales grew thanks to higher prices for natural

gas. Margins were negatively impacted by the time lag in the adjustment of

sales prices to purchase prices, which led to lower earnings year-on-year.

Let me give you a brief update on the situation in Libya: Over the past days,

the events have been developing rapidly. Our foremost concern is the

wellbeing and safety of our 453 employees. We have advised all employees

to remain at home. In the meantime, most of our expats and their families

have left the country. A few delegates voluntarily stay in the country. As a

precautionary measure, we stopped our production of oil and gas at the

beginning of the week. At this moment it is uncertain, when we can restart

production. We will continue to monitor the situation closely.



Review of “Other”

(707)(59)

(323)(226)(460)

387

(648)3,4015,8512010

344293

(79)(45)

9

80

51685

1,263Q4 2009

(627)90

(319)(209)(512)

339

(717)2,5024,5772009

10149

(96)(66)

(229)

142

(139)857

1,590Q4 2010

Salesthereof Styrenics

EBIT before special itemsthereof Corporate research

Group corporate costs Currency results, hedges and other valuation effectsStyrenics, fertilizers, other businesses

Special items

EBIT

Million €


[Chart 29: Review of “Other”]

In “Other”, income from operations before special items

decreased by 190 million euros compared with the fourth quarter

of 2009 despite the improved earnings of our Styrenics business.

Main reason for the decline was a significant increase in

provisions for the long-term incentive program as a result of the

30 percent rise in the BASF share price over the course of Q4 –

something we had hoped would happen but could not predict

when we last met at the end of October.

Positive special items resulting from the allocation of restructuring

expenses to the operating divisions in the fourth quarter were

significantly lower in 2010 than in the previous year.



0

1

2

3

4

5

6

7

8

9

1.8

(0.6)

(2.5)

(1.8)

6.5

(1.9)

1.5

* Paym ents related to intangible assets and property, plant and equipment

Cash12/31/09

OperatingCF

Capex* Acqu isitions Divid end s Oth er cashinflows

Cash12/31/10

Excellent operating cash flow in 2010

thereof €1.6 bn dividends to BASF SE shareholders

Net cash-out for purchase of Cognis: €0.6 bn

Excellent operating cash flow despite €1.7 bn increase in net working capital

Capex* on last year´s level

Full Year 2010 (billion €)

D eb trepayment

(2.3)0.5


[Chart 30: Excellent operating cash flow in 2010]

Let me now briefly discuss our cash flow in 2010. At 6.5 billion

euros, operating cash flow was again very strong, of which 1.2

billion euros were generated in Q4. The very high after-tax

earnings more than offset the increase of 1.7 billion euros in net

working capital requirements due to the expansion of business

volume in 2010. Free cash flow amounted to 3.9 billion euros.

In 2010, we stuck to our priorities with regard to the use of cash:

– We spent 2.5 billion euros for capital expenditures.

– Net cash-out for the purchase of Cognis amounted to

0.6 billion euros.

– We paid 1.6 billion euros in dividends to our shareholders.

– And we used 2.3 billion euros for the repayment of debt,

which includes the refinancing of 1.9 billion of debt taken

over from Cognis.

Despite the Cognis acquisition, dividend payments and capital

expenditures, net debt increased by only 562 million euros

compared to the end of 2009.



Balance sheet remains strong

Balance sheet 2010 vs. 2009 (billion €)

Liquid funds

Accountsreceivable

Long-termassets

22.7

15.0

21.7

31.7

7.7

1.8

Otherliabilities

Financialdebt

Stock-holders’Equity

Dec 312010

Dec 312009

Dec 312009

Dec 312010

59.4

34.5

10.2

1.5

51.3

18.6

14.8

17.9

Inventories

Other assets

8.7

4.5

6.8

3.3

59.4

51.3

Impact of Cognis acquisitionAs of December 31, 2010:

Increase in long-term assets by €2.9 billion, thereof– Goodwill: €0.6 billion– Other intangible assets:

€1.3 billion– Property, plant and

equipment: €0.8 billion

Addition of– €0.5 billion of inventories– €0.4 billion of receivables

Financial debt: €2.6 billion(incl. purchase price of €0.7 bill ion)


[Chart 31: Balance sheet remains strong]

Let me finally briefly turn to our balance sheet. Compared with the

previous year, total assets rose by 8.1 billion euros to 59.4 billion

euros. Thereof, 4.1 billion were related to the acquisition of

Cognis. This includes accounts receivables and inventories of

0.9 billion euros. The first-time consolidation of Cognis led to

goodwill of 0.6 billion euros as well as an increase of provisions

for pensions by around 0.5 billion euros.

Furthermore, currency effects, for example due to the

appreciation of the US dollar and the Japanese yen versus the

euro, inflated our asset base by roughly 2.2 billion euros in 2010.

Our equity ratio improved from 36 percent to 38 percent and is

rock-solid. Furthermore, with our A-rating and a well-balanced

maturity profile of financial debt, BASF has a very strong financial

position.


32BASF 4Q/FY’2010 Conference | February 24th, 2011

Outlook 2011

32


Outlook BASF Group 2011Expectations for global economy

2010

GDP 3.9%

Chemicals (excl. Pharma) 9.3%

Industrial production 8.9%

US$ / Euro 1.33

Oil price (US$ / bbl) 79.50

Forecast 2011

3.3%

5.2%

5.0%

1.35

90


Dr. Jürgen Hambrecht

[Chart 32 + 33: Outlook BASF Group 2011]

Let me conclude with the general outlook for 2011:

After the strong global economic rebound in 2010 supported by

major economic stimulus programs and strong growth in Asia, the

global economy will continue to recover in 2011.

However, in industrialized countries, the austerity programs

necessary to trim public spending will start to dampen the growth

dynamic. Increasing raw material costs and the uncertainty in

North Africa and the Middle East are risks we closely follow up.

In 2011, we expect GDP growth of 3.3 percent. Growth will be

weaker in industrialized countries (2.2 percent), but production in

most of these countries will reach and partly surpass pre-crisis

levels.

We expect global chemical production (without pharmaceuticals)

to grow by 5.2 percent.

For 2011, we expect an average oil price of 90 dollars per barrel,

and an average exchange rate of 1.35 dollars per euro.



Outlook 2011 by regionChemicals (excl. Pharma)

EU-27

USA

Asia (excl. Japan)

Japan

South America

Industrial production

5.2%

2.9%

3.3%

9.6%

1.9%

5.0%

3.0%

3.9%

10.0%

2.3%

4.3%4.6%

World 9.3%

10.1%

5.0%

13.0%

8.8%

6.4%

8.9%

6.0%

5.7%

14.5%

15.8%

6.2%

2010 2011 2010 2011


[Chart 34: Outlook 2011 by region]

In 2011, global chemical production (excluding pharmaceuticals)

will continue to grow in all regions.

In Asia (excluding Japan), growth will remain strong at

approximately 10 percent.

Our growth forecast for China is particularly favorable at

12 percent for 2011.



Outlook 2011 for our key customer industries*

0.9(0.7)(3.3)(8.7)

(11.9)(11.1)(11.3)

(5.8)

(8.1)

2009(World)

3.43.9Nutrition

5.68.8Textiles9.216.6Information & Communications

2.34.2Agriculture

5.77.9Paper

5.912.0Electronics6.121.5Automotive (per-unit-base)

3.6(1.3)Construction

5.08.9Industries total

Growth forecast 2011

(World)2010

(World)Key customer industries of BASF

* Growth Production Index in % p.a.; change compared with previous year


[Chart 35: Outlook for our key customer industries]

All customer industries show normalized solid growth.

Growth is expected to be especially strong in the automotive and

information & communication industries.



Outlook 2011 by segments

Oil & Gas

Agricultural Solutions

BASF Group (incl. Other)

Functional Solutions

Performance Products

Plastics

Segments EBIT before special items 2011

Chemicals


[Chart 36: Outlook by segment]

If we translate all this into the outlook for our businesses in the respective

segments, this means:

In Chemicals, we expect sales in 2011 to be slightly above the level of 2010.

Additional capacities will increase pressure on margins, especially for

cracker products. Earnings are expected to be slightly below the level of

2010.

In Plastics, we expect sales and earnings in 2011 to slightly exceed the level

of the previous year. We anticipate that demand for our products will remain

volatile and that increasing product availability will have a negative impact on

margins.

In Performance Products in 2011, we expect stable demand and – driven

by the Cognis acquisition – substantial sales growth. We aim for a strong

increase in earnings.

In Functional Solutions, we expect rising demand from our key customer

industries – the construction and automotive industries. We aim for a

significant increase in sales and a substantial rise in earnings.

In Agricultural Solutions, we will continue our successful innovation

strategy in 2011. We aim for slight growth in sales and earnings.

Based on our assumptions regarding oil price and euro, we aim in Oil & Gas

for a significant increase in sales and a substantial improvement in earnings.

We base this also on the assumption that we can restart our operations in

Libya in a short period of time.

Now let’s turn to the overall “consolidated” outlook for 2011.



We aim to grow sales on average by two percentage points per year faster than chemical market growth.We strive to grow our earnings further year by year, and to achieve an EBITDA margin of 18% by 2012.

We expect to achieve in 2011:- Significant increase in sales and EBIT before special items.- A high premium on our cost of capital. - Significantly higher sales and earnings in the 1st quarter 2011 vs. previous year’s quarter.

Targets 2011

Medium-term targets

Outlook 2011

We aim to continuously increase the annual dividend, or at least maintain it at the level of the previous year.

Dividend policy


[Chart 37: Outlook 2010]

We expect to achieve in 2011:

Significant increase in sales and EBIT before special items.

A high premium on our cost of capital.

Significantly higher sales and earnings in the 1st quarter 2011 vs.

previous year’s quarter.

We are also abiding by our medium-term targets and our dividend

policy:

We aim to grow sales on average by two percentage points per

year faster than chemical market growth.

We strive for an EBITDA margin of 18 percent by 2012.

And we aim to continuously increase the annual dividend, or at

least maintain it at the level of the previous year.

Thank you for your attention. We are now happy to take your

questions.
