basf investor day asia pacific...17.0 5.0 12.0 9.5 3.5 6.0 + 8.0% + 4.0% basf well positioned in...
TRANSCRIPT
BASF Investor Day Asia Pacific, June 5-6, 2013 1
BASF Investor Day Asia Pacific
Presentations of Day 2 (Nanjing)
BASF Investor Day Asia Pacific, June 5-6, 2013 2
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.
BASF in China – A continuing growth story
Dr. Albert Heuser President Greater China & Functions Asia Pacific
Investor Day Asia Pacific Nanjing, June 6, 2013
4
BASF Investor Day Asia Pacific, June 5-6, 2013
1 | Trends in the Chinese chemical market
2 | BASF business performance in China
3 | Strategy implementation in China
BASF Investor Day Asia Pacific, June 5-6, 2013 5
2010
CAGR 4.8%
7% 8%
7%
11%
33%
34%
Real GDP (in US$ trillion)
8% 6%
7%
14%
41%
24%
13.6 21.8
2020
Greater China Japan South Asia
South Korea ASEAN ANZ
Clockwise from top:
China real GDP 2012: 5.2 trillion US$ = 35% of Asian real GDP
Chinese per-capita income to double by 2020 vs. 2010
12th 5-year plan (2011-2015) focuses on three main priorities:
– sustainable growth
– industrial upgrading
– promotion of domestic consumption
Greater China will increase share of the regional GDP to more than 40% in 2020
BASF Investor Day Asia Pacific, June 5-6, 2013 6
Hebei
Beijing
Heilongjiang
Liaoning
Sichuan
Henan
Anhui Jiangsu
Hubei
Hunan Fujian
Jiangxi
Tianjin
Manufacturing is extended inland towards Western provinces
Shandong
Zhejiang
Guangdong
Chongqing
31 mn refrigerators (2011) 16 mn washers (2011) 28 mn air conditioners (2011) 818 ktons synthetic
detergents (2011)
Anhui
1.72 mn vehicles, thereof 0.9 mn cars (2011)
40 mn laptops (2012)
Chongqing
Fujian Chemical fiber, cotton
spinning and apparel 400 mn sport shoes,
20% of world output (2012)
Shanghai
12 Emerging Provinces: 25% of total land area 47% of China population 2011 41% of China GDP 2011
BASF Investor Day Asia Pacific, June 5-6, 2013 7
CAGR 6.2%
8% 9%
8%
54%
19% 8%
64%
12% 7%
8%
2020
Real chemical production ex. pharma (in US$ trillion)
2010
Greater China will represent 64% of chemical market in Asia Pacific in 2020
China chemical production 2012: US$ 0.6 trillion = 60% of Asian real chemical production
Sustainability becomes differentiating factor
Innovations in chemistry will enable innovations in downstream industries
Chemical markets become more competitive
Greater China Japan South Asia
South Korea ASEAN ANZ
Clockwise from top:
0.8 1.5
2% 1%
BASF Investor Day Asia Pacific, June 5-6, 2013 8
Strategic relevant market in Greater China grows in line with chemical market Strategic relevant market (SRM) Greater China (in billion €)
The SRM in China grows by ~7% p.a. (2010 – 2020), in line with chemical production
All industries will contribute to SRM growth
BASF´s key customer industries:
– Chemicals and plastics
– Consumer goods
– Construction
– Health and nutrition
– Transportation
Others
Transportation
Energy & Resources
Health & Nutrition
Chemicals & Plastics
Construction
Consumer Goods
Agriculture
Electronics
0
20
40
60
80
100
120
140
160
2010 2020
~80
155
10%
19%
14%
39% 18%
13%
40%
10%
7%
CAGR + 7% p.a.
BASF Investor Day Asia Pacific, June 5-6, 2013 9
BASF is well positioned in China in an increasingly competitive environment
Sinopec ~ €27.2 bn Annual report 2012: chemical segment sales
Petrochina €13.7 bn Annual report 2012: external sales of „chemicals and refinery“
ChemChina ~ €10.0 bn Annual report 2012: including oil and equipment business
BASF €6.7 bn China sales 2012; restated sales 2012:€4.5 billion
Formosa Chemicals €4.8 bn China sales 2012, company report
Dow Greater China ~ €4.0 bn Press releases / BASF estimate: China sales 2012
Bayer Greater China ~ €3.6 bn China sales 2012, company report
Sinofert Holdings Ltd. €2.8 bn 2012 Fortune Data
Mitsui Chemicals €1.8 bn China sales 2011, company report
Hengyi Chemical €0.2 bn China sales 2011, company report
Sales in Mainland China in 2011/2012
Major chemical producers in Mainland China
10
BASF Investor Day Asia Pacific, June 5-6, 2013
1 | Trends in the Chinese chemical market
2 | BASF business performance in China
3 | Strategy implementation in China
BASF Investor Day Asia Pacific, June 5-6, 2013 11
BASF’s extensive Greater China network guarantees access to major local markets
* One dot may represent more than one site
21 major wholly-owned companies
10 major joint ventures
32 production sites
32 sales offices
~ 7,300 employees***, thereof approximately 1,000 people in marketing & sales
BASF in Greater China** Asia Pacific headquarters
Verbund site
Chemical production site
Sales office
Greater China headquarters
Innovation Campus
Legend*
Jiangsu
Taiwan
Liaoning
Jilin
Shandong
Guangdong
Beijing
Zhejiang Hunan
Hubei
Chongqing
Guangxi Yunnan
Tianjin
Hong Kong
Shanghai Nanjing
Sichuan Anhui
Fujian
** incl. JV‘s; as of December 31, 2012 *** adjusted to changes in IFRS 10 & 11
BASF Investor Day Asia Pacific, June 5-6, 2013 12
BASF – top provider to international and local Chinese leaders*
* Logos only represent examples out of wide list of varying customers
BASF Investor Day Asia Pacific, June 5-6, 2013 13
* Sales to third parties in China (incl. Hong Kong and Taiwan) by location of customer
BASF has been a committed partner to China since 1885.
Since 2004, BASF’s sales more than tripled
China is third largest market for BASF globally (after Germany and the US)
Business in China is profit contributor to BASF Group
EBITDA growing at CAGR of 30%
Our Chinese business is a powerful growth engine
0
1
2
3
4
5
6
7
2004
2005
2006
2007
2008
2009
2010
2011
2012
2012
r***
0
200
400
600
800
1.000
1.200
1.400
Sales* and EBITDA** in China
Sale
s in
bill
ion
€
EBIT
DA
inde
xed
(200
4 =
100)
CAGR +17% p.a.
*** 2012r figures restated according to changes in IFRS 10 & 11
,
,
,
** by location of company
BASF Investor Day Asia Pacific, June 5-6, 2013 14
„China Green Companies Top 100“ China Entrepreneur Club (CEC) - 2012
BASF is a well recognized corporate citizen in China
15
BASF Investor Day Asia Pacific, June 5-6, 2013
1 | Trends in the Chinese chemical market
2 | BASF business performance in China
3 | Strategy implementation in China
BASF Investor Day Asia Pacific, June 5-6, 2013 16
Grow business by ~11% p.a.
Capture market driven growth
– Accompany customers‘ growth
– Develop business in emerging provinces
Strengthen local R&D
Increase operational efficiencies
Increase local production footprint by implementing ambitious investment plan
Strategy for 2020
Grow smartly in China Sales in Greater China* (in billion €)
0
5
10
15
2012 2012 restated Target 2020
6.7
CAGR ~11% p.a.
5.1
~12
* Sales to third parties in China (incl. Hong Kong and Taiwan) by location of customer
BASF Investor Day Asia Pacific, June 5-6, 2013 17
Seize new business opportunities via industry teams
Industry teams foster cooperation across BASF’s operating divisions to provide customers with industry specific solutions.
Industry Teams in China
Construction Automotive
Paint & Coatings
Packaging
Wind Energy
Food & Agriculture
Electrical & Electronics
Pharma
Mining
Textiles
BASF Investor Day Asia Pacific, June 5-6, 2013 18
Seize new business opportunities via industry teams
Industry teams foster cooperation across BASF’s operating divisions to provide customers with industry specific solutions.
Industry Teams in China
Construction Automotive
Paint & Coatings
Packaging
Wind Energy
Food & Agriculture
Electrical & Electronics
Pharma
Mining
Textiles
BASF Investor Day Asia Pacific, June 5-6, 2013 19
Production of passenger cars and LCVs* (in million units)
North America
EMEA Japan
13 18 23
30
8 10
Production 2011; global production 77 million units
Total production in 2020; global production 122 million units
3.7% p.a.
South America
4 7
6.4% p.a.
3.0% p.a.
China
17
33 7.6% p.a.
other Asia**
12
24
2.5% p.a.
8.0% p.a.
* Light commercial vehicles
China is the largest automotive market, outperforming global market growth
** comprises South Korea, India, Indonesia, Thailand, Vietnam, Malaysia, Philippines. Source: LMCA
Growth rate p.a.
BASF Investor Day Asia Pacific, June 5-6, 2013 20
East Region
Northwest Region Northeast Region
Number of plants: 14
Production 2012: ~3.5 mn units
Number of plants: 12
Production 2012: ~ 2.5 mn units
Number of plants: 22
Production 2012: ~4.5 mn units
Number of plants: 7
Production 2012: ~0.6 mn units
Middle West Region
Number of plants: 26
Production 2012: ~3.6 mn units
South Region
Number of plants: 13
Production 2012: ~2.6 mn units
Expected automotive OEM landscape in China 2015
Automotive production in China will be concentrated in 6 clusters
Source: LMC
North Region
BASF Investor Day Asia Pacific, June 5-6, 2013 21
North Region
BASF is a global leader, partnering with auto producers in China BASF sites supporting the automotive industry
Automotive application center
Engineering plastics Coolants Polyurethanes Catalysts Coatings Coatings system supply
Shanghai
Guilin Catalysts
Chongqing (2014) Polyurethanes
Polyurethanes Coatings system supply
Guangzhou
Tianjin Polyurethanes
Changchun Coatings system supply
Coatings system supply
Foshan
Nanjing Coatings system supply
BASF Investor Day Asia Pacific, June 5-6, 2013 22
Global growth targets (in billion €)
0
2
4
6
8
10
12
14
16
18
2011 2020
17.0
5.0
12.0 9.5
3.5
6.0
+ 8.0%
+ 4.0%
BASF well positioned in China – fastest growing automotive market
Focus on international OEMs and important local producers
Increased R&D partnerships with customers at Innovation Campus in Shanghai
~250 BASF people dedicated to automotive industry in China
+ 6.7%
BASF precious metal sales (trading and mobile emissions catalyst production) BASF Automotive chemical sales global Indication BASF Automotive chemical sales China
Chinese automotive customers contribute strongly to 2020 growth targets
BASF Investor Day Asia Pacific, June 5-6, 2013 23
80
100
120
140
160
180
200
220
2009 2010 2011 2012
BASF sales* growth in emerging provinces** in China (2009 = 100)
Sales in emerging provinces almost doubled since 2009
Emerging provinces account for ~15% of BASF Greater China sales (2012)
Share of business contributed by emerging provinces to grow
More business opportunities by moving closer to customers
6 sales offices in emerging provinces
Close to 100 sales people in emerging provinces
* including sales out of Joint Ventures
BASF has outstanding record in growing business in emerging provinces in China
CAGR Gr. China ~10% p.a.
** Emerging provinces are: Sichuan, Chongqing, Hubei, Hunan, Hebei, Henan, Jiangxi, Anhui, Fujian, Heilongjiang, Liaoning, Tianjin
BASF Investor Day Asia Pacific, June 5-6, 2013 24
Chongqing area – strongly growing industrial and consumer market
Approx. 30 million people live in Chongqing
GDP 2012: ~ USD 185 billion
GDP 2008: ~ USD 83 billion
GDP growth ’08-’12: 22.2% p.a. (9.2% for China)
Key industries − Electronics and computers
− Automotive
− Engineering
− Robotics
Chongqing
BASF Investor Day Asia Pacific, June 5-6, 2013 25
MDI investment project in Chongqing MDI market in China to grow
by ~10% p.a. within next decade up to 3.3 million metric tons per year (2020)
New world-scale plant with capacity of 400,000 metric tons MDI per year
Investment: €860 million
Plant 100% owned by BASF
Part of integrated complex
First units to start up by the end of 2014
BASF Investor Day Asia Pacific, June 5-6, 2013 26
Xinjiang province holds the largest natural gas resources in China
Xinjiang Uyghur autonomous
region
Area: 1,660,000 km2
GDP 2012: ~ USD 120 billion
GDP growth 2012: 12.0%
Tarim basin is largest Chinese natural gas field
Recoverable resources close to 6 trillion cubic meters (source: International Energy Agency)
Major West-to-East pipelines from Turkmenistan and Russia will go through Xinjiang
Xinjiang
Janggar Basin
Tarim Basin
BASF Investor Day Asia Pacific, June 5-6, 2013 27
Securing competitive natural gas for BDO / PolyTHF production
BASF and Xinjiang Markor Chemical Industry Co., Ltd. plan two joint ventures (JV): JV1: 100,000 mt* Butanediol JV2: 50,000 mt* PolyTHF
Location: Korla, Xinjiang Uygur
autonomous region
Cooperation with partner to develop chemical production based on local natural gas
Benefits for BASF: reliable and competitive raw material supply
Start-up planned for 2015
* metric tons
BASF Investor Day Asia Pacific, June 5-6, 2013 28
Korla
Tibet
Qinghai
Inner Mongolia
Heilongjiang
Shandong
Liaoning
Hebei
Sichuan
Henan
Anhui
Nanjing
Jilin
Gansu
Ningxia
Shaanxi
Shanxi
Hubei
Hunan
Zhejiang
Fujian
Jiangxi
Guangxi Yunnan
Guizhou
Taiwan
Hainan
Beijing Tianjin
Shanghai
Maoming
Current investment projects Since 1992 BASF and partners invested ~€5 billion in China
Until 2020 BASF and partners will invest €4 - 5 billion in China
Major current projects:
– Nanjing: Acrylic acid (BASF-YPC) SAP
– Chongqing: MDI – Korla: Butanediol,
PolyTHF – Shanghai: Coatings – Shanghai: Catalysts – Maoming: Isononanol – Kaohsiung: Catamold® – Rudong: Agrochemicals Production clusters
Selected production sites
Implement €4 - 5 billion investment plan to move closer to the customers
Chongqing
Rudong
Kaohsiung
BASF Investor Day Asia Pacific, June 5-6, 2013 29
0
5
10
15
2012 restated Growth fromannounced
projects
Growth fromprojects underconsideration
New businesses Target 2020
* Sales to third parties in China (incl. Hong Kong and Taiwan) by location of customer
Grow business by ~11% p.a.
Capture market driven growth
Strengthen local R&D
Increase operational efficiencies
Increase local production footprint by implementing ambitious investment plan
Continue to scout for profitable investment opportunities
Continue to grow profits
Strategy for 2020 Sales in China* (in billion €)
Grow smartly in China
5.1
~12
BASF Investor Day Asia Pacific, June 5-6, 2013 30
30
BASF is strong local player in China:
– local production for the Chinese market
– close to customer
– strong local marketing and sales organization
Powerful assets in place: world-class production facilities, strong R&D presence
Unparalleled partnerships and customer base
Excellent sustainability record and know-how: a competitive edge
Sales of ~€12 billion by 2020; Consistent increase in profits
China: Key to BASF’s success in Asia Pacific
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 1
Stephan Kothrade President BASF-YPC Company Ltd. June 06, 2013
Creating competitive advantages with a Verbund in China
2
BASF Investor Day Asia Pacific, June 5-6, 2013 Ι
1 | Building a world-scale Verbund site
3 | Success factors
4 | Further growth plans
2 | Business performance
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 3
Nanjing
Shanghai
5th largest population in China (79 million people/2012)
Highly developed infrastructure
Manufacturing accounts for >50% of GDP
Among top 3 in nominal GDP: 5.4 trillion RMB/2012, 17% CAGR 2006-2012
China’s #1 in Foreign Direct Investments since 2006
#1 in per capita income
Jiangsu Province
Jiangsu Province
Nanjing in Jiangsu province One of the industry clusters in China
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 4
BASF Investor Day Asia Pacific, June 5-6, 2013 Ι
Closeness to customers in one of the major industry clusters
Nanjing represents ~5% of the Chemical Sector in China
Second largest refining and ethylene capacities in China
400 chemical companies, thereof 120 in Nanjing Chemical Industry Park
Lower labor cost than in Tier-1 cities Shanghai and Beijing
Chemical Cluster Nanjing
Nanjing in Jiangsu province The 2nd largest chemical cluster in China
Nanjing Downtown
Naphtha Pipeline
Nanjing Chemical Industry Park
Natural Gas Station
BASF-YPC
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 5
BASF Investor Day Asia Pacific, June 5-6, 2013 Ι
50/50 JV with partner Sinopec, ~US$4.5 bn. (~€3.5 bn.) joint total investment until 2012
Capacity: ~ 3 million metric tons of total production/year
Steam cracker, 16 plant clusters, ~2000 employees
Commercial start-up in 2005, first expansion in 2011
BASF representative holds the BASF-YPC President position, Sinopec representative holds the Chairman position
BASF-YPC, heart of our Verbund network in China
The Nanjing Verbund site covers ~340 soccer fields
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 6
C3
C2 Ethylene Glycol
Acrylates
Methylamines
C1 Dimethylformamide
Formic Acid
Ethylene Oxide
Acrylic Acid
Oxo-alcohols
Propionic Acid
Propylene
Ethylene
BASF-YPC covers all relevant BASF value chains Wave 1: Laying the petrochemical foundation
Wave 1 (completed 2005)
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 7
C3
C2 Ethylene Glycol
Methylamines
C1 Dimethylformamide
Formic Acid
Ethylene Oxide
Acrylic Acid
Oxo-alcohols
Propionic Acid
Butadiene
C4 2-Propylheptanol
Polyisobutene
Butenes
Isobutene
Ethanolamines
DMA 3
Ethyleneamines
Dimethylethanolamine
Wave 2 (completed 2011)
Acrylates
Propylene
Ethylene
Non-Ionic Surfactants
BASF-YPC covers all relevant BASF value chains Wave 2: Downstream expansion
Wave 1
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 8
C3
C2 Ethylene Glycol
C1
Ethylene Oxide
Acrylic Acid
Oxo-alcohols
Propionic Acid
C4 2-Propylheptanol
Polyisobutene
Non-Ionic Surfactants
Ethanolamines
DMA 3
Ethyleneamines
Dimethylethanolamine
Wave 1
Acrylates
Glacial Acrylic Acid Superabsorbents
Butadiene
Butenes
Isobutene
Propylene
Ethylene
Methylamines
Dimethylformamide
Formic Acid
BASF-YPC covers all relevant BASF value chains Wave 3: Bringing Verbund to full potential
Wave 3 (under construction)
Wave 2
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 9
BASF-YPC: ~€3.5 billion total joint capex until 2012 Capital Expenditures (in million €)
IPS 1 NASA IPS 2 Others
0
100
200
300
400
500
600
700
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
10
BASF Investor Day Asia Pacific, June 5-6, 2013 Ι
1 | Building a world-scale Verbund site
3 | Success factors
4 | Further growth plans
2 | Business performance
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 11
Business Performance of BASF-YPC Sales (in billion €)
1.72
1.36
1.93
2.76 2.83
0
0.5
1
1.5
2
2.5
3
2008 2009 2010 2011 2012
100%
167%
238%
292%
200%
EBITDA (indexed)
0%
50%
100%
150%
200%
250%
300%
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 12
Continuous improvement of operational excellence
Local project team screens all production plants, also infrastructure & services
BASF delegates infuse tools and methodology from other Verbund sites – technical processes – automation – work processes – organization – contractor management
Optimization of operational excellence
Production Plants
13
BASF Investor Day Asia Pacific, June 5-6, 2013 Ι
1 | Building a world-scale Verbund site
3 | Success factors
4 | Further growth plans
2 | Business performance
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 14
Synergies with local Sinopec subsidiaries
Sinopec supplies naphtha and technical gases to BASF-YPC
Sinopec support in permissions and government relations
BASF technologies
Verbund knowledge from other BASF sites
Expertise in optimizing operational excellence
BASF-YPC provides raw materials, utilities and services to BSNJ (100% BASF)
BASF-YPC Company Limited
扬子石化-
巴斯夫有限责任公司
BASF-YPC is a grown partnership
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 15
BASF-YPC provides raw materials, utilities and services
Organic Flocculants
Cationic Polyacrylamide Cationic Monomer DMA 3
C3
C2
Dimethylamine C1
Methylacrylate BASF-YPC
Acrylic Acid Propylene
Dimethylethanolamine Ethylene Ethylene Oxide DMA 3
BASF-YPC Backbone for BASF’s downstream activities
Utilities Services
DMA 3
BASF Specialties Nanjing
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 16
Geographic proximity: 80% of customers within 400 km around Nanjing
Enhanced market access through BASF China and Sinopec sales network
BASF-YPC’s supplies to local champions and to BASF’s global key accounts
Multiple synergies
Customer proximity of BASF-YPC
*
*
*
* Global BASF key account
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 17
Recruitment and retention Perceived as top employer in
Nanjing; attrition rate only ~2%
Cooperation with local universities and colleges
Successful recruitment from nationally renowned universities
Access to qualified personnel and local talent pool
Talent development for BASF in Greater China and beyond
BASF-YPC is perceived as a top employer
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 18
BASF-YPC is a role model for EHS in China Lost Time Injuries – Contractors, Employees (per million working hours)
1.9
0
0.5 0.45 0.28 0.3
0.5 0.4
0.2 0.2
0
0.5
1
1.5
2
2008 2009 2010 2011 2012
BASF-YPC is a benchmark for occupational & process safety
Outstanding reputation in environmental protection
Participation in BASF’s occupational health campaigns
LTI rate at BASF-YPC is lower than for BASF Group
Won ‘National Safety Culture Model Enterprise Award’
High focus on EHS
Contractors Employees
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 19
BASF-YPC sets new standards
for distribution safety; pushing for double-hull tankers for river transportation
BASF-YPC coaches customers in product stewardship concepts
Active stakeholder dialogue: – Annual EHS Report – Town hall meetings – Donations
(schools, hospitals)
Looking beyond the fence
BASF-YPC: Frontrunner in stakeholder engagement
20
BASF Investor Day Asia Pacific, June 5-6, 2013 Ι
1 | Building a world-scale Verbund site
3 | Success factors
4 | Further growth plans
2 | Business performance
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 21
3rd wave of projects under way MOU signed with Sinopec in
December 2010; up to ~US$1 billion joint investment
Individual feasibility studies
Projects already in execution: – New 60 kt SAP plant – New acrylic acid and butyl
acrylate plants
Projects under consideration: – HPPO – New neopentyl glycol plant – Expansions of ethylene
oxide, 2-propylheptanol and non-ionic surfactants
Further expansion at BASF-YPC
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 22
China is projected to remain the world’s fastest growing acrylics market: >8% CAGR
BASF-YPC’s acrylics expansion will strengthen our market leadership position
Cost leadership through proprietary BASF technology
Share of global Acrylics demand
Example: Highly Attractive Acrylics Value Chain China will become the global #1 acrylics market by 2020
China will climb to #1 in acrylics
North America
China Europe RoAsia Japan RoW
26% 6% 6.3 mn t 2.8 mn t
2000 2020
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 23
Source: BASF Market Intelligence
Baby 78%
Others 2%
1,700 kt
Example: Highly Attractive Acrylics Value Chain SAP is the biggest growth story in acrylics
Growth in SAP
Adult Incontinence 17%
* Emerging Markets
Feminine Care 3%
SAP application split (2012)
Global SAP market ~1,700 kt
Global growth rate: ~5% p.a.: – Increasing wealth in EM’s* – Next-generation baby diapers – Ageing population (>6% p.a.
in Adult Incontinence segment, driven by Western markets)
SAP market in China: High single-digit growth rate expected
BASF’s Global Key Accounts in China gain access to locally produced SAP with globally consistent quality
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司 BASF Investor Day Asia Pacific, June 5-6, 2013 Ι 24
BASF-YPC: Verbund Strength In China Nanjing site is a benchmark: World-scale, integrated, low-cost, consistently
profitable
Customer portfolio includes regional players, national champions, global BASF key accounts – and wholly-owned BASF Specialties Nanjing
Growth driven by stepwise capacity expansion and downstream extension of value chains
Top employer with low attrition rate
Frontrunner in Environment, Health & Safety
Powerful platform for further success
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BASF Investor Day Asia Pacific, June 5-6, 2013 Ι
BASF-YPC Company Limited 扬子石化-巴斯夫有限责任公司
BASF Investor Day Asia Pacific, June 5-6, 2013 31
BASF Specialty Chemicals Mingwei QIN, General Manager
BASF Specialty Chemicals (Nanjing) Co., Ltd.
Investor Day Asia Pacific Nanjing, June 6, 2013
BASF Investor Day Asia Pacific, June 5-6 2013 2
1 | Building a best-in-class specialty site
2 | Business and customers
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BASF Investor Day Asia Pacific, June 5-6 2013
Wholly-owned by BASF
Composed of Henghai and Sunrise areas, part of Nanjing Chemical Industry Park
Close to BASF-YPC
Total area: ~ 37 ha
Available for expansion: 18 ha
6 plants with total investment: approx. US$ 200 million
First production in June 2012
BASF Specialty Chemicals Company Nanjing
BASF-YPC
Henghai area
BASF-YPC
Henghai area
(reserved land)
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BASF Investor Day Asia Pacific, June 5-6 2013
Multi-function
building Workshop Pigments
plant Pigments
plant Additives
plant Warehouse
Administration building
Key products in Sunrise area: Pigments and paint additives
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BASF Investor Day Asia Pacific, June 5-6 2013
Key products in Henghai area: Flocculants and tertiary-Butylamine (t-Ba)
Start-up: June / October 2012
DMA3quat and flocculants plant tertiary-Butylamine plant
Start-up: May 2013
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BASF Investor Day Asia Pacific, June 5-6 2013
Fast and cost efficient project execution
18 months from piling to start
Project costs under budget
Excellent EHS (environment, health and safety) record
How has this been achieved?
Local engineering
Local procurement of capital goods
Closely working project team
► BASF Specialty Chemicals is a benchmark for successful project implementation in China
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BASF Investor Day Asia Pacific, June 5-6 2013
BASF-YPC provides raw materials, utilities and services to Henghai area
Production Water Nitrogen Steam
Plant tBA Plant DMA3Q
Ammonia Isobutene DMA3 Fuel Gas
Demin. Water
Instrument Air/ Plant Air
Potable Water
Service 35kV Monitor
BASF Specialty Chemicals benefits from BASF-YPC Verbund
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BASF Investor Day Asia Pacific, June 5-6 2013
Implementing BASF global standards
Full compliance with all BASF EHS and quality standards
Full compliance with local regulations
Implementation of responsible care system
No compromise on environmental protection, health and safety
Successfully gained ISO 9001 certificate
Implementation of integrated quality management system
BASF Investor Day Asia Pacific, June 5-6 2013 9
1 | Building a best-in-class specialty site
2 | Business and customers
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BASF Investor Day Asia Pacific, June 5-6 2013
BASF Specialty Chemicals serves growing downstream specialty markets
Cationic Flocculants (Zetag® )
Waste water treatment / paper plants
tertiary- Butylamine (t-Ba)
Vulcanization accelerators for rubber and tire production
Pigments / Additives
Industrial and Automotive coatings,
Decorative paints
Flocculants tertiary-Butylamine Pigments & Coating Additives 10
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BASF Investor Day Asia Pacific, June 5-6 2013
Water Stress Health Protection Sustainable Energy Growth
Demand for water treatment solutions grows rapidly in China
Growing industrial
production
Socio-economic megatrends in China
Flocculants tertiary-Butylamine Pigments & Coating Additives 11
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BASF Investor Day Asia Pacific, June 5-6 2013
Zetag® cationic polyacrylamide flocculants used to efficiently separate solids (sludge)/liquids in water treatment processes
Dry sludge can be used as fuel to generate energy
Chinese flocculants market > €150 million, growing by 8% p.a.
First backward integrated polyacrylamide value chain via BASF-YPC
Improved supply reliability and cost efficiency for Asian market
Zetag® flocculants for waste water treatment solutions
Flocculants Tertiary-Butylamine Pigments & Coating Additives 12
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BASF Investor Day Asia Pacific, June 5-6 2013
Tire production in China driven by light vehicle production, replacement tire market and tire exports
Tire production to grow by ~7% p.a., reaching ~500 million units by 2015
Tire production drives demand for vulcanization accelerators
0
100
200
300
400
500
600
2001 2005 2009 2013 2015
335
410
Tire production in China (in million units)
Increased need for mobility drives tire production in China
CAGR ~7% p.a.
Flocculants tertiary-Butylamine Pigments & Coating Additives 13
~500
190
90
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BASF Investor Day Asia Pacific, June 5-6 2013
Market size of t-Ba: ~ US$ 50 million (2011)
New plant serves ~15 growing customers in China
Switch from import to local production shortens lead time by 6 weeks
Cost efficient production process based on backward integration and proprietary technology
t-Ba process free of waste water ► low environmental impact
BASF: leading t-Ba supplier in China
Local production enables BASF to grow Chinese tertiary-Butylamine business
tertiary-Butylamine
Mercapto-benzotriazole
Vulcanization accelerator TBBS
Tire production
other raw materials Rubber
t-Ba-based vulcanization accelerators reduce cycle time and energy consumption in tire production
Flocculants tertiary-Butylamine Pigments & Coating Additives 14
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BASF Investor Day Asia Pacific, June 5-6 2013
0
2
4
6
8
10
12
14
16
18
2005 2010 2015
Paint and coatings consumption in China (in million mt)
Chinese coatings and paint market will continue to grow above GDP
Fastest growing market segments: – Architectural coatings – Industrial coatings – Automotive coatings
Main drivers: – Growth in emerging provinces – Investments in infrastructure – Automotive growth – Environmentally friendly
products
BASF participates in growing Chinese coatings market
CAGR 12% p.a.
5
9
16
Flocculants tertiary-Butylamine Pigments & Coating Additives 15
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BASF Investor Day Asia Pacific, June 5-6 2013
BASF participates in growing Chinese coatings market
Pigments and additives add value (color, properties) to paint and coating systems
Production at BASF Specialty Chemicals reduces lead-time and improves supply security to Asian customers
Local plant with proximity to R&D center in Shanghai reduces time to market for new products
Flexible production set-up allows BASF to adapt to changing market conditions
Varnish
Pigments Additives
Binders
Flocculants tertiary-Butylamine Pigments & Coating Additives 16
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BASF Investor Day Asia Pacific, June 5-6 2013
Independent, wholly-owned specialty chemicals producer
World-class site
Site development is a model for other projects in Asia Pacific
Focused on high-growth downstream markets: water treatment, transportation, coatings, …
Proximity to BASF-YPC: Synergies and lower costs
BASF Specialty Chemicals Nanjing
Powerful local presence: Room to grow