basf results 3q2011
DESCRIPTION
Charts accompanying the 3Q2011 Conference Call for investors and analysts on October 27, 2011 See also http://report.basf.com/2011/q3/en/servicepages/welcome.htmlTRANSCRIPT
BASF 3rd Quarter 2011 Analyst Conference Call 1
BASF with good earnings in Q3Third Quarter 2011 Financial highlights October 27, 2011
BASF 3rd Quarter 2011 Analyst Conference Call 2
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
BASF 3rd Quarter 2011 Analyst Conference Call 3
Sales €17.6 billion +12%EBITDA €2.7 billion (8%)EBITDA margin 15.4% 18.6%EBIT before special items (bSI) €2.0 billion (11%)EBIT bSI adjusted for non-comp. oil taxes €2.0 billion (1%)EBIT €1.9 billion (13%)Net income €1.2 billion (4%)EPS €1.30 (4%)Adjusted EPS €1.52 0%
Business performance Q3’11 vs. Q3’10
BASF with good earnings in Q3 Third quarter 2011 highlights
Further sales growth in chemical activities mainly due to successful price increasesAcquired Cognis business continues to perform strongly; synergy targets increasedAgricultural Solutions on track for record year in sales and earningsEBIT before special items amounted to €2 billion. Adjusted for Libya, which contributed €355 million in last year’s quarter, EBIT before special items increased by 6% compared to Q3 2010.
BASF 3rd Quarter 2011 Analyst Conference Call 4
Major milestones in our active portfolio management achieved
Styrolution JV set on track
Styrolution, 50-50 joint venture between BASF and INEOS, established on October 1, 2011With pro-forma sales of €6.4 billion in 2010* Styrolution is global market leader in its industryBASF received ~€600 million in October as compensation for its contributed business
Divestiture of fertilizer activities
Agreement with EuroChem signed to sell BASF‘s fertilizer assets in Antwerp BASF also plans to sell its 50%-stake in PEC-Rhin JV to EuroChemTotal transaction value ~€700 millionClosing expected by the end of Q1 2012
* unaudited
BASF 3rd Quarter 2011 Analyst Conference Call 5
Important investments to spur further profitable growth
Nanjing expansion on track
Joint investment of USD1.4 billion with Sinopec for first expansion phase of Nanjing Verbund siteSteam cracker expansion, butadiene extraction, non-ionic surfactants plants are now on-stream Majority of remaining plants expected to come on stream around end of 2011
Acrylic acid complex in Brazil
World-scale acrylic acid and SAP* production complex (Camaçari, Bahia)With more than €500 million BASF‘s largest investment in South AmericaRaw material and utilities supply secured via long-term contracts with BraskemConstruction will begin in Q4; start-up planned for 2014
* Superabsorbent polymers
BASF 3rd Quarter 2011 Analyst Conference Call 6
smart forvision –joint concept car by Daimler and BASF
Presented at the International Motor Show in Frankfurt in September 2011BASF solutions are based on three main technology platforms:1. Electrical energy efficiency
- OPVs, OLEDs* support range extension
2. Multifunctional lightweight construction- Composite body parts, wheel rims and car seats
3. Integrated temperature management- Cool pigment coating, temperature reflecting foil
Chemical solutions by BASF are playing a key rolein bringing electromobility quicker to the roads
* OPVs = Organic Photovoltaics, OLEDs = Organic Light Emitting Diodes
Innovations for the mobility of tomorrow
BASF 3rd Quarter 2011 Analyst Conference Call 7
We expect to generate significantly higher salesWe aim to significantly exceed the 2010 EBIT before special itemsadjusted 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 grow sales on average by two percentage points per year faster than chemical production growthWe strive to grow our earnings further year by year, and to achieve an EBITDA margin of 18% by 2012
Medium-term targets
We aim to continuously increase the annual dividend, or at least maintain it at the level of the previous year.
Dividend policy
BASF 3rd Quarter 2011 Analyst Conference Call 8
Chemicals Significant sales growth driven by strong price increases
Intermediates671+4%
Inorganics356
+11%
Petrochemicals2,141+12%
€3,168+10%
617537
765674
621
0
200
400
600
800
Q3 Q4 Q1 Q2 Q3
Sales developmentPeriod 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
BASF 3rd Quarter 2011 Analyst Conference Call 9
Plastics Sales up mainly due to a strong Performance Polymers business
Polyurethanes1,480+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
BASF 3rd Quarter 2011 Analyst Conference Call 10
Sales developmentPeriod 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
PerformanceChemicals
904+9%
Care Chemicals1,265+85%
€3,991+24%
Paper Chemicals423-6%
Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €)
Nutrition & Health471+32% Dispersions
& Pigments 928
+5% 2010 2011
BASF 3rd Quarter 2011 Analyst Conference Call 11
TargetAcquisition EPS accretive as of 2012
Integration Costs€300 million one-time costs until end of 2013 −
thereof €200 million incurred by the end of Q3 2011
€120 million inventory step-up fully incurred already −
€60 million each incurred in Q4 2010 and Q1 2011
Synergies€290 million of additional annual EBIT targeted− €145 million cost synergies by the end of 2013− €145 million growth synergies by the end of 2015
Cognis integration – Synergy target increased to €290 million
BASF 3rd Quarter 2011 Analyst Conference Call 12
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q3’11 vs. Q3’10 4% 11% 3% (6)%
Functional Solutions Strong performance of Catalysts
Catalysts1,608+19%
ConstructionChemicals
5990%
Coatings700
+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
BASF 3rd Quarter 2011 Analyst Conference Call 13
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 €)
20112010
0
200
400
600
800
1.000
Q3 Q320112010
+9%
+44%
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q3’11 vs. Q3’10 12% 3% 0% (6)%
832908
BASF 3rd Quarter 2011 Analyst Conference Call 14
272 225
0
200
400
600
Q3 Q3
Exploration & Production534-39%
Natural Gas Trading
1,661+23%
€2,195 -1%
Sales developmentPeriod Volumes Prices/Currencies Portfolio
Q3’11 vs. Q3’10 (25)% 24% 0%
EBIT bSI Natural Gas TradingEBIT bSI Exploration & Production Net income
Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items/ Net income (million €)
20112010
503227
573
350Non-compensable oil taxes 224
70 123
Oil & Gas EBIT before SI on last year’s level (adjusted for non-compensable oil taxes)
BASF 3rd Quarter 2011 Analyst Conference Call 15
Review of “Other”
Million € Q3 2011 Q3 2010Sales 1,637 1,452thereof Styrenics* 739 683
EBIT before special items (21) 58thereof Corporate research
Group corporate costs Currency results, hedges and other valuation effects Styrenics, fertilizers, other businesses
(86) (58) 104
82
(67) (54) 104
77
Special items (33) (68)
EBIT (54) (10)
* Since January 1, 2011, Styrenics only includes the carved-out Styrenics businesses; the previous year’s values were adjusted accordingly.
BASF 3rd Quarter 2011 Analyst Conference Call 16
Million € Jan - Sep 2011
Jan - Sep 2010
Cash provided by operating activities 5,028 5,307thereof Changes in net working capital (1,337) (783)
Cash used in investing activities (957) (1,175)thereof Payments related to tangible / intangible assets (2,101) (1,518)
Cash used in financing activities (4,105) (3,814)thereof Changes in financial liabilities
Dividends (1,727) (2,378)
(2,003) (1,811)
Operating cash flow strong at €2.0 billionFree cash flow again high at €1.2 billion Net debt further reduced by ~€650 million to €11.6 billion since end of Q2 2011
Third quarter 2011
Operating cash flow remains strong
BASF 3rd Quarter 2011 Analyst Conference Call 17
BASF 3rd Quarter 2011 Analyst Conference Call
Macro-economic assumptions 2011
Previous forecast
GDP 3%-4%
Chemical production (excl. Pharma)
5%-6%
Industrial production 5%-6%
US$ / Euro 1.40
Oil price (US$ / bbl) 110
New forecast
2.5%-3%
4.5%-5%
4.5%-5%
1.40
110
BASF 3rd Quarter 2011 Analyst Conference Call 19
Financial highlights
Million € Q3 2011 Q3 2010 Δ% Q2 2011 Δ%Sales
changes due to - volumes - prices - portfolio - currencies
17,607 15,781 +12%
(3)% +14% +5% (4)%
18,461 (5)%
EBITDA 2,709 2,934 (8)% 3,015 (10)%
EBIT before special items 1,964 2,213 (11)% 2,237 (12)%
EBIT before special items adjusted for non-compensable oil taxes 1,964 1,989 (1)% 2,237 (12)%
Special items (82) (58) - (20) -
EBIT 1,882 2,155 (13)% 2,217 (15)%
Net income 1,192 1,245 (4)% 1,454 (18)%
EPS (€) 1.30 1.35 (4)% 1.59 (18)%
Adjusted EPS (€) 1.52 1.52 0% 1.75 (13)%
BASF 3rd Quarter 2011 Analyst Conference Call
Cognis integration Generating €290 million of growth and cost synergies
Providing joint customer base with access to broader portfolioIncreasing solution capabilitiesExtending innovation capabilitiesLeveraging regional set-up
Cost synergiesRealizing procurement cost savingsConsolidating of administrative structuresImproving production efficiencyConsolidating IT landscape
Synergies (million €)
145
145
0
50
100
150
200
250
300
350
Cost synergies (by the end of 2013) Growth synergies (by the end of 2015)
Growth synergies