we add value as one company - basf€¦ · capex budget 2016-2020 other 14% chemicals 30% capex...

BASF Capital Market Story, May 2016 1

Ingo Rose

DirectorInvestor Relations

OTCQX Virtual Investor Conference for Dividend Paying Companies

May 5, 2016

We add value as one company


150 years

Cautionary note regarding forward-looking statements

This presentation may contain forward-looking statements that are subject to risks anduncertainties, including those pertaining to the anticipated benefits to be realized from theproposals described herein. Forward-looking statements may include, in particular, statementsabout 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 financialperformance. Actual financial performance could differ materially from that projected in theforward-looking statements due to the inherent uncertainty of estimates, forecasts andprojections, and financial performance may be better or worse than anticipated. Given theseuncertainties, readers should not put undue reliance on any forward-looking statements. Theinformation contained in this presentation is subject to change without notice and BASF doesnot undertake any duty to update the forward-looking statements, and the estimates andassumptions associated with them, except to the extent required by applicable laws andregulations.


150 years

BASF – Share information

Symbol: BAS

Trading Platform: Deutsche Börse

ISIN: DE000BASF111

IPO: January 30, 1952

Type of shares: Registered shares

Trading lot: none, one share is tradable

Free float (according to Deutsche Börse):100 %

Number of subscribed shares outstanding (as of 12/31/2015):918,478,694

Symbol: BASFY

OTC Trading Platform: OTCQX

CUSIP: 055262505

Ratio: 1 ADR : 1 Ordinary Share

Depositary bank: Deutsche Bank Trust Company Americas– Tel: +1 212 250 9100 (New York broker desk)

– Tel: +44 207 547 6500 (London broker desk)

– E-mail: [email protected]

– Website: www.adr.db.com

Depositary bank’s local custodian: Deutsche Bank AG, Frankfurt

Ordinary Share information ADR information


150 years

Chemistry as an enabler BASF has superior growth

opportunities: – sustainable innovations– investments– emerging markets

The #1 chemical company €70.4 billion sales, €6.7

billion EBIT bSI in 2015 #1-3 in ~70% of businesses,

present in almost all countries

6 integrated Verbund sites, production in 60 countries

A track record of strong sales and earnings growth

>3.5% dividend yield in every single year from 2006-2015

~€66 billion market capitalization on April 29, 2016

PerspectivePerspectiveLudwigshafen,Germany

Antwerp,Belgium

Nanjing,China

Kuantan,MalaysiaGeismar,

LouisianaFreeport,Texas

Verbund site

PositioningPositioning

We create chemistry for a sustainable future

PerformancePerformance

20

30

40

50

60

70

80

90

2008 2009 2010 2011 2012 20142013 2015


150 years

Global reduction in carbon emissions of 6 million metric tons/a. and reduction of waste

Example Ludwigshafen site:avoidance of 7 million metric tons of freight/a.= 280,000 fewer truckloads

Shared use of on-site facilities: fire department, security, waste water treatment and analytics

Verbund: Unique competitive advantage

* Savings include only tangible synergies. Additional (intangible) benefits and retained profits are not included.

Verbund generates >€1 billion p.a. global cost savings* & supports sustainability


150 years

Percentage of sales 2015*

BASF today – a well-balanced portfolioTotal sales 2015: €70.4 billion

* Not depicted here: ~4% of Group sales reported as ‘Other‘ ** Natural Gas Trading has been divested on Sep. 30, 2015.


150 years

50

100

150

200

250

300

350

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Operational excellence Strong track record

EBITDA

Sales

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

BASF Group* 2001–2015(Index; CAGR 2001–2015)

Fixed Costs

CAGREBITDA

9%

CAGRSales

6%

CAGRFixed Costs3%


150 years

0

1

2

3

4

5

2006 2007 2008 2009** 2010 2011 2012 2013 2014 2015

Strong free cash flow

* Cash provided by operating activities less capex ** 2009 adjusted for re-classification of settlement payments for currency derivatives

Free cash flow*(in billion €)

3.53.2

2.5

3.2

3.9 3.7

2.6

3.2

1.7

3.6


150 years

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2006 2009 2012 2015

2.90

We want to grow or at least maintain our dividend at the previous year’s level

Dividend of €2.90 per share, an increase of 3.6%

Dividend yield of 4.1% in 2015

Dividend yield above 3.5%in any given year since 2006

4.6%

Attractive shareholder return

Key facts 2015

Dividend per share (€)

0.50

1.00

1.50

2.00

* Dividend yield based on share price at year-end

4.1% 3.8% 7.0% 3.9% 3.7%Yield* 3.7%

2.50

3.5%

3.00

4.0% 4.1%

1.50

1.95 1.951.70

2.202.50 2.60 2.70

Dividend policy

2.80


150 years

Average annual performance (with dividends reinvested)

0 3 6 9 12 15

Euro Stoxx 50

DAX 30

MSCI World Chemicals

+5.3%

Last 5 yearsMay 2011 – April 2016

+4.3%

+3.3%

+6.0%

+5.9%

Last 10 yearsMay 2006 – April 2016

BASF

+6.6%

+0.7%

+12.0%

Delivering consistent, long-term value


150 years

Priorities 2016

Focus on capex discipline:

─ Reduce capital expenditures to €4.2 billion in 2016

Cost control and operational excellence:

─ DrivE targeting ~€1 billion annual earnings contributionfrom end of 2018 on

Portfolio optimization ongoing:

─ E.g. agreement to sell industrial coatings business to AkzoNobel

Strong commitment to innovation:

─ Maintain R&D spending at ~€1.95 billion in 2016


150 years

Investments for organic growth

Performance Products16%

Oil & Gas24%

€19.5billion

FunctionalMaterials &Solutions12%

Capex budget 2016-2020

Other14%

Chemicals30%

Capex budget 2016-2020

Asia Pacific18%

€19.5billion

South America*9%

North America26%

Europe46%

AgriculturalSolutions4%

Other1%

by segment by region

* Including Africa and Middle East


150 years

0

1,000

2,000

3,000

4,000

2015 2018

Annual earnings contribution(in million €)

Targeted annual earnings contribution of €1 billion from end of 2018 on

Optimization of processes and structures in all regions, e.g.– manufacturing– incremental capacities– productivity increase

Project timeline: 2016–2018

DrivE program

Operational excellenceDrivE with ~€1 bn earnings contribution

NEXT 2008-2011 DrivE 2016-2018

STEP 2012-2015


150 years

Functional crop care Personal care & food Omega-3 fatty acids Enzymes Battery materials Specialty plastics Selected assets in

Oil & Gas

BASFcore business

Strong partnerships

Gazprom Monsanto Petronas Shell Sinopec Statoil Total Yara

Selected transactions 2010 − until today

Acquisitions

~ €4.5 billion salesin emerging and innovation-driven

businesses

Divestitures

Styrenics Fertilizers Selected assets in Oil & Gas Natural gas trading & storage Custom synthesis business Industrial coatings Textile chemicals PP/PE catalysts

~ €20 billion sales*in businesses with

limited fit and differentiation

potential

Portfolio development towards more market-driven and innovative businesses

* Includes sales of non-consolidated businesses (Styrenics, VNG participation)


150 years

€1.95 billion R&D expendituresin 2015; to be maintained in 2016

~10,000 employees in R&D

~3,000 projects

Ranked No.1 in thePatent Asset Index™

~1,000 new patents in 2015

Research Verbund: Cooperations with more than 600 excellent partners from universities, start-upsand industry

Strong commitment to innovationInnovations for a sustainable future

1.61.7

1.8 1.9 1.95

0.0

0.5

1.0

1.5

2.0

2011 2012 2013 2014 2015

R&D expenditures (billion €)

Chemicals11%

Performance Products20%

Functional Mat. & Sol.20%

Agricultural Solutions26%

Oil & Gas2%

Corporate Research21%

2.0

1.5

1.0

0.5

0

Key facts


150 years

Lower production cost than industry average

Efficiency gains:

run-time extension higher throughput lower energy consumption

Proprietary technology,new process protected by280 active patent families

4 out of 6 production sites already equipped: Ludwigs-hafen, Antwerp, Nanjing and Camaҫari (Brazil)

Innovation: New acrylic acid technologyBASF with best-in-class acrylic acid process

80

85

90

95

100

BASFnew process

BASFclassic process

Industry average

Acrylic acid production technology benchmark(Industry average costs = 100; normalized)

Source: BASF estimate

Key facts


150 years

Innovation: SAVIVA™ Highly efficient Superabsorbent Polymers (SAP)

SAVIVA™ – based on a pioneering SAP technology platform SAVIVA™ the next generation of SAP Round-shaped particles with micro-pores initiates

innovative liquid distribution mechanism

Compared to other SAPs SAVIVA™ leads to: Efficiency gains:

– SAP reduction– Fluff reduction– Reduction of storage, packaging and transportation

costs

Improved sustainability: – Better carbon footprint due to SAP and weight

reduction– Enabler for future diaper designs offering a new

level of comfort and dryness

SAVIVA™ round shaped particle


150 years

InnovationAutomotive is a growth business for BASF

* Excl. precious metals, coatings refinish business;

BASF sales to Automotive vs. global vehicle production(indexed)

50%

75%

100%

125%

150%

175%

2007 2008 2009 2010 2011 2012 2013 2014 2015

BASF salesto Automotive

CAGR

6.7%

Global vehicleproduction

CAGR shown for 2007 – 2015

CAGR

2.8%


150 years

Profitability of BASF will grow faster than global chemical production

Sales growthSlightly faster than the global chemical production

EBITDA growthWell above global chemical production

Remain a strong cash providerContinuously generate high levels of free cash flow

Financial targets for next years

Deliver attractive returnsEarn a significant premium on cost of capital

Progressive dividend policy We want to grow or at least maintain our dividend

BASF Capital Market Story May 2016 20

Appendix


150 years

Sales development Volumes Prices Portfolio Currencies

Q1 2016 vs. Q1 2015 0% (6%) (22%) (1%)

Q1 2016: BASF with slightly lower earnings compared to strong prior-year quarter

Financial figures Q1 2016 Q1 2015 Change

Sales €14.2 billion €20.1 billion (29%)

EBITDA €2.8 billion €2.9 billion (3%)

EBIT before special items €1.9 billion €2.1 billion (8%)

EBIT €1.9 billion €2.0 billion (6%)

Net income €1.4 billion €1.2 billion +18%

Reported EPS €1.51 €1.28 +18%

Adjusted EPS €1.64 €1.43 +15%

Operating cash flow €1.0 billion €2.4 billion (56%)


150 years

Outlook 2016 Sales will be considerably below prior year, due to the divestiture of the natural gas trading

and storage activities and the lower oil and gas prices. Excluding the effects of acquisitions and divestitures, we expect higher volumes in all segments. We expect EBIT before special items to be slightly below the previous year driven by

drastically lower earnings of Oil & Gas. We plan higher earnings in our chemicals business and in the Agricultural Solutions segment. EBIT after cost of capital is expected to be significantly below prior year. However, we still

expect to earn a premium on our cost of capital.

Assumptions 2016 GDP growth: +2.3% Growth in industrial production: +2.0% Growth in chemical production (excl. pharma): +3.4% Exchange rate: $1.10 per euro Oil price (Brent): $40 per barrel

Outlook 2016 confirmed


150 years

EBIT before special items

Million € 2015 Forecast 2016

Chemicals 2,156 considerable decreasePerformance Products 1,366 slight increaseFunctional Materials & Solutions 1,649 slight increaseAgricultural Solutions 1,090 slight increaseOil & Gas 1,366 considerable decreaseOther (888) considerable increase

BASF Group 6,739 slight decrease

Outlook 2016 Forecast by segment

With respect to EBIT before special items, “slight” means a change of 1-10%, while “considerable” is used for changes greater than 11%. “At prior-year level” indicates no change (+/-0%).


150 years

we add value as one company - basf€¦ · capex budget 2016-2020 other 14% chemicals 30% capex...

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