we add value as one company - basf...leverage basf know-how on biodegradable plastics and paper...

BASF Capital Market Story__September 2012

We add value as one company

Markus Zeise Director Investor Relations

New York, September 12, 2012


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

2


The leading chemical company worldwide

- Sales 2011: €73.5 billion

- EBIT before special items 2011: €8.4 billion

- ~111,000 employees

Customers in >200 countries and in virtually all industries

# 1-3 market position in over 75% of businesses

Unique Verbund concept for integrated production

- Six Verbund sites in all major regions

- Production sites in 41 countries

International, interdisciplinary R&D network - More than 10,000 employees in R&D

Highly experienced management team

- Senior executives from 36 countries

BASF today - The Chemical Company Facts & figures

3


Dispersions & Pigments Performance Chemicals Care Chemicals Nutrition & Health Paper Chemicals

Crop Protection

Inorganics Petrochemicals Intermediates

Catalysts Construction Chemicals Coatings

Chemicals

Functional Solutions Performance Products

Agricultural Solutions Oil & Gas Exploration & Production and

Natural Gas Trading

Percentage of sales 2011*

BASF today – a well-balanced portfolio Total sales 2011: €73.5 billion

Performance Polymers Polyurethanes

Plastics

* not depicted here: 9% of Group sales reported as ‚Other‘ 4


Business review BASF Today Trends Purpose and strategic principles Targets Strategic levers BASF Tomorrow – Board priorities

5 BASF Strategy: We create chemistry__November 2011

Business review

BASF strategy & growth targets

Strategic levers

Fit for 2020


Sales €19.5 billion +6% EBITDA €3.1 billion +4% EBIT before special items €2.5 billion +11% EBIT €2.2 billion +1% Net income €1.2 billion (15%) EPS €1.34 (16%) Adjusted EPS €1.60 (9%)

Business performance Q2’12 vs. Q2’11

BASF shows solid development Second quarter 2012 highlights

New second quarter record for sales and earnings in Agricultural Solutions Oil & Gas outperformed mainly due to the resumption of oil production in Libya Demand in chemical businesses did not match the strong previous year level Weaker than expected demand in China Overall sales and earnings in H1 2012 came in above H1 2011

6


Strong free cash flow generation

* Cash provided by operating activities less capex (in 2005 before CTA) ** 2009 adjusted for re-classification of settlement payments for currency derivatives

2.8 2.6

3.3 3.5 3.2

2.53.2

1.8

2002 2003 2004 2005 2006 2007 2008 2009** 2010 2011 H12012

Free cash flow* in billion €

3.9 3.7

-0.1

7


Delivering attractive shareholder returns

€2.50 dividend per share for 2011, dividend yield 4.6%*

15% average annual dividend increase for 2002-2011 period

Dividend yield above 3% in any given year since 2002, total payout €14.5 billion

Dividend per share in €

* Dividend yield based on share price at year-end

Dividend payments

3.7% 3.2% 3.1% 4.1% 3.8% 7.0% 3.9%

Dividend yield* 4.6% 3.9% 3.1%

2.50

Between 1999 & 2008, BASF bought back 28.65% of shares outstanding, spent €9.9 billion

AGM 2012 approved new share buy-back program; up to 10% of shares, 5 years

Share buy-backs 0.70 0.70

0.851.00

1.50

1.95 1.951.70

2.20

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

8


Average annual performance with dividends reinvested

0 3 6 9 12 15 18

Euro Stoxx 50

DAX 30

MSCI World Chemicals

+6.5%

Last 5 years September 2007 – August 2012

+ 9.6%

-7.5%

-1.8%

+1.5%

Last 10 years September 2002 – August 2012

BASF

+9.0%

+1.9%

+15.7%

9

Delivering consistent, long-term value


For the FY 2012, BASF aims to exceed the record levels of sales and EBIT before special items achieved in 2011

BASF will strive again to earn a high premium on cost of capital

Chemical businesses:

• Given the weak demand outlook, we expect volumes to be flat in H2 2012 vs. H1 2012

• In 2012, EBIT before special items is expected to come in below the level of 2011

Outlook 2012

GDP: +2.3% (before: 2.7%)

Industrial production: +3.4% (before: 4.1%)

Chemical production: +3.5% (before: 4.1%)

US$/Euro: 1.30 (unchanged)

Oil price (US$/bbl): 110 (unchanged)

Revised assumptions 2012

Outlook 2012 confirmed

10



11 BASF Strategy: We create chemistry__November 2011

Business review


Strategic levers

Fit for 2020


Demographic challenges … set the stage for the future of the chemical industry

Nine billion people in 2050 but only one earth

Resources, Environment & Climate Food & Nutrition Quality of Life

Chemistry as enabler

12


Key trends for the chemical industry

Integrated chemical companies remain cornerstone

Emerging markets players grow quickly

Raw material players invest further downstream

Competitive landscape will change

Use opportunities from sustainability

Increase resource efficiency

Renewables as raw materials

Stakeholder dialog

Sustainability as strategic driver

Chemistry as enabler

Chemical products replace traditional materials

Create innovative sustainable solutions

Innovation gains in importance

Growth will accelerate

Industrial production > GDP

Chemical production > GDP

Emerging markets will outgrow developed markets

Chemical industry remains an attractive growth industry

13


Striving for strong profitable growth Medium- and long-term sales target*

Sales** in billion €

64

2010 Target 2020

Target 2015

Investments

Acquisitions Innovations

Investments

Acquisitions Innovations

~85

~115

We aim to grow 6 percent p.a.; 2 percentage points above chemical production outperform chemical production by * Published on November 29, 2011

** Potential impact of IFRS changes not included 14


Striving for strong profitable growth All regions will deliver profitable growth

Regional sales targets 2020* (by location of customers) in billion €

North America

2010 2020

13

~5.5% p.a. ~22

South America, Africa, Middle East

~8% p.a.

5 ~11

Europe

~4.5% p.a.

33

~53

Asia Pacific

~8% p.a.

13 ~29

2010 2020

2010 2020 2010 2020

19%** 20%** 46%** 52%**

25%** 20%** 10%** 8%**

* Published on November 29, 2011 ** Percentage of total sales 15


Striving for strong profitable growth Doubling EBITDA by 2020*

EBITDA** in billion €

2010 Target 2020

Target 2015

11.1

~23

~15 Op. Excellence

Growth

Acquisitions

Op. Excellence

Growth

Acquisitions

* Published on November 29, 2011 ** Assumptions 2010-2020: Exchange rate $/€ Ø 1.40, Oil price Ø $110/bbl 16



BASF Strategy: We create chemistry__November 2011

Business review


Strategic levers – Portfolio development

– Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence

Fit for 2020


Chemistry as key enabler for functionalized materials & solutions

Deep understanding of customer value chains required

New molecules

Improved applications

Functionalized materials & solutions

1960 1970 1980 1990 2000 2010 2020

Batteries, membranes ...

Portfolio development We expand from chemicals to chemistry

18


Crop protection Engineering plastics Electronic chemicals Custom synthesis Catalysts Construction chemicals Water-based resins Pigments Plastic additives Oil & Gas Personal care & food Battery materials

BASF core business

Strong partnerships

Gazprom Monsanto Petronas Shell Sinopec Total

Selected transactions 2001 − today

Acquisitions

~ €15bn sales ~ €10bn sales*

Divestitures

Pharma Fibers Printing systems Polyolefins Polystyrene Americas Agro generics Vitamins premix Fertilizers Styrenics (transferred into

Styrolution JV on Oct. 1, 2011)

* without Styrenics

Portfolio development Towards more market driven and innovative businesses

19


Portfolio development Moving downstream towards customer industries

* Agriculture, Construction, Consumer Goods, Health & Nutrition, Electronics, Energy & Resources, Transportation ** Sales excluding Oil & Gas

Functionalized Materials & Solutions Customized Products Classical Chemicals

2020 in % of sales**

Chemical Industry First customer industries*


~ 40%

~ 30% ~ 70%


~ 50%

~ 60%

~ 50%

20


BASF sales by first customer industry*

Bubble Size: BASF divisional sales by first customer industry (2010)**

* Excluding Oil & Gas and Other ** Excluding Agricultural Solutions, Health & Nutrition, Oil & Gas and Other

> 15 %

< 10 %

< 10 %

> 15 %

Inorganics Petro- chemicals

Construction Chemicals

Dispersions & Pigments

Catalysts Intermediates Coatings Care Chemicals

Performance Polymers

Poly- urethanes

Performance Chemicals

Paper Chemicals

Consumer goods

Transportation

Construction

Energy & Resources

Market approach Cross-divisional customer industry approach

21


E-textiles

Solar roof with transparent organic solar panels and OLED modules

Multifunctional seat

Infrared-reflective coating

Infrared-reflective film

High performance foams

Lightweight tridion cell

All-plastic wheel

Cross-divisional approach: ‘Smartforvision’ Technology competencies combined with customer know-how

Daimler & BASF concept car ‘Smartforvison’

22


Potential Increased incremental oil recovery of up to 10% on

waterflooding. Sales potential to be defined after completion of trials

Approach Leverage BASF’s Verbund knowhow in white

biotechnology for Oil & Gas production Proprietary biopolymer from Schizophyllum fungus allows

for enhanced oil recovery due to its high viscosifying efficiency

Biopolymer is stable in high temperature and high salinity reservoirs

Current activities Schizophyllan biopolymer to be produced at BASF

Ludwigshafen via fermentation. First trial in mature Wintershall oil field starting in 2012 (Bockstedt, Germany)

Cross-divisional approach Biopolymer for enhanced oil recovery

Schizophyllan biopolymer

Schizophyllum commune

23


Cross-divisional approach ecovio biodegradable plastic in paper applications

Business potential 2020 Market size: opportunity to substitute > 200 kt of

various products Sales potential for BASF: ~€40 million

(ecovio FS Paper for extrusion coating) Additional business opportunities in wet-end

applications under evaluation

Concept Leverage BASF know-how on biodegradable plastics

and paper chemicals to offer sustainable solutions for packaging and foodservice ware

Current activities ecovio FS Paper launched in various markets since 2010 Business Model for sustainable „Closed System“

throughout whole value chain (incl. waste management) R&D-projects for additional applications and solutions

24


Innovations for a sustainable future Commitment to R&D

€1.6 billion R&D expenditures in 2011 (2010: €1.5 billion)

~10,100 employees in R&D

~2,800 projects

Research Verbund: About 1,950 partnerships with universities, start-ups and industry partners

24%

1%

Corporate Research 23%

Agricultural Solutions

26%

Functional Solutions 12%

Performance Products 21%

Chemicals 8%

Plastics 9%

€1.6 billion

Oil & Gas 1%

Increase R&D spending to €1.7 billion in 2012

Total R&D expenditures 2011 in billion €

Strong commitment to R&D

25


Sustainability in customer industries will drive our innovative growth fields

Health & Nutrition

Consumer Goods Construction Transportation Electronics Energy &

Resources Agriculture

Customer industries

Energy management

Water solutions

Wind energy

Rare earth metals

recycling

Heat management

Enzymes Plant biotechnology

Batteries for mobility

Lightweight composites

Heat management

Functional crop care

Medical Organic electronics

Growth Fields*

* Including growth fields still under evaluation

Ongoing inflow of new growth fields

Innovations for a sustainable future Chemistry as an enabler for many customer industries

26


Growth Field examples

Business potential 2020*

Market size: >€20 billion

BASF sales potential: >€500 million

Market size: ~€20 billion

BASF sales potential: >€800 million

Market size: ~€11 billion gross trait value

BASF sales potential: €1.8 billion gross trait sales before partner share

Existing Activities

New global business unit for battery chemicals & materials

Electrode material plant being built in Ohio. Acquired Novolyte, Merck’s electrolytes, Ovonik, equity position in Sion Power

R&D network with academia Sites in US, China, Europe

BASF expertise and portfolio (high-performance flocculants, desalination and antifouling chemicals….)

Acquired inge water-technologies (membranes) to offer module systems

BASF as Trait Technology Partner of leading trait and seed companies

Yield & Stress collaboration with Monsanto (corn, soy, cotton, canola and wheat)

Targets Become the leading supplier of battery materials

Target customers: Battery producers

Leading supplier of innovative water solutions

Forward integration into membrane technologies

Contribute to more efficient agriculture, healthier nutrition

Make Plant Biotechnology an operating division within the Agricultural Solutions segment

Batteries for mobility Plant biotechnology Water solutions

Innovations for a sustainable future BASF growth field examples

* Published on November 29, 2011 27


Future investments in € billlion

Thereof investments in emerging markets

Total investments

35-45%

15-20

30-40%

~15

2006 – 2010 2011 – 2015 2016 – 2020

10.9

~20%

Investments … will boost future organic growth

28


Expansion joint venture activities in Malaysia

Expansion Verbund site Nanjing, China*

MDI plant Chongqing, China

Acrylic acid complex, Brazil

Expansion oil & gas activities

* Memorandum of Understanding signed

TDI plant Ludwigshafen, Germany

Investments Major projects

29


Acquisitions … will contribute to profitable growth in the future

Provide a minimum return on investment of 8% after tax

Are EPS accretive by year three at the latest

Financial acquisition criteria

Generate profitable growth above the industry average

Are innovation-driven

Offer a special value proposition to customers

Reduce earnings cyclicality

Strategic acquisition criteria

We want to acquire businesses which …

30


BASF Group 2002–2011 Index

50

100

150

200

250

300

2002 2005 2008 2011

CAGR 2002 – 2011

10 %

10 %

4 %

EBITDA

Sales

Fixed costs

Operational excellence Strong track record

31


Operational excellence New program STEP: Earnings contribution ~€1 billion

Annual earnings contribution in € million

0

1,000

2,000

3,000

2012 2015

Former cost saving programs NEXT STEP

Project timeline: 2012–2015 Measures to optimize processes and

structures in all regions, e.g. − manufacturing, maintenance − supply chain − engineering, best-cost country sourcing

Fixed cost savings and margin improvements

One-time costs & investments: ~€1 billion Targeted annual earnings contribution:

~€1 billion by end of 2015, thereof €100 million in 2012 (run-rate)

NEXT Program

STrategic Excellence Program ‘STEP’

Annual earnings contribution of €1 billion will be achieved in 2012

Achieved by end 2011: >€ 800 million

32



BASF Strategy: We create chemistry__November 2011

Business review


Strategic levers

Fit for 2020


Key financial targets 2015 / 2020

Grow at least 2 percentage points above chemical production

Earn a premium on cost of capital of at least €2.5 billion on average p.a.

Profitability targets Growth targets

2015

2020

Sales ~€85 billion

Sales ~€115 billion

EBITDA ~€15 billion EPS ~€7.50

Double EBITDA to ~€23 billion (compared with 2010)

34

BASF Capital Market Story__September 2012 BASF Strategy: We create chemistry__November 2011

Appendix Business development Q2 2012


Chemicals Earnings impacted by weaker margins throughout the portfolio

Intermediates 763 +10%

Inorganics 426 +21%

Petrochemicals 2,159 (8%)

€3,348 -1%

674621

381467 436

0

200

400

600

800

Q2 Q3 Q4 Q1 Q2

EBIT before special items (million €)

2012 2011

Q2’12 segment sales (million €) vs. Q2’11

Sales development Period Volumes Prices Portfolio Currencies

Q2’12 vs. Q2’11 (14%) (2%) 10% 5%

36


Plastics Sequential earnings improvement in challenging environment

Polyurethanes 1,580 +5%

Performance Polymers

1,298 (2%)

€2,878+2%


Q2’12 vs. Q2’11 (5%) 0% 1% 6%


383

317

110

219256

0

200

400

Q2 Q3 Q4 Q1 Q2


2012 2011

37


Performance Products Higher prices could not fully compensate weak demand vs.Q2 ‘11

Performance Chemicals

944 +4%

Care Chemicals 1,237 (9%)

€4,122 +1%

Paper Chemicals 427 +2%


Nutrition & Health 509 +6% Dispersions

& Pigments 1,005 +7%

513440

220

452 446

0

200

400

600

Q2 Q3 Q4 Q1 Q2



Q2’12 vs. Q2’11 (5%) 1% 0% 5%

2012 2011

38


Functional Solutions Demand from the automotive industry remained strong

Catalysts 1,620 +8%

Construction Chemicals

621 +8%

Coatings 733

+6%

€2,974 +8%


167 162

88

148134

0

50

100

150

200

Q2 Q3 Q4 Q1 Q2



Q2’12 vs. Q2’11 0% (1%) 3% 6%

2012 2011

39


Q2’12 segment sales (million €) vs. Q2’11 EBIT before special items (million €)

2012 2011

0

200

400

Q2 Q2

2012 2011

0

500

1.000

Q2 Q2

1,467


Q2’12 vs. Q2’11 14% 2% 0% 6%

414 331

1,205

Agricultural Solutions Record Q2 sales and earnings driven by strong demand

40


Oil & Gas Strong growth supported by oil production in Libya

Exploration & Production 1,251 +122%

Natural Gas Trading

2,334 +23%

€3,585 +46%

Q2’12 segment sales (million €) vs. Q2’11 EBIT bSI/Net income (million €)

63257

87 213269

0

200

400

600

800

1,000

Q2/2011 Q2/2012

880

Natural Gas Trading

Exploration & Production

Net income

Non compensable oil taxes (Q2 2011: €0 million; Q2 2012: €445 million)

332

793

Sales development Period Volumes Prices/Currencies Portfolio

Q2’12 vs. Q2’11 31% 14% 1%

41


Review of “Other”

Million € Q2 2012 Q2 2011 Sales 1,107 1,714 thereof Styrenics - 811

EBIT before special items (76) (163) thereof Corporate research Group corporate costs Currency results, hedges and other valuation effects Styrenics, fertilizers, other businesses

(95) (61)

52

13

(87) (59)

(118)

76

Special items (116) 27

EBIT (192) (136)

42


Strong operating cash flow at €3.5 billion

Million € H1 2012 H1 2011 Cash provided by operating activities 3,460 3,038 thereof Changes in net working capital (651) (1,178)

Cash provided by investing activities (1,084) 81 thereof Payments related to tangible / intangible assets (1,669) (1,265)

thereof Acquisitions / divestitures 430 32

Cash used in financing activities (2,198) (2,764) thereof Changes in financial liabilities Dividends

269 (2,462)

(486) (2,278)

Increase in net working capital by €0.7 billion Free cash flow amounted to €1.8 billion Dividend payments to BASF SE shareholders €2.3 billion Net debt decreased by €0.7 billion to €11.5 billion in comparison to H1 2011

First half 2012

43

BASF Capital Market Story__September 2012 44

BASF Capital Market Story__September 2012 45 BASF Strategy: We create chemistry__November 2011 45

Appendix


Our purpose

We create chemistry for a sustainable future.

46


Our strategic principles

We add value as one company.

We innovate to make our customers more successful.

We drive sustainable solutions.

We form the best team.

47


Sales BASF Group excluding Oil & Gas in billion € by location of customer

Developed markets*

Emerging markets

* BASF definition: Developed markets include EU15, Norway, Switzerland, North America, Japan, Australia, New Zealand

Target 2020: ~45% sales share of Emerging Markets

Strong and profitable growth in emerging markets

28 22%

34%

61

~115

45%

48


Innovations for a sustainable future €7 billion EBITDA targeted from innovations in 2020

Sales and EBITDA from innovations in billion €

2015 2020

~10

~30

Sales from innovations launched within last 5 years

Sales from innovations launched within last 10 years

~2.5

~7 EBITDA from innovations launched within last 5 years

EBITDA from innovations launched within last 10 years

49


Outlook 2012 Expectations for global economy

GDP

Chemicals (excl. Pharma)

Industrial production

US$ / Euro

Oil price (US$ / bbl)

2.3%

3.5%

3.4%

1.30

110

EU-27

USA

Asia (excl. Japan)

Japan

South America

World Chemicals by region

-0.2%

2.2%

7.5%

2.8%

3.3%

50


North America

Europe*

Asia**

South America

Key Trends Shale gas in the USA already reality,

in Asia and South America shale gas exploitation in early stage

Realization potential in Europe at risk (public acceptance)

Price advantage for methane and ethane in North America – shift to lighter cracker feedstock leads to higher propylene and butadiene prices

Impact on BASF US cracker: projects in place to further

increase share of lighter feed Cost savings for energy and

C1-based value chains Lower availability of propylene and

butadiene in North America lead to higher prices

Further opportunities for BASF`s value chains are explored

Shale gas development in trillion m³

50 years demand (at 2010 level)

Shale gas potential Proved reserves

** China, India, Pakistan

* Western Europe plus Baltics and Ukraine

Source: EIA, IHS, CERA

Global shale gas development and impact on BASF

51

we add value as one company - basf...leverage basf know-how on biodegradable plastics and paper...

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