BASF Analyst Conference Q2 2011

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BASF 2 Quarter 2011 Analyst Conference Call 1 BASF posts strong results Second Quarter 2011 Financial highlights July 28, 2011

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Charts accompanying the 2Q2011 Conference Call for investors and analysts on July 28, 2011

Transcript of BASF Analyst Conference Q2 2011

Page 1: BASF Analyst Conference Q2 2011

BASF 2nd Quarter 2011 Analyst Conference Call 1

BASF posts strong results

Second Quarter 2011 Financial highlightsJuly 28, 2011

Page 2: BASF Analyst Conference Q2 2011

BASF 2nd 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

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BASF 2nd Quarter 2011 Analyst Conference Call 3

Sales €18.5 billion +14%EBITDA €3.0 billion +5%EBITDA margin 16.3% 17.7%EBIT before special items (bSI) €2.2 billion +1%EBIT bSI adjusted for non-comp. oil taxes €2.2 billion +12%EBIT €2.2 billion +7%Net income €1.5 billion +23%EPS €1.59 +23% Adjusted EPS €1.75 +17%

Business performance Q2’11 vs. Q2’10

BASF posts strong results Second quarter 2011 highlights

Robust sales and earnings growth in the chemicals business with volumes up 5%Excellent performance of the acquired former Cognis businessEarnings in Agricultural Solutions increased despite adverse weather conditionsSales growth in Oil & Gas was price driven. Net income rose by 74%

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Important milestones in Q2 2011

Styrolution

Joint venture of BASF and INEOS to form the global market leader in styrenicsJoint venture contract signedFTC and EU antitrust approval receivedClosing subject to remaining approvals from antitrust authorities in other countries Closing of joint venture expected in Q4 2011

New TDI plant in Europe

TDI is a key component for polyurethane foams with growth rates above GDPBASF to expand its leading position in TDI with a new 300kt/a plant in Europe The world‘s largest single-train TDI plantSuperior technology and unique Verbundconcept provide industry leading cost structureStart-up of production in 2014

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Focus on future markets BASF intensifying R&D around electromobility

Market trendsSustainable electromobility is key to climate friendly mobility High-performance batteries and innovative solutions for weight reduction and heat management are essential for efficient electromobility

BASF activitiesInvestment of three-digit million euro sum over the next five years for R&D and production of battery materials• Current investment in innovative cathode materials plant in

Elyria, Ohio to start up in mid-2012Portfolio expansion by entering electrolytes and positioning BASF as future system supplier for high performance batteriesLightweight construction solutions and heat managementsystems further help to reduce energy consumption

Electromobility – leveraging BASF’s R&D and business platforms

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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

We forecast Brent oil price of $110/bbl (from $100/bbl) and US$/€ of $1.40 (from $1.35)We assume that oil production in Libya will not restart during 2011 →EBIT before special items from our Libyan oil production for the full year 2011

will be about €1 billion lower compared with 2010 (thereof about €700 million of non-compensable oil taxes)

Assumptions

Medium-term targets

Outlook 2011

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 expect to achieve a high premium on our cost of capital

Targets 2011

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Chemicals Robust sales and earnings supported by price increases

Intermediates693+7%

Inorganics351

+8%

Petrochemicals2,348+18%

€3,392+14%

687617

537

765674

0

200

400

600

800

Q2 Q3 Q4 Q1 Q2

Sales developmentPeriod Volumes Prices Portfolio Currencies

Q2’11 vs. Q2’10 2% 20% 0% (8)%

Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items (million €)

20112010

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Plastics Strong demand in all product lines resulted in increased earnings

Polyurethanes1,498+7%

Performance Polymers

1,330+12%

€2,828 +9%

349 371

285

393 383

0

200

400

Q2 Q3 Q4 Q1 Q2

Sales development Period Volumes Prices Portfolio Currencies

Q2’11 vs. Q2’10 4% 12% 0% (7)%

Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items (million €)

20112010

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BASF 2nd Quarter 2011 Analyst Conference Call 9

Sales developmentPeriod Volumes Prices Portfolio Currencies

Q2’11 vs. Q2’10 2% 6% 27% (5)%

Performance Products Strong earnings contributions from acquired Cognis business

471

370294

554513

0

100

200

300

400

500

600

Q2 Q3 Q4 Q1 Q2

PerformanceChemicals

908+13%

Care Chemicals1,353+100%

€4,095+30%

Paper Chemicals417(5)%

Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items (million €)

Nutrition & Health480+29%

Dispersions & Pigments

937+9% 20112010

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Sales developmentPeriod Volumes Prices Portfolio Currencies

Q2’11 vs. Q2’10 12% 8% 0% (7)%

Functional Solutions Strong demand from automotive drove earnings growth

Catalysts1,500+22%

Construction Chemicals

5770%

Coatings689

+6%

€2,766+13%

165 158

33

142167

0

50

100

150

Q2 Q3 Q4 Q1 Q2

Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items (million €)

20112010

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Agricultural Solutions High global demand for agricultural products drove volume growth

320 331

0

100

200

300

400

Q2 Q2

Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items (million €)

20112010

0200400600800

1,0001,2001,400

Q2 Q220112010

0%+3%

Sales developmentPeriod Volumes Prices Portfolio Currencies

Q2’11 vs. Q2’10 6% 0% 0% (6)%

1,211 1,205

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148257

0

200

400

600

Q2 Q2

Oil & Gas Higher oil and gas prices compensated for lower volumes

Exploration & Production563(34)%

Natural Gas Trading

1,898+25%

€2,461 +4%

Sales developmentPeriod Volumes Prices/Currencies Portfolio

Q2’11 vs. Q2’10 (19)% 23% 0%

63

EBIT bSI Natural Gas TradingEBIT bSI Exploration & Production Net income

Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items/ Net income (million €)

20112010

420269

515

332

95

Non-compensable oil taxes 209

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Review of “Other”

Million € Q2 2011 Q2 2010Sales 1,714 1,471thereof Styrenics 811 785*

EBIT before special items (163) (301)thereof Corporate research

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

(87) (59)

(118)

76

(78) (55)

(198)

67

Special items 27** (106)

EBIT (136) (407)

* Since January 1, 2011, Styrenics only includes the carved-out styrenics businesses; the previous year’s values were adjusted accordingly

** Incl. €68 million from repeal of fine imposed by the EU on Ciba in 2009

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Operating cash flow in H1 2011

Million € H1 2011 H1 2010Cash provided by operating activities 3,038 2,721thereof Changes in net working capital (1,178) (1,355)

Cash provided by investing activities 81 (599)thereof Payments related to tangible / intangible assets (1,265) (889)

Cash used in financing activities (2,764) (2,054)thereof Changes in financial liabilities

Dividends (486)

(2,278)(292)

(1,762)

Operating cash flow at €3.0 billion despite reclassification of €887 million gain from the sale of K+S stakeFree cash flow at €1.8 billion Net debt amounted to €12.3 billion, a reduction of €1.3 billion since end of 2010

First half 2011

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Back-Up

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Financial highlights

Million € Q2 2011 Q2 2010 Δ% Q1 2011 Δ%Sales

changes due to - volumes - prices - portfolio - currencies

18,461 16,214 +14%

+2% +13% +5% (7)%

19,361 (5)%

EBITDA 3,015 2,867 +5% 3,365 (10)%

EBIT before special items 2,237 2,206 +1% 2,732 (18)%

EBIT before special items adjusted for non-compensable oil taxes 2,237 1,997 +12% 2,452 (9)%

Special items 20 (127) - (182) -

EBIT 2,217 2,079 +7% 2,550 (13)%

Net income 1,454 1,183 +23% 2,411 (40)%

EPS (€) 1.59 1.29 +23% 2.62 (39)%

Adjusted EPS (€) 1.75 1.50 +17% 1.94 (10)%

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Balance sheet review

Balance sheet June 30, 2011 vs. end of 2010 (billion €)

Liquid funds

Accounts receivable

Long-term assets

22.7

15.0

21.7

34.5

10.2

1.5

Other liabilities

Financial debt

Stock- holders’ Equity

Jun 31 2011

Jun 31 2011

Dec 31 2010

Dec 31 2010

59.3

32.5

10.9

1.8

59.3

23.0

14.1

22.2

Inventories

Other assets

9.5

4.6

8.7

4.5

59.459.4

Long-term assets decreased by €2.0 billion amongst others due to the sale of shares in K+S

Inventories increased by €0.8 billion reflecting the expansion of our business and raw material inflation

Net debt decreased by €1.3 billion to €12.3 billion

Accounts receivable were up by €0.7 billion as a result of the expansion of our business

Equity ratio at 39% (up 1 percentage point)

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Cognis – integration objectives

TargetsAchieve 20% EBITDA margin in the Performance Products segment by 2012Acquisition accretive as of 2012

CostsOne-time integration costs of €290 million until end of 2013 Inventory step-up of €120 millionCosts already incurred:−

2010: €80 million (thereof €60 million inventory step-up)

H1/2011: €210 million (thereof €60 million inventory step-up)

SynergiesGenerate €275 million of additional EBIT− €135 million growth synergies by the end of 2015− €140 million cost synergies by the end of 2013