BASF Investor Day Automotive Key Note

BASF – creating chemistry for sustainable mobility

Kurt Bock Chairman & CEO

Wayne Smith Member of the Board of Directors

London

September 5, 2012

BASF Investor Day Automotive September 5, 2012 2


Investor Day ‘Strategy 2020’ November 2011

The future of the chemical industry: many growth opportunities

Nine billion people in 2050 but only one Earth

Chemistry as enabler

Growth of chemical production

above GDP

60% of chemical production in

emerging countries

Sustainability and innovation as main

driver

Innovation focus on materials & solutions



Our purpose

We create chemistry for a sustainable future.



Growth above market with increasing share from emerging markets

*

BASF definition: Developed markets include EU15, Norway,

Switzerland, North America, Japan, Australia, New Zealand

** Sales excluding Oil & Gas

Emerging marketsDeveloped markets*

2020in % of sales**

~55% ~ 45%

2010 in % of sales

(€53bn**)

~ 66% ~ 34%

2001 in % of sales

(€28 bn**)

~ 78% ~ 22%



We expand from chemicals to chemistry

Chemistry as key enabler for functionalized materials & solutionsDeep understanding of customer value chains required

New molecules

Improved applications

Functionalized materials & solutions

1960 1970 1980 1990 2000 2010 2020

Batteries, membranes ...



Moving downstream towards customer industries

* Agriculture, Construction, Consumer Goods, Health & Nutrition, Electronics, Energy & Resources, Transportation

** Sales excluding Oil & Gas

Functionalized Materials & SolutionsCustomized ProductsClassical Chemicals

Chemical Industry First customer industries*

2020in % of sales**

~30% ~ 70%

2010 in % of sales**

~ 40% ~ 60%

2001 in % of sales**

~ 50% ~ 50%



We add value as one companyPeople Verbund

Customer Verbund

Technology Verbund

Production Verbund



Striving for strong profitable growthSales* (in billion €)

64

2010 Target 2020

Target 2015

Investments

Acquisitions

CAGR ~6%

Innovations

Investments

AcquisitionsInnovations

~85

~115

We will outperform chemical production by 2 percentage points p.a.* Potential impact of IFRS changes not included


Trends in the automotive industry

BASF –

leading partner to automotive

BASF at the forefront of new technologies

BASF’s ambition to grow further


Automotive is a demanding industry – Only the fittest will prosper

StructureConcentrated industry

Global scale with local focus

Demanding high performance & cost efficiency

Tiered supplier structure

3-5 year innovation cycle

BASF strengths offer opportunities

Global footprintLocal knowledge and local presence

Innovation powerLong standing andtrustful relationships

TrendsRegulatory framework for safer and cleaner transportation

Emerging markets grow over-proportionally

Increasing model variety

Stronger collaboration among OEMs and tier- suppliers

Standardization of platforms across segments and brands will continue


Source: LMCA

Car production outgrew GDP for the last 30 years

40

80

160

120

1980 1985 1990 1995 2000 2005 2010 2015 2020

CAGR 3%

+40 million cars in last 30 years

Global annual car production (in million)


40

80

160

120

1980 1985 1990 1995 2000 2005 2010 2015 2020

CAGR ~5%

CAGR 3%

Unit growth expected to further accelerate

Global annual car production (in million)

+40 million cars in next 10 years

+40 million cars in last 30 years

Source: LMCA


Cars/1000 people in 2011

Cars on the road in China would grow by ~100 million

What happens if the vehicle penetration in China catches up with Brazil?

Source: LMCA


OEM production in emerging markets will doubleProduction of passenger cars and LCVs* (in million units)

North America

EMEAJapan

South Korea

Note: ASEAN comprises Indonesia, Thailand, Vietnam, Malaysia, and Philippines; Other Asian countries <1million unitsSource: LMCA

1318 23

30

5 5

810

Production 2011; Global production 77 million units

Total production in 2020; Global production 122

million units

3.7% p.a.

South America

47

6.4% p.a.

3.0% p.a.

China

17

337.6% p.a.

India

41314.0%

p.a.

2.5% p.a.

ASEAN

3 68.0% p.a.

0% p.a.

* Light commercial vehicles


Emerging country OEMs will grow faster..

Chinese and Indian OEMs will gain importance as regional playersThe main part of the future growth will come from mature global OEMs

0

20

40

60

80

100

120

140

2011 2020

Global vehicle production (in million units)

Established OEMs Emerging country OEMs

13

27

77

122

4.5%

8.5%

64

95

5.2% p.a.

Source: LMCA


2011

Ford

Hyundai.Kia

Suzuki

Fiat-Chrysler

BMW

Daimler

Honda

Volkswagen

Renault-Nissan

8.0

3.5

1.8

5.4

3.2

2.2

2.9

4.3

3.08.0

3.46.6

2.9

1.21.8

0.81.7

2.5

2.3

8.7

million units12.2

12.0

11.0

10.3

10.0

7.6

6.1

6.1

5.4

4.7

3.1

3.0

2.5Source: LMCA

Toyota 4.47.6

PSA 1.13.6

SAIC 1.71.4

General Motors

..but established OEMs will maintain lead with more than ¾ of total vehicle production in 2020

2020

BASF Investor Day Automotive September 5, 2012 18Light Duty Heavy Duty Motorcycle

USA CA LEV III US Tier 3

US 2010 Global, 4a Global, 4b

EuropeEuro 5 Euro 6 Euro 7

Global, 4a Euro VI Global, 4b Euro VIIEuro 4 Euro 5

BrazilEuro 5 Euro 6

Euro V Euro VI

RussiaEuro 4 Euro 5 Euro 6Euro IV Euro V Euro VI

IndiaEuro 4 Euro 5 Euro 6Euro IV Euro V Euro VIEuro 3 Euro 4 Euro 5

China Euro 4 Euro 5 Euro 6Euro IV Euro V

Euro 3 Euro 4 Euro 5

South Korea

Euro V Euro VI Euro VII

Japan Global, 4a Global, 4b

Vietnam Euro 3 Euro 4

Thailand Euro 42010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Phase in

Announced Regulations Future Regulations

All OEMs face a major challenge: Emission reduction


80

280

240

200

160

120

202020182016201420102008200620042002

95

164125

130

229241

158

143

2012

CO2 targets(in g/km)

173186

All OEMs face a major challenge: Emission reduction

Source: BCG


Weight reduction Emission reduction

New powertrains

Heat management

Safety

Haptics (Touch & Feel)

Appearance

Design

The key focus areas of car manufacturers –today and tomorrow


Chemical content of cars will rise – Innovative chemistry is an enabler

Chemical content today equals ~€850* per car, and is rising!

Cars in 1950

Cars of today

Cars in future

Chemical content

Chemical content in a standard car

* Including Precious metals


Chemical market for automotive will almost double

0

40

80

120

2011 2015* 2020*

65

111

Chemical market for automotive (in billion €)

82

* Precious metals constant at 2011 pricesSource: LMCA/BCG/BASF

~6% p.a.



BASF – leading partner to automotive




BASF – a leading partner to the automotive industry

BASF sales in 2011 to the automotive industry are €9.5* billion

No. 1 chemical supplier to the automotive sector

−

No. 1 mobile emission catalyst supplier

−

No. 1 in topcoats for exterior coatings

−

No. 1 in plastic solutions for lightweight

Frontrunner in developing new solutions for the cars of tomorrow

−

R&D spending for automotive in 2011 ~€200 million

Preferred development partner for leading OEMs

* Includes Precious Metals


Acting as one company BASF has the broadest offering to automotive industry

Suspension:Jounce bumper,

Top mount,Coil Spring isolator

Lubricants, engine coolants

Spoiler, lower bumper stiffener

HeadrestsRoof module

Carpet, Floor mats

Seats, handrests, armrests

Steering wheel

ABS cable

Door side part

Dashboard

Headliner

Hatrack

Air-filter housing

Window encapsulation

Coatings, Pigments

Fuel additives

Leather and textile chemicals

Brake fluids

Engine encapsulation

Battery materials

Catalysts

Cross beam

Air intake manifold, charge-air lines

Oil pan

Wheel rim


BASF is the No.1 chemical partner for the automotive industry

Top 100 suppliers Automotive (2011) Supplier ranking

Confirmed by three leading automotive industry publications ‘BASF is the No. 1 chemical partner’:

Source: Automobilproduktion, July 24, 2012

Rank Company Sales (in €

billion)

1 Bosch 30.4

2 Continental 29.1

17 9.5

41 DuPont

46 PPG Industries

51 Lanxess

61 Bayer

69 Evonik


Building on our cross-divisional customer industry approach

BASF sales by first customer industry*

Bubble Size: BASF divisional sales by first customer industry (2011)**

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

> 15 %

< 10 %

< 10 %

> 15 %

Inorganics Petro-chemicals

ConstructionChemicals

Dispersions& Pigments

Catalysts Intermediates Coatings CareChemicals

Performance Polymers

Poly- urethanes

PerformanceChemicals

Paper Chemicals

Consumer goods

Transportation

Construction

Energy & Resources


Automotive industry structure requires close collaboration among all players

OEMs increase level of external sourcing OEMs influence sourcing decisions at tier-suppliersOEMs build exclusive R&D partnerships with key suppliers to ensure future innovation powerSuppliers gradually increase added value and get involved in design at early stageSuppliers provide techno-logical leadership, extensive module and system integration skills

Component supplierTier-2

Parts supplierTier-3+

Module/ system supplier

Tier-1

OEM

Aftermarket


Industry structure* BASF products

Coatings Coolants & Brake FluidsPlastics for OEMswith own processing

Plastics Catalysts Coatings for car parts

Plastics Catalysts Coatings for car parts Pigments

Plastics Pigments Solvents

Refinish coatings Coolants & Brake FluidsFuel additives

Component supplierTier-2

Parts supplierTier-3+

Module/ system supplier

Tier-1

OEM

*

Based on business model, not real supply chain

** Includes Precious Metals

BASF Group Sales 2011

BASF AutomotiveSales**€9.5 billion

10%

60%

30%

€73.5 bn

Aftermarket

BASF’s offering is an unparalleled fit to the whole automotive value chain


BASF’s cross divisional approach adds value to our customers

PerformanceChemicals

R & DCoatings

EngineeringPlastics

SouthAmerica

Poly- urethanes

Europe

Asia PacificCatalysts

Dispersions & Pigments

NorthAmerica

Communi-cations

Intermediates

Breadth of portfolio

Global coverage

InnovationCommunications


BASF has global automotive presence and is near to all major OEMsAutomotive Production sites and R&D centers

Source: company data


BASF is working with all global and emerging country OEMs

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Through tailor-made customer eventsBring together BASF experts from different operating units, regions and R&D with customersDemonstration of BASF’s comprehensive product and solutions portfolioMore than 100 innovation workshops, high-level meetings, and Tech Days across all regions within the last three years

A win-win-situation for all

Strengthens business relationshipsLeads to numerous joint development projects such as concept cars smart forvision and HED7 Numerous commercial projects for near- and mid-term realization evolved

ZF Friedrichshafen

Hyundai

Early involvement – more than 100 innovation workshops in last 3 years


BASF and Hyundai.Kia – taking the partnership to a new level

BASF senior management and global key account teams jointly present BASF auto competencies to Hyundai.Kia

BASF Management kick off

Large exhibition where BASF presents its comprehensive product and solutions portfolio

Tech fair in Korea at Hyundai. Kia site

25 joint innovation work teams met quarterly at R&D centre of Hyundai.Kia in Korea

Forming 25 joint innovation work team

Roadshows held in Europe, NAFTA and Asia

Roadshows at Hyundai. Kia production sites

Demonstrate the innovation power in form of a concept car

Kick-off concept car project

2005

200620042007

2008

2010presented at

Geneva Motor Show


Index 2003 = 100%

Hyundai.Kia and BASF growing successfully

Hyundai increase in car production by 225%

BASF increase in sales by ~550%


2007

~70

~77

BASF 3rd party sales to automotive industry (in billion €)

Automotive production (in million)

2011 2007

7.6

2011

9.5~2.4% 6%

BASF has grown twice as fast as the automotive production



BASF –



BASF’s ambition to further grow


BASF evolved from a raw material supplier to a solution provider

Past Today Future

Cost and complexity reduction

Raw Material Know-How

Part Substitution

Cost reduction

System and value chain know-how

Functional IntegrationSystem SolutionsSingle Solutions


Delivering innovative solutions from across the BASF portfolio

System solution provider

Selective Catalytic Reduction (SCR)

on filter

Process innovator

Integrated coatings process

Lightweight construction: Plastic wheels

Enhanced driving and interior comfort:

Cellasto®

Engineering and design expert

System supplier


Safety

Weight reduction

Emission reduction

New powertrains

Heat management

Haptics (Touch & Feel)

Appearance

Design

Innovation focused to meet industry needs

Multifunctional lightweight construction

Integrated temperature management

Energy storage and management


Multifunctional lightweight construction Global competence in seating

Innovative combination and unique network of cross divisional material expertise:

Seat – one of the most heavy, complex and value-intensive applications in the car‘s interior

BASF bundled material and simulation competence

BASF provides products and solutions for:

−

weight reduction

−

improved safety

−

better haptics

−

freedom of design

Several projects with OEMs as well as major Tier 1 suppliers (Opel, Faurecia, Daimler, Hyundai)

Weight –

Design –

Safety –

Haptics


Integrated temperature management Insulation / heat management solutions

Status: lab

Status: commercialStatus: pilot

* Infrared

** Near Infrared

NIR** reflective polymerfilm for car windows

Polymer foams for thermal insulation

Thermal engine encapsulation for optimized heat management

Functional pigmentsfor high IR* reflectivity

Status: pilot


BASF – developing a leading position in battery material solutions

Business potential 2020 BASF SRM* includes cathodes and electrolytes

: > €5 billionSales potential for BASF: > €500 million

Existing activitiesChemicals & materials for lithium-ionWork on battery concepts for Generation IVIntensive collaborating with leading universities

& industry partners

TargetsPosition BASF as system supplier for cell

manufacturersUtilize technology and business synergiesExpand electrolyte activities

* Strategic relevant market



BASF –





Automotive to contribute significantly to BASF 2020 growth targets

2020

17.0

5.0

12.0***

2015

12.3

4.1

8.2**

2011

9.5

3.5

6.0*

2007

7.6

2.8

4.8

Growth targets (in billion €)

BASF Automotive chemical salesBASF precious metal sales (trading and mobile emissions catalyst production)

+5.7%

+6.7%

+5.7%

+8.0%

+5.7%

+4.0%

* Incl. sales of €400 million related to cross-divisional initiatives; ** Incl. sales of €600 million related to cross-divisional initiatives; *** Incl. sales of €600 million related to cross-divisional initiatives and sales of €500 million related to battery


Hyundai concept car HED7 Introduction of Thomas Bürkle

BASF Investor Day Automotive Key Note

Investor Relations

Transcript of BASF Investor Day Automotive Key Note