We add value as - BASF€¦ · BASF Capital Market Story May 2013 Cautionary note regarding ......
Transcript of We add value as - BASF€¦ · BASF Capital Market Story May 2013 Cautionary note regarding ......
We add value as one company
CEO Roadshow Kurt Bock BASF SE New York May 7, 2013
BASF Capital Market Story May 2013
Cautionary note regarding forward-looking statements
This presentation may contain 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. Forward-looking statements may include, 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 and assumptions with respect to future events and financial performance. Actual financial performance 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. 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.
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BASF Capital Market Story May 2013
Chemistry as an enabler BASF has superior growth
opportunities: - sustainable innovations - investments - emerging markets
Ambitious financial targets
The #1 chemical company €72.1 billion sales, €6.6
billion EBIT bSI in 2012* #1-3 in >75% of businesses,
present in >200 countries 6 integrated Verbund sites,
production in 41 countries
10 years of strong sales and earnings growth
19% average annual total shareholder return**
16% average annual dividend increase, >3% yield in every single year***
Performance
We create chemistry for a sustainable future
Perspective
** April 2003 – March 2013 *** for 2003-2012
Ludwigshafen, Germany
Antwerp, Belgium
Nanjing, China
Kuantan, Malaysia Geismar,
USA Freeport, USA
Verbund site
Positioning
* restated numbers, reflecting IFRS 10/11 changes
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BASF Capital Market Story May 2013
BASF today – a well-balanced portfolio Total sales 2012: €72.1 billion*
Percentage of sales 2012**
** Not depicted here: ~5% of Group sales reported as ‘Other‘ * Restated numbers, reflecting IFRS 10/11 changes, new segment structure effective Jan. 1, 2013
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BASF Capital Market Story May 2013
Business review BASF Today Trends Purpose and strategic principles Targets Strategic levers BASF Tomorrow – Board priorities
BASF Strategy: We create chemistry__November 2011
Business review
BASF strategy & growth targets
Strategic levers
BASF Capital Market Story May 2013
BASF with a solid start to 2013
Business performance Q1’13 Q1’12 vs. Q1’12 Sales €19.7 billion €18.8 billion +5% EBITDA €2.9 billion €3.3 billion (14%) EBIT before special items €2.2 billion €2.0 billion +10% EBIT €2.2 billion €2.6 billion (17%) Net income €1.4 billion €1.7 billion (15%) Reported EPS €1.57 €1.85 (15%) Adjusted EPS €1.67 €1.54 +8% Operating cash flow €2.0 billion €1.5 billion +33%
Sales development Period Volumes Prices Portfolio Currencies
Q1’13 vs. Q1’12 5% 1% 0% (1%)
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BASF Capital Market Story May 2013
Integration activities on track Key work packages (e.g. IT, finance, human resources) proceed smoothly Integration expected to be completed by end of 2013
Integration of Becker Underwood and Pronova BioPharma
Water and oilfield & mining activities merged into new global business unit on April 1, 2013 Leather & textile chemicals: concentration of R&D activities at Shanghai Innovation Campus Plastic additives and pigments businesses: downsizing of Swiss operations and R&D activities Total net headcount reduction: about 500 positions by the end of 2015
Restructuring measures to strengthen competitiveness of Performance Products segment
Portfolio optimization
Joint $500 million investment to build integrated aroma ingredient complex Investment to meet globally growing demand in flavor and fragrance industry, especially in Asia
Expansion of the existing joint venture with PETRONAS in Kuantan, Malaysia
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BASF Capital Market Story May 2013
2.8 2,6
3.3 3.53.2
2.5
3.2
2.6
1.2
2003 2004 2005 2006 2007 2008 2009** 2010 2011 2012 Q12013
Strong free cash flow generation
* Cash provided by operating activities less capex (in 2005 before CTA) ** 2009 adjusted for re-classification of settlement payments for currency derivatives
Free cash flow* in billion €
3.9 3.7
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BASF Capital Market Story May 2013
Delivering attractive shareholder returns
Dividend of €2.60 per share for 2012 (+4%)
2003-2012: Average annual dividend increase of 16%
Attractive dividend yield of 3.7% in 2012**
Dividend yield above 3% in any given year since 2002, total payout almost €17 billion
* Dividend yield based on share price at year-end
Dividend payments
3.7% 3.2% 3.1% 4.1% 3.8% 7.0% 3.9%
Dividend yield* 4.6% 3.1%
2.50
0.70 0.85 1.00
1.50
1.95 1.951.70
2.20
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
2.60
Dividend per share in €
3.7%
** Based on BASF share price of €71.15 on Dec. 28, 2012
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BASF Capital Market Story May 2013
Excluding the effects of acquisitions and divestitures, we strive to increase our sales volumes in 2013
We aim to exceed the 2012 restated levels in sales and EBIT before special items
The expected increase in demand, together with our measures to improve operational excellence and raise efficiency, will contribute to this
We aim to earn a high premium on cost of capital once again in 2013
Outlook 2013
GDP: +2.4%
Industrial production: +3.4%
Chemical production: +3.6%
US$ / Euro: 1.30
Oil price (US$ / bbl): 110
Assumptions 2013
Outlook 2013 confirmed
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BASF Capital Market Story May 2013
Business review BASF Today Trends Purpose and strategic principles Targets Strategic levers BASF Tomorrow – Board priorities
BASF Strategy: We create chemistry__November 2011
Business review
BASF strategy & growth targets
Strategic levers
BASF Capital Market Story May 2013
Demographic challenges … set the stage for the future of the chemical industry
Nine billion people in 2050 but only one earth
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Resources, Environment & Climate Food & Nutrition Quality of Life
Chemistry as enabler
BASF Capital Market Story May 2013
Key financial targets 2015 / 2020
Grow at least 2 percentage points above chemical production
Earn a premium on cost of capital of at least €2.0 billion on average p.a.
Profitability targets Growth targets
2015
2020
Sales ~€80 billion
Sales ~€110 billion
EBITDA ~€14 billion EPS ~€7.50
EBITDA ~€22 billion
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BASF Capital Market Story May 2013
Business review BASF Today Trends Purpose and strategic principles Targets Strategic levers BASF Tomorrow – Board priorities
BASF Strategy: We create chemistry__November 2011
Business review
BASF strategy & growth targets
Strategic levers – Portfolio development
– Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence
BASF Capital Market Story May 2013
Portfolio development We expand from chemicals to chemistry
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 ...
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BASF Capital Market Story May 2013
Portfolio development Moving downstream towards customer industries
* Agriculture, Construction, Consumer Goods, Health & Nutrition, Electronics, Energy & Resources, Transportation ** Sales excluding Oil & Gas. Targets were published on November 29, 2011.
Functionalized Materials & Solutions Customized Products Classical Chemicals
2020 in % of sales**
Chemical Industry First customer industries*
2010 in % of sales**
~ 40%
~ 30% ~ 70%
2001 in % of sales**
~ 50%
~ 60%
~ 50%
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BASF Capital Market Story May 2013
Engineering plastics Electronic chemicals Catalysts Construction chemicals Water-based resins Pigments Plastic additives Oil & Gas Personal care & food Battery materials Functional crop care Omega-3 fatty acids
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
17 * only closed deals have been considered
BASF Capital Market Story May 2013
Ongoing portfolio development
Acquisition of Pronova BioPharma
Restructuring in Performance Products Aroma Ingredients Investment, Kuantan
Transactions with Statoil and Gazprom
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BASF Capital Market Story May 2013
BASF sales by first customer industry*
Bubble Size: BASF divisional sales by first customer industry (2010)**
> 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
* Excluding Oil & Gas and Other ** Excluding Agricultural Solutions, Health & Nutrition, Oil & Gas and Other
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BASF Capital Market Story May 2013
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’
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BASF Capital Market Story May 2013
1.4 1.4 1.5
1.6 1.7
0,0
0,5
1,0
1,5
2,0
2008 2009 2010 2011 2012
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€1.7 billion R&D expenditures in 2012
Increase of R&D spending planned for 2013
~10,500 employees in R&D
~3,000 projects
Research Verbund: About 1,950 partnerships with universities, start-ups and industry partners
Target 2015 and 2020: - €10 billion in sales from innovations younger 5 years; - €30 billion in sales from innovations younger 10 years
Strong commitment to R&D Innovations for a sustainable future
Key facts R&D expenditures (billion €)
Chemicals 10%
Performance Products 20%
Functional Mat. & Sol. 20%
Agricultural Solutions 25%
Oil & Gas 2%
Corporate Research 23%
BASF Capital Market Story May 2013
Sustainability in customer industries will drive our innovative growth fields
* Including growth fields still under evaluation
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*
Ongoing inflow of new growth fields
Chemistry as an enabler: Growth Fields Innovations for a sustainable future
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BASF Capital Market Story May 2013 23
Joint development with adidas, illustrating our customer focus
New energy BOOST™ cushioning material, provides highest energy return in the running industry
Solid granular material* is ‘blown up’, turned into 1000’s of small energy capsules
With their unique cell structure, these energy capsules store and unleash energy more efficiently in every stride
New shoe is available in stores since February, 2013
Innovation with adidas: BOOST™ Technology competencies combined with customer know-how
Key facts
Photo: adidas * TPU (Thermoplastic polyurethane)
BASF Capital Market Story May 2013
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
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BASF Capital Market Story May 2013
Expansion Verbund site Nanjing, China*
MDI plant Chongqing, China
* Memorandum of Understanding signed
TDI plant Ludwigshafen, Germany
Investments Major projects
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Expansion oil & gas activities
Aroma Ingredients Kuantan, Malaysia
Acrylic acid complex Camacari, Brazil
BASF Capital Market Story May 2013
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 …
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BASF Capital Market Story May 2013
Operational excellence STEP program on track: ~€1 billion earnings contribution by 2015
Annual earnings contribution (€ million)
0
1,000
2,000
3,000
2012 2015
Former cost saving programs NEXT STEP
Targeted annual earnings contribution of ~€1 billion by end of 2015
Project timeline: 2012–2015 Program is on track Measures to optimize processes and
structures in all regions, e.g. − manufacturing, maintenance − supply chain − engineering, best-cost country sourcing
One-time costs & investments: ~€1 billion
NEXT Program
STrategic Excellence Program ‘STEP’
NEXT program successfully completed Annual earnings contribution of
~€1 billion achieved in 2012
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BASF Capital Market Story May 2013
Appendix
Business development Q1 2013
BASF Capital Market Story May 2013
Chemicals Earnings increase due to higher margins
Intermediates 700 +4%
Monomers 1,680 +4%
Petrochemicals 2,016 (9%)
€4,396 -3%
556 601 569445
650
0
200
400
600
800
Q1 Q2 Q3 Q4 Q1
EBIT before special items (million €)
2013 2012
Q1’13 segment sales (million €) vs. Q1’12
Sales development Period Volumes Prices Portfolio Currencies
Q1’13 vs. Q1’12 (2%) 1% (1%) (1%)
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BASF Capital Market Story May 2013
Performance Products Stable volumes but lower earnings
Performance Chemicals
891 0%
Care Chemicals 1,275 0%
€3,880-2%
Paper Chemicals 362 (8%)
Q1’13 segment sales (million €) vs. Q1’12
Nutrition & Health 493 +4% Dispersions
& Pigments 859
(7%)
452 442
344
183
379
0
200
400
600
Q1 Q2 Q3 Q4 Q1
EBIT before special items (million €)
2013 2012
Sales development Period Volumes Prices Portfolio Currencies
Q1’13 vs. Q1’12 0% (2%) 1% (1%)
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BASF Capital Market Story May 2013
Functional Materials & Solutions Increased demand in Performance Materials
Catalysts 1,453 (1%)
Construction Chemicals
458 (9%)
Coatings 698
(2%)
€4,181+0%
Q1’13 segment sales (million €) vs. Q1’12
257216 231 228 239
0
50
100
150
200
250
300
Q1 Q2 Q3 Q4 Q1
EBIT before special items (million €)
2013 2012
Sales development Period Volumes Prices Portfolio Currencies
Q1’13 vs. Q1’12 2% 0% 0% (2%)
Performance Materials 1,572 +6%
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BASF Capital Market Story May 2013
Agricultural Solutions Excellent start into the year, record sales and earnings
Q1’13 segment sales (million €) vs. Q1’12 EBIT before special items (million €)
2013 2012
0
200
400
Q1 Q1
2013 2012
0
500
1.000
1.500
Q1 Q1
1,556 498 419 1,327
Sales development Period Volumes Prices Portfolio Currencies
Q1’13 vs. Q1’12 13% 1% 4% (1%)
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BASF Capital Market Story May 2013
Oil & Gas Sales growth due to higher production
Exploration & Production
789 +14%
Natural Gas Trading 3,871 +21%
€4,660 +20%
Q1’13 segment sales (million €) vs. Q1’12 EBIT bSI/Net income (million €)
201415
162397
0
200
400
600
800
Q1/2012 Net Income Q1/2013 Net Income
Natural Gas Trading
Exploration & Production
Net income
640
Sales development Period Volumes Prices/Currencies Portfolio
Q1’13 vs. Q1’12 19% 1% 0%
439 468
630
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BASF Capital Market Story May 2013
Review of “Other”
Million € Q1’13 Q1’12 Sales 1,065 976 EBIT before special items (182) (314) thereof Corporate research Group corporate costs Currency results, hedges and other valuation effects Styrenics, fertilizers, other businesses
(97) (56)
56
59
(97) (58)
(206)
145
Special items (28) 578
EBIT (210) 264
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BASF Capital Market Story May 2013
Balance sheet remains strong Balance sheet March 31, 2013 vs. Dec. 31, 2012 (billion €)
Liquid funds
Accounts receivable
Long-term assets
27.7
13.3
23.2
35.3
9.5
1.6
Other liabilities
Financial debt
Stockholders’ equity
Dec 31 2012
Dec 31 2012
March 31 2013
March 31 2013
62.7
25.6
12.8
22.3
Inventories
Other assets
9.6
3.4
62.7
Highlights March 31, 2013 Long term assets increased
mainly due to consolidation of former Pronova BioPharma business
Short term assets up due to increase in accounts receivable
Increase in financial debt due to issuance of long-term bonds
Net debt: €10.9 billion Equity ratio: 41%
36.5
11.1
2.4
9.9
3.7
66.7
3.1
66.7
Disposal group
2.5
Disposal group
35
3.3 2.0
BASF Capital Market Story May 2013
Appendix
Additional information
BASF Capital Market Story May 2013 37
Outlook 2013 Expectations for the global economy
2012
GDP 2.2%
Chemicals (excl. pharma) 2.6%
Industrial production 2.4%
US$ / Euro 1.28
Oil price: Brent (US$ / bbl) 112
Forecast 2013
2.4%
3.6%
3.4%
1.30
110
BASF Capital Market Story May 2013
Outlook 2013 by region Chemical production (excl. pharma)
EU-27
USA
Asia (excl. Japan)
Japan
South America
3.6%
0.3%
1.9%
8.1%
-0.6%
3.7%
World 2.6%
-1.4%
2.5%
7.7%
-4.5%
1.9%
2012 Forecast 2013
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BASF Capital Market Story May 2013
Sales Billion €
* communicated during ‚We Create Chemistry‘ Investor Day on November 29, 2011
∆ = IFRS 10/11 impact
EBITDA Billion €
~79 ~85
~115
~72 ~80
~110
0
20
40
60
80
100
120
∆ -7 ∆ -5
∆ -5
2012 2012 restated
2015* 2015 adjusted
2020* 2020 adjusted
~12.5
~15
~23
~10
~14
~22
0
5
10
15
20
25
2012 2012 restated
2015* 2015 adjusted
2020* 2020 adjusted
∆ -2.5
∆ -1
∆ -1 ∆ = IFRS 10/11 impact
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“We create chemistry” strategy Adjusted key financial targets for 2015 and 2020
BASF Capital Market Story May 2013
“We create chemistry” strategy Earnings per share target for 2015
Earnings per share €
Business growth 1.30
4.96
2002 2010
0.5
0.9
0.8
1.5 Margin
Tax rate
Share buy-back
Target 2015*
~7.5
„STEP“
Share buy-back
Growth
* First published on November 29, 2011 40
BASF Capital Market Story May 2013 41