We add value as one company · BASF Capital Market Story__March 2012 2 . This presentation includes...

BASF Capital Market Story__March 2012

We add value as one company

Dr. Kurt Bock Chairman of the Board of Executive Directors Roadshow London March 8, 2011

BASF Capital Market Story__March 2012 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


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

3 BASF Strategy: We create chemistry__November 2011

Business review

BASF Today

Trends

Purpose and strategic principles

Targets

Strategic levers

Roadmap 2020

Vorführender

Präsentationsnotizen


Business performance FY’11 vs. FY’10

Sales development Period Volumes Prices Portfolio Currencies

FY’11 vs. FY’10 0% 12% 5% (2)% Record year 2011

Sales EBITDA EBIT before special items EBIT Net income Reported EPS Adjusted EPS Operating cash flow

4

€73.5 billion +15% €12.0 billion +8% €8.4 billion +4% €8.6 billion +11% €6.2 billion +36% €6.74 +36% €6.26 +9% €7.1 billion +10%


Investments Start-up of Nanjing expansion Commissioning of Nord Stream and the OPAL pipeline

Portfolio management Completion of Cognis integration Start of business of Styrolution JV with Ineos Divestiture of K+S shares and agreement to sell fertilizer assets (Antwerp)

Operational excellence Completion of NEXT program – annual earnings contribution of more than

€1 billion as of 2012

Major achievements in 2011

5


Delivering attractive shareholder returns

Dividend of €2.50 per share proposed to AGM

Attractive dividend yield of 4.6% in 2011*

Average annual dividend increase of 15% over last ten years

Dividend yield above 3% in any given year since 2002

Dividend per share in €

* Dividend yield based on share price at year-end

0.70 0.700.85

1.00

1.50

1.95 1.951.70

2.20

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Strong commitment to shareholder returns

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

Dividend yield* 4.6% 3.9% 3.1%

6

2.50 Proposal


Outlook 2012 Expectations for global economy

2011

GDP 2.7%

Chemicals (excl. Pharma) 4.8%

Industrial production 4.7%

US$ / Euro 1.39

Oil price (US$ / bbl) 111

Forecast 2012

2.7%

4.1%

4.1%

1.30

110

7


Outlook 2012 by region Chemical production (excl. pharma)

EU-27

USA

Asia (excl. Japan)

Japan

South America

4.1%

0.8%

2.2%

8.0%

3.4%

3.9%

World 4.8%

1.6%

2.1%

11.1%

-3.1%

4.7%

2011 Forecast 2012

8


BASF Group aims to exceed the record levels of sales and EBIT before special items achieved in 2011.

In H1 2012, BASF will most likely not achieve the exceptionally high results of the comparable period in 2011. However, we aim to outperform H2 2011.

More specifically, we plan to increase sales and earnings in all our business segments with the exception of the segment Chemicals.

In 2012, BASF will strive to earn again a high premium on cost of capital.

Outlook BASF Group 2012




Business review

BASF Today

Trends


Targets

Strategic levers

Roadmap 2020


Outperformed global chemical production by >3 percentage points p.a.

Sales to third parties in billion €

11

BASF total growth 9.6% p.a.

BASF volumes + M&A 6.8% p.a.

BASF volumes 3.5% p.a.

Global chemical production

3.6% p.a.

0

10

20

30

40

50

60

70

80

2002 Volumes Prices Currencies M&A 2011

32

74

12

22 -7

14

2002 – 2011


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

0

20

40

60

2001

28 Developed markets*

Emerging markets

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

22%

2011

34%

61

12

Target 2020: ~45% sales share of Emerging Markets

Strong and profitable growth in emerging markets


Strong focus on operational excellence

BASF Group 2002–2011 Index

13

50

100

150

200

250

300

2002 2005 2008 2011

CAGR 2002 – 2011

10 %

10 %

4 %

EBITDA

Sales

Fixed costs


Continuous strong free cash flow generation

14

* 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

2.5

3.2

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

Free cash flow* in billion €

3.9 3.7

-0.1


10-year performance (February 2002 – January 2012) (average annual performance with dividends reinvested)

+8.0%

-1.4%

+14.2%

-3 0 3 6 9 12 15

BASF

Euro Stoxx 50

DAX 30

MSCI World Chemicals

+2.4%

Last 5 years

+14.5%

-7.4%

-1.0%

+3.3%

Delivering consistent, long-term value




Business review

BASF Today

Trends


Targets

Strategic levers

Roadmap 2020


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

Nine billion people in 2050 but only one earth

17

Resources, Environment & Climate Food & Nutrition Quality of Life

Chemistry as enabler


Key trends for the chemical industry

18

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




Business review

BASF Today

Trends


Targets

Strategic levers

Roadmap 2020


Our purpose

We create chemistry for a sustainable future.

20


Our strategic principles

We add value as one company.

21

We innovate to make our customers more successful.

We drive sustainable solutions.

We form the best team.




Business review

BASF Today

Trends


Targets

Strategic levers

Roadmap 2020


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

23

Sales* in billion €

64

2010 Target 2020

Target 2015

Investments

Acquisitions Innovations

Investments

Acquisitions Innovations

~85

~115

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


Striving for strong profitable growth All regions will deliver profitable growth

24

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%*

* Percentage of total sales


Striving for strong profitable growth Doubling EBITDA by 2020

25

EBITDA* in billion €

2010 Target 2020

Target 2015

11.1

~23

~15 Op. Excellence

Growth

Acquisitions

Op. Excellence

Growth

Acquisitions

* Assumptions 2010-2020: Exchange rate $/€ Ø 1.40, Oil price Ø $110/bbl




Business review

BASF Today

Trends


Targets

Strategic levers

Roadmap 2020


Business review BASF Today Trends Purpose and strategic principles Targets Strategic levers – Portfolio development – Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence

BASF Tomorrow – Board priorities 27 BASF Strategy: We create chemistry__November 2011


Roadmap 2020


We expand from chemicals to chemistry

Chemistry as key enabler for functionalized materials & solutions

Deep understanding of customer value chains required

28

New molecules

Improved applications

Functionalized materials & solutions

1960 1970 1980 1990 2000 2010 2020

Batteries, membranes ...


Portfolio development towards more market driven and innovative businesses

29

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

BASF core business

Strong partnerships

Gazprom Monsanto Petronas Shell Sinopec Total

Selected transactions 2001 − today

Acquisitions

€15bn (Sales)

€9bn (Sales)

excluding fertilizers, styrenics

Divestitures

Pharma Fibers Printing systems Polyolefins Polystyrene Americas Agro generics Vitamins premix Fertilizers (planned) Styrenics (Styrolution JV)


Moving downstream towards customer industries

30

* 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%





Roadmap 2020


Building on our cross-divisional customer industry approach

32

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


Combining cross-divisional technology competencies with customer know-how

33

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

Smart forvision – Joint concept car of Daimler and BASF





Roadmap 2020


Chemistry as an enabler for many customer industries

35

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


Growth field: Batteries for electromobility

36

Market size: > €20 billion Sales potential for BASF: > €500 million

Business potential 2020

Chemicals & materials for lithium-ion batteries

Work on battery concepts for Generation IV Intensive collaboration with universities &

industry partners

Existing activities

Position BASF as a system supplier for cell manufacturers

Utilize technology and business synergies Expand electrolyte activities

Targets


Growth field: Water Solutions

37

Market size: €20 billion BASF sales potential: > €800 million


High-performance flocculants, desalination and antifouling chemicals & polymers used in membranes (BASF & Ciba)

Acquired know-how on membrane technologies and module systems (inge watertechnologies)

Position BASF as the leading supplier of innovative chemical solutions worldwide

Forward integration into membrane technologies Leverage synergies to develop improved

additives, flocculants and polymers

Targets

Existing activities


Growth field: Plant biotechnology

38

Global trait value in 2020: ~€11 billion Expected gross trait sales potential of plant biotech

pipeline before partner share in 2020: €1.8 billion


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

Further collaborations with Bayer, Cargill, CTC, Embrapa and KWS

Position BASF as “The Trait Technology Partner” Achieve more efficient agriculture and healthier

nutrition Implement a Plant Biotechnology operating

division within the Agricultural Solutions segment

Targets

Existing activities


Innovation will spur further growth

€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 shareholder returns


€7 billion EBITDA targeted from innovations in 2020

40

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





Roadmap 2020


Investments will boost future organic growth

42

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%


Expansion joint venture activities in Malaysia*

Expansion Verbund site Nanjing, China*

MDI plant Chongqing, China

Acrylic acid complex, Brazil

Expansion oil & gas activities

* Memoranda of Understanding signed

Major investment projects

TDI plant Ludwigshafen, Germany





Roadmap 2020


Acquisitions will contribute to profitable growth in the future

45

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 …





Roadmap 2020

BASF Capital Market Story__March 2012 47 47

Annual earnings contribution in € million

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

(CapEx) Fixed cost savings and margin

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

~€1 billion by end of 2015

NEXT Program

STrategic Excellence Program ‘STEP’

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

Achieved by end 2011: >€ 800 million

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




Business review

BASF Today

Trends


Targets

Strategic levers

Roadmap 2020


Key financial targets 2015 / 2020

49

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)


Fit for 2012 and beyond

We add value as “One company”

Continued top and bottom line growth with key focus on emerging markets

Expansion of portfolio downstream towards functionalized materials and solutions

Strong focus on sustainability and innovation

Commitment to deliver long-term shareholder value

50

BASF Capital Market Story__March 2012 52 BASF Strategy: We create chemistry__November 2011 52

Backup Business development Q4 2011


Business performance Q4’11 vs. Q4’10


Q4’11 vs. Q4’10 (1)% 9% 2% 0%

Financial highlights Q4 2011

Sales EBITDA EBIT before special items EBIT Net income Reported EPS Adjusted EPS Operating cash flow

53

€18.1 billion +10% €2.9 billion +7% €1.5 billion -14% €1.9 billion +15% €1.1 billion +3% €1.23 +3% €1.05 -24% €2.1 billion +80%


Chemicals Price increases could not compensate for lower volumes


Q4’11 vs. Q4’10 (8)% 7% 6% 1%

FY’11 vs. FY’10 (1)% 16% 2% (3)%

Intermediates 631 -4%

Inorganics 355

+9%

Petrochemicals 2,136 +9%

€3,122 +6%

537

381

0

200

400

600

Q4 '10 Q4 '11

Q4’11 segment sales (million €) vs. Q4’10 EBIT before special items (million €)

2,4412,302

0

1,000

2,000

FY '10 FY '11


Plastics Weaker demand led to receding margins


Q4’11 vs. Q4’10 (3)% 6% 1% 1%

FY’11 vs. FY’10 4% 10% 0% (2)%

Polyurethanes 1,395 +2%

Performance Polymers

1,178 +8%

€2,573+5%


285

110

0

100

200

300

Q4 '10 Q4 '11

1,2031,284

0

400

800

1,200

FY '10 FY '11



Q4’11 vs. Q4’10 (6)% 6% 19% 0%

FY’11 vs. FY’10 (1)% 6% 25% (2)%

Performance Products Earnings burdened by destocking and integration costs

Performance Chemicals

822 +6%

Care Chemicals 1,180 +55%

€3,629 +19%

Paper Chemicals 390 -4%


Nutrition & Health 442 +15%

Dispersions & Pigments

795 +9%

294

220

0

100

200

300

Q4 '10 Q4 '11

1,7271,554

0

500

1,000

1,500

2,000

FY '10 FY '11



Q4’11 vs. Q4’10 6% 8% (1)% (1)%

FY’11 vs. FY’10 9% 10% 1% (3)%

Functional Solutions Continuous strong earnings improvement

Catalysts 1,595 +17%

Construction Chemicals 536

+4%

Coatings 739

+8%

€2,870+12%


33

88

0

20

40

60

80

100

Q4 '10 Q4 '11

467

559

0

200

400

600

FY '10 FY '11


Agricultural Solutions Another record year for Crop Protection


0

200

400

600

800

1,000

Q4 Q42011 2010


Q4’11 vs. Q4’10 (5)% 2% 0% 0%

FY’11 vs. FY’10 6% 0% 0% (3)%

845 822 42 41

0

10

20

30

40

50

Q4 '10 Q4 '11

749810

0

300

600

900

FY '10 FY '11


Oil & Gas Higher oil prices improved sales and net income

Exploration & Production 1,017 -4%

Natural Gas Trading

2,923 +53%

€3,940 +33%

Sales development Period Volumes Prices/Currencies Portfolio Q4’11 vs. Q4’10 7% 25% 1%

FY’11 vs. FY’10 (11)% 23% 0%

EBIT bSI Natural Gas Trading EBIT bSI Exploration & Production

Net income

Q4’11 segment sales (million €) vs. Q4’10 EBIT before special items / Net income (million €)

564

713 685

230276

0

200

400

600

800

Q4 '10 Q4 '11

2,1112,430

923 1,064

0

500

1,000

1,500

2,000

2,500

FY '10 FY '11

BASF Capital Market Story__March 2012 60 BASF Strategy: We create chemistry__November 2011 60

Backup New targets for environment health and safety

BASF Capital Market Story__March 2012 BASF Capital Market Story 61

Health: Continuous improvement

Sustainable water management

Drinking water for production

CO2 emissions from gas transport*

Greenhouse gases*

Prior goal 2020

Status 2011

Energy efficiency + 25 %

New goal 2020

100 %

- 25 %

- 10 %

- 50 %

1 criterion KPI with 5 criteria

Now

+ 26 %

- 35 %

NEW

NEW

NEW

- 40 %

+ 35 %

To date

* specific

BASF sets new ambitious goals for environment, health and safety

BASF Capital Market Story__March 2012 BASF Capital Market Story 62

Nitrogen emissions into water

by 2020, compared to 2002

Heavy metal emissions into water

by 2020, compared to 2002

- 80 % - 60 %

Global goals reached by the start of 2012

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