We add value as one company - BASF · OLED modules Multifunctional seat ... battery chemicals &...
Transcript of We add value as one company - BASF · OLED modules Multifunctional seat ... battery chemicals &...
Deutsche Bank_GSA Conference_May 15, 2012
We add value as one company
Deutsche Bank GSA Conference
Dr. Albert HeuserPresident
FrankfurtMay 15, 2012
Deutsche Bank_GSA Conference_May 15, 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
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Dispersions & Pigments Performance Chemicals Care Chemicals Nutrition & Health Paper Chemicals
Crop Protection
Inorganics Petrochemicals Intermediates
Catalysts Construction Chemicals Coatings
Chemicals
Functional SolutionsPerformance Products
Agricultural Solutions Oil & Gas Exploration & Production and
Natural Gas Trading
Percentage of sales 2011*
BASF today – a well-balanced portfolioTotal sales 2011: €73.5 billion
Performance Polymers Polyurethanes
Plastics
* not depicted here: 9% of Group sales sales reported as ‚Other‘
Deutsche Bank_GSA Conference_May 15, 2012
Business reviewBASF TodayTrendsPurpose and strategic principlesTargetsStrategic leversBASF Tomorrow – Board priorities
4BASF Strategy: We create chemistry__November 2011
Business review
BASF growth targets
Strategic levers
Fit for 2020
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Sales €20.6 billion +6% EBITDA €3.9 billion +16% EBIT before special items €2.5 billion (7%) EBIT €3.1 billion +22%
Net income €1.7 billion (28%) EPS €1.88 (28%) Adjusted EPS €1.57 (19%)
Business performance Q1’12 vs. Q1’11
BASF with solid start to 2012First quarter highlights
Sales increase primarily driven by higher prices, volumes stable Demand in chemical activities did not match the exceptionally strong level of Q1 2011 Agricultural Solutions and Oil & Gas with strong start into the year Divestiture of fertilizer activities completed, ~€650 million disposal gain booked as special item
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Continuous strong free cash flow generation
6
* 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
0.9
2002 2003 2004 2005 2006 2007 2008 2009** 2010 2011 Q12012
Free cash flow*in billion €
3.9 3.7
-0.1
Deutsche Bank_GSA Conference_May 15, 2012
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 sharein €
* 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%
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2.50
Between 1999–2008, BASF bought back 28.65% of shares outstanding, spent €9.9 billion
New share buy-back program: - up to 10% of shares- within next 5 years
Share buy-backs0.70 0.70
0.851.00
1.50
1.95 1.951.70
2.20
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
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Outlook 2012 confirmed
BASF aims to exceed the record levels of sales and EBIT before SI 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.
In 2012, BASF will strive again to earn a high premium on cost of capital
Outlook 2012
GDP: +2.7%
Industrial production: +4.1%
Chemical production: +4.1%
US$ / Euro: 1.30
Oil price (US$ / bbl): 110
Assumptions 2012
Deutsche Bank_GSA Conference_May 15, 2012
Business reviewBASF TodayTrendsPurpose and strategic principlesTargetsStrategic leversBASF Tomorrow – Board priorities
9BASF Strategy: We create chemistry__November 2011
Business review
BASF growth targets
Strategic levers
Fit for 2020
Deutsche Bank_GSA Conference_May 15, 2012
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
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Key trends for the chemical industry
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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 gainsin importance
Growth will accelerate
Industrial production > GDP
Chemicalproduction > GDP
Emerging markets will outgrow developed markets
Chemical industry remains an attractive growth industry
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Striving for strong profitable growth Medium- and long-term sales target
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Sales*in billion €
64
2010 Target 2020
Target 2015
Investments
AcquisitionsInnovations
Investments
AcquisitionsInnovations
~85
~115
We will outperform chemical production by 2 percentage points p.a.* Potential impact of IFRS changes not included
Deutsche Bank_GSA Conference_May 15, 2012
Striving for strong profitable growth All regions will deliver profitable growth
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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 20202010 2020
19%*20%*46%*52%*
25%*20%*10%*8%*
* Percentage of total sales
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Striving for strong profitable growth Doubling EBITDA by 2020
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EBITDA*in billion €
2010 Target2020
Target 2015
11.1
~23
~15Op. Excellence
Growth
Acquisitions
Op. Excellence
Growth
Acquisitions
* Assumptions 2010-2020: Exchange rate $/€ Ø 1.40, Oil price Ø $110/bbl
Deutsche Bank_GSA Conference_May 15, 2012
Business reviewBASF TodayTrendsPurpose and strategic principlesTargetsStrategic leversBASF Tomorrow – Board priorities
15BASF Strategy: We create chemistry__November 2011
Business review
BASF growth targets
Strategic levers– Portfolio development– Market approach– Innovations for a sustainable future– Investments– Acquisitions– Operational excellence
Fit for 2020
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We expand from chemicals to chemistry
Chemistry as key enabler for functionalized materials & solutions
Deep understanding of customer value chains required
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New molecules
Improved applications
Functionalized materials & solutions
1960 1970 1980 1990 2000 2010 2020
Batteries, membranes ...
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Portfolio development towards more market driven and innovative businesses
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Crop protection Engineering plastics Electronic chemicals Custom synthesis Catalysts Construction chemicals Water-based resins Pigments Plastic additives Oil & Gas Personal care & food
BASFcore 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
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Moving downstream towards customer industries
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* Agriculture, Construction, Consumer Goods, Health & Nutrition, Electronics, Energy & Resources, Transportation** Sales excluding Oil & Gas
Functionalized Materials & SolutionsCustomized ProductsClassical Chemicals
2020in % of sales**
Chemical Industry First customer industries*
2010in % of sales**
~ 40%
~30% ~ 70%
2001in % of sales**
~ 50%
~ 60%
~ 50%
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Building on our cross-divisional customer industry approach
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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
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Combining cross-divisional technology competencies with customer know-how
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E-textiles
Solar roof with transparentorganic solar panels andOLED 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
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Chemistry as an enabler for many customer industries
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Sustainability in customer industries will drive our innovative growth fields
Health & Nutrition
Consumer GoodsConstructionTransportation Electronics Energy &
ResourcesAgriculture
Customerindustries
Energymanagement
Water solutions
Wind energy
Rare earth metals
recycling
Heat management
Enzymes Plant biotechnology
Batteries for mobility
Lightweight composites
Heat management
Functional crop care
Medical OrganicElectronics
GrowthFields
Ongoing inflow of new growth fields
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GrowthFieldexamples
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
ExistingActivities
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 biotechnologyWater solutions
BASF growth field examples
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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 Research23%
Agricultural Solutions
26%
FunctionalSolutions12%
PerformanceProducts21%
Chemicals8%
Plastics9%
€1.6billion
Oil & Gas1%
Increase R&D spending to €1.7 billion in 2012
Total R&D expenditures 2011in billion €
Strong commitment to R&D
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€7 billion EBITDA targeted from innovations in 2020
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Sales and EBITDA from innovationsin billion €
2015 2020
~10
~30
Sales from innovations launched within last 5years
Sales from innovations launched within last 10years
~2.5
~7EBITDA from innovations launched within last 5years
EBITDA from innovations launched within last 10years
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Investments will boost future organic growth
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Future investmentsin € billlion
Thereof investments in emerging markets
Total investments
35-45%
15-20
30-40%
~15
2006 – 2010 2011 – 2015 2016 – 2020
10.9
~20%
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Expansion joint ventureactivities in Malaysia
Expansion Verbund siteNanjing, China*
MDI plant Chongqing, China
Acrylic acid complex, Brazil
Expansion oil & gas activities
* Memorandum of Understanding signed
Major investment projects
TDI plant Ludwigshafen, Germany
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Acquisitions will contribute to profitable growth in the future
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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 …
Deutsche Bank_GSA Conference_May 15, 2012
Strong focus on operational excellence
BASF Group 2002–2011Index
28
50
100
150
200
250
300
2002 2005 2008 2011
CAGR 2002 – 2011
10 %
10 %
4 %
EBITDA
Sales
Fixed costs
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Annual earnings contributionin € 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
New operational excellence program STEP: Earnings contribution ~€1 billion
Deutsche Bank_GSA Conference_May 15, 2012
Business reviewBASF TodayTrendsPurpose and strategic principlesTargetsStrategic leversBASF Tomorrow – Board priorities
30BASF Strategy: We create chemistry__November 2011
Business review
BASF growth targets
Strategic levers
Fit for 2020
Deutsche Bank_GSA Conference_May 15, 2012
Key financial targets 2015 / 2020
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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 targetsGrowth targets
2015
2020
Sales ~€85 billion
Sales ~€115 billion
EBITDA ~€15 billion EPS ~€7.50
Double EBITDA to ~€23 billion (compared with 2010)
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AppendixBusiness development Q1 2012
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ChemicalsMargins improved over Q4 2011 thanks to higher prices
Intermediates683-4%
Inorganics 354+0%
Petrochemicals2,447+11%
€3,484+6%
EBIT before special items (million €)
20122011
Q1’12 segment sales (million €) vs. Q1’11
Sales development Period Volumes Prices Portfolio Currencies
Q1’12 vs. Q1’11 (4%) (1%) 8% 3%
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PlasticsTDI and MDI margins improved on higher prices vs. Q4 2011
Polyurethanes1,409-5%
PerformancePolymers
1,269-3%
€2,678-4%
Sales development Period Volumes Prices Portfolio Currencies
Q1’12 vs. Q1’11 (9%) 2% 1% 2%
Q1’12 segment sales (million €) vs. Q1’11
EBIT before special items (million €)
20122011
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Performance ProductsSolid demand but below exceptionally high level of Q1 2011
PerformanceChemicals
900+1%
Care Chemicals1,283-7%
€3,999+0%
Paper Chemicals410+4%
Q1’12 segment sales (million €) vs. Q1’11
Nutrition & Health476+1% Dispersions
& Pigments930
+10%
EBIT before special items (million €)
20122011
Sales development Period Volumes Prices Portfolio Currencies
Q1’12 vs. Q1’11 (5%) 3% 0% 2%
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Functional SolutionsGood performance driven by high demand from automotive
Catalysts1,630-3%
ConstructionChemicals
502+7%
Coatings713
+6%
€2,845+1%
Q1’12 segment sales (million €) vs. Q1’11 EBIT before special items (million €)
20122011
Sales development Period Volumes Prices Portfolio Currencies
Q1’12 vs. Q1’11 (4%) (1%) 4% 2%
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Agricultural SolutionsExcellent start into the year
Q1’12 segment sales (million €) vs. Q1’11 EBIT before special items (million €)
20122011
0
200
400
Q1 Q1
20122011
0
500
1,000
Q1 Q1
1,327
Sales development Period Volumes Prices Portfolio Currencies
Q1’12 vs. Q1’11 3% 3% 0% 2%
419343
1,230
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Oil & GasHigher volumes and prices boosted sales and earnings
Exploration &Production1,336+25%
Natural GasTrading
3,639+52%
€4,975+44%
Q1’12 segment sales (million €) vs. Q1’11 EBIT bSI/Net income (million €)
118306 202
416626
0
200
400
600
800
1,000
1,200
Q1/2011 Q1/2012
1,157
Natural Gas Trading
Exploration & Production
Net income
Non compensable oil taxes (Q1 2011: €280 million; Q1 2012: €451 million)
744955
Sales development Period Volumes Prices/Currencies Portfolio
Q1’12 vs. Q1’11 22% 23% (1%)
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