We create chemistry for a sustainable future · 2018-11-17 · We create chemistry for a...
Transcript of We create chemistry for a sustainable future · 2018-11-17 · We create chemistry for a...
We create chemistry for a sustainable future
Tobias HöldSenior Investor
Relations Manager
Stefan KochInvestor Relations
Manager
Bankhaus Lampe
Deutschland
Konferenzen
Baden Baden
March 28, 2017
BASF Capital Market Story, March 2017 2
Cautionary note regarding
forward-looking statements
This presentation contains forward-looking statements. These statements are based on current
estimates and projections of BASF management and currently available information. Future
statements are not guarantees of the future developments and results outlined therein. These are
dependent on a number of factors; they involve various risks and uncertainties; and they are based
on assumptions that may not prove to be accurate. Such factors include those discussed in the
Opportunities and Risks Report from pages 111 to 118 of the BASF Report 2016. We do not assume
any obligation to update the forward-looking statements contained in this presentation.
BASF Capital Market Story, March 2017 3
Agenda
At a glance1
Strategic levers2
Segments3
BASF Capital Market Story, March 2017 4
Growth above chemical industry average – driven by innovative and sustainable products
and solutions
Unique Verbund concept – competitive advantage based on integrated sites, operational
excellence and best-in-class technologies
Broad and resilient portfolio – with global market access and strong customer relationships
Earnings growth and strong cash flow generation – based on operational and financial
strength
Long-term value creation with progressive dividend policy – grow or at least maintain
dividend at the previous year’s level
BASF shares – an attractive investment
BASF Capital Market Story, March 2017 5
Chemicals – a growth industryGlobal annual growth rate of ~3.6%*
…more food needed
by 2050
…more primary energy
consumption by 2050
…of the world population
will live in cities by 2050
Agriculture Health & Nutrition
Energy & Resources
Automotive &Transport
Construction &Housing
Consumer products
…people by 2050
Electric & Electronics
Chemistry as enabler to meet current and future needs
70% 50%~10 bn 30%
* Forecast average annual real change 2017-2019; BASF Report 2016, p.121
BASF Capital Market Story, March 2017 6
Broad and resilient portfolio2016: Sales of €57.6 billion; EBITDA of €10.5 billion
Percentage of sales 2016*
* Not depicted here: ‘Other’ 3% of Group sales and EBITDA €(1.0) billion
BASF Capital Market Story, March 2017 7
Global market access through regional presence
Kuantan
Hong Kong
Nanjing
Freeport
Florham Park
Geismar
Ludwigshafen
Antwerp
São Paulo
Regional centersSelected sites
Verbund sites
Selected research
and development sites
Asia Pacific
Europe
South America
North America
Sales €14,042 million
EBIT €1,113 million
Employees 17,583
Sales €26,039 million
EBIT €3,632 million
Employees 70,784
Sales €12,165 million
EBIT €1,098 million
Employees 18,156
Sales €5,304 million
EBIT €432 million
Employees 7,307
Sales by location of customer; EBIT by location of company
BASF Capital Market Story, March 2017 8
Verbund – unique competitive advantageActively managed in line with market requirements
Annual cost savings of more than €1 billion through integrated production
Verbund concept supports sustainability, reduces waste and avoids CO2 emissions of 6 million tons p.a.
Energy savings
>€300 million p.a.
People, Customers, Technology, Production
BASF Capital Market Story, March 2017 9
Fourth quarter sales and earnings significantly above
prior-year quarter
Financial figures Q4 2016 Change Q4 2015 FY 2016 Change FY 2015
Sales €14.8 billion 7% €57.6 billion (18)%
EBITDA €2.5 billion 31% €10.5 billion (1)%
EBIT before special items €1.2 billion 15% €6.3 billion (6)%
EBIT €1.2 billion 278% €6.3 billion 0%
Net income €0.7 billion 103% €4.1 billion 2%
Reported EPS €0.75 103% €4.42 2%
Adjusted EPS €0.79 (22)% €4.83 (3)%
Operating cash flow €1.9 billion 97% €7.7 billion (18)%
Sales development Volumes Prices Portfolio Currencies
Q4 2016 vs. Q4 2015 6% 1% 0% 0%
FY 2016 vs. FY 2015 2% (4)% (15)% (1)%
BASF Capital Market Story, March 2017 10
Stepwise increase of earnings level
EBIT and EBITDA*
billion €, 2001 - 2016
3.7
4.7 4.6
7.0 7.28.4
8.9
7.7
6.5
9.9
11.2
10.010.4
11.010.6 10.5
0
2
4
6
8
10
12
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
EBIT EBITDA
0.7
2.2 2.2
4.5 4.85.5
6.0
4.6
2.8
6.7
8.0
6.7 7.27.6
6.2 6.3
CAGREBITDA
7%CAGREBIT
16%
* 2010, 2011 indicative, adjusted for IFRS 10 & 11; 2001 – 2009 as reported, without non-compensable foreign income taxes on oil production
Avg. EBITDA level in depicted years
BASF Capital Market Story, March 2017 11
billion €, 2001 - 2016
2.3 2.3
4.94.6
5.3
5.9 5.8
5.0
5.7
6.5
7.16.6
8.1
7.0
9.4
7.7
0
1
2
3
4
5
6
7
8
9
10
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Free cash flowOperating cash flow
-0.5 -0.1
2.8 2.6
3.3 3.53.2
2.53.2
3.9 3.7
2.6
3.2
1.7
3.6 3.6
6.3%
Strong cash flow development
BASF Capital Market Story, March 2017 12
Attractive dividendWe want to grow or at least maintain dividend at the previous year’s level
* Dividend yield based on share price at year-end
Dividend per share
€
0.65 0.70 0.700.85
1.00
1.50
1.95 1.95
1.70
2.20
2.502.60
2.702.80
2.903.00
0
1
2
3
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Yield* 3.1% 3.9% 3.1% 3.2% 3.1% 4.1% 3.8% 7.0% 3.9% 3.7% 4.6% 3.7% 3.5% 4.0% 4.1% 3.4%
Proposal:
BASF Capital Market Story, March 2017 13
Delivering consistent, long-term valueCurrent market capitalization: €81 billion*
Average annual performance
(with dividends reinvested)
0 2 4 6 8 10 12 14
Euro Stoxx 50
DAX 30
MSCI World
Chemicals
+5.8%
BASF
+7.2%
+1.0%
+12.9%
Last 10 years
March 2007 – February 2017
0 2 4 6 8 10 12 14
Last 5 years
March 2012 – February 2017
+9.7%
+8.9%
+11.5%
+10.1%
* As of February 28, 2017
BASF Capital Market Story, March 2017 14
Sales growth – slightly faster than global chemical production
Deliver attractive returns – earn a significant premium on cost of capital
EBITDA growth – well above global chemical production
Remain a strong cash provider – continuously generate high levels of free cash flow
Progressive dividend policy – grow or at least maintain dividend at previous year’s level
Financial targets for the coming years
BASF Capital Market Story, March 2017 15
Innovations for a sustainable future
Investments in organic growth
M&A opportunities and portfolio pruning measures
Our priorities
Cost discipline and operational excellence
We aim to grow sales and earnings faster than global chemical production
in the coming years, driven by
BASF Capital Market Story, March 2017 16
Outlook 2017 for BASF Group
We want to slightly raise EBIT before special items compared with 2016
We expect BASF Group sales to grow considerably in the 2017 business year
BASF Group EBIT is also expected to grow slightly in 2017
We are likely to once again earn a significant premium on our cost of capital in 2017
BASF Capital Market Story, March 2017 17
Agenda
At a glance1
Strategic levers2
Segments3
► Portfolio development
► Investments
► Innovation
► Sustainability
► Operational excellence
BASF Capital Market Story, March 2017 18
Continuous global portfolio development
target(in % of sales*)~50% ~50%
Maintaining a balanced portfolio
Divestment of
businesses,
e.g., due to loss
of differentiation
Divestment of
businesses,
e.g., due to lower
market attractiveness
Commoditization leads to
restructuring
Growth fields
Innovation
pipeline
Acquisitions
Specialties and solutions Differentiated commodities
Attractive markets
Differentiation by process
technologies and integration
Attractive markets
Differentiation by customer
proximity and innovations
* Excluding Oil & Gas sales
BASF Capital Market Story, March 2017 19
Portfolio development towards more market-driven and
innovative businesses
Strong Partnerships
Gazprom
PETRONAS
Sinopec
Total
Selected transactions
2010 − today
BASF
core business
~€5.4 billion sales
in emerging and
innovation-driven businesses
Acquisitions
Functional crop care
Personal care & food
Omega-3 fatty acids
Enzymes
Battery materials
Specialty plastics
Selected assets in Oil & Gas
Refinish coatings
Surface treatment
Divestitures
~€20.7 billion sales
in businesses with limited fit
and differentiation potential
Styrenics
Fertilizers
Selected assets in Oil & Gas
Natural gas trading & storage
Custom synthesis business
Textile chemicals
Polyolefin catalysts
Industrial coatings
BASF Capital Market Story, March 2017 20
Clear acquisition criteria
We want to acquire businesses which …
provide a return on investment above
the WACC
are EPS accretive by year three at the
latest
We want to acquire businesses which …
generate profitable growth above the industry
average
are innovation-driven
offer a special value proposition to customers
reduce earnings cyclicality
Acquisition
criteria
Strategic acquisition criteria Financial acquisition criteria
BASF Capital Market Story, March 2017 21
Chemetall – a global leader in surface treatment
products and services
Key facts
One of the strongest globally managed
brands in the sector
Proprietary manufacturing technologies,
rigorous product quality and
performance standards
Leading market positions in the
automotive, aerospace and cold
forming segments
Long-standing, service-intensive
customer relationships
Track record of strong growth and high
profitability
An excellent strategic fit for BASF Coatings
Significant global presence and record of accelerated expansion in emerging markets
BASF Coatings site Chemetall site
BASF Capital Market Story, March 2017 22
Investments in organic growthInvestments of ~€3.9 billion planned for 2017
Performance
Products
21%
Oil & Gas
23% €19.0 billion
Capex budget 2017-2021
(by segment)
Other
13%
Chemicals
24%
Capex budget 2017-2021
(by region)
Asia Pacific
16%
North America
22%
Agricultural
Solutions
4%
Other**
3%
Functional Materials
& Solutions
15%
€19.0 billion
South America*
10%
* Including Africa and Middle East, ** Alternative sites currently being investigated
Europe
49%
Oil & Gas Europe
BASF Capital Market Story, March 2017 23
Investment projects with startup in 2017
Aroma ingredients complex
Kuantan, Malaysia
BASF and PETRONAS further
expand joint activities in Malaysia
Investment: around €500 million
Ammonia plant
Freeport, Texas
BASF and Yara are building world-
scale ammonia plant in the U.S.
750,000 tons per year;
hydrogen-based process
Engineering plastics
Schwarzheide, Germany
Expansion of annual capacity
by 70,000 tons
Increasing BASFʼs global compounding
capacity to more than 700,000 tons
BASF Capital Market Story, March 2017 24
Oil & Gas
2%
Innovation will drive future growth
Agricultural
Solutions
26%
Chemicals
10%
Performance Products
20%
Corporate Research
21%
Key facts
€1.86 billion R&D expenditures in 2016
R&D expense to sales ratio ~3%
~10,000 employees in R&D
~3,000 projects
~850 new patents in 2016
Research Verbund:
Cooperations with more than 600
excellent partners from universities,
startups and industry
In 2016, sales of >€10 billion with
products launched during last 5 years
R&D expenditures 2016
€1.86 billion
Functional Materials
& Solutions
21%
BASF Capital Market Story, March 2017 25
Innovations for a sustainable futureExamples with significant contributions to sustainability
FWC™ Four-Way Conversion
catalyst removes particulates
Acronal® MB – from biomass to
dispersions
Trilon M® phosphate alternative
for dishwashing detergentsSLENTITE® high-performance
insulation material
Green Sense® resource-efficient
concrete production
ecovio® biodegradable polymer
solution
BASF Capital Market Story, March 2017 26
Sustainable Solution Steering®
Novel methodology to screen and steer our portfolio
4.2% 0.3%
>60,000 product applications analyzed
(€53.2 billion sales, 95.9% of BASF’s
portfolio)
27.2% Accelerators
– outgrow their markets
– deliver margins above the average
– represent majority of BASF’s R&D
pipeline
68.3% Performers
<1% Challenged products
Increase the share of Accelerators from 23% in 2014 to 28% by 2020
27.2%
68.3%
Substantial sustainability
contribution in the value chain
Meets basic sustainability
standards on the market
Specific sustainability issues
which are being actively addressed
Significant sustainability concern,
action plan developed
Sustainable
Solution
Steering
Percentage of
sales 2016
BASF Capital Market Story, March 2017 27
Carbon efficiencyResponsible use of raw materials by the chemical industry
BASF uses raw materials responsibly: ~80% of carbon
converted to products, ~20% needed for processes*
Continuous efficiency improvements
22 million tons CO2 emissions by BASF in 2016 compared to
10-30 million tons p.a. for one coal-fired power plant
Chemical industry: only ~10% of global consumption of fossil resources**
Growing world population needs access to energy, housing,
healthcare and food
Consumption of resources has to be reduced in order to limit global
warming to <2°C
Chemistry as enabler for low-carbon technologies
(e.g., lightweight parts, battery materials, insulation, etc.)20%
CO280%
products
*BASF carbon mass balance calculation (2016, non-audited) **IEA 2015
BASF Capital Market Story, March 2017 28
0
1.000
Earnings contribution 2016 2017-2018 Total
Operational excellenceDrivE with ~€1 billion targeted earnings contribution
DrivE program
Targeted annual earnings contribution of
€1 billion from end of 2018 on
Optimization of processes and structures
in all regions, including
– manufacturing
– incremental capacities
– productivity increase
Project timeline: 2016–2018
€350 million
€650 million
Goal €1 billion
Annual earnings contribution DrivE
million €
1,000
BASF Capital Market Story, March 2017 29
Strong track record in operational excellence
* Excl. companies with major IFRS 10/11 restatements, i.e. BASF YPC Nanjing, Libya onshore, other Oil & Gas and Catalysts companies
50
100
150
200
250
300
350
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
EBITDA
Sales
Fixed Costs
CAGREBITDA
8%
CAGRSales
4%
3%
CAGRFixed Costs
BASF Group* 2001–2016
indexed; CAGR 2001–2016
BASF Capital Market Story, March 2017 30
Digitalization will support BASF’s growth and efficiency
Digital Business Models
Smart Innovation
Smart Supply Chain
Smart Manu-facturing
Growth
Digital business models
Customer connectivity
Digitalization of R&D
New revenue streams
Increased supply share
Higher innovation output
Predictive maintenance
Augmented reality in production
Smart supply chain
Increased capacity
Increased work efficiency
Reduced working capital
Efficiency
BASF Capital Market Story, March 2017 31
Agenda
At a glance1
Strategic levers2
Segments3► Chemicals
► Performance Products
► Functional Materials & Solutions
► Agricultural Solutions
► Oil & Gas
BASF Capital Market Story, March 2017 32
ChemicalsSignificantly higher earnings driven by strong volume growth and increased prices
Intermediates
693
+3%
Monomers
1,662
+19%
Petrochemicals
1,207
+8%
€3,562
+12%
Sales Q4 2016 vs. Q4 2015
million €
Sales development Volumes Prices Portfolio Currencies
Q4 2016 vs. Q4 2015 6% 6% 0% 0%
FY 2016 vs. FY 2015 3% (11)% 0% 0%
EBIT before special items
million €
249
635
0
250
500
750
Q4 2015 Q4 2016
+155%
2,156 2,064
0
1,000
2,000
3,000
FY 2015 FY 2016
(4%)
BASF Capital Market Story, March 2017 33
Performance ProductsEarnings slightly up due to improved margins
Performance Chemicals
947
(4)%
Nutrition & Health
443
+3%
Dispersions & Pigments
1,034
(1)%
€3,602
(1)%
Sales development Volumes Prices Portfolio Currencies
Q4 2016 vs. Q4 2015 0% 0% (2)% 1%
FY 2016 vs. FY 2015 1% (2)% (2)% (1)%
Care Chemicals
1,178
+1%
228 231
0
100
200
300
Q4 2015 Q4 2016
+1%
Sales Q4 2016 vs. Q4 2015
million €
EBIT before special items
million €
1,366
1,745
0
1,000
2,000
FY 2015 FY 2016
+28%
BASF Capital Market Story, March 2017 34
1,649
1,946
0
1,000
2,000
FY 2015 FY 2016
Functional Materials & Solutions Profitable growth based on continued strong demand from the automotive industry
Coatings
921
+14%
Catalysts
1,736
+12%
Sales development Volumes Prices Portfolio Currencies
Q4 2016 vs. Q4 2015 11% (1)% 0% 0%
FY 2016 vs. FY 2015 7% (5)% 0% (1)%
389
458
0
250
500
Q4 2015 Q4 2016
+18%
Construction
Chemicals
564
0%
Performance Materials
1,740
+9%
€4,961
+10%
Sales Q4 2016 vs. Q4 2015
million €
EBIT before special items
million €
+18%
BASF Capital Market Story, March 2017 35
1,090 1,087
0
1,000
2,000
FY 2015 FY 2016
Agricultural SolutionsSales grew considerably due to higher volumes; earnings burdened by higher fixed costs
Sales development Volumes Prices Portfolio Currencies
Q4 2016 vs. Q4 2015 9% (2)% 0% 3%
FY 2016 vs. FY 2015 (2)% 0% 0% (2)%
144
79
0
100
200
Q4 2015 Q4 2016
(45)%
+10%
Sales Q4 2016 vs. Q4 2015
million €
EBIT before special items
million €
0%
1,1671,281
0
1,000
2,000
Q4 2015 Q4 2016
BASF Capital Market Story, March 2017 36
Oil & GasSales and earnings increased significantly, mainly due to higher volumes
Sales development Volumes Prices / Currencies Portfolio
Q4 2016 vs. Q4 2015 23% 3% 0%
FY 2016 vs. FY 2015 3% (3)% (79)%
EBIT before special items / Net income
million €
731*
922*
0
500
1,000
Q4 2015 Q4 2016
+26%
127* 163*
-184
182
-250
0
250
500
Q4 2015 Q4 2016
Natural Gas TradingExploration & Production Net income
* Including transportation business ** Natural Gas Trading divested to Gazprom end of September 2015 as part of the asset swap
Sales Q4 2016 vs. Q4 2015
million €
1,000
426**
940
517
1,050
362
0
1,000
2,000
FY 2015 FY2016
1,366
*
BASF Capital Market Story, March 2017 37BASF Investor Day 2015 – Keynote speech 37