1BASF Capital Market Story November 2010
Profitable growth loves ups and downsProfitable growth loves ups and downs
2BASF Capital Market Story November 2010
Business dynamics remained strong in Q3
1.21.5
2.02.2 2.2
0.0
0.5
1.0
1.5
2.0
2.5
Q3 Q4 Q1 Q2 Q3
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q3’10 vs. Q2’10 (3)%* 0% 0% 0%
Q3’10 vs. Q3’09 5% 10% 0% 8%
1-9 ’10 vs. 1-9 ’09 14% 6% 2% 4%
EBIT before special items (billion €)
20102009
12.8 13.215.5 16.2 15.8
0
4
8
12
16
20
Q3 Q4 Q1 Q2 Q3
Sales (billion €)
* +2% volume growth w/o Agricultural solutions and Oil & Gas
20102009
3BASF Capital Market Story November 2010
Construction ChemicalsSTYROLUTION Oil and Gas
Carve-out of Styrenics activities into STYROLUTIONEffective: January 1, 2011Sales 2009: €2.5 billionEmployees 2009: 1,460
BASF admixtures used in the construction of Gotthard Base Tunnel – World’s longest railway tunnelSpecial admixtures for long distance and high temperature
Five North Sea oil discoveries in 2010:
– Norway: Beta and Maria; – UK: Catcher, Blakeney,
CladhanNew discoveries with growth potentialAppraisal phase starts asap
Important operational developments
4BASF Capital Market Story November 2010
* According to German GAAP** Cash provided by operating activities less capex (in 2005 before CTA)*** 2009 adjusted for re-classification of settlement payments for currency
derivatives
Continuous strong cash flow
Cash Flow (billion €)
Cash provided by operating activitiesFree cash flow**
-1
0
1
2
3
4
5
6
7
2001* 2002* 2003* 2004 2005** 2006 2007 2008 2009 2010Q1-Q3
5.3
3.8
***
5BASF Capital Market Story November 2010
Average annual dividend increase of 12.8%(2001-2009)
Dividend yield above 3% in any given year since 2001
Attractive dividend yield of 3.9% in 2009*
Consistent, long-term valueJan 2001 – September 2010:Average annual performance of BASF share** of 11%
For 2010, we expect to increase the dividend.3.9%
Attractive shareholder returns
Key factsDividend per share (€)
1.70
0.70 0.700.85
1.00
1.50
1.95 1.95
0.65
0.0
0.5
1.0
1.5
2.0
2001 2002 2003 2004 2005 2006 2007 2008 2009
0.5
1.0
1.5
2.0
3.1% 3.9% 3.1%
* Dividend yield based on share price at year-end
3.2% 3.1% 4.1% 3.8% 7.0%Yield*
** With dividends reinvested
1 | Focus on operational excellence
2 | Well positioned for profitable growth
3 | Outlook
6
Earnings
Earnings
Costs
7BASF Capital Market Story November 2010
Vertical and horizontal integration of production plants, energy and waste flows, logistics and site infrastructure
Know-how Verbund
Energy Verbund and combined heat and power plants lead to- Savings of ∼2.6 million tons
oil equivalent p.a.- Reduction of CO2 -emissions
of ~6 million tons p.a.
7
Unique ‘Verbund’ concept Cost savings of >€500 million p.a. in Ludwigshafen alone
BASF site Ludwigshafen, Germany Verbund Concept
8BASF Capital Market Story November 2010
Since 2001 sales and earnings increased significantly
Fixed costs represent around 30% of total costs
Ciba synergies and NEXT will drive fixed costs down
Synergies from Ciba integration 2010E:€350 million run-rate
Fixed costs indexed EBITDA indexedSales indexed
Tenacious fixed cost management
Key factsBASF Group development 2001-2009
TrendIndex
50
100
150
200
250
2001 2003 2005 2007 2009
9BASF Capital Market Story November 2010
> 500 individual projects to simplify processes, structures and production sites in all regions
Project timeline:2008-2011
Annual earnings contribution of €600 million in 2010 expected
Targeted earnings contribution by 2012:≥€1 billion
Completed restructuring programs New efficiency program NEXT
Sustainable improvement of cost base
New EXcellence Targets (NEXT)Annual earnings contribution (million €)
20122010E0
500
1,000
1,500
2,000
2,500
2003 2005 2007 2009
1 | Focus on operational excellence
2 | Well positioned for profitable growth
3 | Outlook
10
Earnings
Earnings
Costs
11BASF Capital Market Story November 2010
Leading positions in growth industries
and emerging markets
Ongoing portfolio
optimization
Excellent innovation platform
We strive to outperform global chemical production growth by at least 2 percentage points p.a.
Well positioned for profitable growth
Translate megatrends into business growthContinue expansion in Asia
Continue with active portfolio managementDrive portfolio closer to customers
Product and system innovation as growth driversStrong pipeline of innovations
Growth target:
12BASF Capital Market Story November 2010
Leading positions in growth industries and
emerging markets
12
13BASF Capital Market Story September 2010
Ambitious targets for 2020
Regional sales targets 2020
Outgrow global chemical production growth by 2 percentage points
Earn premium on cost of capital in all regions
* corresponds to sales of €17 billion in 2020, assuming $/€ of 1.40
** oil price assumption of $75/bbl until 2013, thereafter increase to ~$100/bbl up to 2020
Profitable growth to more than €90 billion in sales by 2020
2009 2020
€9bn€20 bn
Asia Pacific
7-8% p.a.2009 2020
€30 bn
€49 bn**
Europe, including Africa, Middle East
4-5% p.a.
2009 2020
South America
€3 bn €6 bn~8% p.a.
2009 2020
North America
€9 bn€17 bn*
5-6% p.a.
14BASF Capital Market Story September 2010
Growth in emerging markets Outgrowing Asian Pacific chemical market by 2 percentage points p.a.
New Zealand
Australia
China
Pakistan
Bangladesh
India Thailand
Singapore
Indonesia
Taiwan
JapanS. Korea
Malaysia
VietnamHong Kong
Asia Pacific service center
Regional headquarters
Verbund site
Chemical production site *
R&D center *
Strengthen market focus through industry and customer target groupsDevelop and market innovations in Asia for AsiaInvest in Asia to generate 70% of sales through local production
– €2 billion investments planned for 2009-2013
• Expansion of Verbund site Nanjing, China
• New MDI plant in Chongqing, China* Some sites not shown due to scale
BASF expects to double sales to €20 billion in Asia Pacific by 2020:
15BASF Capital Market Story November 2010
Ongoing portfolio optimization
15
16BASF Capital Market Story November 2010
BASFcore
businesses
Powerful partnerships
Major acquisitions Major divestitures
Pharmaceuticals
Fertilizers
Refineries
Fibers
Printing systems
Polyolefins (Basell)
Polystyrene North America
Agchem generics
Premix
Crop protectionSuperabsorbentsOil & Gas (Revus)Engineering Plastics Electronic ChemicalsCustom synthesisCatalysts (Engelhard)Construction Chem.Water-based resinsPigments (Ciba)Plastic additives (Ciba)
16 billion Euro*(Sales)
10 billion Euro**
(Sales)
GazpromMonsantoPetronasShellSinopecTotal
** not including Styrenics business
Selected transactions 1999 to date
Styrenics (STYROLUTION)(to be divested)
Pro-active portfolio management
Cognis(acquisition announced)
* not including Cognis
17BASF Capital Market Story November 2010
Active portfolio management pays off
Chemical activities
Agricultural Solutions
Oil & Gas, including non-deductible oil taxes
EBITDA by activity (in billion €, without Other)
Recent acquisitions reshaped portfolio- Closer to customers- Innovation-driven- Profitable growth above
industry average
BASF’s EBITDA (excluding Other) was €9 billion in 1-9/2010
EBITDA margin 1-9/2010:17.8%
* Based on German GAAP** As of 2007 according to new segment structure
(excl. Styrenics and corporate costs)
Our diversified portfolio is a key strength
2010Q1-Q3
0
2
4
6
8
10
2001* 2003* 2005 2007** 2009
18BASF Capital Market Story November 2010
Specific solutions based on renewable resources formining, synthetic lubricants, coatings and crop protection industries
Sales 2009: €786 millionEBITDA margin 2009: 11.2%
Functional Products
Products and formulations forthe personal and home caremarkets
Sales 2009: €1,457 millionEBITDA margin 2009: 13.2%
Care Chemicals
Products, formulations and concepts for functional food, beverage, dietary supplements and pharma
Sales 2009: €325 millionEBITDA margin 2009: 13.2%
Nutrition & Health
Cognis A global leader in value-added products
19BASF Capital Market Story November 2010
Integration into Performance Products segment with the following objectives
Growing >2% points faster than the relevant market
Achieve 20% EBITDA margin in the Performance Products segment by 2012
Acquisition accretive as of 2012
Integration costs of €200-250 million until end of 2012
Cost synergies of at least 5% of 2009 net sales fully achieved by 2013
BASF + Cognis Clear targets
20BASF Capital Market Story November 2010
Excellent innovation platform
20
21BASF Capital Market Story November 2010
R&D spending in 2010 planned on similar level
Innovation will spur further growth
Total R&D expenditures 2009 (billion €)R&D investments: 3.5% of sales*More than 9,300 employees involved in R&DAround 1,900 partnerships with universities, startup companies and industry partners Five Growth Clusters:- Nanotechnology- Energy Management- Plant Biotechnology- Industrial Biotechnology- Raw Material ChangeBudget for Growth Clusters (2009-2011): up to €1 billion
Strong commitment to R&D
* Excluding Oil & Gas
24%
1%
Corporate Research23%
Agricultural Solutions
25%
Functional Solutions12%
Performance Products20%
Chemicals9%
Plastics9%
€1.4 billion
Other2%
22BASF Capital Market Story November 2010
CO2 scrubbing NaphthaMax®
III
High-efficiency capture of carbon dioxide (CO2) from combustion gases in coal-fired power plantsDevelopment of new processes and solvents
Catalyst for Fluid Catalytic Cracking (FCC) unitsIncreased zeolite activity and coke selectivity as well as improved hydrothermal stabilityIncreased gasoline yield from the FCC unitTranslating to higher refinery margins
Standak®
Top
SeedSolutions® innovation for soybean growers in BrazilReady-to-use insecticidal and fungicidal seed protection with Plant Health characteristicsAttractive and fast growing market driven by high value seed
Introducing the next leading technologies
23BASF Capital Market Story November 2010
4.53.50
5
10
15
20
Innovation pipeline worth €19 billion
* New or improved products or new applications, max. 5 years on market, including Growth Clusters
Net present value by segments (billion €)
Net Present Value (NPV) represents discounted earnings after tax from R&D projects after deduction of R&D expenditures
Major contribution from Agricultural Solutions and Performance Products
History of high success rate due to consequent R&D controlling and Phasegateprocess, including life cycle management
R&D contributes significantly to earnings growth
€19 billion
17% Performance Products7% Plastics4% Chemicals
9% Functional Solutions
45% Agricultural Solutions
3% Oil & Gas15% Corporate Research
1 | Focus on operational excellence
2 | Well positioned for profitable growth
3 | Outlook
24
Earnings
Earnings
Costs
25BASF Capital Market Story November 2010
GDP
Chemicals (excl. Pharma)
Industrial production
US$ / EURO
Oil price (US$ / bbl)
3% - 4%
7% - 8%
7% - 8%
1.30
75
Assumptions 2010
26BASF Capital Market Story November 2010
We aim to grow sales on average by two percentage points per year above chemical market growth.We strive to grow our earnings further year by year and to achieve an EBITDA margin of 18% until 2012.
We expect:- the good business development to continue in the fourth quarter of 2010 - sales of ~€ 63 billion and EBIT before special items of more than € 8 billion in 2010- to earn a high premium on our cost of capital- to increase the dividend
Targets 2010
Medium-term targets
We aim to continuously increase the annual dividend, or at least maintain it at the level of the previous year.
Dividend policy
Outlook: record year 2010
27BASF Capital Market Story November 2010
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
28BASF Capital Market Story November 2010
29BASF Capital Market Story November 2010
* Styrenics reported under ‘Other’
Percentage of sales 2009
Chemicals
15%
Plastics*
14%
Functional Solutions14%
Performance Products18%
Agricultural Solutions7%
Oil & Gas
22%
Construction Chemicals
Inorganics
Petrochemicals
Intermediates
Performance Chemicals
Coatings
Dispersions & Pigments
Performance Polymers
Polyurethanes
Crop Protection
Exploration & Production and Natural Gas Trading
Care Chemicals
Catalysts
Paper Chemicals
BASF today – a well-balanced portfolio Total sales 2009: €50.7 billion
30BASF Capital Market Story November 2010
Delivering consistent, long-term value
Long-term performance January 2001 – September 2010 (average annual performance with dividends reinvested)
BASF total return well above benchmark levels
Average annual dividend increase of 12.8%(2001-2009)
Attractive dividend yield of 3.9% in 2009, based on share price at year-end
Aim to increase dividend each year, or at least maintain it at the previous year‘s level
Committed to shareholder value
MSCI World Chemicals
DAX 30
Euro Stoxx 50
BASF
5.7%
-0.3%
-3.0%
11.3%
-5 0 5 10 15
31BASF Capital Market Story November 2010
Chemicals Continued strong demand
Intermediates643(1)%
Inorganics322
(1)%
Petrochemicals1,909(4)%
€2,874 (3)%
364315
461
687617
0
200
400
600
Q3 Q4 Q1 Q2 Q3
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q3’10 vs. Q2’10 0% (2)% 0% (1)%
Q3’10 vs. Q3’09 10% 25% 0% 9%
1-9 ’10 vs. 1-9 ’09 22% 31% 0% 4%
Q3’10 segment sales (million €) vs. Q2’10 EBIT before special items (million €)
20102009
32BASF Capital Market Story November 2010
Plastics Earnings up thanks to high capacity utilization
Polyurethanes1,458+4%
Performance Polymers
1,140(4)%
€2,598 +1%
216251
279
349 371
0
200
400
Q3 Q4 Q1 Q2 Q3
Sales development Period Volumes Prices Portfolio Currencies
Q3’10 vs. Q2’10 1% 0% 0% 0%
Q3’10 vs. Q3’09 14% 7% 0% 11%
1-9 ’10 vs. 1-9 ’09 27% 10% 0% 5%
Q3’10 segment sales (million €) vs. Q2’10 EBIT before special items (million €)
20102009
33BASF Capital Market Story November 2010
Performance Products Solid earnings despite one-off costs
286209
419471
370
0
100
200
300
400
500
Q3 Q4 Q1 Q2 Q3
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q3’10 vs. Q2’10 1% 1% 0% 0%
Q3’10 vs. Q3’09 7% 7% 0% 7%
1-9 ’10 vs. 1-9 ’09 15% 3% 13% 4%
Dispersions & Pigments
887+4%
Performance Chemicals
832+3%
Care Chemicals682+1%
€3,206 +2%
Paper Chemicals448+2%
Q3’10 segment sales (million €) vs. Q2’10 EBIT before special items (million €)
Nutrition & Health357(4)%
20102009
*
* Reduction in EBIT before special items due to one-time charges
34BASF Capital Market Story November 2010
Functional Solutions Increased volumes drive topline growth
Catalysts1,347+10%
Construction Chemicals599
+4%
Coatings645
(1)%
€2,591 +6%
106 101 111
165 158
0
50
100
150
Q3 Q4 Q1 Q2 Q3
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q3’10 vs. Q2’10 7% (1)% 0% 0%
Q3’10 vs. Q3’09 15% 9% 1% 12%
1-9 ’10 vs. 1-9 ’09 18% 11% 1% 7%
Q3’10 segment sales (million €) vs. Q2’10 EBIT before special items (million €)
20102009
35BASF Capital Market Story November 2010
Agricultural Solutions Successful start to new season in South America
21
66
0
40
80
Q3 Q3
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q3’10 vs. Q2’10 (31)% (1)% 0% 1%
Q3 ’10 vs. Q3 ’09 29% (6)% 0% 11%
1-9 ’10 vs. 1-9 ’09 7% (3)% 0% 4%
Q3’10 segment sales (million €) vs. Q3’09 EBIT before special items (million €)
20102009
832
623
0
200
400
600
800
1,000
Q3 Q320102009
+34%
+214%
36BASF Capital Market Story November 2010
Oil & Gas Improved earnings despite lower volumes
186 272
0
200
400
600
800
Q3 Q3
Exploration & Production881(1)%
Natural Gas Trading
1,347(10)%
€2,228 (7)%
Sales developmentPeriod Volumes Prices/Currencies Portfolio
Q3’10 vs. Q2’10 (12)% 6% 0%
Q3’10 vs. Q3’09 (23)% 16% 0%
1-9 ’10 vs. 1-9 ’09 3% (13)% 0%
83 70
EBIT bSI Natural Gas TradingEBIT bSI Exploration & Production
Net income
Q3’10 segment sales (million €) vs. Q3’09 EBIT before special items / Net income (million €)
20102009
467503
550 573
37BASF Capital Market Story November 2010
0
100
200
300
400
500
2009 2010 2011/2012 SteadyState
130
350
Integration costs2009: €785 million2010: ~€170 million2011/2012: ~€100 million
Net reduction of positions- Target: 3,800- Status Q3 2010: >2,400
Ciba non-production sites- To be consolidated: 58- Status Q3 2010: 47 exited
23 Ciba production sites under strategic review- Planned exit: 15*(thereof 11 implemented)
Ciba integration: synergies exceed targets Structural integration of Ciba completed
Expected synergy run rate (million €) Impact of Ciba acquisition
450 >450Synergy Target
Synergy run rate Effective in 2009
* On two sites exit of production activities only
Top Related