BASF Creditor Story · BASF Creditor Story November 2016 6 150 years Global reduction in carbon emissions of 6 million metric tons p.a. and reduction of ... reaction injection molding

BASF Creditor Story November 2016 1

BASF Creditor Story

Ulf LoleitSenior Vice President

Treasury

Hong Kong

December 2016


150 years

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.


BASF at a glance

Business review & outlook

Path forward

Financing highlights


150 years

Chemistry as an enabler

BASF has superior growth

opportunities:

– sustainable innovations

– investments

– emerging markets

The #1 chemical company

€70.4 billion sales, €6.7

billion EBIT bSI in 2015

#1-3 in ~70% of businesses,

present in almost all

countries

6 integrated Verbund sites,

production in 60 countries

A track record of strong

sales and earnings growth

>3.5% dividend yield in

every single year from

2006-2015

~€73.6 billion market

capitalization on October

27, 2016

Perspective

Ludwigshafen,

Germany

Antwerp,

Belgium

Nanjing,

China

Kuantan,

MalaysiaGeismar,

Louisiana

Freeport,

Texas

Verbund site

Positioning

We create chemistry

for a sustainable future

Performance


150 years

Percentage of sales 2015*

* Not depicted here: ~4% of Group sales reported as ‘Other‘ ** Natural Gas Trading has been divested on Sep. 30, 2015.

BASF today – a well-balanced portfolioTotal sales 2015: €70.4 billion


150 years

Global reduction in carbon

emissions of 6 million metric

tons p.a. and reduction of

waste

Example Ludwigshafen site:

avoidance of 7 million metric

tons of freight p.a.

= 280,000 fewer truckloads

Shared use of on-site facilities:

fire department, security, waste

water treatment and analytics

Verbund: Unique competitive advantage

* Savings include only tangible synergies. Additional (intangible) benefits and retained profits are not included.

Verbund generates >€1 billion p.a. global cost savings* and supports sustainability


BASF at a glance


Path forward



150 years

Components of growth

* 2010, 2011 indicative, adjusted for IFRS 10 & 11

59.6

70.4

+10.5-1.4 +2.6 -0.9

20

40

60

80

2010 2015

Volumes

PricesFX M&A

Sales* analysis 2010 – 2015

(in billion €)

(in billion €) Net sales 2010 Volumes Prices FX M&ASales CAGR

2010 - 2015

BASF Group

w/o Oil & Gas51.4

+2.8 (+1.1% CAGR)

-0.9 +2.6 +1.6 +2.3%

Oil & Gas 8.2+7.7

(+14.2% CAGR)-0.5 +0.0 -2.5 +9.6%

3.4%

CAGR


150 years

Steady earnings growth

* 2010, 2011 indicative, adjusted for IFRS 10 & 11; 2001 – 2009 as reported, without non-compensable foreign income taxes on oil production

EBIT and EBITDA*

(in billion €, 2001 - 2015)

3.7

4.7 4.6

7.0 7.2

8.48.9

7.7

6.5

9.9

11.2

10.010.4

11.010.6

8.0

0

2

4

6

8

10

12

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1-Q32016

EBITEBITDA

0.7

2.2 2.2

4.5 4.8

5.56.0

4.6

2.8

6.7

8.0

6.7 7.27.6

6.2

5.0

CAGREBITDA

7.9%CAGREBIT

16.6%


150 years

0

1

2

3

4

5

2007 2008 2009** 2010 2011 2012 2013 2014 2015 Q1-Q32016

Free cash flow development

* Cash provided by operating activities less capex

** 2009 adjusted for re-classification of settlement payments for currency derivatives

Free cash flow*

(in billion €)

3.2

2.5

3.2

3.93.7

2.6

3.2

1.7

3.6

2.9


150 years

Q3 2016: Financial figures for BASF Group

Financial figures Q3 2016 Q3 2015 Change

Sales €14.0 billion €17.4 billion (20%)

EBITDA €2.4 billion €2.9 billion (15%)

EBIT before special items €1.5 billion €1.6 billion (5%)

EBIT €1.5 billion €1.9 billion (22%)

Net income €0.9 billion €1.2 billion (27%)

Reported EPS €0.97 €1.31 (26%)

Adjusted EPS €1.10 €1.07 +3%

Operating cash flow €2.5 billion €3.4 billion (25%)

Sales development Volumes Prices Portfolio Currencies

Q3 2016 vs. Q3 2015 4% (5%) (18%) (1%)


150 years

Outlook 2016 for BASF Group confirmed

Outlook 2016

Sales will be considerably below prior year due to the divestiture of the natural gas trading

and storage activities and the lower oil and gas prices.

We expect EBIT before special items to be slightly below the previous year level due to

significantly lower earnings in Oil & Gas.

Assumptions 2016

GDP growth: +2.3%

Growth in industrial production: +2.0%

Growth in chemical production*: +3.4%

Exchange rate: $1.10 per euro

Oil price (Brent): $45 per barrel (previous forecast: $40 per barrel)

* Excluding pharma


BASF at a glance


Path forward



150 years

Grow sales and earnings faster than global chemical production,

driven by

– Continued focus on innovations

– Capital expenditures

– Acquisitions

– Operational excellence and Verbund advantages

Focus on cash generation/conversion

Continue with our progressive dividend policy

Focus on pruning our portfolio

Maintain industry-leading position in sustainability

The path forward:

Our priorities


150 years

Strategic lever:

Innovations

Allow for creativity

Balance incremental und disruptive innovations

Manage innovation pipeline efficiently on all levels

Build on our global R&D Verbund

Leverage external collaborations even more

Align R&D activities with business models:

– Differentiated commodities

• Focus on improving processes and addressing raw material change

• Launch selected product innovations

– Specialties and solutions

• Develop new, tailored offerings in close collaboration with customers

• Pursue solution-oriented approach

Keep annual R&D spending at ~3% of sales*

* Without Oil & Gas


150 years

€1.95 billion R&D expenditures

in 2015; to be maintained in

2016

~10,000 employees in R&D

~3,000 projects

Ranked No.1 in the

Patent Asset Index™

~1,000 new patents in 2015

Research Verbund:

Cooperations with more than

600 excellent partners from

universities, start-ups

and industry

Strong commitment to innovationInnovations for a sustainable future

Key facts

1.6

1.71.8 1.9 1.95

0.0

0.5

1.0

1.5

2.0

2011 2012 2013 2014 2015

R&D expenditures

(billion €)

Chemicals

11%

Performance Products

20%

Functional Mat. & Sol.

20%

Agricultural Solutions

26%

Oil & Gas

2%

Corporate Research

21%

2.0

1.5

1.0

0.5

0


150 years

Hyundai Motor and BASF showcase joint

development of RN30 concept car

Body coating: Color Pro IC

waterborne basecoat and

iGloss® clearcoat

Fender and spoiler:

Elastolit® rigid foam and

reaction injection molding

systems

Seat cover and steering

wheel: unique surface

technology valure™

Electronics and electric:

Ultramid® advanced plastics

for sophisticated components


150 years

Strategic lever:

Capital expenditures

Differentiated commodities

With proprietary technology and/or Verbund advantages

Focus on:

– emerging markets

– backward integration in the U.S.

– upgrading our asset base in Europe

Specialties and solutions

Incremental investments for new products

Regional expansion of businesses

Oil & Gas

Focus investment budget by active portfolio optimization to secure free cash flow

Keep reserve-to-production ratio of approx. 10 years


150 years

Investments for organic growth

Performance

Products

16%

Oil & Gas

24%

€19.5

billion

Functional

Materials &

Solutions

12%

Capex budget 2016-2020

Other

14%

Chemicals

30%

Capex budget 2016-2020

Asia Pacific

18%

€19.5

billion

South

America*

9%

North America

26%

Europe

46%

Agricultural

Solutions

4%

Other

1%

by segment by region

* Including Africa and Middle East


150 years

Provide a return on investment

above the WACC

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 …

Strategic lever:

Acquisitions


150 years

BASF to acquire Chemetall

Transaction highlights

Purchase price of US$3.2 billion (debt free)

All-cash offer, financing secured

Expected closing of transaction by the end of 2016

Synergies on industry-typical level

EPS accretive in year 1 excluding integration costs, in year 2 including integration costs

Transaction will significantly enhance BASF Coatings’ position as complete solutions provider

Chemetall – a global technology and innovation leader in metals surface treatment


150 years

Chemetall – a global leader in surface

treatment products and services

FiguresFacts

Sales

2015: US$845 million

2016E*: US$851 million


EBITDA

2015: US$202 million



EBITDA margin

2015: 24%

2016E*: 25%

2017E*: 26%

CAGR sales

(2007 – 2015)~7% (at constant exchange rates)

Key customer

industries

Automotive, aerospace, coil,

metal forming

Regional sales

~50% Western Europe

~30% North America

~20% Emerging markets, mainly Asia

Employees ~2,500 (~50% sales professionals)

Sites21 production sites in all regions

10 R&D sites

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

Significant global presence and record of

accelerated expansion in emerging markets

Track record of strong growth and high

profitability* average analysts’ estimates


150 years

0

1,000

2,000

3,000

4,000

2015 2018

Annual earnings contribution

(in million €) Targeted annual earnings

contribution of €1 billion from

end of 2018 on

Optimization of processes and

structures in all regions, e.g.

– manufacturing

– incremental capacities

– productivity increase

Project timeline: 2016–2018

DrivE program

Strategic lever: Operational excellence

DrivE with ~€1 billion earnings contribution

NEXT 2008-2011 DrivE 2016-2018

STEP 2012-2015


150 years

50

100

150

200

250

300

350

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Strong track record in operational

excellence

EBITDA

Sales

* Excl. companies with major IFRS 10/11 restatements, i.e. BASF YPC Nanjing, Libya onshore, other Oil & Gas and Catalysts companies

BASF Group* 2001–2015

(indexed; CAGR 2001–2015)

Fixed Costs

CAGREBITDA

9%

CAGRSales

6%

CAGRFixed Costs

3%


150 years

Strategic lever:

Continuous portfolio development

Specialties and

solutions

Differentiated

commodities

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

* Excluding Oil & Gas sales

Attractive markets

Differentiation by process

technologies and integration

Attractive markets

Differentiation by customer

proximity and innovations


150 years

Functional crop care

Personal care & food

Omega-3 fatty acids

Enzymes

Battery materials

Specialty plastics

Selected assets in Oil & Gas

Refinish coatings

Surface treatment*

BASF

core business

Strong partnerships

Gazprom

Monsanto

Petronas

Shell

Sinopec

Statoil

Total

Yara

Selected transactions

2010 − until today

Acquisitions

~ €5.2 billion salesin emerging and innovation-driven

businesses

Divestitures

Styrenics

Fertilizers

Selected assets in Oil & Gas

Natural gas trading & storage

Custom synthesis business

Textile chemicals

Polyolefin catalysts

Industrial coatings*

~ €20 billion sales

in businesses with limited fit and differentiation

potential

Portfolio development towards more

market-driven and innovative businesses

* Closing expected in 2016


150 years

2.2% 0.2%

Novel methodology to screen

and steer our portfolio*

26.6% Accelerators:

– outgrow their markets

by 2-10%

– deliver margins >10%

above the average

– represent >60% of BASF’s

R&D pipeline

71% Performers

<1% Challenged products

* More than 60,000 product applications analyzed representing €64.9 billion in sales or 95.4% of BASF’s portfolio.

Increase the share of Accelerators from 23% in 2014 to 28% by 2020

Strategic lever: Sustainability

Sustainable Solution Steering

26.6%

71.0%

Substantial sustainability

contribution in the value chain

Meets basic sustainability

standards in the market

Specific sustainability issue

which is actively addressed

Significant sustainability concern,

action plan in development

Sustainable

Solution

Steering


150 years

Four-Way Conversion Catalyst

removes particulates

Trilon M® high-performance

phosphate alternative

SLENTITE® high-performance

insulation material

ecovio® biodegradable

polymer solution

Green Sense® resource efficient

concrete production

Solutions for a sustainable future

Acronal® MB – from biomass

to dispersions


150 years

Sustainability goalsOverview

Procurement Goal 2020 2015

Sustainability performance

assessment of relevant suppliers70% 31%

Employees Goal 2021 2015

Women in leadership positions 22-24% 19.5%

Long-term goal 2015

Non-German senior executives 35.6%

Senior executives with

international experience >80% 82.9%

Production Goal 2025 2015

Process safety incidents1) ≤0.5 2.1

Lost-time injury rate1) ≤0.5 1.4

Annual goal 2015

Health Performance Index >0.9 0.97

Product stewardship Goal 2020 2015

Risk assessment of products2) >99% 67.8%

Energy & climate protection Goal 2020 2015

Greenhouse gas emissions3) -40% -34.6%

Introduction of ISO 50001 energy management system4) 90% 39.5%

Water Goal 2025 2015

Sustainable water management at

Verbund sites and water stress areas100% 36.2%

Products & Solutions Goal 2020 2015

Proportion of “Accelerators”5) in

product portfolio28% 26.6%

1) per one million working hours

2) for products >1 metric ton per year

3) per metric ton of sales products; excl. Oil & Gas, baseline 2002

4) at all relevant sites (primary energy demand, local energy prices)

5) products with substantial contribution to sustainability


150 years

Ludwigshafen siteSustainably maintaining the basis

500

700

900

1,100

1,300

1,500

1,700

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Maintenance, replacement,retrofitting, modernization

Forecast

*

million €


150 years

SafetyContinual improvement in operational safety

1.5

2.0

2.5

3.0

3.5

2011 2012 2013 2014 2015 2016

BASF SE

Jan.-Sep.

Work-related accidentsLost-time injury rate per 1 million working hours

* Source: BG RCI

Safety has top priority at BASF

Significantly fewer work-related

accidents than the average in

the chemical industry in

Germany*

Same safety standards for the

partner companies of BASF

Regular audits and inspections


150 years

Profitability of BASF will grow faster than

global chemical production

Sales growth

Slightly faster than the global chemical production

EBITDA growth

Well above global chemical production

Remain a strong cash provider

Continuously generate high levels of free cash flow

Financial targets for the coming years

Deliver attractive returns

Earn a significant premium on cost of capital

Progressive dividend policy

We want to grow or at least maintain our dividend


BASF at a glance


Path forward



150 years

Financing strategy

Diversified Debt Financing Instrumentsas of September 30, 2016

€20 billion debt issuance

program (for long-term debt

financing)

US$12.5 billion commercial

paper program (for short-term

debt financing)

Two broadly syndicated

backup-lines of €3 billion each

(maturing in 2020 and 2021)

Funding Strategy Highlights

Commercial Papers

17%Bank Loans

19%

€-denominated

Bonds

47%

€15.8billion

Keep a solid A rating (ratings* S&P A / Moody’s A1 / Scope A)Our target:

* Last confirmation Moody’s: June 23, 2016. Last confirmation S&P: August 10, 2016. Last confirmation Scope: September 6, 2016.

Other Bonds

17%


150 years

* Nominal values, excluding industrial revenue and pollution control bonds from BASF Corporation.

Profile as of November 10, 2016 (in billion €)*

Well-balanced bond maturity profile

1.0

2.0

2.5

0.5

0.0

1.5

3.0

2.6

0.50.4

0.5

0.8

1.31.3

0.3

1.3

0.7

1.0

0.3 0.3 0.40.5 0.5

1.8

1.0

2019

1.01.3

20222018

1.8

2021

0.8

1.9

2016 2020

1.3

2024 >20262025 20262017 2023

Bonds issued after September 30, 2016 Bonds outstanding as of September 30, 2016


150 years

Highlights of BASF’s credit

Strong track record of sales and earnings growth

Combining economic success with social commitment and

environmental protection

Diversified financing strategy with a strong commitment to

keep a solid A rating

Focus on operational excellence

- Advantageous cost position due to unique Verbund concept

- Disciplined cost management

Well positioned for profitable growth

- Excellent innovation platform

- Leading positions in growth industries and emerging markets

- Ongoing portfolio optimization

Strong free cash flow over the last decade


150 years

BASF Creditor Relations Team

Frank Wilhelmi

Head of Capital Market Financing

Dr. Lars Budde

Senior IR Manager

Creditor Relations

Contact Details:

Email: [email protected]

Phone: +49 621 60 91386

Websites: www.basf.com/bonds

www.basf.com/anleihen

Thomas Langguth

Capital Market Financing

Niklas Friese

Capital Market Financing


150 years


150 years

Overview of bonds (1/2) as of September 30, 2016

Bond Term Issuer Volume ISIN Code

1.5% Euro Bond 2016/2031 BASF SE €200 million XS1374994280

1.375% GBP Bond 2014/2017 BASF SE GBP250 million XS1144218804

EUR Floating Rate Note 2014/2017 BASF SE €300 million XS1043167433



3.89% USPP Series A 2013/2025 BASF SE USD250 million N/A

4.09% USPP Series B 2013/2028 BASF SE USD700 million N/A

4.43% USPP Series C 2013/2034 BASF SE USD300 million N/A

3.675% NOK Bond 2013/2025 BASF SE NOK1.45 billion XS0932079717


2.875% EUR Bond 2013/2033 BASF SE €200 million XS0932307100



3% EUR Bond 2013/2033 BASF SE €500 million XS0885399583


150 years

Overview of bonds (2/2) as of September 30, 2016

Bond Term Issuer Volume ISIN Code

1.875% EUR Bond 2013/2021 BASF SE €1.0 billion XS0883560715

2.0% EUR Bond 2012/2022 BASF SE €1.25 billion DE000A1R0XG3

1.5% EUR Bond 2012/2018 BASF SE €1.0 billion XS0836260975



5.875% GBP Bond 2009/2017 BASF SE GBP400 million XS0420401779

4.875% EUR Bond 2003/2018 Ciba Specialty Chemicals

Finance Luxembourg S.A.€500 million XS0170386998


Appendix I – Q3 2016 reporting

150 years


ChemicalsHigher volumes, but margin pressure in Petrochemicals and

Intermediates

Intermediates

662

(6%)

Monomers

1,405

(8%)

Petrochemicals

1,310

(7%)

€3,377

(7%)

EBIT before special items

million €

633

249

465 467 497

0

200

400

600

800

Q3 Q4 Q1 Q2 Q3


Q3 2016 vs. Q3 2015 5% (12%) 0% 0%

20162015

Sales Q3 2016 vs. Q3 2015

million €

150 years


Performance

Chemicals

945

(6%)

Performance ProductsSignificant increase in earnings driven by higher volumes,

improved margins and lower fixed costs

Care

Chemicals

1,175

(4%)

€3,771

(3%)Nutrition

& Health

504

+2%

Dispersions

& Pigments

1,147

(2%)


Q3 2016 vs. Q3 2015 2% (3%) (2%) 0%


million €

Sales Q3 2016 vs. Q3 2015

million €

20162015

319

228

547503

464

0

200

400

600

Q3 Q4 Q1 Q2 Q3

150 years


Functional Materials & SolutionsSignificantly higher earnings on continued good demand in

automotive and construction as well as lower fixed costs

Catalysts

1,552

+5%

Coatings

790

+5%

€4,660

3%

Performance

Materials

1,712

+2%

Construction

Chemicals

606

(1%)


million €


Q3 2016 vs. Q3 2015 8% (3%) (1%) (1%)

Sales Q3 2016 vs. Q3 2015

million €

20162015

371 389

456

535497

0

200

400

600

Q3 Q4 Q1 Q2 Q3

150 years


Agricultural SolutionsSignificantly higher earnings due to improved margins and

lower fixed costs


Q3 2016 vs. Q3 2015 (4%) 0% 0% 1%

Sales Q3 2016 vs. Q3 2015

million €

2016201520162015

1,077 1,049

0

200

400

600

800

1,000

1,200

Q3 Q3

(3%)

7

97

0

25

50

75

100

125

Q3 Q3

€90million


million €

150 years


Oil & GasConsiderably lower sales and earnings due to disposal

of gas trading business as well as lower prices

Sales development Volumes Prices/Currencies Portfolio

Q3 2016 vs. Q3 2015 3% (3%) (83%)

Natural Gas Trading

Exploration & Production

Net income

79

292

194

625

33

0

200

400

600

Q3 2015 Q3 2015 Q3 2016 Q3 2016

EBIT before special items, net income

million €

Sales Q3 2016 vs. Q3 2015

million €

371

2,939

618

667

0

1,000

2,000

3,000

4,000

5,000

Q3 Q3

20162015

(83%)

3,606

667

Natural Gas Trading

Exploration & Production

* Including transportation business

* Including transportation business

*

*

150 years


Review of “Other”

million € Q3 2016 Q3 2015

Sales 538 685

EBIT before special items (233) (98)

Thereof Corporate research costs (77) (104)

Costs of corporate headquarters (54) (53)

Foreign currency results, hedging and

other valuation effects(101) 22

Other businesses 15 30

Special items (23) 26

EBIT (256) (72)

150 years


Cash flow Q1 – Q3 2016

million € Q1 – Q3 2016 Q1 – Q3 2015

Cash provided by operating activities 5,840 8,494

Thereof changes in net working capital (393) 2,500

miscellaneous items (172) (497)

Cash used in investing activities (2,776) (4,955)

Thereof payments related to tangible / intangible assets (2,915) (4,387)

acquisitions / divestitures 212 227

Cash used in financing activities (1,898) (3,504)

Thereof changes in financial liabilities 837 (649)

dividends (2,753) (2,900)

150 years


Strong balance sheet

24.127.6

15.2

15.8

31.529.7

Dec 312015

Sep 302016

2.2 3.53.1 3.5

9.59.8

9.79.8

46.346.5

Dec 312015

Sep 302016

Liquid funds

Accountsreceivable

Long-termassets

Inventories

Other assets

70.873.1

70.873.1

Otherliabilities

Financialdebt

Equity

Balance sheet September 30, 2016 vs. December 31, 2015

billion € Total assets increased by

€2.3 billion, mainly due to

higher liquid funds

Inventories were

Provisions for pensions and

similar obligations increased

by €3.6 billion

Net debt declined by around

€600 million to €12.3 billion

Equity ratio: 41%


150 years

Documents

BASF Creditor Story · BASF Creditor Story November 2016 6 150 years Global reduction in carbon emissions of 6 million metric tons p.a. and reduction of ... reaction injection molding