We add value as - BASF€¦ · BASF Credit 8Story November 2014 We aim to increase our sales volumes excluding the effects of acquisitions and divestitures. Nonetheless, sales will

We add value as one company

Tobias Dratt Senior Vice President

Treasury

Creditor Roadshow

Singapore

November 26, 2014

BASF Credit Story November 2014 2

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

Growth levers

Operational excellence

Financing highlights


BASF – The Chemical Company

#1 chemical company – uniquely positioned with

broad market access and customers in more than

200 countries in virtually all industries

Combining economic success, social responsibility

and environmental protection

Top 3 market positions in ~75 % of our businesses

6 unique Verbund sites and 376 other production

sites in more than 40 countries

International, interdisciplinary R&D network with

more than 10,650 employees

Globally, more than 112,000 employees

We create chemistry for a sustainable future


Percentage of sales 2013*

* Not depicted here: ~6% of Group sales reported as ‘Other‘

BASF today – a well-balanced portfolio Total sales 2013: €74 billion


BASF outperformed global chemical

production by ~3 percentage points p.a.

Sales to third parties billion €

33

79

72

74

16.6

20.7 -4.8

13.7

-6.6 3.7 -0.5 -2.0 0.6

20

40

60

80

2001 2012 2012 restated

2013

Volumes

Prices

Currencies M&A

Volumes Prices Currencies M&A

IFRS

Impact


Q3 2014: BASF with higher sales and

earnings

Sales development

Period Volumes Prices Portfolio Currencies

Q3’14 vs. Q3’13 7% (4%) 0% 0%

Q1-Q3 2014 vs. Q1-Q3 2013 6% (3%) 0% (2%)

Business performance Q3’14 vs. Q3’13 Q1-Q3’14 vs. Q1-Q3’13

Sales €18.3 billion +3% €56.3 billion +1%

EBITDA €2.5 billion +1% €8.2 billion +4%

EBIT before special items €1.8 billion +9% €6.0 billion +5%

EBIT €1.8 billion +8% €6.1 billion +8%

Net income €1.0 billion (5%) €3.8 billion +3%

Reported EPS €1.14 (5%) €4.16 +3%

Adjusted EPS €1.27 (1%) €4.45 +2%


We aim to increase our sales volumes excluding the effects of acquisitions and divestitures.

Nonetheless, sales will decline slightly compared with 2013 due to the divestiture of the gas

trading and storage business planned for autumn 2014 and negative currency effects.

Despite the challenging environment, we strive for a slight increase in EBIT before special

items.

Outlook 2014

GDP: 2.3% (previous: 2.5%)

Industrial production: 3.4% (previous: 3.7%)

Chemical production: 4.0% (previous: 4.4%)

US$ / Euro: 1.35 (unchanged)

Oil price (US$ / bbl): 105 (previous: 110)

Assumptions 2014

Outlook 2014


Customers from 17 countries

More than 100 production sites

130 sales offices*

16,708 employees,

thereof ~700 R&D staff

Sales in 2013: €12.5 billion**

EBITbSI in 2013: €842 million

BASF in Asia Pacific

* Some sites are not shown due to scale. Site and office numbers refer

to companies of significant size where BASF holds a stake of at least

50% .

** Sales to third parties by location of customers.

Regional headquarters

Verbund site

Production site

R&D/Technical center

Asia Pacific service center

Singapore

Hong Kong

Japan South Korea

Mongolia

China

Pakistan

India

Sri Lanka

Bangladesh

Thailand Vietnam

Philippines

Indonesia

Taiwan

Malaysia

Australia

New Zealand


Functional

Materials &

Solutions

30%

Sales* by segment

Chemicals

31%

Other

9%

Performance

Products

26% Greater

China

44%

Australia,

New Zealand (ANZ)

4%

South Asia

10%

Japan

12%

South Korea

8%

ASEAN

22%

€12.5

billion €12.5

billion

Sales by sub-region

Agricultural

Solutions

4%

Sales Asia Pacific 2013

South Asia: India, Pakistan, Bangladesh, Sri Lanka

ASEAN: Singapore, Philippines, Vietnam,

Thailand, Indonesia, Malaysia

*Sales to third parties by location of customers


BASF at a glance

Growth levers




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

Nine billion people in 2050 but only one earth

Resources, Environment & Climate

Food & Nutrition Quality of Life

Chemistry as enabler


Portfolio development Moving downstream towards customer industries

* Agriculture, Construction, Consumer Goods, Health & Nutrition, Electronics, Energy & Resources, Transportation.

** Sales excluding Oil & Gas. Targets were published on November 29, 2011.


Catalysts

Construction chemicals

Water-based resins

Pigments, plastic additives

Oil & Gas

Personal care & food

Battery materials

Functional crop care

Omega-3 fatty acids

Enzymes

…

BASF

core business

Strong partnerships

Gazprom

Monsanto

Petronas

Shell

Sinopec

Statoil

Total

Selected transactions

2004 − today

Acquisitions

~ €14 billion sales

Divestitures

Printing systems

Agro generics

Vitamin premixes

Styrenics

Fertilizers

Construction equipment, flooring and wall systems

Natural gas trading and storage business

Textile chemicals

…

~ €16 billion sales*

Portfolio development Towards more market driven and innovative businesses

* Without styrenics (transferred into Styrolution JV on Oct. 1, 2011). Natural Gas Trading: Closing expected in autumn 2014


Chemistry-based innovations Growth and technology fields

Growth fields

Resources,

Environment

& Climate

Food &

Nutrition

Quality of Life White

Biotechnology

Materials,

Systems &

Nanotechnology

Raw Material

Change

Key customer industries

Health & Nutrition

Consumer Goods

Transportation

Energy & Resources

Electronics

Agriculture

Construction

Technology fields Global needs

...

Batteries for Mobility

Enzymes

Heat Management for Construction

Organic Electronics

Functional Crop Care

Plant Biotechnology

E-Power Management

Wind Energy

Lightweight Composites

Water Solutions


Strong commitment to innovation Innovations for a sustainable future

1.4 1.5

1.6 1.7

1.8

0.0

0.5

1.0

1.5

2.0

2009 2010 2011 2012 2013

€1.8 billion R&D expenditure in

2013, further increase of R&D

spending planned in 2014

~10,650 employees in R&D

~3,000 projects

Research Verbund:

Cooperations with ~600

excellent partners from

universities, start-ups

and industry

Target 2015 and 2020:

– €10 billion in sales from

innovations younger 5 years

– €30 billion in sales from

innovations younger 10 years

R&D expenditures

in € billion

Chemicals

10%

Performance Products

20%

Functional Mat. & Sol.

20%

Agricultural Solutions

26%

Oil & Gas

3%

Corporate Research

21%

Key facts

2.0

1.5

1.0

0.5

0


Expansion of research capabilities in

Asia Pacific with new R&D centers

R&D Center Korea (2013)

Focus: electronics

R&D Center Singapore (2007)

Focus: water, membrane, oilfield

R&D Center Australia (2012)

Focus: mining

Innovation Campus Asia Pacific,

Shanghai (2012)

Focus: polymers & materials

Global R&D Center India (2014)

Focus: life science, agro

R&D Center Japan (2013)

Focus: battery materials


Expansion oil & gas activities

Aroma Ingredients Kuantan, Malaysia

Investments Major projects

Ammonia and gas-to-propylene in USA*

MDI plant Chongqing, China

Acrylic acid complex Camacari, Brazil

TDI plant Ludwigshafen, Germany

* Under evaluation


Performance

Products

15%

Oil & Gas

20%

€20

billion

Functional

Materials &

Solutions

12%

Capex budget 2014-2018

Other

13%

Chemicals

33%

Capex budget 2014-2018

Asia Pacific

18%

€20

billion

South

America

4%

North America

25%

Europe

49%

Agricultural

Solutions

7%

Other

4%

by segment by region

Investments Capex budget 2014-2018 by segment and region


Innovation ~3,500 R&D staff

Market €25 billion sales

Portfolio >€2 billion sales from

new biz and acquisitions

People ~9,000 new jobs

Investment 75% OMP ratio

Excellence €1 billion cost savings

We create chemistry in Asia Pacific:

2020 targets


BASF at a glance

Growth levers




Operational excellence Strong track record

BASF Group* 2001–2013 Index

50

100

150

200

250

300

350

2001 2006 2009 2012

CAGR 2001 – 2013

10 %

8 %

3 %

EBITDA

Sales

Fixed costs

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

2013


Global reduction in carbon

emissions of 6.1 million metric

tons/a. and reduction of waste

Example Ludwigshafen:

avoidance of 7 million metric

tons of freight/a.

= 280,000 fewer truckloads

Shared use of on-site facilities:

fire department, security, waste

water treatment and analytics

Verbund generates >€1 billion p.a. global

cost savings*, supports sustainability

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


0

1,000

2,000

3,000

4,000

2013 2015

Former cost saving programs

NEXT STEP

Operational excellence programs ~€1.3 billion earnings contribution from STEP by 2015

Annual earnings contribution

in € million Targeted annual earnings

contribution increased

from €1 billion to ~€1.3 billion

by end of 2015

Optimization of processes and

structures in all regions, e.g.

manufacturing, maintenance

supply chain

engineering, best-cost country

sourcing

Project timeline: 2012–2015

Between €0.9 and €1 billion by

the end of 2014 expected

One-time cost : ~€1 billion

STEP program


BASF at a glance

Growth levers




* Cash provided by operating activities less capex (in 2005 before CTA) ** 2009 adjusted for re-classification of settlement payments for currency derivatives *** Figures for 2013 in accordance with changes in IFRS and new segment structure as of January 1, 2013

Cash provided by operating activities

Free cash flow*

4.8

3.2

1.3

0

1

2

3

4

5

6

7

8

2004 2005 2006 2007 2008 2009** 2010 2011 2012 2013*** Q1-Q32014

Continuous strong free cash flow

generation

Free cash flow in billion €

7.9


Diversified Debt Financing Instruments As of September 30, 2014

EUR 20 billion debt issuance

program (for long-term debt

financing)

USD 12.5 billion commercial

paper program (for short-term

debt financing)

Two broadly syndicated

backup-lines of EUR 3 billion

each (maturing in 2018 and

2019, respectively)

Funding Strategy Highlights

Commercial Papers

7%

Bank Loans

18%

EUR-denominated

Bonds

60%

€15.8 billion

Financing strategy

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

* Last Confirmation Moody’s: October 31, 2014 Last Confirmation S&P: May 13, 2014

Other Bonds

15%


2.2

1.1 1.1

1.8

0.8

0.3

0.7

1.0

0.5

2.1

0.0

0.5

1.0

1.5

2.0

2.5

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 >2024

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

Profile as of September 30, 2014 (billion €)*

Well balanced bond maturity profile


Highlights of BASF’s credit

1. Strong track record, outperforming chemical production by 3% p.a. (2001-2013)

6. Diversified financing strategy with a strong commitment to keep a solid A rating

Strong free cash flow in every single year over the last decade

Focus on operational excellence

Advantageous cost position due to unique Verbund concept

Focus on cost management

2. Well positioned for profitable growth

Excellent innovation platform

Leading Positions in growth industries and emerging markets

Ongoing portfolio optimization

5.

3.

4. Combining economic success with social commitment and environmental protection


Appendix I


Overview of bonds (1/2) as of September 30, 2014

Bond Term Issuer Volume ISIN Code

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

2.5% Euro Bond 2014/2024 BASF SE € 500 million XS1017833242

1.375% Euro Bond 2014/2019 BASF SE € 750 million XS1017828911

3.89% USPP Series A 2013/2025 BASF SE USD 250 million N/A

4.09% USPP Series B 2013/2028 BASF SE USD 700 million N/A

4.43% USPP Series C 2013/2034 BASF SE USD 300 million N/A


3.675% NOK Bond 2013/2025 BASF SE NOK 1.45 billion XS0932079717


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



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



Overview of bonds (2/2) as of September 30, 2014

1 Guaranteed by BASF SE

Bond Term Issuer Volume ISIN Code

2.0% EUR Bond 2012/2022 BASF SE € 1 billion DE000A1R0XG3

1.5% EUR Bond 2012/2018 BASF SE € 1 billion XS0836260975



5.875% GBP Bond 2009/2017 BASF SE GBP 400 million XS0420401779

5.125% EUR Bond 2009/2015 BASF Finance Europe N.V. 1 € 2 billion XS0412154378

4.5% EUR Bond 2009/2016 BASF Finance Europe N.V. 1 € 150 million XS0414672070

3.625% CHF Bond 2008/2015 BASF Finance Europe N.V. 1 CHF 200 million CH0039943292

4.5% EUR Bond 2006/2016 BASF SE € 500 million DE 000 A0JRFB0

4.875% EUR Bond 2003/2018 Ciba Specialty Chemicals

Finance Luxembourg S.A. € 500 million XS0170386998


BASF Creditor Relations Team

Frank Wilhelmi

Head of Capital Market Financing

Hannes Koske

IR Manager Creditor Relations

Contact Details:

Email: [email protected]

Hotline: +49 621 60 48230

Websites: www.basf.com/bonds

www.basf.com/anleihen

Juliane Beckmann

Senior Specialist

Capital Market Financing

Lüthje Brandt

Specialist

Capital Market Financing


2013 sales* and EBIT before special

items in the regions

million €

North America

South America, Africa, Middle East Asia Pacific

Europe

Sales 14,573

EBIT before 1,539 special items

Sales 4,386

EBIT before 387 special items

Sales 43,335

EBIT before 4,422 special items

Sales 11,679

EBIT before 842 special items

* Sales to third parties by location of company

58%

16% 6%

20%

Sales

BASF Group

73,973


Monomers

Intermediates

Dispersions &

Pigments

Performance

Chemicals

Care

Chemicals

Paper

Chemicals

Coatings

Catalysts

Construction

Chemicals

BASF sales by first customer industry*

> 15 %

> 10 %

< 10 %

> 15 %

Consumer goods

Transportation

Construction

Energy & Resources

Market approach Cross-divisional customer industry approach

* Excluding Oil & Gas, Crop Protection and Other. 2012 numbers

Petro-

chemicals

Performance

Materials

Bubble Size: BASF divisional sales by first customer industry*/**

** Nutrition & Health sales predominantly into Health & Nutrition market


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

Cross-divisional approach BASF’s technology Verbund combined with customer know-how

Daimler & BASF concept car ‘Smartforvision’


Customer Verbund - adidas and BASF Working together for disruptive innovation: Infinergy™


Growth field example: Enzymes Innovation-driven specialties for various markets

Become a major player in enzyme technology; sales target of >€400million (2020)

Textile /

Leather

Oilfield Water

Biofuels

Detergents

Processed

food Beverages

Bakery Feed

Existing business mainly with

enzymes for animal nutrition

Acquired Henkel's detergent

enzyme technology

Entered into research and

license agreement with Dyadic

to access C1-host technology

Successfully acquired enzyme

biotechnology company

Verenium

R&D pipeline is reinforced with

several new projects

Enzymes know-how leveraged

with chemical ingredients

Pulp &

Paper

The fungus Aspergillus niger is a powerful

production host for feed enzymes.


Acquisitions … will contribute to profitable growth in the future

Provide a minimum return on

investment of 8% p.a. 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 …


Appendix II


Chemicals Earnings growth despite flat volumes

Intermediates

701

0%

Monomers

1,587

(1%)

Petrochemicals

1,913

(1%)

€4,201

(1%)

Q3’14 segment sales (million €) vs. Q3’13

Sales development


Q3’14 vs. Q3’13 0% (1%) 0% 0%

EBIT before special items (million €)

527 510

601 570616

0

200

400

600

800

Q3 Q4 Q1 Q2 Q3

2014 2013


Performance Products Sales and earnings stability during restructuring

Performance

Chemicals

847

+3%

Care Chemicals

1,203

0%

€3,919

(1%)

Paper Chemicals

344

(6%)


Nutrition

& Health

522

(3%) Dispersions

& Pigments

1,003

0%


Sales development


Q3’14 vs. Q3’13 0% 0% 0% (1%)

376

216

427 435376

0

200

400

600

Q3 Q4 Q1 Q2 Q3

2014 2013


Functional Materials & Solutions Continued robust demand from automotive

Catalysts

1,572

+7%

Construction

Chemicals

565

(2%)

Coatings

736

+1%

€4,527

+2%


Sales development


Q3’14 vs. Q3’13 1% 2% 0% (1%)

Performance

Materials

1,654

(1%)

300

238

311356

310

0

200

400

Q3 Q4 Q1 Q2 Q3


2014 2013


Agricultural Solutions Strong earnings decline in seasonally slow quarter


Sales development


Q3’14 vs. Q3’13 (4%) 2% 0% (1%)

0

100

200

Q3 Q3

0

300

600

900

1,200

Q3 Q3

1,018 (3%)

43

(75%)

172 1,054


2014 2013 2014 2013


62

451*

194

265

0

100

200

300

400

500

Q3/2013 Net Income Q3/2014 Net Income

Oil & Gas Considerably higher sales and earnings

Exploration &

Production

611

(19%)

Natural Gas

Trading

3,059

+29% €3,670

+17%

Q3’14 segment sales (million €) vs. Q3’13 EBIT bSI/Net income (million €)

Natural Gas Trading

Exploration & Production

Net income

Sales development

Period Volumes Prices/Currencies Portfolio

Q3’14 vs. Q3’13 43% (26%) 0%

422

360

310

504

* Incl. one-time disposal gain of 164 million euros from the divestment of

a 15% stake in Edvard Grieg field


Review of “Other”

Million € Q3’14 Q3’13

Sales 977 947

EBIT before special items (7) (105)

Thereof Corporate research

Group corporate costs

Currency result, hedges and other

valuation effects

Other business

(96)

(53)

100

23

(90)

(57)

(74)

59

Special items (20) (24)

EBIT (27) (129)


Cash Flow Solid cash flow in Q1-Q3 2014

Million € Q1-Q3’14 Q1-Q3’13

Cash provided by operating activities 4,765 5,982

Thereof Changes in net working capital

Miscellaneous items

(739)

(425)

374

(327)

Cash provided by investing activities (3,625) (4,629)

thereof Payments related to tangible / intangible assets (3,426) (3,038)

Acquisitions / divestitures 355 (1,093)

Cash used in financing activities (995) (1,300)

thereof Changes in financial liabilities

Dividends

1,661

(2,656)

1,304

(2,604)


EBITDA / EBITDA impact (billion €)

Projection 2015

Expected sales and

EBITDA in line with financial

market expectations for

2015

Market expectation for 2015

EBITDA between €10 - €12

billion. BASF aims to

achieve upper end of range

Detailed outlook for 2015

provided on Feb. 27, 2015


Appendix III


Macroeconomics Competition Sustainability

Capturing opportunities and addressing

challenges in Asia Pacific

Demands of

society & government


We create chemistry in Asia Pacific:

Our strategic levers

Innovation Market Portfolio

People Investment Excellence


Market Connecting with our customers and

business partners to capture growth

opportunities

€25 billion sales by 2020

Drive industry and customer orientation

Engage with stakeholders to support

sustainable development

Explore opportunities in new markets

52 BASF Credit Story November 2014


Innovation Driving innovation in Asia for Asia and

the world

~3,500 R&D staff by 2020

Expand the Asia Pacific presence within BASF’s

global R&D network

Collaborate with customers to capture new

business areas



Portfolio Enhancing our portfolio

>€2 billion sales from new business and

acquisitions by 2020

Develop new businesses and growth fields

Identify attractive acquisition opportunities



Investment Expanding our local production network

75% own manufactured products

(OMP ratio) by 2020

Implement ambitious investment plan efficiently

Form production clusters to address target

industry needs



People Attracting and developing talent

~9,000 new jobs by 2020

Develop a differentiated recruitment approach

Establish a “Learning Campus”

Redesign our motivational compensation and

rewards system

Engage our people in sustainability



Excellence Improving operational efficiency and

organizational effectiveness

€1 billion cost savings by 2020

Drive marketing and sales excellence

Enhance operational excellence

Optimize business enabling structures

Increase collaboration efficiency



Documents

We add value as - BASF€¦ · BASF Credit 8Story November 2014 We aim to increase our sales volumes excluding the effects of acquisitions and divestitures. Nonetheless, sales will