Upload
basf
View
13.747
Download
3
Embed Size (px)
Citation preview
BASF Strategy: We create chemistry
London November 29, 2011
BASF Strategy: We create chemistry__November 2011 2
Forward-looking statements
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.
BASF Strategy: We create chemistry__November 2011 3
What do we want to achieve today?
Explain where we stand today and how this supports our future growth
Share our view on major trends and growth perspectives of the chemical industry
Present our new strategic principles and financial targets
Show how our strategy will increase shareholder value
BASF Strategy: We create chemistry__November 2011 4
Our strengths
Operational excellence
Investments
Growth
Sustainability
Acquisitions
Customer orientation
Innovation
Diversity & Inclusion Employer attractiveness
“The Chemical Company”
Portfolio development Team
Technology
Verbund
BASF Strategy: We create chemistry__November 2011 5
BASF today Trends Purpose and strategic principles Targets Strategic levers BASF tomorrow – Board priorities
BASF Strategy: We create chemistry__November 2011 6
Outperformed global chemical production by 4 percentage points p.a.
Sales to third parties in billion €
BASF total growth 7.8% p.a.
BASF volumes + M&A 6.6% p.a.
BASF volumes 4.1% p.a.
Global chemical production 3.0% p.a.
30
60
20
50
40
Prices
12
33
Volumes
14
64
M&A
11
Currencies
–6
70
2001 2010
BASF Strategy: We create chemistry__November 2011 7
€9bn (Sales excl. planned
measures)
Portfolio development towards more market driven and innovative businesses
Acquisitions
Crop protection Engineering plastics Electronic chemicals Custom synthesis Catalysts Construction chemicals Water-based resins Pigments Plastic additives Oil & Gas Personal care & food
€15bn (Sales)
BASF core business
Strong partnerships
Gazprom Monsanto Petronas Shell Sinopec Total
Divestitures
Pharma Fibers Printing systems Polyolefins Polystyrene Americas Agro generics Vitamins premix Fertilizers (planned) Styrolution (planned)
Selected transactions 2001 − today
BASF Strategy: We create chemistry__November 2011 8
Strong sales and earnings increase in all segments
Sales by segment in billion €
Chemicals
2001 2010
5.0
11.4
EBITDA by segment in billion €
Initiatives for growth
2001 2010
0.90
3.0
Plastics
2001 2010
5.4 9.8
2001 2010
0.53 1.7
New steam cracker in Port Arthur
Start-up of Verbund site in Nanjing
Expansion of Antwerp New technologies
(e.g. acrylic acid)
Integrated world-scale plants and technology leadership
New plants (MDI/TDI in China, HPPO in Antwerp)
Innovations: Ultramid®, Ultradur®, Neopor®, Ecoflex®
BASF Strategy: We create chemistry__November 2011 9
Strong sales and earnings increase in all segments
Sales by segment in billion €
Performance Products
2001 2010
7.4
12.3
EBITDA by segment in billion €
Initiatives for growth
2001 2010
0.52 2.2
Functional Solutions
2001 2010
2.3
9.7
2001 2010
0.16 0.86
Ciba / Cognis Strong relations with
multinational companies New plants (Citral, SAP,
surfactants, PIB) Innovations: Personal
care and food ingredients
Engelhard / Degussa Construction Chemicals
Strong cooperation with leading OEMs
Innovations: Diesel Oxidation Catalyst, scratch-resistant coatings
BASF Strategy: We create chemistry__November 2011 10
Innovations: F500®, Boscalid, Kixor®
Plant Health (AgCelence®) SeedSolutions Expansion in emerging
markets
Strong sales and earnings increase in all segments
Sales by segment in billion €
Agricultural Solutions
2001 2010
3.5 4.0
EBITDA by segment in billion €
Initiatives for growth
2001 2010
0.51 0.94
Oil & Gas
2001 2010
4.5
10.8
2001 2010
1.6 3.0
E&P expansion in Russia and Norway
1P reserves 2010: 1,123 million boe (R/P ratio = 10 years)
Gas for Europe Strategy
BASF Strategy: We create chemistry__November 2011 11
Strong and profitable growth in emerging markets
0
20
40
60
2001
28%
34%
2010
53
28
Developed markets* Emerging markets *BASF definition: Developed markets include EU15, Norway, Switzerland, North America, Japan, Australia, New Zealand
22%
0
2
4
6
8
10
2001
34%
2010
8.2
2.5
25%
Sales BASF Group excluding Oil & Gas in billion € by location of customer
EBITDA BASF Group excluding Oil & Gas in billion € by location of customer
BASF Strategy: We create chemistry__November 2011 12
Strong focus on operational excellence
BASF Group 2001–2010 Index
50
100
150
200
250
300
2001 2004 2007 2010
CAGR
12 %
8 %
2 %
EBITDA
Sales
Fixed costs
BASF Strategy: We create chemistry__November 2011 13
Generating high EBITDA margins
EBITDA margin in %
Target range
2010 2001 2002 2003 2004 2005 2006 2007 2008 2009
14.6 15.3 17.6 18.5 19.3 20.5
17.4 15.3 15.8
12.7
18
14
BASF Strategy: We create chemistry__November 2011 14
Decade of outperformance in sector margins
EBITDA margin in %
0
5
10
15
20
25
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
BASF Group EBITDA margin
European chemical sector Ø*
US chemical sector Ø**
Asian chemical sector Ø***
* AkzoNobel, Arkema, Clariant, DSM, Evonik (Degussa), Lanxess, Solvay
** Celanese, Dow, DuPont, Huntsman, PPG *** Formosa Plastics, Mitsubishi Chemicals, Mitsui
Chemicals, Sinopec Chemicals, Sumitomo Chemicals Source: Company reports, Thomson One, Reuters
BASF Strategy: We create chemistry__November 2011 15
Solid track record of earning a premium on cost of capital
EBIT after cost of capital* in billion €
2010 2001 2002 2003 2004 2005 2006 2007 2008 2009
–0.2**
1.6
2.9
2.1 2.4
1.8
–0.6 –0.6
–2.6
3.5 Target first established
* Cost of capital rate varied from 9% to 13% ** Including Ciba integration costs of €0.8 billion
BASF Strategy: We create chemistry__November 2011 16
Best-in-class asset profitability – Capital turnover improved by 2% p.a.*
EBITDA on total assets in %
2001
DuPont
DSM
Dow
Celanese
Bayer
AkzoNobel
25%
20%
15%
10%
5%
0% 80 60 40 20 0
BASF SABIC
Degussa
Sales in billion €
2010
80 60 40 20 0
BASF
SABIC Lanxess
Evonik DuPont DSM
Dow Celanese
Bayer
AkzoNobel
= EBIT * Capital turnover = sales over total assets
BASF Strategy: We create chemistry__November 2011 17
Generating strong EPS growth
Earnings per share** in €
* Excluding extraordinary income ** Adjusted for 2:1 stock split in 2008
2010 2001 2002 2003 2004 2005 2006 2007 2008 2009
4.96
1.54
3.13
4.16
3.19 2.87
1.83
0.81 1.30
–0.10*
BASF Strategy: We create chemistry__November 2011 18
From 2001 to 2010, BASF paid dividends in the amount of ~€13 billion
Delivering attractive shareholder returns
Dividend per share in €
* Dividend yield based on share price at year-end
1.701.951.95
1.50
1.000.850.700.700.65
2.20
2001 2004 2007 2010
Dividend payments
3.9% 3.1% 3.2% 3.1% 4.1% 3.8% 7.0% Yield* 3.7% 3.1% 3.9%
From 2001 to 2010, BASF bought back shares in the amount of €8.9 billion
This equaled ~25% of total shares outstanding
Share buy-backs
BASF Strategy: We create chemistry__November 2011 19
Delivering consistent, long-term value – Last 10 years
Long-term performance November 2001 – October 2011 (average annual performance with dividends reinvested)
-1 2 5 8 11 14
BASF
Euro Stoxx 50
DAX 30
MSCI World Chemicals
+3.0%
+15.1%
Last 5 years
+8.2%
–1.0%
13.7%
–6.9%
–0.4%
4.0%
BASF Strategy: We create chemistry__November 2011 20
BASF today
The leading chemical company
No. 1 – 3 market positions in over 75% of businesses
Active management of portfolio towards higher returns and less cyclicality
Focus on innovative products and solutions
Benchmark in operational excellence with unique Verbund concept
Strong earnings power, high cash flow generation and a strong financial profile
Generation of long-term attractive shareholder returns
BASF Strategy: We create chemistry__November 2011 21
BASF today Trends Purpose and strategic principles Targets Strategic levers BASF tomorrow – Board priorities
BASF Strategy: We create chemistry__November 2011 22
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
BASF Strategy: We create chemistry__November 2011 23
Key trends for the chemical industry
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 gains in importance
Growth will accelerate
Industrial production > GDP
Chemical production > GDP
Emerging markets will outgrow developed markets
Chemical industry remains an attractive growth industry
BASF Strategy: We create chemistry__November 2011 24
Chemicals to outgrow key customer industries
Transportation
100
142
138219
23
127
0
1
2
3
4
5
6
7
8
9
10
0 1 2 3 4 5 6 7 8 9 10
in %
Construction Agriculture
Customer industry growth CAGR 2010-2020 in % p.a.
Energy & Resources
Electronics
Health & Nutrition
Consumer Goods
Che
mic
al p
rodu
ctio
n gr
owth
C
AGR
201
0-20
20 in
% p
.a.
= Market of 2020 in bn € (real, 2008)
148
Chemicals growth above customer industries
Chemicals growth below customer industries
Source: BASF
BASF Strategy: We create chemistry__November 2011 25
BASF Today Trends Purpose and strategic principles Targets Strategic levers BASF tomorrow – Board priorities
BASF Strategy: We create chemistry__November 2011 26
Our purpose
We create chemistry for a sustainable future.
Our strategic principles
BASF Strategy: We create chemistry__November 2011 28
Our strategic principles
We add value as one company.
We innovate to make our customers more successful.
We drive sustainable solutions.
We form the best team.
BASF Strategy: We create chemistry__November 2011 29
We add value as one company
Hedging
Operational excellence
Financial strength
Global reach
People Verbund
Customer Verbund
Production Verbund
Technology Verbund
Value chains
Construction
Electronics
Energy & Resources
Consumer Goods Transportation
Agriculture
Health & Nutrition
BASF Strategy: We create chemistry__November 2011 30
BASF today Trends Purpose and strategic principles Targets Strategic levers BASF tomorrow – Board priorities
BASF Strategy: We create chemistry__November 2011 31
Assumptions 2010 – 2020
Growth 2001 - 2010
Global GDP 2.5% p.a.
Chemical production (excl. pharma) 3.0% p.a.
Industrial production 2.4% p.a.
Growth 2010 – 2020 (Forecast*)
3.0% p.a.
4.0% p.a.
3.8% p.a.
* Assumptions 2010-2020: Exchange rate $/€ Ø 1.40, Oil price Ø $110/bbl
BASF Strategy: We create chemistry__November 2011 32
Striving for strong profitable growth
Sales* in billion €
64
2010 Target 2020
Target 2015
Investments
Acquisitions Innovations
Investments
Acquisitions Innovations
~85
~115
We will outperform chemical production by 2 percentage points p.a. * Potential impact of IFRS changes not included
BASF Strategy: We create chemistry__November 2011 33
All regions will deliver profitable growth
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 2020 2010 2020
19%* 20%* 46%* 52%*
25%* 20%* 10%* 8%*
* Percentage of total sales
BASF Strategy: We create chemistry__November 2011 34
Doubling EBITDA by 2020
EBITDA* in billion €
2010 Target 2020
Target 2015
11.1
~23
~15 Op. Excellence
Growth
Acquisitions
Op. Excellence
Growth
Acquisitions
* Assumptions 2010-2020: Exchange rate $/€ Ø 1.40, Oil price Ø $110/bbl
BASF Strategy: We create chemistry__November 2011 35
BASF today Trends Purpose and strategic principles Targets Strategic levers BASF tomorrow – Board priorities
BASF Strategy: We create chemistry__November 2011 36
Our strategic levers
Portfolio development
Market approach
Innovations for a sustainable future
Investments
Acquisitions
Operational excellence
BASF Strategy: We create chemistry__November 2011 37
BASF today Trends Purpose and strategic principles Targets Strategic levers – Portfolio development – Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence
BASF tomorrow – Board priorities
BASF Strategy: We create chemistry__November 2011 38
Successfully managing an integrated company
Performance
Mar
ket a
ttrac
tiven
ess hi
gh
low
low high Circle size: Strategic Business Unit sales
= €1bn
Divested businesses: - Fertilizers (planned) - Styrenics (planned) - Polyolefins - Printing inks - Fibers
76 Strategic Business Units Majority of businesses in
attractive markets due to active portfolio management
Performance is a weighted score based on operating profitability and competitive position (e.g. market share)
Market attractiveness is a weighted score based on market growth and market size, innovation opportunities and competitive environment
BASF Strategy: We create chemistry__November 2011 39
We expand from chemicals to chemistry
Chemistry as key enabler for functionalized materials & solutions
Deep understanding of customer value chains required
New molecules
Improved applications
Functionalized materials & solutions
1960 1970 1980 1990 2000 2010 2020
Batteries, membranes ...
BASF Strategy: We create chemistry__November 2011 40
A different look at our current portfolio...
Excellent position and growth opportunities; synergies with chemical businesses
Chemical business based on our production Verbund
Customer-oriented specialties, backward integration in Verbund value chains
Integration of competencies in chemistry: R&D, technology, market knowledge and global access to customer industries
Functionalized Materials & Solutions
Classical Chemicals Customized Products
Oil & Gas
Exploration & production of oil and gas, gas trading activities
Cracker products, plastizicers, acrylic acid, MDI/TDI
PU systems, vitamins, personal care ingredients
Battery materials, water solutions, crop protection agents, engineering plastics
BASF Strategy: We create chemistry__November 2011 41
...which we will further strengthen
Selectively enter materials and solutions business where chemical competence is growth driver
Classical Chemicals
Customized Products
Functionalized Materials & Solutions
Synergies and growth via technology and customer industry Verbund
Expand market position downstream in existing and adjacent value chains
Expand market positions outside of Europe
Keep profitable production Verbund businesses
Portfolio strategy
Oil & Gas Expand E&P in core regions Grow natural gas business in Europe
Battery materials Crop protection Water solutions
Cognis Ciba Strong R&D pipeline
Expansion of Nanjing New chemical
complexes in Malaysia and Brazil
Initiatives taken
Achimov, Revus Nord Stream, South
Stream
BASF Strategy: We create chemistry__November 2011 42
Moving downstream towards customer industries
* Agriculture, Construction, Consumer Goods, Health & Nutrition, Electronics, Energy & Resources, Transportation ** Sales excluding Oil & Gas
Functionalized Materials & Solutions Customized Products Classical Chemicals
2020 in % of sales**
Chemical Industry First customer industries*
2010 in % of sales**
~ 40%
~30% ~ 70%
2001 in % of sales**
~ 50%
~ 60%
~ 50%
BASF Strategy: We create chemistry__November 2011 43
Oil & Gas business provides significant advantages for BASF
Oil & Gas
Strong contributor to BASF’s profitable
growth
Significant cash flow
and long-term
profitability
Hydrocarbon hedge
Technological synergies through BASF
Verbund
BASF Strategy: We create chemistry__November 2011 44
BASF today Trends Purpose and strategic principles Targets Strategic levers – Portfolio development – Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence
BASF tomorrow – Board priorities
BASF Strategy: We create chemistry__November 2011 45
Building on our cross-divisional customer industry approach
BASF sales by first customer industry*
Bubble Size: BASF divisional sales by first customer industry (2010)**
* Excluding Oil & Gas and Other ** Excluding Agricultural Solutions, Nutrition & Health, 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
BASF Strategy: We create chemistry__November 2011 46
Combining cross-divisional technology competencies with customer know-how
Smart forvision – joint concept car of Daimler and BASF
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
BASF Strategy: We create chemistry__November 2011 47
Significant opportunities in wind energy
Epoxy systems and adhesives (Intermediates)
Paint (Coatings) Core foams (Plastics)
Sales potential by 2020: ~ €300 million
Blades
Grouts and admixtures (Construction Chemicals)
Paint (Coatings)
Tower and base
Hydraulic fluids and gear oils (Performance Chemicals)
Nacelle
Tower and base
Blades
Nacelle
BASF Strategy: We create chemistry__November 2011 48
BASF today Trends Purpose and strategic principles Targets Strategic levers – Portfolio development – Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence
BASF tomorrow – Board priorities
BASF Strategy: We create chemistry__November 2011 49
Sustainability will become even more important
SUPPLY DEMAND
1976 2010
Annual regenerative capacity of the planet
Human beings now demand more from the Earth than can be regenerated
Earth’s resources
Consumption of Earth’s resources
+
BASF Strategy: We create chemistry__November 2011 50
Advancement of sustainability: Integration into everyday business
1960s 1970s 1980s 1990s 2000s Beyond 2010
Safety
+ Emission control
+ Climate protection
+ Social responsibility
+ Integration / portfolio
Motivation
Regulatory Cost
Value generation Sources: Booz & Company; UN World Commission on Environment and
Development; Archive company data and reports
BASF Strategy: We create chemistry__November 2011 51
Chemistry as an enabler for many customer industries
Sustainability in customer industries will drive our innovative growth fields
Health & Nutrition
Consumer Goods Construction Transportation Electronics Energy &
Resources Agriculture
Customer industries
Energy management
Water solutions
Wind energy
Rare earth metals
recycling
Heat management
Enzymes Plant biotechnology
Batteries for mobility
Lightweight composites
Heat management
Functional crop care
Medical Organic Electronics
Growth Fields*
*Including growth fields still under evaluation
Ongoing inflow of new growth fields
BASF Strategy: We create chemistry__November 2011 52
Growth field: Batteries for electromobility
Market size: > €20 billion Sales potential for BASF: > €500 million
Business potential 2020
Chemicals & materials for lithium-ion batteries
Work on battery concepts for Generation IV Intensive collaboration with universities &
industry partners
Existing activities
Position BASF as a system supplier for cell manufacturers
Utilize technology and business synergies Expand electrolyte activities
Targets
BASF Strategy: We create chemistry__November 2011 53
Growth field: Water Solutions
Market size: €20 billion BASF sales potential: > €800 million
Business potential 2020
High-performance flocculants, desalination and antifouling chemicals & polymers used in membranes (BASF & Ciba)
Acquired know-how on membrane technologies and module systems (inge watertechnologies)
Position BASF as the leading supplier of innovative chemical solutions worldwide
Forward integration into membrane technologies Leverage synergies to develop improved
additives, flocculants and polymers
Targets
Existing activities
BASF Strategy: We create chemistry__November 2011 54
Global trait value in 2020: ~€11 billion Expected gross trait sales potential of plant biotech
pipeline before partner share in 2020: €1.9 billion
Business potential
Yield & Stress collaboration with Monsanto (corn, soy, cotton, canola and wheat)
Further collaborations with Bayer, Cargill, CTC, Embrapa and KWS
Position BASF as “The Trait Technology Partner” Achieve more efficient agriculture and healthier
nutrition Implement a Plant Biotechnology operating
division within the Agricultural Solutions segment
Targets
Existing activities
Growth field: Plant biotechnology
BASF Strategy: We create chemistry__November 2011 55
AgBalance™ – Manage progress in agriculture sustainability
Farm profits Variable and
fixed costs Subsidies ...
AgBalanceTM
Independent assurance of functionality and coherence received by:
Unique and holistic method that assesses sustainability in agriculture
Creates value for customers, stakeholders and BASF:
Helps our customers (e.g. farmers) to differentiate with more sustainable solutions
Fosters more rational debate on sustainability in agriculture
Guides BASF`s own strategy and portfolio development with specific focus on sustainable solutions
Consumers Fair trade Future
Generations ...
Biodiversity Water Use Soil Emissions ...
BASF Strategy: We create chemistry__November 2011 56
Sustainability as future growth driver
Connect – in our team and with society
Enable our customers to develop more sustainable solutions
Deliver excellence in our operations
Creating value
Reducing risk
We fully integrate sustainability into our strategic decision making
BASF Strategy: We create chemistry__November 2011 57
Asia will lead in R&D spending in 2020
€1bn €3bn
€15bn €25bn
~ €200bn ~ 6% CAGR
Brazil
United States
Mexico
Canada
Spain Italy
Poland
Egypt
Finland
U.K.
France
Israel
Hungry Serbia
Czech Belgium
Netherlands
Denmark
Sweden
Malaysia Singapore
Japan
India
Philippines
Russia
China
Thailand
Vietnam Taiwan
Australia
~ €190bn ~ 6% CAGR
~ €240bn ~ 9% CAGR
Ireland Germany
Switzerland Austria
BASF Strategy: We create chemistry__November 2011 58
BASF’s global R&D footprint today North America: 1,330 employees in R&D
Europe: 7,500 employees in R&D
Major R&D site
Asia 550 employees in R&D
South America: 220 employees in R&D
BASF Strategy: We create chemistry__November 2011 59
Strengthening our R&D platform in Asia Pacific to accelerate growth
Innovation in Asia for Asia
8 R&D sites plus technical centers in Asia Pacific
R&D experts to increase from 550 to more than 800 by 2020
€55 million investment includes innovation campus and Greater China head office
Leverage global R&D capabilities with Competence Centers in Singapore, India and China
Co-operations with ~100 institutes and universities BASF‘s new innovation campus in Shanghai
BASF Strategy: We create chemistry__November 2011 60
Targeted €7 billion of EBITDA from innovations in 2020
Sales and EBITDA from innovations in billion €
2015 2020
~10
~30
Targeted spending of ~3% of sales (excluding Oil & Gas) p.a. on R&D
Sales from innovations launched within last 5 years
Sales from innovations launched within last 10 years
~2.5
~7 EBITDA from innovations launched within last 5 years
EBITDA from innovations launched within last 10 years
BASF Strategy: We create chemistry__November 2011 61
BASF today Trends Purpose and strategic principles Targets Strategic levers – Portfolio development – Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence
BASF tomorrow – Board priorities
BASF Strategy: We create chemistry__November 2011 62
Emerging markets will contribute 60% to global chemical production in 2020
Global chemical production (excl. pharma) Trillion $ (real 2005)
Emerging markets Developed markets*
of which China
World
~1.2 1.1 ~1.4
1.0
0
0.5
1.0
1.5
2.0
3.0
0.9
0.4
~2.1
~3.1
~1.3
2.5
~45% ~40%
1995 2010 2015
~1.3
~1.8
~50%
2020
*BASF definition: Developed markets include EU15, Norway, Switzerland,
North America, Japan, Australia, New Zealand
Source: BASF
BASF Strategy: We create chemistry__November 2011 63
Growth above market with increasing share from emerging markets
*BASF definition: Developed markets include EU15, Norway, Switzerland, North America, Japan, Australia, New Zealand
** Sales excluding Oil & Gas
2020 in % of sales**
2010 in % of sales
(€53bn**)
2001 in % of sales
(€28 bn**)
Emerging markets Developed markets*
~ 66%
~55% ~ 45%
~ 78%
~ 34%
~ 22%
BASF Strategy: We create chemistry__November 2011 64
Investments will boost future organic growth
Future investments in € billlion
Nanjing expansion Expansions in Malaysia MDI plant in Chongqing TDI plant in Europe Acrylic acid complex
including superabsorbents in Brazil
Sodium methylate plants in South America
Antioxidants in Bahrain Achimov Blocks IV and V Battery materials in the
United States
Current major projects
Thereof investments in emerging markets
Total investments
35-45%
15-20
30-40%
~15
2006 – 2010 2011 – 2015 2016 – 2020
10.9
~20%
BASF Strategy: We create chemistry__November 2011 65
BASF today Trends Purpose and strategic principles Targets Strategic levers – Portfolio development – Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence
BASF tomorrow – Board priorities
BASF Strategy: We create chemistry__November 2011 66
Acquisitions will contribute to profitable growth in the future
Are EPS accretive by year three at the latest
Provide a minimum return on investment of 8% after tax
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…
BASF Strategy: We create chemistry__November 2011 67
BASF today Trends Purpose and strategic principles Targets Strategic levers – Portfolio development – Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence BASF tomorrow – Board priorities
BASF Strategy: We create chemistry__November 2011 68
Annual earnings contribution of ≥€1 billion from NEXT will be achieved in 2012
> 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 achieved
Annual earnings contribution of more than €1 billion will be achieved in 2012
Annual earnings contribution in € million
NEXT New EXcellence Targets
0
500
1,000
1,500
2,000
2,500
2003 2005 2007 2009 2012
Completed restructuring programs
Operational excellence program NEXT
BASF Strategy: We create chemistry__November 2011 69
New operational excellence program STEP: Earnings contribution ~€1 billion
Annual earnings contribution in € million
Optimization of processes, structures and production sites in all regions
Measures: – Fixed cost savings – Margin improvement – Capacity increase – Better sourcing
Project timeline: 2012 - 2015 Targeted earnings contribution of
about €1 billion by end of 2015
STEP STrategic Excellence Program
0
1,000
2,000
3,000
2012 2015
Former cost saving programs NEXT STEP
BASF Strategy: We create chemistry__November 2011 70
BASF today Trends Purpose and strategic principles Targets Strategic levers BASF tomorrow – Board priorities
BASF Strategy: We create chemistry__November 2011 71
Key financial targets 2015 / 2020
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 targets Growth targets
2015
2020
Sales ~€85 billion
Sales ~€115 billion
EBITDA ~€15 billion
Double EBITDA to ~€23 billion (compared with 2010)
BASF Strategy: We create chemistry__November 2011 72
Cash generation enables business growth and shareholder returns
Source of cash (2001-2010) in €
Use of cash (2001-2010) in €
Cash and financing 5%
Earnings after tax 35%
Depreciation 44%
Acquisitions 19%
Dividend 20%
Capex 35%
Divestitures 15%
Share buy- back 13% €68
billion €68
billion
Working capital 5%
CTA* % others 8%
Financial investments
& Other 1%
* Contractual Trust Agreement: transfer of pension obligations to external trust
BASF Strategy: We create chemistry__November 2011 73
Our financial policies
Pursue capital discipline
Focus on tight working capital management
Support growth with profitable acquisitions
Grow dividend
Consider share buy-back program
Maintain a solid A credit rating
BASF Strategy: We create chemistry__November 2011 74
Our strategy will create shareholder value
Earnings per share in €
Business growth 1.30
4.96
2002 2010
0.5
0.9
0.8
1.5 Margin
Tax rate
Share buy-back
Target 2015
~7.5
„STEP“
Share buy-back
Growth
BASF Strategy: We create chemistry__November 2011 75
BASF tomorrow – Roadmap to 2020
We add value as “One company”
Continued top and bottom line growth with key focus on emerging markets
Expansion of portfolio downstream towards functionalized materials and solutions
Strong focus on sustainability and innovation
Commitment to deliver long-term shareholder value