basf analyst conference q1 2011
DESCRIPTION
Charts accompanying the 1Q2011 Conference Call for investors and analysts on May 6, 2011TRANSCRIPT
1BASF 1st Quarter 2011 Analyst Conference Call
Powerful start to 2011BASF remains on growth track
First Quarter 2011 Financial highlightsMay 6, 2011
2BASF 1st Quarter 2011 Analyst Conference Call
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
3BASF 1st Quarter 2011 Analyst Conference Call
Sales €19.4 billion +25%EBITDA €3.4 billion +28%EBITDA margin 17.4% 17.0%EBIT before special items €2.7 billion +40%EBIT €2.6 billion +39%
Net income €2.4 billion +134%EPS €2.62 +134% Adjusted EPS €1.94 +47%
Business performance Q1’11 vs. Q1’10
Powerful start to 2011 First quarter highlights
Excellent sales and earnings growth in the chemical activitiesCognis contributed significantly to the good results in Performance ProductsAgricultural Solutions started with strong sales and earningsHigher sales and earnings in Oil & Gas despite lower volumes from Libya
4BASF 1st Quarter 2011 Analyst Conference Call
Important milestones in Q1 2011
Gas for Europe StrategyMDI project in Chongqing Fertilizer activities
Project approvedConstruction already startedCompletion in 2014World-scale capacity of 400,000 metric tons Total investment~€860 million
Two Memoranda of Understanding signed with Gazprom
– Development of two additional sites of Achimov deposits in Russia
– Acquisition of 15% stake in South Stream
10.3% stake in K+S sold– Capital gain before taxes
€887 millionPlan to sell major part of the fertilizer assets:
– Sales: Mid three-digit million– Capacity: 2.5 million tons
5BASF 1st Quarter 2011 Analyst Conference Call
Chemicals Record earnings
Intermediates709+22%
Inorganics353
+25%
Petrochemicals2,214+28%
€3,276+27%
461
687617
537
765
0
200
400
600
800
Q1 Q2 Q3 Q4 Q1
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q1’11 vs. Q1’10 4% 21% 0% 2%
Q1’11 segment sales (million €) vs. Q1’10 EBIT before special items (million €)
20112010
6BASF 1st Quarter 2011 Analyst Conference Call
Plastics Strong volumes and prices lifted sales and earnings
Polyurethanes1,479+21%
Performance Polymers
1,309+34%
€2,788 +27%
279
349 371
285
393
0
200
400
Q1 Q2 Q3 Q4 Q1
Sales development Period Volumes Prices Portfolio Currencies
Q1’11 vs. Q1’10 14% 11% 0% 2%
Q1’11 segment sales (million €) vs. Q1’10 EBIT before special items (million €)
20112010
7BASF 1st Quarter 2011 Analyst Conference Call
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q1’11 vs. Q1’10 3% 5% 29% 2%
Performance Products Acquisitions are paying off
419471
370294
554
0
100
200
300
400
500
600
Q1 Q2 Q3 Q4 Q1
PerformanceChemicals
895+23%
Care Chemicals1,376+117%
€3,982+39%
Paper Chemicals393- 6%
Q1’11 segment sales (million €) vs. Q1’10 EBIT before special items (million €)
Nutrition & Health469+27%
Dispersions & Pigments
849+17% 20112010
8BASF 1st Quarter 2011 Analyst Conference Call
Cognis – integration objectives
TargetsAchieve 20% EBITDA margin in the Performance Products segment by 2012Acquisition accretive as of 2012
CostsOne-time integration costs of €290 million until end of 2013 Inventory step-up of €120 millionCosts already incurred:−
2010: €80 million (thereof €60 million inventory step-up)
−
Q1/2011: €158 million (thereof €60 million inventory step-up)
SynergiesGenerate €275 million of additional EBIT− €135 million growth synergies by the end of 2015− €140 million cost synergies by the end of 2013
9BASF 1st Quarter 2011 Analyst Conference Call
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q1’11 vs. Q1’10 18% 13% 1% 3%
Functional Solutions Strong automotive demand drove sales and earnings
Catalysts1,677+58%
Construction Chemicals
469+9%
Coatings672
+13%
€2,818+35%
111
165 158
33
142
0
50
100
150
Q1 Q2 Q3 Q4 Q1
Q1’11 segment sales (million €) vs. Q1’10 EBIT before special items (million €)
20112010
10BASF 1st Quarter 2011 Analyst Conference Call
Agricultural Solutions Strong sales and earnings growth
321 343
0
100
200
300
400
Q1 Q1
Q1’11 segment sales (million €) vs. Q1’10 EBIT before special items (million €)
20112010
0200400600800
1,0001,2001,400
Q1 Q120112010
+7% +7%
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q1’11 vs. Q1’10 8% (2)% 0% 1%
1,1451,230
11BASF 1st Quarter 2011 Analyst Conference Call
273 306
0
200
400
600
800
Q1 Q1
Oil & Gas Higher oil and gas prices compensated for lower volumes
Exploration & Production1,068+4%
Natural Gas Trading
2,387+9%
€3,455 +7%
Sales developmentPeriod Volumes Prices/Currencies Portfolio
Q1’11 vs. Q1’10 (13)% 20% 0%
118
EBIT bSI Natural Gas TradingEBIT bSI Exploration & Production
Net income
Q1’11 segment sales (million €) vs. Q1’10 EBIT before special items / Net income (million €)
20112010
484626
629744
145
12BASF 1st Quarter 2011 Analyst Conference Call
Review of “Other”
Million € Q1 2011 Q1 2010Sales 1,812 1,338thereof Styrenics 843 666
EBIT before special items (209) (266)thereof Corporate research
Group corporate costs Currency results, hedges and other valuation effects Styrenics, fertilizers, other businesses
(83) (55) (78)
185
(82) (51)
(136)
101
Special items (35) (34)
EBIT (244) (300)
13BASF 1st Quarter 2011 Analyst Conference Call
Excellent operating cash flow in Q1 2011
Million € Q1 2011 Q1 2010Cash provided by operating activities 2,255 1,368thereof Changes in net working capital 260 (680)
Cash provided by investing activities 257 (454)thereof Payments related to tangible / intangible assets (547) (392)
Cash used in financing activities (1,200) (757)thereof Changes in financial liabilities
Dividends (1,073)
(127)(679) (78)
Despite improved business activities net working capital decreased slightly Free cash flow at €1.7 billion Net debt reduced by €2.4 billion to €11.1 billion since December 31, 2010€972 million proceeds from the sale of K+S stake
First quarter 2011
14BASF 1st Quarter 2011 Analyst Conference Call
We aim to grow sales on average by two percentage points per year faster than chemical production growthWe strive to grow our earnings further year by year, and to achieve an EBITDA margin of 18% by 2012
We are increasing our Brent oil price forecast from $90/bbl to $100/bblWe are assuming that oil production in Libya will not restart during 2011 →EBIT before special items from our Libyan oil production for the full year 2011
will be about €1 billion lower compared with 2010 (thereof about €700 million of non-compensable oil taxes)
Assumptions
Medium-term targets
Outlook 2011
We expect to generate significantly higher salesWe aim to significantly exceed the 2010 EBIT before special itemsadjusted for non-compensable oil taxes (2010: €7.2 billion)We expect to achieve a high premium on our cost of capital
Targets 2011
15BASF 1st Quarter 2011 Analyst Conference Call
16BASF 1st Quarter 2011 Analyst Conference Call 16
Back-Up
17BASF 1st Quarter 2011 Analyst Conference Call
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q1’11 vs. Q1’10 5%* 13% 6% 1%
BASF Group Q1 2011
* Volumes +9% (without Oil & Gas)
2.02.2 2.2
1.8
2.7
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Q1 Q2 Q3 Q4 Q1
EBIT before special items (billion €)
15.5 16.2 15.8 16.419.4
0
4
8
12
16
20
Q1 Q2 Q3 Q4 Q1
Sales (billion €)
2011201020112010
18BASF 1st Quarter 2011 Analyst Conference Call
Financial highlights Strong earnings improvement in Q1
Million € Q1 2011 Q1 2010 Δ% Q4 2010 Δ%Sales
changes due to - volumes - prices - portfolio - currencies
19,361 15,454 +25%
+5% +13%
6% +1%
16,424 +18%
EBITDA 3,365 2,627 +28% 2,703 +25%
EBIT before special items 2,732 1,954 +40% 1,765 +55%
Special items (182) (114) . (78) .
EBIT 2,550 1,840 +39% 1,687 +51%
Net income 2,411 1,029 +134% 1,100 +119%
EPS (€) 2,62 1,12 +134% 1,20 +118%
Adjusted EPS (€) 1,94 1,32 +47% 1,39 +40%
19BASF 1st Quarter 2011 Analyst Conference Call
Balance sheet further strengthened
Balance sheet March 31, 2011 vs. end of 2010 (billion €)
Liquid funds
Accounts receivable
Long-term assets
22.7
15.0
21.7
34.5
10.2
1.5
Other liabilities
Financial debt
Stock- holders’ Equity
Mar 31 2011
Mar 31 2011
Dec 31 2010
Dec 31 2010
60.2
32.7
11.1
2.8
60.2
23.5
13.9
22.8
Inventories
Other assets
8.7
4.9
8.7
4.5
59.459.4
Proceeds from the sale of BASF’s stake in K+S were used to reduce debt
Net debt decreased by €2.4 billion to €11.1 billion.
Accounts receivable increased by €0.9 billion due to the expansion of our business
Equity ratio at 39% (up 1 percentage point)
20BASF 1st Quarter 2011 Analyst Conference Call
Cognis integration Generating €275 million of growth and cost synergies
Providing joint customer base with access to broader portfolioIncreasing solution capabilitiesExtending innovation capabilitiesLeveraging regional set-up
Cost synergiesRealizing procurement cost savingsConsolidating of administrative structuresImproving production efficiencyConsolidating IT landscape
Synergies (million €)
140
135
0
50
100
150
200
250
300
Growth synergies (by the end 2015) Cost synergies (by the end of 2013)
Growth synergies