growing a successful isocyanates joint venture · about future events, future financial...

上海巴斯夫聚氨酯有限公司中外合资 Shanghai BASF Polyurethane Co. Ltd. is a Joint Venture of 中国石化集团资产经营管理有限公司上海华谊(集团)公司巴斯夫集团 SINOPEC Assets Shanghai Hua Yi BASF Management (Group) Company Group Corporation

上海巴斯夫聚氨酯有限公司 Shanghai BASF Polyurethane Co. Ltd.

上海巴斯夫聚氨酯有限公司中外合资 Shanghai BASF Polyurethane Co. Ltd. is a Joint Venture of 中国石化集团资产经营管理有限公司上海华谊(集团)公司巴斯夫集团 SINOPEC Assets Shanghai Hua Yi BASF Management (Group) Company Group Corporation Marko Murtonen

General Manager, Shanghai BASF Polyurethane Co. Ltd. September 27, 2013

Growing a successful isocyanates joint venture


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SBPC site presentation Ι September 27, 2013 Ι

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.

Cautionary note regarding forward-looking statements

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1 | Building a world-scale isocyanates site

3 | Market approach

4 | Further growth plans

2 | Business performance


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Shanghai Center

50km

Hongqiao Dom. Airport

Pudong Intl. Airport

Shanghai

International Deep-Water

Port

Expressway Main Road Railway Yangtse River

Hangzhou Bay

SCIP

Geographical Location of SCIP

Shanghai Caojing

Source: SCIP presentation


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Shanghai Center

50km

Hongqiao Dom. Airport

Pudong Intl. Airport

Shanghai

International Deep-Water

Port

Expressway Main Road Railway Yangtse River

Hangzhou Bay

SCIP

Integrated chemical park

Value chains at SCIP include base chemicals, intermediates and downstream products

More than 50 companies invested ~USD15 billion

Located close to markets in Shanghai and the Jiangsu province and the Zhejiang province (combined GDP: ~USD1.7 trillion)

Good logistics with access to highways, railroads and Shanghai Deep-Water Port

Support of local government

Shanghai Chemical Industry Park (SCIP)

Geographical Location of SCIP



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Bayer

PIC / PC Project

MDI/TDI/HDI Project

Integrated Project

Incinerator

Evonik Multi-user Site China

Mitsubishi Gas

Chemical PC

Internal Cases

Lucite MMA Project

Secco Ethylene Project Tankfarm

Shanghai Chlor-Alkali Chemicals

Co., Ltd

STYG PVC

GPCC

Mitsui GPCC BPA You Yue

Storage

BaiLian Tankfarm

Co- gen

Refinery and Cracker Project Dow Chemical

Integrated Project Invista

Nylon-6,6 HuaYi Polymer

Projects Lam- berti

Waste Water

Treatment

Bonded Warehouse

Fine Chemical Park

Budenheim APP

Natural Gas Gate

3M Adhesives

Industrial water works

R&D Center

R&D Center

Refinery and Cracker Project

CEPSA Chemical

BASF is a large investor in SCIP

SLIC/SBPC MDI/TDI

New projects

THF PTHF

Basonat Huntsman

Hangzhou Bay



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BASF with sizable operations in SCIP

G7

BASF stake:

70%

14%

16%

Huntsman

Ultramid® Coating resins

Basecoat Infra-structure

New investments

BASF stake: 100%

* Shanghai Lianheng Isocyanate Co.

** Shanghai BASF Polyurethanes Co. THF, PolyTHF

Basonat Land option

BASF stake: 35%

35%

15%

8% 7%

BASF Chemicals Company (BACH)

MDI TDI

SBPC**

Huntsman

Shanghai Hua Yi

Shanghai Chlor-Alkali Chemical

Sinopec Assets Management

crude MDI

SLIC*


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Nitric Acid

Integrated isocyanates production set-up

BASF system houses Huntsman

MDI Distillation

DNT

MDI Distillation 120kt/a

TDI 160kt/a

Merchant market

Crude MDI

SBPC (total investment ~€500 million)

SLIC


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Synergies with local Sinopec subsidiaries

Supply of naphtha, toluene and other upstream chemicals to SCIP and SBPC

Support in permissions and government relations

Synergies with local Shanghai Hua Yi subsidiaries

Supply of chlorine

Take-off of hydrochloric acid from SBPC

SBPC benefits from sharing of responsibilities among partners

BASF technologies

BASF management processes

BASF sales force and market access

Expertise in operational excellence

BASF Greater China functions (e.g. EHS, HR, legal)

Shanghai BASF Polyurethanes

Co. Ltd.

上海巴斯夫聚氨

酯有限公司


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Production, quality

management

Finance, IT, procurement

Sales & marketing,

supply chain management

Maintenance, engineering

& EHS

Human resources,

administration

SBPC Joint Venture management structure

SBPC joint venture management structure

General Manager (GM)

SBPC Board

Deputy General Manager (DGM)

Technology Agreed common goals:

– Profitable growth of SBPC – #1 position in TDI – Leading position in MDI – Earn premium on cost of

capital Board appointed by investors

according to equity share

GM and DGMs are delegates from partner companies

Annual targets approved by SBPC Board

Clear roles and responsibilities

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3 | Market approach




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Sales (in million €)

407

495 465

644 609

782

0

100

200

300

400

500

600

700

800

900

2007 2008 2009 2010 2011 2012

100%

106% 80%

118% 81%

EBITDA (indexed)

0%

50%

100%

150%

200%

250%

113%

Strong EBITDA yields high return on assets (>20 percent)

SBPC started operation in 2006

Business grows by ~10% in 2013


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€10 - 15 million sustainable savings from 2015 onwards

Striving for operational excellence

Operational Excellence

People SBPC is BASF’s pilot for operational excellence in BASF Greater China with focus on: People

– Develop skills and increase knowledge

Assets – Advance process control – Improve plant reliability and

energy efficiency – Optimize production

processes Processes and structures

– Improve maintenance process

– Optimize logistics and supply chain

Work processes

& structures Assets

Operational excellence


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SBPC adheres to BASF’s

high safety, health and environmental standards

SBPC always achieved good results in most demanding Responsible Care Audits

No lost time incidents in SBPC team since 2007

SBPC applied for Safety Grade A Standard – highest safety standard

in China – granted by Chinese

government

BASF quality management policy and processes

Safety comes first!


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BASF and SBPC are committed to employee development

SBPC perceived as top employer in SCIP

Low attrition rate: < 4%

Reasons: – Safety culture and record – Inspiring business culture – Team building – Systematic people

development process – Training programs with

local universities and colleges

– Talent development for BASF in Greater China and beyond

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3 | Market approach




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Isocyanates – Raw materials for polyurethanes

Toluene diisocyanate

(TDI)

Polyether polyols

Flexible polyurethane foams

e.g. furniture, mattresses e.g. automotive seating

+ =

Methylene diphenyl

diisocyanate (MDI)

Polyether polyols

Rigid & microcellular polyurethane foams

e.g. insulating foams e.g. shoe soles

+ =


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Polyurethanes have versatile applications

Automobile & transportation

Construction & civil engineering

Furniture, interior fittings, sanitary

ware

Sports, recreation & leisure

Footwear

Electrical engineering, cables & electronics

Medical technology

Refrigerating & heating appliances

Polyurethanes


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2010

CAGR >6%

22%

35% 28%

16%

MDI demand (in million metric tons)

20%

30% 36%

14%

~4.6 ~8.8

2020

BASF: #2 position in China

Fastest growth of MDI expected in China (~10% p.a.)

China will become largest market in 2020 (>3 million metric tons)

Growth drivers are: – Increased demand for

energy efficiency – Increasing standards of

living result in higher needs for • furniture, • footwear, • appliances, • performance textiles

– Growth in transportation and construction

MDI is a fast-growing market

Rest of Asia

Europe

Greater China

North and South America

Clockwise from top:


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2010

CAGR >5%

22%

35%

28%

16%

TDI demand (in million metric tons)

16%

30% 40%

14%

~1.8 ~3.1

2020

Clockwise from top:

BASF: #1 position in China

Fastest growth of TDI expected in China (~7% p.a.)

China will become largest market in 2020 (>1.2 million metric tons)

Growth drivers are: – Replacement of palm

fibers and steel spring mattresses

– Increasing standards of living result in higher needs for furniture

– Growing demand for high-end coatings, including automotive applications

TDI – BASF is local market leader in China

Rest of Asia

Europe

Greater China

North and South America


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Geographic proximity: 70% of customers within 400 km around Shanghai

Major SBPC customers are leading companies in their industry

SBPC serves diversified customer portfolio

Enhanced market access through BASF China sales network

Synergies for cross divisional approach via Greater China industry teams

Multiple synergies

* Logos only represent examples of SBPC’s customers list

SBPC serves a wide range of customers*


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Video: Customer interview


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SBPC business growth is based on customers´ trust:

Consistently high product quality

Supply reliability and flexibility to match customers‘ needs

Know-how sharing and customer education (e.g. EHS, supply chain)

Customer-oriented business approach „A customer‘s problem is also our problem“

Focus on long-term relationships in all phases of the business cycle 0

50

100

150

200

250

2008 2009 2010 2011 2012 2013 FC

CAGR ~18% p.a.

Example: Isocyanates business with Huafon (sales indexed, 2008 = 100)

Strong commitment to customers

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3 | Success factors




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120

0

50

100

150

200

250

2006

MDI nameplate capacity (in thousand metric tons)

210

2014

160

0

50

100

150

200

250

2006

TDI nameplate capacity (in thousand metric tons)

185

2014

Further growth of TDI and MDI business in China

+16% +75%


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Local market leader in TDI, #2 supplier of MDI in China.

Focused on growing polyurethane markets in Shanghai, as well as in Jiangsu and Zhejiang provinces

Strong commitment to customers: Quality, flexibility, reliability

Success factors: Superior technology, operational excellence, employee involvement and dedication

Profitable and growing business since day 1 of operation

SBPC is a major contributor to BASF’s “grow smartly” strategy in Asia Pacific

SBPC – A succesfully growing joint venture

growing a successful isocyanates joint venture · about future events, future financial...

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