kurt bock chairman of the board of executive directors€¦ · kurt bock chairman of the board of...
TRANSCRIPT
We add value as one company
Oil & Gas
Agricultural Solutions
Functional Materials & Solutions
Performance Products
Chemicals
Value
Kurt Bock Chairman of the Board of Executive Directors UniCredit & Kepler Cheuvreux 13th German Corp. Conference Frankfurt, January 20, 2014
BASF Capital Market Story January 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 Capital Market Story January 2014 3
Chemistry as an enabler BASF has superior growth
opportunities: – sustainable innovations – investments – emerging markets
Ambitious financial targets
The #1 chemical company €72.1 billion sales, €6.6
billion EBIT bSI in 2012* #1-3 in >75% of businesses,
present in >200 countries 6 integrated Verbund sites,
production in 60 countries
10 years of strong sales and earnings growth
16% average annual dividend increase, >3% yield in every single year**
~€71 billion market capitalization***
Performance Perspective
** for 2003-2012 ***as of December 30, 2013
Ludwigshafen, Germany
Antwerp, Belgium
Nanjing, China
Kuantan, Malaysia Geismar,
USA Freeport, USA
Verbund site
Positioning
* Restated numbers, reflecting IFRS 10/11 changes
We create chemistry for a sustainable future
BASF Capital Market Story January 2014 4
Percentage of sales 2012**
** Not depicted here: ~5% of Group sales reported as ‘Other‘ * Restated numbers, reflecting IFRS 10/11 changes, new segment structure effective Jan. 1, 2013
BASF today – a well-balanced portfolio Total sales 2012: €72.1 billion*
BASF Capital Market Story January 2014 5
Business review
BASF strategy & growth targets
Strategic levers
BASF Capital Market Story January 2014 6
Robust 3rd quarter 2013 for BASF
BASF Capital Market Story January 2014 7
Strong free cash flow generation
* Cash provided by operating activities less capex (in 2005 before CTA) ** 2009 adjusted for re-classification of settlement payments for currency derivatives
BASF Capital Market Story January 2014 8
Delivering attractive shareholder returns
Dividend of €2.60 per share for 2012
2003-2012: Average annual dividend increase of 16%
Attractive dividend yield of 3.7% in 2012**
Dividend yield above 3% in any given year since 2002, total payout almost €17 billion
* Dividend yield based on share price at year-end
Dividend payments
** Based on BASF share price of €71.15 on Dec. 28, 2012
BASF Capital Market Story January 2014 9
We do not anticipate an acceleration of global economic growth in the 4th quarter of 2013
For the full year, BASF confirms its outlook: We strive to exceed the record levels in sales and EBIT before special items in a challenging economic environment
Our focus on growth markets and innovation, in combination with our measures to optimize our portfolio and to improve operational excellence, will contribute to this
We aim to earn a high premium on cost of capital in 2013
Outlook 2013
GDP: +2.0% (unchanged)
Industrial production: +2.7% (unchanged)
Chemical production: +3.1% (unchanged)
US$ / Euro: 1.30 (unchanged)
Oil price (US$ / bbl): 105 (unchanged)
Assumptions 2013
Outlook 2013*
* Published at Q3 2013 reporting on October 25, 2013
BASF Capital Market Story January 2014 10
Delivering consistent, long-term value
BASF Capital Market Story January 2014 11
Business review
BASF strategy & growth targets
Strategic levers
BASF Capital Market Story January 2014 12
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 Capital Market Story January 2014 13
Grow at least 2 percentage points above chemical production
Earn a premium on cost of capital of at least €2.0 billion on average p.a.
Profitability targets Growth targets
2015
2020
Sales ~€80 billion
Sales ~€110 billion
EBITDA ~€14 billion EPS ~€7.50
EBITDA ~€22 billion
Key financial targets 2015 / 2020 are ambitious
BASF Capital Market Story January 2014 14
Business review
BASF strategy & growth targets
Strategic levers – Portfolio development
– Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence
BASF Capital Market Story January 2014 15
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 Capital Market Story January 2014 16
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.
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 Capital Market Story January 2014 17
Engineering plastics Electronic chemicals Catalysts Construction chemicals Water-based resins Pigments Plastic additives Oil & Gas Personal care & food Battery materials Functional crop care Omega-3 fatty acids
BASF core business
Strong partnerships
Gazprom Statoil Monsanto Petronas Shell Sinopec Total
Selected transactions 2001 − today*
Acquisitions
~ €16bn sales ~ €10bn sales**
Divestitures
Pharma Fibers Printing systems Polyolefins Polystyrene Americas Agro generics Vitamins premix Fertilizers Styrenics (transferred into
Styrolution JV on Oct. 1, 2011)
Construction equipment, flooring systems
** Without Styrenics
Portfolio development Towards more market driven and innovative businesses
* Only closed deals have been considered
BASF Capital Market Story January 2014 18
Market approach Cross-divisional customer industry approach
* Excluding Oil & Gas, Crop Protection and Other ** Nutrition & Health sales predominantly into Health & Nutrition market
BASF Capital Market Story January 2014 19
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: ‘Smartforvision’ Technology competencies combined with customer know-how
Daimler & BASF concept car ‘Smartforvision’
BASF Capital Market Story January 2014 20
Strong commitment to innovation Innovations for a sustainable future
€1.7 billion R&D expenditures in 2012, further increase planned for 2013
~10,500 employees in R&D
~3,000 projects
Research Verbund: About 1,950 partnerships with universities, start-ups and industry partners
Target 2015 and 2020:
– €10 billion in sales from innovations younger 5 years;
– €30 billion in sales from innovations younger 10 years
Key facts
BASF Capital Market Story January 2014 21
Joint development with adidas, illustrating our customer focus
New cushioning material, provides highest energy return in the running industry
Solid granular material* is ‘blown up’, turned into 1000’s of small energy capsules
With their unique cell structure, these energy capsules store and unleash energy more efficiently in every stride
New shoe is available in stores since February, 2013
Key facts
Photo: adidas
* TPU (Thermoplastic polyurethane)
Innovation with adidas: Infinergy™ Technology competencies combined with customer know-how
BASF Capital Market Story January 2014 22
BASF growth fields focus on enabling technologies
Health & Nutrition
Consumer Goods Construction Transportation Electronics Energy &
Resources Agriculture
Customer industries
Water solutions
Heat management
Enzymes Plant biotechnology
Batteries for mobility
Lightweight composites
Functional crop care
Medical Organic electronics
Growth Fields*
E-Power management
Wind energy
Resources, Environment & Climate Food & Nutrition Quality of life
Chemistry as enabler
* Including growth fields still under evaluation
Materials Systems & Nanotechnology
Raw Material Change
White Biotechnology
Techno-logy
fields
BASF Capital Market Story January 2014 23
Enabling technology: Battery Materials Driving the future of electromobility
* Driving range (km) of an electric car (with a 100kg battery)
0 100 200 300 400
Li-S**
HE/HV
Li-ion
Generation 2: Current Generation 3: 2017 Generation 4: 2022+
BASF‘s technology roadmap- Battery materials for today and tomorrow
Li-ion HE/HV Li-ion Li-S
Driving range (km)*
Technology
From Li-ion to Lithium-sulfur
Business potential 2020 Strategic relevant market: >€5 billion globally
(~€4 billion in Asia Pacific)
Sales potential BASF: >€500 million globally (~€350 million in Asia Pacific)
BASF activities Start of business unit „Battery Materials“ in 2012
Several technology-driven acquisitions undertaken
Three-digit million euro invest for R&D and production
R&D network with universities / industrial partners
BASF Capital Market Story January 2014 24
Investments: Capex for organic growth* develops in line with business growth
* Without acquisitions
BASF Capital Market Story January 2014 25
Investments … will boost future organic growth
Future investments in € billion
BASF Capital Market Story January 2014 26
* Memorandum of Understanding signed
TDI plant Ludwigshafen, Germany
Expansion oil & gas activities
Aroma Ingredients Kuantan, Malaysia
Investments Major projects
Expansion Verbund site Nanjing, China*
MDI plant Chongqing, China
Acrylic acid complex Camacari, Brazil
BASF Capital Market Story January 2014 27
BASF aims to further increase its sales 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**
2012 in % of sales
(€62bn**)
2001 in % of sales
(€28 bn**)
Emerging markets Developed markets*
~ 65%
~ 55% ~ 45%
~ 78%
~ 35%
~ 22%
BASF Capital Market Story January 2014 28
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 …
BASF Capital Market Story January 2014 29
Operational excellence programs STEP program on track: ~€1 billion earnings contribution by 2015
Targeted annual earnings contri-bution of ~€1 billion by end of 2015
Project timeline: 2012–2015 Program is on track Measures to optimize processes
and structures in all regions, e.g. – manufacturing, maintenance – supply chain – engineering, best-cost country
sourcing One-time costs & investments:
~€1 billion
NEXT Program
STrategic Excellence Program ‘STEP’
NEXT program successfully completed
Annual earnings contribution of ~€1 billion achieved in 2012
BASF Capital Market Story January 2014 30
Appendix 1:
Q3 2013 Reporting
BASF Capital Market Story January 2014 31
Cash offer of 4 US dollars per share
Offer expires on October 31, 2013
Enterprise value ~62 million US dollars
Acquisition will strengthen BASF‘s footprint in the enzyme growth market
Optimization of global production network
Reduction of 650 positions worldwide
Investment of €250 million in production and R&D
Transaction completed July 31, 2013
Increased production from 3,000 to ~40,000 boe per day in Norway
Compensation payment of ~781 million US dollars*
Important corporate developments
Transaction with Statoil completed
Restructuring in Pigments business
Cash offer for Verenium enzyme biotechnology
* Euro/dollar exchange rate July 31, 2013: €1 = $1.3275
BASF Capital Market Story January 2014 32
Chemicals Pressure on volumes and margins
Intermediates 700 (7%)
Monomers 1,599 (11%)
Petrochemicals 1,925 (6%)
€4,224 (8%)
Q3’13 segment sales (million €) vs. Q3’12
Sales development Period Volumes Prices Portfolio Currencies
Q3’13 vs. Q3’12 (2%) (3%) 0% (3%)
EBIT before special items (million €)
569445
650
495 527
0
200
400
600
800
Q3 Q4 Q1 Q2 Q3
2013 2012
BASF Capital Market Story January 2014 33
Performance Products Growth in volumes and earnings
Performance Chemicals
896 (3%)
Care Chemicals 1,209 (1%)
€3,939(1%)
Paper Chemicals 365 (8%)
Q3’13 segment sales (million €) vs. Q3’12
Nutrition & Health 540 +10% Dispersions
& Pigments 929
(2%)
EBIT before special items (million €)
Sales development Period Volumes Prices Portfolio Currencies
Q3’13 vs. Q3’12 6% (3%) 1% (5%)
344
183
379 394 376
0
200
400
600
Q3 Q4 Q1 Q2 Q3
2013 2012
BASF Capital Market Story January 2014 34
Functional Materials & Solutions Sound overall demand, especially in automotive
Catalysts 1,466 +12%
Construction Chemicals
576 (9%)
Coatings 728
(5%)
€4,439+3%
Q3’13 segment sales (million €) vs. Q3’12
Sales development Period Volumes Prices Portfolio Currencies
Q3’13 vs. Q3’12 8% 2% (1%) (6%)
Performance Materials 1,669 +5%
231 228 239293 300
0
200
400
600
Q3 Q4 Q1 Q2 Q3
EBIT before special items (million €)
2013 2012
BASF Capital Market Story January 2014 35
Agricultural Solutions Sales growth despite pronounced currency headwinds
Q3’13 segment sales (million €) vs. Q3’12
Sales development Period Volumes Prices Portfolio Currencies
Q3’13 vs. Q3’12 8% 4% 3% (10%)
0
100
200
Q3 Q30
300
600
900
1.200
Q3 Q3
1,054 172 171 1,008
EBIT before special items (million €)
2013 2012 2013 2012
BASF Capital Market Story January 2014 36
103
318
62
451
0
100
200
300
400
500
Q3/2012 Net Income Q3/2013 Net Income
Oil & Gas Substantially higher net income
Exploration & Production
754 +15%
Natural Gas Trading 2,376 +29%
€3,130 +25%
Q3’13 segment sales (million €) vs. Q3’12 EBIT bSI/Net income (million €)
Natural Gas Trading
Exploration & Production
Net income
Sales development Period Volumes Prices/Currencies Portfolio
Q3’13 vs. Q3’12 22% (2%) 5%
499
396 360
422
BASF Capital Market Story January 2014 37
Appendix 2:
Charts from Roundtable Oil & Gas (London, September 13, 2013)
BASF Capital Market Story January 2014 38
Oil & Gas – Strong earnings contribution to BASF Group
BASF Capital Market Story January 2014 39
Oil & Gas – Strong free cash flow contribution to BASF Group
∼45% of operating cash flow delivered to BASF Group (Avg. 2003-2012) * Wintershall cash flow, not BASF Group consolidated view ** Free cash flow: Operating cash flow less payments related to property, plant and equipment and intangible assets
BASF Capital Market Story January 2014 40
2008
2012
2008-2012: – Oil & Gas: Solid profit
contributor to BASF Group
– Oil & Gas accounted for 30% of BASF Group capex
EBITDA share of Oil & Gas in BASF‘s portfolio expected to remain in the same order of magnitude in the upcoming years
Capex share of Oil & Gas business in BASF portfolio will slightly decline
Key facts
* Excluding non-deductible oil taxes **Fixed assets, tangible assets from acquisitions, activated exploration expenditures
Average EBITDA* 2008-2012 (€ billion)
Cumulative capex (plant, property, equipment) (€ billion)
BASF Group w/o Oil & Gas
7.0 (76%)
BASF Group w/o Oil & Gas
12.3 (70%)
Oil & Gas 2.2 (24%)
Oil & Gas 5.2** (30%)
2008
2012 -
-
Share of Oil & Gas in BASF portfolio
BASF Capital Market Story January 2014 41
Oil & Gas provides earnings stability
01.0002.0003.0004.0005.0006.0007.0008.000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
EBIT before special items BASF Group* (million €) Excluding non-compensable taxes on oil production
EBIT bSI* Oil & Gas EBIT bSI BASF Group w/o Oil & Gas
2012(restated)
* Excluding non-compensable taxes on oil production
BASF Capital Market Story January 2014 42
Natural Gas
Focus Oil & Gas business on attractive E&P activities 1 Exit natural gas
storage and trading business
3
Active portfolio management – Focus on profitable upstream activities
2 Harvest gas transport business
Exploration / Development / Production Upstream Natural Gas
Storage / Trading Transport
BASF Capital Market Story January 2014 43
2015 target maintained despite restatement (Effect: -18 million boe in 2012)
Continue to significantly invest in core and development regions
E&P Capex 2013-2015 ~€2.0 billion**
– Russia/Caspian Sea ~€0.5 billion
– Europe ~€1.2 billion
– South America and Middle East ~€0.3 billion
Oil & Gas – Excellent further growth opportunities Production volumes (million boe)*
0
50
100
150
200
2012* 2015 target
>160
126
Russia
South America
North Africa/Middle East Europe
Key Facts
* Restated, figures for 2012 adjusted to changes in IFRS; 2012 reported: 144 million boe ** Without capex in financial participations
BASF Capital Market Story January 2014 44
2012 restated 2013
Financial performance
Sales to 3rd parties: €12.7 billion EBIT before special items: €1.9 billion Net income: €1.2 billion
E&P: In 2013, we expect an increase in sales and earnings due to higher production volumes. Natural Gas Trading: Decrease in earnings due to margin pressure.
Production volumes Total production: 126 million boe Overall higher production expected due to the further field development of Achimgaz and our transaction with Statoil in Norway.
Sales volumes Natural gas sales: 47 billion m³ Natural gas sales expected on similar level.
Investments*/ Expenditures
Investments 2008-2012 (IFRS old):~€5.2 billion thereof E&P: ~€3.1 billion thereof Natural Gas Trading: ~€2.1 billion
Investments** 2013-2015: ~ €2.4 billion thereof E&P: ~ €2.0 billion thereof Natural Gas Trading: ~ €0.4 billion
Macroeconomic assumptions
Average oil price (brent): $112 per barrel Average exchange rate: $1.28 per €
Forecast 2013: $105 per barrel $1.30 per €
Oil & Gas – Outlook 2013
44
* Incl. tangible assets from acquisitions, activated exploration expenditures, without capex in financial participations
** Without tangible assets from acquisitions and activated exploration expenditures
BASF Capital Market Story January 2014 45
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