we add value as - basf – united states...basf capital market story july 72014 global reduction in...

We add value as one company

Hans-Ulrich Engel CFO of BASF SE CFO Roadshow Frankfurt July 25, 2014

BASF Capital Market Story July 2014 4

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.


Chemistry as an enabler BASF has superior growth

opportunities: – sustainable innovations – investments – emerging markets

Ambitious financial targets

The #1 chemical company €74 billion sales, €7.2 billion

EBIT bSI in 2013 #1-3 in >75% of businesses,

present in >200 countries 6 integrated Verbund sites,

production in 60 countries

A track record of strong sales and earnings growth

14% average annual dividend increase, >3% yield in every single year*

~€80 billion market capitalization in June 2014

Performance Perspective

* for 2004-2013

Ludwigshafen, Germany

Antwerp, Belgium

Nanjing, China

Kuantan, Malaysia Geismar,

USA Freeport, USA

Verbund site

Positioning

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


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.


Business review

BASF strategy & growth targets

Strategic levers


BASF increases earnings considerably due to higher volumes

Business performance Q2’14 Q2’13 vs. Q2’13 Sales €18.5 billion €18.4 billion +1% EBITDA €2.7 billion €2.5 billion +10% EBIT before special items €2.1 billion €1.8 billion +12% EBIT €2.0 billion €1.8 billion +14% Net income €1.3 billion €1.2 billion +12% Reported EPS €1.41 €1.26 +12% Adjusted EPS €1.54 €1.40 +10% Operating cash flow €0.9 billion €2.0 billion (53%)

Sales development Period Volumes Prices Portfolio Currencies

Q2’14 vs. Q2’13 6% (2%) 1% (4%)


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


0

2

4

6

8

10

0

10

20

30

40

50

60

Strong and profitable growth in emerging markets Sales BASF Group excl. Oil & Gas billion € by location of customer

2001 2013

EBITDA BASF Group excl. Oil & Gas billion € by location of customer

Emerging markets Developed markets**

** BASF definition: Developed markets include EU15, Norway, Switzerland, North America, Japan, Australia, New Zealand

28

2.5

2001

59

CAGR +5.0%*

7.3

2013

22%

35% 33%

25%

CAGR +12.8%*

CAGR +7.8%*

37% 36%

CAGR +10.2%*

* Nominal CAGR


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


0

1

2

3

4

2004 2005 2006 2007 2008 2009** 2010 2011 2012 2013 1H2014

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

Free cash flow* in € billion

2.6

3.3 3.5

3.2

2.5

3.2

3.9 3.7

2.6

3.2

0.5


0.851.00

1.50

1.95 1.951.70

2.202.50

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Attractive dividend yield

Dividend of €2.70 per share for 2013, an increase of 3.8%

2004-2013: Average annual dividend increase of ~14%

Attractive dividend yield of 3.5% in 2013**

Dividend yield above 3% in any given year since 2004

* Dividend yield based on share price at year-end

Dividend payments

3.7% 3.2% 3.1% 4.1% 3.8% 7.0% 3.9%

Dividend yield* 4.6%

2.60 2.70

3.7%

** Based on BASF share price of €77.49 on Dec. 30, 2013

Dividend per share in €

CAGR 14%

3.5%


Average annual performance with dividends reinvested

0 3 6 9 12 15 18 21

Euro Stoxx 50

DAX 30

MSCI World Chemicals

+9.3%

Last 5 years July 2009 – June 2014

+29.1%

+9.6%

+15.4%

+16.5%

Last 10 years July 2004 – June 2014

BASF

+10.7%

+4.5%

+18.9%

Delivering consistent, long-term value


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.

We expect a slight increase in EBIT before special items, especially as a result of considerably higher contributions from the Performance Products and Functional Materials & Solutions segments.

We aim to earn a high premium on our cost of capital once again in 2014.

Outlook 2014

GDP: +2.5% (previous: 2.8%)

Industrial production: +3.7%

Chemical production: +4.4%

US$ / Euro: 1.35 (previous: 1.30)

Oil price (US$ / bbl): 110

Assumptions 2014

Outlook 2014 confirmed


Business review


Strategic 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


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


Business review


Strategic levers – Portfolio development

– Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence


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.


Engineering plastics 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 2001 − today

Acquisitions

~ €16 billion sales

Divestitures

Pharma Agro generics Vitamins premix Printing systems Construction equipment,

wall & flooring systems Gas Trading …

~ €22 billion sales*

Fibers Polyolefins Fertilizers Styrenics

Chemicals divestitures

Portfolio development Towards more market driven and innovative businesses

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


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™


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


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


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


Balance sheet remains strong Balance sheet June 30, 2014 vs. December 31, 2013 (billion €)

Liquid funds

Accounts receivable

Long-term assets

37.1

9.4

1.8

Other liabilities

Financial debt

Stockholders’ equity

Dec 31 2013

June 30 2014

June 30 2014

Dec 31 2013

64.4

Inventories

Other assets

9.6

3.7

Highlights June 30, 2014 Short-term assets increased by

€2.6 billion: - Accounts receivables grew

seasonally by €1.0 billion - Liquid funds up by €0.6 billion

Net debt increased to €14.6

billion Equity ratio: 39%

38.5

10.4

2.4

9.8

3.7

68.4

3.6 Disposal group

Disposal group 2.8

27.8

20.9

64.4

1.3

26.9

22.9

1.6

68.4

17.0 14.4


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*

* Source: BASF Report 2013


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


Sales share from emerging markets to further increase

*BASF definition: Developed markets include EU15, Norway, Switzerland, North America, Japan, Australia, New Zealand

** Sales excluding Oil & Gas


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 …


0

1,000

2,000

3,000

2013 2015

Former cost saving programs NEXT STEP

Operational excellence programs STEP program on track: ~€1 billion earnings contribution by 2015

Annual earnings contribution in € million

Targeted annual earnings contribution of ~€1 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

Program is on track

Total of ~€600 million achieved by the end of 2013

One-time cost & investments: ~€1 billion

STEP program


Restructuring in Performance Products Announced measures to strengthen competitiveness

Measures

Leather and textile chemicals (March 18, 2013)

Establishment of global innovation center in China Optimization of various functions and relocation to Asia Pacific

Water, oilfield and mining chemicals (March 27, 2013)

Establishment of global business unit to realize synergies Divestment of industrial water management business

Plastic additives and pigments (April 23, 2013)

Adjustments at sites in the Basel area to adapt to changed market conditions

Downsizing of R&D activities

Pigments (October 23, 2013)

Optimization of global production network Closure, restructuring and evaluation of strategic options for

production assets

Paper (January 23, 2014)

Shutdown of latex production in Europe Ongoing portfolio optimization

Nutrition & Health (April 25, 2014)

Adaption of product portfolio and organizational processes to market realities

Care Chemicals (June 5, 2014)

Set of measures to adapt to changed customer needs and market conditions within its Home Care, Industrial & Institutional Cleaning and Formulation Technologies businesses

Ongoing efficiency projects in various businesses

Site closures and relocations Adaption of organizational setup to market needs

Reduction of >2000 positions until end of 2017

Annual earnings of ~€500 Million from 2017 onwards

One-time costs in the magnitude of ~€250-300 Million


Appendix:

Q2 2014 Reporting


Portfolio optimization

Strengthen competitiveness of Performance Products

Sale of 50% share in Styrolution to Ineos

Capacity expansions in Functional Materials and Solutions

Enlarged production footprint in Asia Pacific to support growing demand


Chemicals North America drives volume and profit growth

Intermediates 701

(2%)

Monomers 1,578 (2%)

Petrochemicals 2,019 +9%

€4,298 +3%

Q2’14 segment sales (million €) vs. Q2’13


Q2’14 vs. Q2’13 9% (3%) 0% (3%)

EBIT before special items (million €)

495 527 510601 570

0

200

400

600

800

Q2 Q3 Q4 Q1 Q2

2014 2013


Performance Products Restructuring measures increase earnings

Performance Chemicals

824 (3%)

Care Chemicals 1,204 (2%)

€3,924(3%)

Paper Chemicals 342 (8%)


Nutrition & Health 520 (4)% Dispersions

& Pigments 1,034

0%



Q2’14 vs. Q2’13 1% 0% 0% (4%)

2014 2013

394 376

216

427 435

0

200

400

600

Q2 Q3 Q4 Q1 Q2


Functional Materials & Solutions Continued good demand from automotive industry

Catalysts 1,528 +4%

Construction Chemicals

541 (8%)

Coatings 756

+1%

€4,5180%



Q2’14 vs. Q2’13 6% 0% (1%) (5%)

Performance Materials 1,693 (0%)


2014 2013

293 300238

311356

0

200

400

600

Q2 Q3 Q4 Q1 Q2


Agricultural Solutions Exchange rate driven sales and earnings decrease



Q2’14 vs. Q2’13 0% 2% 0% (6%)

0

200

400

600

Q2 Q20

500

1.000

1.500

2.000

Q2 Q2

1,666 433

485 1,727


2014 2013 2014 2013


Oil & Gas Higher production volumes drive earnings

Exploration & Production

807 +54%

Natural Gas Trading 2,387 +3% €3,194

+13%

Q2’14 segment sales (million €) vs. Q2’13 EBIT bSI/Net income (million €)

Natural Gas Trading

Exploration & Production

Net income

Sales development Period Volumes Prices/Currencies Portfolio

Q2’14 vs. Q2’13 24% 16% 5%

382

322

477

587

59

280110

393

0

100

200

300

400

500

600

Q2/2013 Net Income Q2/2014 Net Income

323 477


Review of “Other”

Million € Q2’14 Q2’13 Sales 855 1,072 EBIT before special items (328) (217) thereof Corporate research

Group corporate costs Foreign currency results, hedges and other measurement effects Other businesses

(97) (57)

(117)

33

(97) (58) (63)

37

Special items (13) 3

EBIT (340) (214)


Operating cash flow in H1 2014 Million € H1’14 H1’13 Cash provided by operating activities 2,644 4,030 thereof Changes in net working capital Miscellaneous items

(1,375) (153)

(633) 646

Cash used in investing activities (2,301) (2,582) thereof Payments related to tangible / intangible assets (2,125) (1,884) Acquisitions / divestitures 355 (516) Cash provided by financing activities 189 (823) thereof Changes in financial liabilities Dividends

2781 (2592)

1,762 (2585)


Appendix II:

Chemicals Day


2004 2005 2007 2008 2012 2013 1999 2006 2010 2011 2000

Continuous development of Chemicals global asset footprint

PVC Polyolefins

Minority share in ‘Williams cracker’

Styrenics

Acrylonitrile, Seal Sands

Divestitures / Joint ventures

BASF Petronas, Kuantan

BASF-YPC, Nanjing

Major investments

Polyamide fibers

Steam cracker, Port Arthur

Isocyanates, China

Expansion BASF-YPC, Nanjing

BASF Specialty Chemicals, Nanjing

Feedflex, Port Arthur

Expansion Antwerp cracker

Fertilizers


Balanced portfolio of products for internal supply and merchant market sales

Industrial gases Acetylene Purified ethylene

oxide Formaldehyde Ammonia Cracker products Butanediol Caprolactam PBT** base resin Acrylic acid MDI

Internal supply driven

TDI PolyTHF®

Amines Higher alcohols Polyalcohols and

specialties Formic acid Inorganic salts Glues and resins

Merchant market driven

** Polybutylene terephthalate

captive use only


Sales to other BASF segments

Sales to 3rd parties

Chemicals segment grows by selling into the BASF Verbund and to the market

* IFRS 10 & 11 impact: -€1.3Bn; Impact of new segment structure: +€5.3Bn ** Without Catalysts (now part of Functional Materials & Solutions segment)


0

100

200

300

400

500

2001 2002 2003 2004 2005 2006* 2007* 2008 2009 2010 2011 2012restated

2013

EBITDA margin Chemicals / oil price Index 2001 = 100

Chemicals with stable profitability, little correlation to oil price

EBITDA margin Chemicals (as % of sales)

Oil price

* Without Catalysts (now part of Functional Materials & Solutions segment)


EBIT after cost of capital Chemicals

EBIT after cost of capital* in million €

restated

Chemicals earned a premium on cost of capital even during the 2008 / 2009 recession*** * EBIT after cost of capital concept was introduced in 2004.

*** The former Plastics segment also earned a premium on cost of capital during the 2008 / 2009 recession.

Chemicals is a strong earnings contributor

0

500

1.000

1.500

2.000

2004 2005 2006** 2007** 2008 2009 2010 2011 2012 2013

2,000

1,500

1,000

500

0

** Without Catalysts (now part of Functional Materials & Solutions segment)


2001 2002 2003 2004 2005 2006* 2007* 2008 2009 2010 2011 2012restated

2013

Chemicals generates strong and steady free cash flow

Cash flow Chemicals in million €


Free cash flow (EBITDA – additions to plant, property & equipment)

Since 2001, Chemicals contributed ~€17 billion of free cash flow to BASF Group

Operating cash flow (EBITDA)

2,000

3,000

4,000

1,000

-1,000

0


Increasing usage of alternative feedstock in global chemicals market


.

Europe Ongoing restructuring of olefins and polyolefins industry Focus on innovative chemistry Integrated production setups will remain competitive

North America New capacities based on shale gas Export of NGLs*/ LPG** and base-products

China Strong domestic demand will drive capacity additions Abundant coal reserves drive coal-to-chemicals investments Expected to remain a net importer of many basic chemicals

Middle East Diminishing feedstock advantage due to shale gas

(USA) and coal (China) Export hub for raw materials and base-products

South America Focus on renewable resources Will remain net importer of chemicals from the U.S.

Raw material supply and integration concepts will define competitiveness

* Natural Gas Liquids ** Liquefied Petroleum Gas


Shale gas in the U.S.: Lower energy and feedstock cost

Increased U.S. shale gas production disconnected crude oil prices from natural gas prices in North America

Increased production of natural gas liquids (NGLs): ethane, propane, butane

NGL price drop drives shift to lighter cracker feed slates

– Improved profitability of light feed crackers

– Narrow cracker output

Game changer shale gas

Source: IHS Inc. The use of this content was authorized in advance by IHS. Any further use or redistribution of this content is strictly prohibited without written permission by IHS. All rights reserved. Natural gas price Germany: Statistisches Bundesamt “Grenzübergabepreis” Germany


Natural Gas Liquids Ethane Propane Butane

► Cracker Feed

Shale gas is beneficial for methane and ethane based chemistry

Methane and ethane to retain their advantageous cost position in North America

Low transportability of ethane ► Shift to ethane crackers

Propane and butane easy to transport ► Export with link to global market

Very limited transportability of methane

Methane to remain an abundant product with low pricing in North America (despite LNG projects)

Methane ► Power plants ► Ammonia ► Methanol

Composition of shale gas


Ammonia joint venture* enables low raw materials costs for BASF downstreams

World-scale producer economics plant with focus on captive demand only (BASF)

Site: BASF Verbund site Freeport, Texas

Capacity: 750 kt p.a.

Advantages of hydrogen & nitrogen based technology:

– Lower capital investment

– No greenhouse gas emissions

– Faster execution

Improved cost position for BASF’s downstream products

Caprolactam Isocyanates Amines

Yara

…

Long-term sourcing contracts

Yara-BASF joint venture

BASF Group

Ammonia

Nitrogen** Hydrogen**

merchant market

* Project under evaluation ** Hydrogen and nitrogen are available in the Freeport area


Gas-to-propylene complex* covers internal demand at attractive conditions

U.S. Gulf Coast location

World-scale plant

Start-up: ~2019

Port Arthur cracker and new on-purpose propylene complex to cover entire captive propylene demand

Mid-term no sales to merchant market

Lower cost than alternative PDH technology

Cost leading gas-to-propylene technology covers supply gap

Propylene supply North America

Acrylic acid Oxo-alcohols Polyols …

Propylene Propylene (Port Arthur cracker)

Downstream products

Methanol

Methane (from shale gas)

Flexible feed (NGL’s, Naphtha)

* Project under evaluation


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.


Philosophy of transfer pricing Safe and flexible supply at competitive prices Transfer prices linked to market prices No cross-subsidizing Value driven management in all steps of the

value chain

Additional Verbund benefits Flexible planning along value chains High security of supply, low logistics costs,

no sales and sourcing costs Joint quality management Joint engineering and process development Cross-functional knowledge exchange Additional capacity at Verbund sites dilutes fixed costs

Chemicals is at the heart of the BASF Production Verbund

Additional Verbund benefits

Transfer pricing

Downstream divisions

Chemicals segment


Chemicals supplies key raw materials to BASF downstream segments


Merchant Market

Value chains of the BASF

Verbund

Ethylene Propylene Butadiene

Close to entire cracker output in Ludwigshafen is used within Verbund

<5%

Raffinates Aromatics …

Cracker products Ludwigshafen

>95%

BASF-YPC Nanjing supply for captive demand:

2006: 60% 2014: 75% BASF SE, Ludwigshafen, Germany BASF Investor Day Chemicals segment – Key note speech, May 22, 2014 61


0%

2%

4%

6%

8%

10%

12%

14%

16%

0

50

100

150

200

250

300

350

400

2000 2001 2002 2003 2004 2005 2006* 2007* 2008 2009 2010 2011 2012 2013 2014 2015 2016restated

Consolidated sales indexed (2000 = 100)

Capex as % of sales

Capex focused on organic growth as well as on bottom-line improving projects

Capex as % of sales Chemicals segment

Consolidated sales Chemicals segment

Capex outlook



Continuous process innovation leads to best-in-class technology

Proprietary BASF technology, with best-in-class process

Significant cost synergies due to two parallel projects (Nanjing, Camacari)

Acrylic acid will supply downstream units (superabsorbent polymers; acrylates)

Cost curve case study: Acrylic acid China

Acrylic Acid cash cost curve, China average cash costs 2015 in US$/kg

Cas

h co

sts

BAS

F

clas

sic

proc

ess

BAS

F

new

pro

cess

Source: BASF estimate

Production capacity


Leading single-train technology

New TDI plant strengthens and benefits from Ludwigshafen Verbund

Schwarzheide plant to be closed after start-up of new plant

New TDI plant re-balances competitive environment of European TDI market


TDI cash cost curve, Europe average cash costs 2015 in US$/kg

New Ludwigshafen TDI plant will provide superior cost structure in Europe

Cost curve case study: TDI Europe


BASF caprolactam production focused on captive demand

BASF plants well positioned on cost curve

Best-in-class cost position in Europe

Constant process improvement ongoing

Worldscale caprolactam plants supply downstream demand of polyamide 6 applications

Further cost improvement in North America after start-up of ammonia JV with Yara

Caprolactam cash cost curve average cash costs 2015 in US$/kg

BAS

F N

orth

Am

eric

a

BAS

F Eu

rope

Production capacity

Cas

h co

sts

Cost curve case study: Caprolactam



Chemicals enable growth of downstream businesses

Chemicals benefit from downstream growth

Investment projects mainly improve cost positions

Key success factors Operational and commercial

excellence Process innovation Focused and disciplined

capex plan Further Verbund integration

Chemicals will continue to contribute to BASF profit

Sales Chemicals in billion €

BASF’s Chemicals segment: The success story continues!

EBITDA Chemicals in billion €

0

5

10

15

20

25

30

35

2013 Target 2020

Sales to third parties

Intersegmental transfers EBITDA Chemicals

CAGR 2013-2020 4-5%

0

5

10

15

2013 Target 2020

EBITDA upside range

CAGR 2013-2020 6-7.5%

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