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BASF Credit Story August 2016 1
We add value as one company
BASF Creditor Relations
Deutsche Bundesbank
FrankfurtAugust 16, 2016
BASF Credit Story August 2016 2
150 years
Cautionary note regarding forward-looking statements
This presentation may contain forward-looking statements that are subject to risks anduncertainties, including those pertaining to the anticipated benefits to be realized from theproposals described herein. Forward-looking statements may include, in particular, statementsabout 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 financialperformance. Actual financial performance could differ materially from that projected in theforward-looking statements due to the inherent uncertainty of estimates, forecasts andprojections, and financial performance may be better or worse than anticipated. Given theseuncertainties, readers should not put undue reliance on any forward-looking statements. Theinformation contained in this presentation is subject to change without notice and BASF doesnot undertake any duty to update the forward-looking statements, and the estimates andassumptions associated with them, except to the extent required by applicable laws andregulations.
BASF Credit Story August 2016 3
BASF at a glance
Business review & outlook
Path forward
Financing highlights
BASF Credit Story August 2016 4
150 years
Chemistry as an enabler BASF has superior growth
opportunities: – sustainable innovations– investments– emerging markets
The #1 chemical company €70.4 billion sales, €6.7
billion EBIT bSI in 2015 #1-3 in ~70% of businesses,
present in almost all countries
6 integrated Verbund sites, production in 60 countries
A track record of strong sales and earnings growth
>3.5% dividend yield in every single year from 2006-2015
~€65 billion market capitalization on August 9, 2016
PerspectiveLudwigshafen,Germany
Antwerp,Belgium
Nanjing,China
Kuantan,MalaysiaGeismar,
LouisianaFreeport,Texas
Verbund site
Positioning
We create chemistry for a sustainable future
Performance
BASF Credit Story August 2016 5
150 years
BASF today – a well-balanced portfolioTotal sales 2015: €70.4 billion
Percentage of sales 2015*
* Not depicted here: ~4% of Group sales reported as ‘Other‘ ** Natural Gas Trading has been divested on Sep. 30, 2015.
BASF Credit Story August 2016 6
150 years
Verbund: Unique competitive advantage
Global reduction in carbon emissions of 6 million metric tons p.a. and reduction of waste
Example Ludwigshafen site:avoidance of 7 million metric tons of freight p.a.= 280,000 fewer truckloads
Shared use of on-site facilities: fire department, security, waste water treatment and analytics
* Savings include only tangible synergies. Additional (intangible) benefits and retained profits are not included.
Verbund generates >€1 billion p.a. global cost savings* & supports sustainability
BASF Credit Story August 2016 7
BASF at a glance
Business review & outlook
Path forward
Financing highlights
BASF Credit Story August 2016 8
150 years
Steady earnings growth
* 2010, 2011 indicative, adjusted for IFRS 10 & 11; 2001 – 2009 as reported, without non-compensable foreign income taxes on oil production
EBIT and EBITDA*(in billion €, 2001 - 2015)
3,7
4,7 4,6
7,0 7,2
8,48,9
7,7
6,5
9,9
11,2
10,010,4
11,010,6
0
2
4
6
8
10
12
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015EBITEBITDA
0,7
2,2 2,2
4,5 4,85,5 6,0
4,6
2,8
6,7
8,06,7 7,2
7,6
6,2
CAGREBITDA
7.9%CAGREBIT
16.6%
BASF Credit Story August 2016 9
150 years
Q2 2016: Financial figures for BASF Group
Financial figures Q2 2016 Q2 2015 Change
Sales €14.5 billion €19.1 billion (24%)
EBITDA €2.8 billion €3.0 billion (7%)
EBIT before special items €1.7 billion €2.0 billion (16%)
EBIT €1.7 billion €2.0 billion (16%)
Net income €1.1 billion €1.3 billion (14%)
Reported EPS €1.19 €1.38 (14%)
Adjusted EPS €1.30 €1.49 (13%)
Operating cash flow €2.3 billion €2.8 billion (17%)
Sales development Volumes Prices Portfolio Currencies
Q2 2016 vs. Q2 2015 2% (7%) (16%) (3%)
BASF Credit Story August 2016 10
150 years
Outlook 2016 for BASF Group confirmed
Outlook 2016 Sales will be considerably below prior year due to the divestiture of the natural gas trading
and storage activities and the lower oil and gas prices. We expect EBIT before special items to be slightly below the previous year level due to
significantly lower earnings in Oil & Gas.
Assumptions 2016 GDP growth: +2.3% Growth in industrial production: +2.0% Growth in chemical production (excl. pharma): +3.4% Exchange rate: $1.10 per euro Oil price (Brent): $40 per barrel
BASF Credit Story August 2016 11
BASF at a glance
Business review & outlook
Path forward
Financing highlights
BASF Credit Story August 2016 12
150 years
Grow sales and earnings faster than global chemical production, driven by
– Continued focus on innovations
– Capital expenditures
– Acquisitions
– Operational excellence and Verbund advantages
Focus on cash generation/conversion
Focus on pruning our portfolio
Maintain industry-leading position in sustainability
The way forward: Our priorities
BASF Credit Story August 2016 13
150 years
€1.95 billion R&D expendituresin 2015; to be maintained in 2016
~10,000 employees in R&D
~3,000 projects
Ranked No.1 in thePatent Asset Index™
~1,000 new patents in 2015
Research Verbund: Cooperations with more than 600 excellent partners from universities, start-upsand industry
Key facts
1.61.7
1.8 1.9 1.95
0,0
0,5
1,0
1,5
2,0
2011 2012 2013 2014 2015
R&D expenditures (in billion €)
Chemicals11%
Performance Products20%
Functional Mat. & Sol.20%
Agricultural Solutions26%
Oil & Gas2%
Corporate Research21%
2.0
1.5
1.0
0.5
0
Strategic lever: Innovations
BASF Credit Story August 2016 14
150 years
Performance Products16%
Oil & Gas24%
€19.5billion
FunctionalMaterials &Solutions12%
Capex budget 2016-2020
Other14%
Chemicals30%
Capex budget 2016-2020
Asia Pacific18%
€19.5billion
South America*9%
North America26%
Europe46%
AgriculturalSolutions4%
Other1%
by segment by region
* Including Africa and Middle East
Strategic lever:Capital expenditures
BASF Credit Story August 2016 15
150 years
Strategic lever: Acquisitions
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 Credit Story August 2016 16
150 years
BASF to acquire ChemetallTransaction highlights
Purchase price of US$3.2 billion (debt free)
All-cash offer, financing secured
Expected closing of transaction by the end of 2016
Synergies on industry-typical level
EPS accretive in year 1 excluding integration costs, in year 2 including integration costs
Transaction will significantly enhance BASF Coatings’ position as complete solutions provider
Chemetall – a global technology and innovation leader in metals surface treatment
BASF Credit Story August 2016 17
150 years
Chemetall – a global leader in surface treatment products and services
FiguresFacts
Sales2015: US$845 million 2016E*: US$851 million2017E*: US$895 million
EBITDA2015: US$202 million2016E*: US$217 million2017E*: US$231 million
EBITDA margin2015: 24%2016E*: 25%2017E*: 26%
CAGR sales(2007 – 2015) ~7% (at constant exchange rates)
Key customer industries
Automotive, aerospace, coil,metal forming
Regional sales~50% Western Europe~30% North America~20% Emerging markets, mainly Asia
Employees ~2,500 (~50% sales professionals)
Sites 21 production sites in all regions10 R&D sites
One of the strongest globally managed brands in the sector
Proprietary manufacturing technologies, rigorous product quality and performance standards
Leading market positions in the automotive, aerospace and cold forming segments
Long-standing, service-intensive customer relationships
Significant global presence and record of accelerated expansion in emerging markets
Track record of strong growth and high profitability
* average analysts’ estimates
BASF Credit Story August 2016 18
150 years
Strategic lever: Operational excellenceDrivE with ~€1 bn earnings contribution
0
1,000
2,000
3,000
4,000
2015 2018
Annual earnings contribution(in million €)
Targeted annual earnings contribution of €1 billion from end of 2018 on
Optimization of processes and structures in all regions, e.g.– manufacturing– incremental capacities– productivity increase
Project timeline: 2016–2018
DrivE program
NEXT 2008-2011 DrivE 2016-2018
STEP 2012-2015
BASF Credit Story August 2016 19
150 years
50
100
150
200
250
300
350
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Strategic lever: Operational excellence
EBITDA
Sales
* Excl. companies with major IFRS 10/11 restatements, i.e. BASF YPC Nanjing, Libya onshore, other Oil & Gas and Catalysts companies
BASF Group* 2001–2015(indexed; CAGR 2001–2015)
Fixed Costs
CAGREBITDA
9%
CAGRSales
6%
CAGRFixed Costs3%
BASF Credit Story August 2016 20
150 years
Strategic lever: Strong free cash flow generation
* Cash provided by operating activities less capex ** 2009 adjusted for re-classification of settlement payments for currency derivatives
0
1
2
3
4
5
2007 2008 2009** 2010 2011 2012 2013 2014 2015 1HY2016
Free cash flow*(in billion €)
3.2
2.5
3.2
3.9 3.7
2.6
3.2
1.7
3.6
1.4
BASF Credit Story August 2016 21
150 years
Strategic lever: Continuous portfolio development
Specialties and solutions
Differentiated commodities
target(in % of sales*)
~ 50% ~ 50%
Maintaining a balanced portfolio
Divestment of businesses, e.g., due to loss of differentiation
Divestment of businesses, e.g., due to
lower market attractiveness
Commoditization leads to restructuring
Growth fields
Innovation pipeline
Acquisitions
* Excluding Oil & Gas sales
Attractive markets Differentiation by process
technologies and integration
Attractive markets Differentiation by customer
proximity and innovations
BASF Credit Story August 2016 22
150 years
Functional crop care Personal care & food Omega-3 fatty acids Enzymes Battery materials Specialty plastics Selected assets in Oil & Gas Refinish coatings Surface treatment*
BASFcore business
Strong partnerships
Gazprom Monsanto Petronas Shell Sinopec Statoil Total Yara
Selected transactions 2010 − until today
Acquisitions
~ €5.2 billion salesin emerging and innovation-driven
businesses
Divestitures
Styrenics Fertilizers Selected assets in Oil & Gas Natural gas trading & storage Custom synthesis business Textile chemicals Polyolefin catalysts Industrial coatings*
~ €20 billion sales*in businesses with
limited fit and differentiation
potential* Closing expected in 2016
Strategic lever: Continuous portfolio development
BASF Credit Story August 2016 23
BASF at a glance
Business review & outlook
Path forward
Financing highlights
BASF Credit Story August 2016 24
150 years
Financing strategy
Diversified Debt Financing Instrumentsas of June 30, 2016
€20 billion debt issuance program (for long-term debt financing)
US$12.5 billion commercial paper program (for short-term debt financing)
Two broadly syndicated backup-lines of €3 billion each (maturing in 2020 and 2021, respectively)
Funding Strategy Highlights
Commercial Papers15%
Bank Loans21%
€-denominated Bonds
48%
€15.9billion
Keep a solid A rating (current ratings* S&P A / Moody’s A1)Our target:
* Last confirmation Moody’s: June 23, 2016. Last confirmation S&P: March 14, 2016.
Other Bonds16%
BASF Credit Story August 2016 25
150 years
0.4
1.4
1.8
0.8
0.3
1.01.3
0.5 0.4
1.9
0.0
0.5
1.0
1.5
2.0
2.5
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 >2026
* Nominal values, excluding industrial revenue and pollution control bonds from BASF Corporation.
Profile as of June 30, 2016 (in billion €)*
Well-balanced bond maturity profile
BASF Credit Story August 2016 26
150 years
Overview of bonds (1/2) as of June 30, 2016
Bond Term Issuer Volume ISIN Code1.5% Euro Bond 2016/2031 BASF SE €200 million XS1374994280
1.375% GBP Bond 2014/2017 BASF SE GBP250 million XS1144218804
EUR Floating Rate Note 2014/2017 BASF SE €300 million XS1043167433
2.5% Euro Bond 2014/2024 BASF SE €500 million XS1017833242
1.375% Euro Bond 2014/2019 BASF SE €750 million XS1017828911
3.89% USPP Series A 2013/2025 BASF SE USD250 million N/A
4.09% USPP Series B 2013/2028 BASF SE USD700 million N/A
4.43% USPP Series C 2013/2034 BASF SE USD300 million N/A
EUR Floating Rate Note 2013/2016 BASF SE €200 million XS0963402572
3.675% NOK Bond 2013/2025 BASF SE NOK1.45 billion XS0932079717
EUR Floating Rate Note 2013/2020 BASF SE €300 million XS0931272776
2.875% EUR Bond 2013/2033 BASF SE €200 million XS0932307100
EUR Floating Rate Note 2013/2018 BASF SE €300 million XS0903325206
3.25% EUR Bond 2013/2043 BASF SE €200 million XS0888667200
3% EUR Bond 2013/2033 BASF SE €500 million XS0885399583
BASF Credit Story August 2016 27
150 years
Overview of bonds (2/2) as of June 30, 2016
Bond Term Issuer Volume ISIN Code1.875% EUR Bond 2013/2021 BASF SE €1.0 billion XS0883560715
2.0% EUR Bond 2012/2022 BASF SE €1.25 billion DE000A1R0XG3
1.5% EUR Bond 2012/2018 BASF SE €1.0 billion XS0836260975
4.25% EUR Bond 2009/2016 BASF SE €200 million XS0439773002
4.625% EUR Bond 2009/2017 BASF SE €300 million XS0437957086
5.875% GBP Bond 2009/2017 BASF SE GBP400 million XS0420401779
4.875% EUR Bond 2003/2018 Ciba Specialty Chemicals Finance Luxembourg S.A. €500 million XS0170386998
BASF Credit Story August 2016 28
150 years
Highlights of BASF’s credit
Strong track record of sales and earnings growth
Combining economic success with social commitment and environmental protection
Diversified financing strategy with a strong commitment to keep a solid A rating
Focus on operational excellence- Advantageous cost position due to unique Verbund concept
- Disciplined cost management
Well positioned for profitable growth- Excellent innovation platform- Leading positions in growth industries and emerging markets- Ongoing portfolio optimization
Strong free cash flow over the last decade
BASF Credit Story August 2016 29
150 years
BASF Creditor Relations TeamFrank WilhelmiHead of Capital Market Financing
Dr. Lars BuddeSenior IR ManagerCreditor Relations
Contact Details:Email: ir@basf.comPhone: +49 621 60 91386Websites: www.basf.com/bonds
www.basf.com/anleihen
Lüthje BrandtCapital Market Financing
Thomas LangguthCapital Market Financing
BASF Credit Story August 2016 30
150 years
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