Barclays 2014 Hi-Tech Chemistry Series: Care Chemicals, London · 2018-11-17 · statements about future events, future financial performance, plans, strategies, expectations, prospects,

Gabriel Tanbourgi President BASF Care Chemicals

Barclays 2014 Hi-Tech Chemistry Series: Care Chemicals London – July 8, 2014

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BASF Capital Market Story Care Chemicals 2014

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.

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Care Chemicals accounts for 7% of BASF’s total sales

Functional Materials & Solutions 23%

Performance Products 21%

Agricultural Solutions 7%

Chemicals 23%

Oil & Gas 20%

€74 billion

Other 6%

BASF Group third party sales 2013

Care Chemicals 7%

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Well positioned for future growth Optimization initiatives started in 2012

Successful integration of acquisitions

2012 transfer of businesses to other BASF divisions

2012 negatively impacted by significant decline in laurics oil prices, resumption of normal levels in 2013

Several internal optimization programs initiated

Site consolidation in Europe for alkoxylations (Fino Mornasco, Castellbisbal)

Since 2012: EBITDA margin is back on growth track

Optimization

Sales in billion €

Integration

EBITDA Margin indexed**

Cog

nis*

Cib

a

5.2

Laurics oil price effect Transferred businesses

Care Chemicals sales development

2.1 2.8

5.0 4.9

0,000

1,000

2,000

3,000

4,000

5,000

6,000

2009 2010 2011 2012 2013

6.0

5.0

4.0

3.0

2.0

1.0

0 0

50

100

150

* One time integration costs of € 290 million ** Starting 2011

5


Historic BASF position Current BASF position

1 Personal care ingredients

Home care ingredients

Hygiene

3

1

1 1

1

Ciba BASF Cognis

Cognis acquisition improves Care Chemicals market positions

6


Cognis: Delivering topline line growth & bottom line synergies

58

85

2013

Procurement cost savings

Consolidation of administrative structures

Production efficiency

Consolidation of IT landscape

Other

143

Labor

Non-labor

EBIT contribution of €143 million in 2013

217

580

58

145

2013 plan 2015

Sales

EBIT

In 2013 Care Chemicals represents ¾ of the total topline growth synergies

Growth synergies, EBIT effect on BASF in million €

Cost synergies in million €

7


Development of strategic relevant markets

0

10

20

30

40

50

2012 2020

38.5

51.0 3.6%

* Industrial & Institutional Cleaning

Personal Care: Characterized by low market volatility and high profitability. Combination with standard products offers significant advantages

Home Care: Emerging middle class and sustainable solutions fuel demand growth

Industrial & Institutional Cleaning: Opportunities from increased hygiene awareness and growth of public institutions in emerging markets

Hygiene: Special focus on adult incontinence and emerging market growth

11.2 15.3

17.7

22.3

3.0

4.5 6.6

8.9

Home Care and I&I* Hygiene Personal Care Others

Care Chemicals strategic relevant markets in billion €

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Major focus on consumer driven industries

€4.9 bn*

Personal Care Specialties,

Oleo Surfactants & Alcohols

Home Care, Industrial & Institutional

Cleaning

Hygiene Formulation Technologies

AgChem Additives

* Sales 2013

Sales of €4.0 bn in 3 consumer driven industries

9


Competitive edge through strong customer offers

Combination leads to larger share of customer attention resulting in stronger interaction

Marketing

Concepts

Customer

10


Broad offering of standard and specialty ingredients

Example: Home Care and Industrial & Institutional Cleaning

Broadest portfolio in industry

Deep understanding of market needs and formulation expertise

Leading innovator for our customers

Focus on continuous development of technology position

Cost benefits and security of supply through Verbund

Strong customer relationships

Low cost provider for

standard products

Innovation driven

business model

Simplification Tailored solutions Concepts Solution driven innovation Customer dialogue

11


.

Antwerp

Geismar Nanjing

Ludwigshafen

North America: 10 sites Asia Pacific: 9 sites Europe: 14 sites

South America: 3 sites

Focus on Specialties Hubs (Standard and Specialties)

Best of both: Hub and spoke concept Combining efficiency and effectiveness

Kuantan

Düsseldorf

Global footprint of Home Care and Industrial & Institutional Cleaning


12


Growing income in emerging markets offers growth opportunities in Hygiene

Example: Hygiene Care Chemicals: Major global player in super-absorbents

supplying global brand leaders and regional champions Broadest global production footprint Leading innovator Excellent cost position through backward integration and

operational excellence Technology improvements will offer profitable growth

perspectives Development of renewable superabsorbents to face

increasing demand for sustainable products Strong customer relationship


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Ensuring local supply for our customers Parallel investment in 2 backward integrated production sites

.

Antwerp

Freeport

Nanjing

Ludwigshafen Pilot plant

Camaҫari

Mannheim

Kuantan

Charlotte

Guaratingueta

Shanghai

Rayong

New SAP plants SAP plants today Technical centers

Acrylic Acid production

Example: Hygiene Global network of research,

production and service sites

Investments in emerging markets: – Nanjing (China) started

up in April 2014

– Camaҫari (Brazil) going live by end of 2014

Backward integration into acrylic acid production (Verbund)


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Joint business development plan with strategic partners

Global organizational setup Cross divisional coordination within

BASF Best relationship management

in the industry Biggest innovation power for

our strategic partners

Annual plans with major players Localized technical support Production close to customers Market driven innovation Claim support Consumer & trend information

Offering special value proposition to our customers

Differentiated customer approach

Global Key Accounts Brand & Regional Customers


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Intelligent use of our technology platform creates added value

~ €1.5 billion

~40% Captive sales to other BASF units e.g. Coating additives Water treatment Oilfield & Mining

Our technology platform delivers significant contributions beyond Care Chemicals

Formulation Technologies supplying e.g. Chemical industry Construction industry Metal surface treatment AgChem additives

~60%


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Market empathy + science excellence turn customer wishes into profitable offerings

MARKET EMPATHY Consumer empathy Marketing expertise Customer intimacy Market knowledge Trend know-how Competition understanding

PERFORMANCE

SCIENCE EXCELLENCE Intellectual property Scientific & production technology Formulation expertise Sustainability expertise Claim support (perceivable) Regulatory expertise

MEETS EMOTION


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BASF Capital Market Story Care Chemicals 2014 17

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Understanding our customers’ wishes – Pillow talk effect

Softness of a product on the skin is very difficult to evaluate

We use different fabric surfaces to translate diverse perceptions of softness into measurable data

Easy intuitive, nonverbal and intercultural description of skin feel - just choose the right pillows!

Allows for excellent differentiation of products and formulation concepts

Supports positioning and claim substantiation

Highly accepted by our customers


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Perfect Flawlessly pretty, sets uncompromising standards Intensive Conditioning Mask Conditioner with Color-

Illusion Pigments

Professional Classically styled, quietly confident, well-groomed Detoxication Conditioner Sensational Hair Oil

Creative Always on the go, spontaneous and effortlessly good-looking Vibrant Color

Conditioner Leave-on Glitter Conditioning Gel

Authentic Easy-going, genuine and naturally good-looking Anti-Hair Breakage

Conditioner Volume Conditioner

Energetic Strong, assertive and confident, but rough around the edges Conditioner Fluid Cream Mousse Leave-on

Protected Naturally beautiful, caring, approachable and feminine Conditioner for Scalp & Hair Anti-Pollution Conditioner

Inspired by life Needs-based conditioners

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Strong platform for customer cooperation Enhanced innovative power

Example: Cooperation in personal care with one specific customer

Pipeline as of 2011 after structural integration

Opportunity Fields

Business Case Lab Phase

Launch Phase 3 Phase 2

Phase 1

Phase 5

Additional joint innovation projects of BASF and former Cognis as of 2013

Pilot Phase Phase 4

Gate 1

Gate 2

Gate 3

Gate 4

Gate 5


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Innovation as major growth driver Many successful product launches in Personal Care

2013 2014

Shadownyl (Biological Active)

Tinosorb® A2B (UV Filter) Timica Terra Color

(Effect Pigments) Lamesoft (Skin Feel)

Skin Care Hair Care Concepts Plantaquat (Conditioner) Luviset One (Styling) Luviskol (Styling)

Cosmetic for real life Everlasting Beauty

Skin Care Hair Care Concepts Cetiol Ultimate (Emollient) Slim-Excess®

(Face & body contour) N N N

Vibracolor Monlight Blue (Hair Color)

Ultrahold® Power

N N n

Validated conditioners typology system

>400 further innovation projects and concepts in the pipeline


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But we do even more

Customer need: Phosphate substitute for automatic dish washing

Our solution: High performing chelates – Eco-friendly – Readily bio-degradable

Resetting the innovation potential for future product generations via completely new technology in superabsorbent (SAP) polymers and diaper concepts

New technology offers significant potential both in mature and emerging markets

Hygiene: SAPX

Home Care: Trilon® M


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.

Strong global research & development network

Development centers

Research centers

North America

Mexico Ecatepec

U.S.A Charlotte Cincinnati Freeport Long Island Stony Brook Tarrytown Wyandotte San Diego

South America Brazil

Jacarei Guaratingueta

Europe

Spain Barcelona

Italy Cesano Maderno

France Nancy Lyon Levallois-Perret Cedex

Switzerland Basel

Germany Düsseldorf Grenzach Ludwigshafen

Turkey Cayirova-Gebze

Asia Pacific

Japan Tokyo India

Mumbai

Thailand Rayong Bangkok

South Korea Seoul

China Shanghai

R&D intensity clearly above BASF Group average


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Opening up new growth fields

Enzymes are key performance ingredients in modern detergent formulations

Size of industrial enzymes market: €3 billion Care Chemicals is entering the detergent enzyme market Expansion into enzyme technology will increase BASF’s

position as innovation leader

Bioacrylics are derived from renewable resources Customers request bio-based products in order to market

their products with credible eco-claim Care Chemicals develops new tailor-made technologies for

superabsorbents from renewable raw materials

Home Care: Enzymes

Hygiene: Bioacrylics


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Leveraging enzymes know-how with chemical ingredients

Acquired Henkel's detergent enzyme technology

Entered into research and license agreement with Dyadic to access C1-host technology

Successfully acquired specialized enzyme biotechnology company Verenium

R&D pipeline is strongly reinforced with several new R&D projects

Improved performance in stain removal via

Enzymes will strengthen our unique position as full range supplier

Enzymes + Chemistry


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Bio-based superabsorbents Ready to capture business potential through innovation

Mass balance approach

Based on plant- and waste-oil and

bio-gas

Available today Mid Term Future

Laun

ch

Pro

cess

de

velo

pmen

t R

esea

rch

Bio-based superabsorbent

Renewable carbon from fermentation

of sugars

Next generation

Renewable Non-food


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100% sustainable sourcing of oleo chemicals by 2015 Segregated offer already available since 2013 Mass balance system SAP More than 85% of the R&D budget is earmarked for research into

sustainable products and processes

Sustainability: We show the way Dialogue platform with customers for sustainable development

Basic feedstock Supply Retailer Consumer BASF Customer

Sustainable sourcing Offerings Transport

options Needs &

perspectives Initiatives/ strategies

“Green” behavior

Care Chemicals Trigger Point Concept


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Care Chemicals: Aims for strong top line growth and margin improvement

Sales in billion €

Growth Optimization

Integration

Cib

a

Care Chemicals sales development

2.1 2.8

5.2 5.0 4.9

0

50

100

150

0,000

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2009 2010 2011 2012 2013 projection2020

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0

* One time integration costs of € 290 million

Cog

nis*

EBITDA Margin

indexed**

** Starting 2011

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BASF Care Chemicals

Leading supplier to large, attractive consumer markets

Strong technology footprint & formulation know-how

Understanding customer needs and developing customized solutions

Strong profile as sustainability leader

Capitalizing on accelerated growth in emerging markets

Bolt-on acquisitions in new growth fields

►Aim to grow faster than our strategic relevant markets Profitability above BASF average

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BASF Capital Market Story Care Chemicals 2014 30

Documents

Barclays 2014 Hi-Tech Chemistry Series: Care Chemicals, London · 2018-11-17 · statements about future events, future financial performance, plans, strategies, expectations, prospects,