Martin Brudermüller,Vice Chairman of BASF SE Albert Heuser, … · 2018-11-06 · Martin Brudermüller,Vice Chairman of BASF SE Albert Heuser, President Greater China & Functions

Martin Brudermüller, Vice Chairman of BASF SE Albert Heuser, President Greater China & Functions Asia Pacific Gops Pillay, President South & East Asia, ASEAN, ANZ

We create chemistry in Asia Pacific

“grow smartly”

Investor Day Asia Pacific Shanghai, June 5, 2013

BASF Investor Day Asia Pacific, June 5-6, 2013 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.


Our global strategic framework

Why – Our purpose

What – Our strategic principles

How – Our values

We create chemistry for a sustainable future

Creative Open Responsible Entrepreneurial

We add value as one company.

We innovate to make our customers more successful.

We drive sustainable solutions.

We form the best team.


1

2

3

Where we are

Trends in Asia Pacific

“grow smartly” – Asia Pacific Strategy

4 Strategic levers


Customers from 17 countries

More than 100 production sites

148 sales offices*

~16,400 employees, thereof 800 R&D staff

Sales in 2012: ~€12.5 billion**

EBITDA in 2012: €1.2 billion***

BASF in Asia Pacific

* Some sites are not shown due to scale. Site and office numbers refer to companies of significant size where BASF holds a stake greater than 50% .

** Sales by location of customer

*** EBIT by location of company

All figures for 2012 have been adjusted to changes in IFRS 10 & 11

Regional headquarters

Verbund site

Production site

R&D/Technical center

Asia Pacific service center

Singapore

Hong Kong

Japan South Korea

Mongolia

China

Pakistan

India

Sri Lanka

Bangladesh

Thailand Vietnam Philippines

Indonesia

Taiwan

Malaysia

Australia

New Zealand


EBITDA by location of company € billion

0.6 0.7

0.8

1.2

0.8 0.9

1.7 1.6

1.4 1.2*

0

1

2

2004

2005

2006

2007

2008

2009

2010

2011

2012

2012

r

5.3 6.5

8.1 9.6 9.3 8.7

12.5 14.4 14.9

12.5*

0

10

20

2004

2005

2006

2007

2008

2009

2010

2011

2012

2012

r

Sales by location of customer € billion

* 2012r figures restated according to changes in IFRS 10 & 11

Sales and profitability in Asia Pacific

+14% p.a.

+11% p.a.


Functional Materials &

Solutions 30%

Sales by segment

Chemicals 31%

Other 8%

Performance Products 27% Greater

China 42%

Australia, New Zealand (ANZ)

4%

South Asia 11%

Japan 13%

South Korea 8%

ASEAN 22%

€12.5 billion

€12.5 billion

Sales by sub-region

Agricultural Solutions 4%

Figures for 2012 adjusted to changes in IFRS and new segment structure as of January 1, 2013.

Sales Asia Pacific 2012

South Asia: India, Pakistan, Bangladesh, Sri Lanka ASEAN: Singapore, Philippines, Vietnam,

Thailand, Indonesia, Malaysia

Sales to third parties by location of customers


1

2

3

Where we are



4 Strategic levers


Emerging trends in Asia drive the need for sustainable development

Demands of society

& government


Macroeconomics Competition Sustainability

Capturing opportunities and addressing challenges in Asia Pacific

Demands of

society & government



Real GDP (World) US$ trillion

Asia Pacific will be the global growth engine


13%

29%

31%

27%

14%

25%

28%

33%

49.7 67.1

2020

CAGR World: 3.0%

Asia Pacific: 4.8%

14%

28%

30%

28%

52.3

2012

2010

11

Source: BASF

Asia Pacific Rest of World Europe North America


China is in the process of becoming the dominant Asian economy

Greater China Japan South Asia South Korea ASEAN ANZ

Real GDP (Asia Pacific) US$ trillion


2010

7% 8% 7%

11%

33%

34%

8%6%

7%

14%

41%

24%

13.6 21.8

7%

7%8%

11%

35%

32%

14.9

2012

CAGR Asia Pacific: 4.8%

2020

12

Source: BASF


Asia Pacific is the fastest growing chemical market, outpacing GDP

11%

25%

22%

42% 2.4

Real chemical production excluding pharma (World) US$ trillion


Asia Pacific Rest of World Europe North America

40%

10%

23%

27%

10%

21%

19%

50% 2.2

3.2

2020

CAGR World: 4.0%

Asia Pacific: 6.2%

2012

2010

13

Source: BASF


China is the dominating chemical market in Asia Pacific

7%

8%

60%

14% 10%

1.0

Real chemical production excluding pharma (Asia Pacific) US$ trillion


Greater China Japan South Asia South Korea ASEAN ANZ

8% 9%

8%

54%

19%

8%

64%

11% 7%

9% 0.9

1.6

CAGR Asia Pacific: 6.2%

2012

2010 2020

Source: BASF; CAGR Asia Pacific 6.2%

14

2%

1%

1%


Asian companies grow share in global chemical market

21% 30%

79%

70%

2006 2011

953

1,294

Sales – Global Top 100 Chemical Companies US$ billion

Source: BASF

Macroeconomics Competition Sustainability 15

Asian companies Non-Asian companies

Share of Asia Pacific companies has increased by 9 ppts from 2006 to 2011

13 new Asian companies have joined the list of the top 100 chemical producers since 2006

Asia Pacific becomes the center of global competition

Feedstock access becomes a key competitive advantage

Attracting local talent, land scarcity and sustainability topics are key challenges for growth in Asia Pacific


67% 4% 3% 2%

24%

Other local producers Sinopec/PetroChinaFormosa Chemicals Mitsubishi ChemicalsImports

Competitive landscape in Asia Pacific becomes more challenging

100%

Imports

Production for local market

2012

24%

76%

2002

34%

66%

Chemical demand excluding pharma in Asia Pacific Share of local production and imports in total market*, 2002 – 2012 (%)

* Total market is defined as apparent consumption, i.e. production – exports + imports Source: IHS Global Insight, BASF

2012



Chemical market in Asia Pacific is dominated by local players

1 Sinopec 44.9 Chemical Segment only

2 Mitsubishi Chemicals 29.7 estimated (business year April - March)

3 Formosa Chemicals 23.7 Formosa Petrochemical Corp. only

4 ChemChina 19.9 2011

5 Sumitomo Chemicals 18.3 estimated (business year April - March)

6 LG Chem 16.1

7 Toray 15.5

8 BASF 14.9 adjusted to changes in IFRS: €12.5 bn

9 Mitsui Chemicals 13.0 estimated (business year April - March)

10 Reliance Chemicals 12.8 Petrochemical segment only; business year April - March

Chemical Sales in Asia Pacific in 2012 (€ billion)

Top 10 chemical producers in Asia Pacific


Source: BASF, Company reports


Source: UNEP Global Environment Outlook 2012


Increasing need for sustainability driven by governments and society needs

18


*According to Dow Jones Sustainability World IndexSM

The DJSI is composed of global sustainability leaders as identified by SAM’s corporate sustainability assessment, and represents the top 10% of the largest 2,500 companies in the Dow Jones Global Total Stock Market IndexSM based on long-term economic, environmental and social criteria.

Asian companies overtook US companies in Dow Jones Sustainability World Index


21%

18% 52%

9%

2012

18%

21% 54%

7%

2003

19

Asia Pacific Other Europe US


China

India Japan South Korea Singapore Thailand Malaysia Indonesia Australia

2011 Rank* 7 (↑3) 4 (↓2) N.A. 1 (→) 6 (↓1) 2 (↑3) 3 (→) 8 (↓1) N.A.

Plan 12th Five year plan

National action plan on climate change

National strategic projects

National strategy for green growth and Five-year plan

10-Year national green plan

National energy policy

10th Five year plan

National midterm development plan

Carbon plan

Focus area** Energy & waste management safety

Water & energy efficiency

Energy & waste management

GHG reduction targets

Waste management clean air water supply

Bio-energy Green housing waste management

Energy sustainable palm oil scheme

Energy & climate change R&D platform

Opportunity Waste water treatment biodegradable plastics

Sustainable agriculture & habitat

Future city initiative

Foster green technology & industries

Environment & water technology innovation

Biogas production e.g. agro & industry waste

Promote green technology R&D

Infrastructure development increased food production

Green initiative funding

* 2011 ranking and changes compared to 2010 according to The Asian Sustainability Rating (2011+2012) (excludes Japan and Australia) ** Top focus areas listed. Detailed list available Source: Asian Sustainability Ratios; published government documents; BASF

Sustainability in Asia Pacific is increasingly addressed by governments


BASF Investor Day Asia Pacific — June 5-6, 2013

Some Asia Pacific players already have a good sustainability positioning

EHS & CSR focus

Product oriented

Solution oriented

Valu

e cr

eatio

n th

roug

h su

stai

nabi

lity

Shape industry orientation

Start to tackle critical customer issues

Future outlook

Internal to external orientation

Holistic business steering

Source: Company annual/sustainability reports, SAM Yearbook 2010 & 2011


Global player

Asia Pacific player


1

2

3

Where we are



4 Strategic levers


We create chemistry for a sustainable future.

BASF grows smartly in Asia Pacific


BASF grows smartly, balancing economy, environment and society

* Sales target 2020 after restatement for IFRS 10 & 11

Achieve sales* of €25 billion in 2020 Grow profitably by at least 2 percentage

points above chemical production Innovate to drive sustainable solutions for

customers

Achieve OMP ratio of 75% with investments of ~€10 billion**

Invest in cutting edge technologies to improve our competitiveness

Create ~9,000 value-adding employment opportunities by 2020

Engage with society and stakeholders to secure license to operate

Contribute to the social development of communities in our operating neighborhood

Balance

Society Environ-ment

Economy

** Total investments incl. partners, post IFRS 10 & 11, excl. intangibles


1

2

3

Where we are



4 Strategic levers


Our strategic levers

Innovation Market Portfolio

People Investment Excellence


Market Connecting with our customers and business partners to capture growth opportunities €25 billion sales by 2020 Drive industry and customer orientation Engage with stakeholders to support

sustainable development Explore opportunities in new markets

27 BASF Investor Day Asia Pacific, June 5-6, 2013


2020 2012 restated

New Business & Acquisitions

Organic Growth

Sales contributions € billion

Organic growth drives top line growth

2012 restated = adjusted to changes in IFRS 10 & 11

New Sales Target: €25 billion

€12.5 billion

CAGR ~9%

>€2 billion >€10 billion


0

8

16

0 8 16

BAS

F’s

ann

ual s

ales

gro

wth

201

0-20

20 (%

)

SRM growth 2010-2020 (%)

Consumer Goods

Chemicals & Plastics

Construction

Agriculture

Transportation

Health & Nutrition

Electronics

Others

Energy & Resources

Sales in 2010

SRM = Strategic Relevant Market

Sales vs. SRM growth rate by key customer industries

Dynamic industrialization drives sales BASF will generate annual sales growth above SRM growth


BASF Industry Teams Focus on ten most important industries

Automotive

Construction

Packaging

Paint & Coatings

Pharma

Industries Targeted BASF growth rates

12 % p.a.

9 % p.a.

10 % p.a.

7 % p.a.

10 % p.a.

Sales 2010

Target Sales 2020

Petro- chemicals

Catalysts

Coatings

Construction Chemicals

Performance Materials

Dispersions & Pigments

Nutrition & Health

Paper Chemicals

Intermediates

Monomers

BASF divisions

Performance Chemicals

Mining Food & Agriculture Electrical & Electronics Wind Energy Textiles


0

8

16

0 8 16SRM growth 2010-2020 (%)

BAS

F’s

annu

al s

ales

gro

wth

201

0-20

20 (%

)

South Asia

ASEAN

South Korea

Greater China

ANZ

Japan

3rd party net sales in 2010

SRM = Strategic Relevant Market

BASF will generate highest sales growth in Greater China, South Asia and ASEAN

Sales vs. SRM growth by sub-region


Task forces will explore untapped markets in Asia Pacific

Mongolia

Myanmar

Laos

Cambodia

GDP (nominal) in 2012

Source: GDP: United Nations; Mongolia sales: WASP; Cambodia, Laos, Myanmar: ASEAN sub-region

Total Population 2012: 72.4 million 2020: 77.8 million

Mongolia (GDP: US$10.2 billion) Natural mineral & mining industry Construction Agriculture

Laos (GDP: US$8.9 billion) Low cost labor Agriculture (livestock & crop)

Myanmar (GDP: US$54.0 billion) Natural resources (e.g. gas) Newly opening attractive market

Cambodia (GDP: US$14.4 billion) Low cost labor Textile industry Agriculture


Tap into the potential of the “Base of Pyramid”

Focus areas Housing: Affordable mass housing,

slum rehabilitation Food: Food fortification, packaging

and storage Energy: Solar energy and wind

energy Healthcare: Water purification,

personal care products

Approach Explore untapped market

opportunities New collaborative business models

for penetrating new markets along with customers, NGOs and government agencies

Initial focus on South Asia, starting in India; potential to be extended to ASEAN / Indonesia Middle Class

Emerging Middle Class

Affluent

Parts of Bottom of Pyramid


Innovation Driving innovation in Asia for Asia and the world ~3,500 R&D staff by 2020 Expand the Asia Pacific presence within BASF’s

global R&D network Collaborate with customers to capture new

business areas



Address specific R&D areas for BASF in Asia Pacific

Electronics Agro

Catalysts Polymers & Materials

Mining Water


Expand research capabilities in Asia Pacific with new R&D centers

R&D Center Korea (2013) Focus: electronics

R&D Center Singapore (2007) Focus: water, membrane, oilfield

R&D Center Australia (2012) Focus: mining

Innovation Campus Asia Pacific, Shanghai (2012) Focus: polymers & materials

Innovation Campus Asia Pacific, India (in planning) Focus: life science, agro

R&D Center Japan (2013) Focus: battery materials


Portfolio Enhancing our portfolio >€2 billion sales from new business and acquisitions by 2020 Develop new businesses and growth fields Identify attractive acquisition opportunities



Ongoing inflow of new growth fields

Opportunities in identified growth fields

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


Battery materials will play a key role in advancing electromobility of the future Focus Advanced cathodes and electrolytes development for lithium-ion batteries, as well as next-generation battery systems

Business potential 2020 Overall market size: >€20 billion globally (~€16 billion in Asia Pacific) SRM size: >€5 billion globally (~€4 billion in Asia Pacific) BASF sales potential: >€500 million globally (~€350 million in Asia Pacif.)

Activities Acquisition of Novolyte Technologies (April 2012), including production

facility, Application Technology Center in Suzhou, China New electrolytes R&D laboratory and Application Technology Center for

Battery Materials starting up in Amagasaki, Japan, 2013 Ongoing collaboration with leading universities, institutes and industry

partners, as well as battery producers and OEMs

Target Position BASF as a leading global solution provider for battery and cell

manufacturers


Portfolio development Asia Pacific Towards more market driven and innovative businesses

* only closed deals have been considered

~€3 billion sales in Asia Pacific

Acquisitions

Plastic additives, Pigments (Ciba)

Mining Safety Solutions (Hock)

Catalysts (Engelhard) Care Chemicals (Cognis) Construction Chemicals

(Degussa) Electronic Chemicals

(Merck, Novolyte) Health & Nutrition

(Takeda, Pronova) Crop Protection

(Becker Underwood)

BASF Core Business

Strong Partnerships

Petronas Sinopec Shell Hua Yi Heesung Sumitomo Metal Mining Huntsman

Selected Transactions 2001 − Today*

Divestitures

~€0.5 billion sales** in Asia Pacific

Pharma (Knoll) Printing systems Polyamide fibers

(Honeywell) Animal nutrition premix

business Styrenics (transferred into

Styrolution JV on Oct 1, 2011)

Selected transactions with relevant impact in Asia Pacific*

** without Styrenics


Investment Expanding our local production network 75% own manufactured products (OMP ratio) by 2020 Implement ambitious investment plan efficiently Form production clusters to address target

industry needs



Ambitious investment plan to realize an OMP ratio of 75% by 2020

61 54

75

0

25

50

75

100

OMP ratio (%)

2012 restated

2020 2012


0

5

10

Investments in Asia Pacific (€ billion)

actual* plan**

Continuous investments underline our long-term commitment to Asia

1993-2002 2003-2012 2013-2020

5

7

~10

* Investments 1993-2012 incl. partners and incl. intangibles ** Investments 2013-2020 incl. partners, post IFRS 10 & 11, excl. intangibles

BASF share: ~75%

BASF share: ~80%

∅ capex p.a 0.5 0.7 1.25

Milestones Kuantan Nanjing Chongqing / Maoming (China) (Malaysia) (China) Kuantan (Malaysia)


Investment focus on China, ASEAN, and India

ASEAN

Greater China

South Asia

Japan South Korea

ANZ

Investment of €10 billion until 2020*

* Investments incl. partners, post IFRS 10 & 11, excl. intangibles


Major investment projects Asia Pacific MDI plant Location: Chongqing, China Planned start-up: 2014 Investment: ~€860 million

Isononanol (INA) plant Location: Maoming, China Planned start-up: 2015

Aroma ingredients complex Location: Kuantan, Malaysia Planned start-up: 2016 Investment: US$500 million (100%)

Expansion of Verbund site Location: Nanjing, China Feasibility studies ongoing Investment: up to US$1 billion (100%)

Polyurethanes, Surfactants & Dispersions Location: Dahej, India Planned start-up: 2014 Investment: €150 million


People Attracting and developing talent ~9,000 new jobs by 2020 Develop a differentiated recruitment approach Establish a “Learning Campus” Redesign our motivational compensation and

rewards system Engage our people in sustainability



Key Measures Strategic Priorities

Excellent people

Excellent place to work

Excellent leaders

Differentiated recruitment and employer branding

Competencies

Performance Management

Learning Campus

Strong focus on development and retention to strengthen employee pipeline


* Source: tivian GmbH and HR Business Solutions

Attrition rate Lower than peer average*

BASF Average peers in Asia

6.8%

vs.

8.9%

Striving for long-term employee commitment

Employee commitment Higher than peer average*

BASF Asia

Peers vs.

74%

57%


c

Reinforce strategy

Customize business learning

Management innovation

Foster one company

Regional talent program Executive MBA

Leaders New leader curriculum New employee learning Learning Campus

Sustainability learning

Cooperation with top institutions

Senior executives & top talents

Employees

Academy platform Learning, consulting &

coaching

Learning Programs

Learning Campus

Kick-off activities Target areas

1

2

3

4

The BASF place to evolve

A landmark that reflects BASF values and people excellence

Provides a unique environment for inspiring learning

Designed for talent development activities and regional learning programs

Learning Campus enhances employees’ development opportunities


Excellence Improving operational efficiency and organizational effectiveness €1 billion cost savings by 2020 Drive marketing and sales excellence Enhance operational excellence Optimize business enabling structures Increase collaboration efficiency



€1 billion cost savings by 2020

Shared services (Finance, IS/IT, etc.)

Procurement Supply chain Functional efficiency

initiatives

Functional Excellence

Savings in investment costs and depreciation

Investment Process Excellence

Raw material savings through yield increases

Energy and utilities Production efficiency

gains

Operational Excellence Structural Excellence

BU efficiency targets (e.g. sales efficiency)

Structural Excellence Program

Regional excellence initiative will drive Asia Pacific’s profitable growth


Substantial cost savings to be achieved through investment process excellence

Locally adjusted workflow and cooperation with regional engineering partners allows faster project execution

Project duration

Imported equipment

Engineering service cost

Project A Past projects in Asia

Project B

-10m**

Engineering measures

Early transfer to Asian engineering resources Enabling more localized plant concepts

Procurement measures

Higher share of technical procurement in Asia Adapt BASF specification to local supplier

conditions as far as possible

Schedule measures

* On average

-50%*

-30%*

** Month on average


Sales and Personnel costs € billion

Increased efficiency improves productivity per employee

0

5

10

15

20

25

30

2012 2020

12.5

~25

Personnel costs Sales

+100%

+80%

While sales are expected to double from 2012 to 2020 personnel costs will rise by 80%

Planned personnel increase of 9,000 employees to achieve 75% OMP ratio

Personnel costs include salary cost, inflation and headcount related overhead costs

Despite personnel increase, personnel costs as a percentage of sales will decline from 2012 to 2020


Innovation ~3,500 R&D staff

Market €25 billion sales

Portfolio >€2 billion sales from

new biz and acquisitions

People ~9,000 new jobs

Investment 75% OMP ratio

Excellence €1 billion cost savings

We create chemistry in Asia Pacific: 2020 targets


Documents

Martin Brudermüller,Vice Chairman of BASF SE Albert Heuser, … · 2018-11-06 · Martin Brudermüller,Vice Chairman of BASF SE Albert Heuser, President Greater China & Functions