Sanjeev Gandhi President Intermediates Division Investor Day Chemicals segment May 22, 2014
Intermediates Excellence in the Verbund
BASF Investor Day Chemicals segment – Intermediates, May 22, 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 Investor Day Chemicals segment – Intermediates, May 22, 2014 3
… is a uniquely positioned, innovation-driven and highly profitable growth business
… is rooted in the BASF Verbund, and a bridge to the market
… is focused on excellence in commodities, and also has solutions business
BASF Intermediates
► … is a robust and long-term value driver for BASF
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 4
Functional Materials & Solutions 23%
Performance Products 21%
Agricultural Solutions 7%
Chemicals 23%
Oil & Gas 20% Other
6%
BASF Group third party sales 2013
Intermediates, a small but powerful part of BASF’s balanced portfolio
Intermediates 4% €74
billion
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 5
Strongly rooted in the Verbund, and selling mainly to the merchant market
Bridge between Verbund and merchant market
Market
70% raws
BASF Intermediates
Petrochemicals, Monomers
Performance Materials, Crop Protection, Performance Chemicals, Care Chemicals Nutrition & Health
35% 35% products
BASF Verbund
35% 30% raws
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 6
Intermediates is uniquely positioned within BASF and versus peers
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014
~ 3,000 > 40 technologies
Broadest portfolio in industry:
~ 700 chemical intermediates
customers
6
CAGR (2004-2013)
consolidated sales
A decade of profitable growth:
~ 5.5%
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 7
Amines
Acids &
Specialties
Polyalcohols &
Specialties
Butanediol & Derivatives
Global trends trigger growth of Intermediates demand
* Market growth, CAGR 2007 – 2013
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 8
Intermediates holds leading market positions in all its key product lines
Amines
Acids &
Specialties
Polyalcohols &
Specialties
#: Market position in 2013 DCC: Dairen Chemical Corporation FAC: Feicheng Acid Chemicals Co. Ltd.
Butanediol & Derivatives
Formic acid: #1
Propionic acid: #1
Neopentylglycol: #1
Hexanediol: #1 Specialty Amines: #1
Ethanolamines: #2
PolyTHF®: #1
BDO: #1
Main Competitors
Huntsman AkzoNobel
Dow
Evonik
Kemira
Clariant
LG Chem
DuPont
Taminco
Ashland
Invista
Mitsubishi Chemical
Perstorp
Ube Arkema
DCC
FAC
Eastman
Luxi Chemical Corp
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 9
Regionally balanced business
Consolidated sales by region in billion €
Rest of world 1%
Asia 21%
Rest of world 3%
N. America 16%
Asia 27%
Europe 54%
Diversified regional sales split, Asia grows strongly
Europe 64%
CAGR ~5.5%
* 2013 adj. to exclude IFRS effect (Nanjing JV and Jilin JV)
2004 ~€2.7 bn
2013* ~€4.3 bn
N. America 14%
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 10
Global asset footprint in 2015
.
Production site Verbund site
Ludwigshafen
Nanjing
Zachary
Caojing
Jilin
Kuantan
Chiba
Ulsan
Yeosu
Evans City Geismar
Freeport
Assets close to customers: 18 sites; 7 JVs; 3,000 employees; ~5 million t/a capacity
Nanjing
Korla
Americas: 4 sites
Europe: 4 sites Asia: 10 sites
Barcelona
Antwerp
Schwarzheide
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 11
Outgrowing chemicals market
Consolidated sales in million €
* Without Pharma
0
1.000
2.000
3.000
4.000
5.000
2004 2005 2006 2007 2008 2009 2010 2011 2012R 2013 2014E
** R = restated, includes IFRS 10/11 changes, new segment structure (both effective January 1, 2013)
Intermediates has outgrown chemical production*: ~5.5% vs. ~3.7% (CAGR 2004-13)
**
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 12
Verbund integration means flexibility and value capture
Merchant
The C1 value chain generated ~€0.5 billion cash flow in 2013
PolyTHF® Natural Gas
Acetylene BDO THF
e.g. Acetylene/BDO value chain Ludwigshafen
Captive
merchant market outlets
GBL
PBT
BDO=1,4-Butanediol; GBL=gamma-Butyrolactone; THF=Tetrahydrofuran; PBT=Polybutylene terephthalat
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 13
BASF has cost leading acetylene technology Continuous improvement of
cash costs
New improved Reppe process** gives cost leadership for new plants
Investment economics based on favorable raw material
Process improvements and favorable raw material positions drive economics
1,4-Butanediol (BDO) global cash cost curve* average cash costs 2013 in US$/kg
* Source: BASF ** Reppe technology, first introduced by BASF in 1930’ies
Production capacity
Cas
h co
sts
BAS
F Pl
ant 1
BAS
F Pl
ant 3
BAS
F Pl
ant 4
BAS
F Pl
ant 2
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 14
Innovation power Three pillars of innovation
New & improved processes New products New applications
Innovation pipeline Total NPV*: ~€500 million
* Not risk-adjusted, 2013 view
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 15
Continuous improvement of cost leading technology by – optimized plant set-up – new catalyst – optimized process
conditions – other minor investments
Innovation power Process innovation: PolyTHF® production
Process innovation is leveraged globally
PolyTHF® site
.
Ludwigshafen
Caojing
Ulsan
Geismar
Korla
► 2009 to 2013: +100 kt/a capacity addition at low cost to 290 kt/a
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 16
Innovation power Application innovations: Formic acid
1960 2010 2011 2013 2012 2014 2009 2008 2007 2006
Sugar cane plant cleaning: Settmill®
Animal feed: Amasil®
Formic acid in textile treatment
Rubber coagulent
Water treatment / membrane cleaning
Flue gas desulfurization
Formic acid in bee-hive stripes
Life-cycle management and market expansion via new applications
Industrial & homecare cleaners: Protectol FM®,
Luvipur®
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 17
Renewable butanediol
Competitive bio-based process using renewable raw materials and CO2
Proprietary bacteria strain from BASF JV with Corbion Purac
Bio-based succinic acid JV
Fermentation process, licensed from genomatica Sugar as renewable feedstock First to market with commercial volumes
Open innovation approach for production of bio-based intermediates
Innovation power Product innovation: Bio-based chemicals
+
Bio-based polymers
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 18
Intermediates is an innovation driver within BASF
BASF growth fields
Resources, Environment
& Climate
Food & Nutrition
Quality of Life
Intermediates 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
Intermediates contributes to 7 of 10 BASF growth fields
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 19
Intermediates: Incubator for innovation 2 businesses transferred to other divisions (Jan. 2013)
Transferred to Catalysts
Developed electrolytes for LiB* – until 2012
Today: internal supplier of high-quality carbonates
Transferred to Performance Materials
Developed epoxy systems – until 2012
Today: internal supplier of high-quality amines
One-company approach
* LiB = Lithium-ion Batteries
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 20
2009 2010 2011 2012 2013
Business growth drives investments Track record of investments into new plants (2009 – 2013)
Amines Cluster Nanjing
Cyclododecanone Ludwigshafen
Methylamines Geismar
Globally balanced expansion of asset footprint
Tert-Butylamine Nanjing
Amines Ludwigshafen
Novolyte acquisition Zachary
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 21
2014 2015 2016 2017
Business growth drives investments Significant investments into new plants (2014 – 2018)
Formic acid Geismar
Continued investments in all regions
Bio-based succinic acid Montmeló
Korla Site Pic tba
2018
Pic BSNJ
Pic Ground Break LU Pic BYC
BDO expansion Geismar
Specialty amines Ludwigshafen
BDO/PolyTHF® Korla
NPG Nanjing
DMAPA / PEA Nanjing
HDO Ludwigshafen & Freeport
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 22
Key differentiators for profitable growth
Rooted in the Verbund
Global asset & product portfolio
Innovation power & unique
technology portfolio
Effective business models
22
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 23
Effective upstream business model to manage complexity
Solutions business Lean & reliable lower volumes global assets
Lean & reliable larger volumes regional assets
‚Lean & reliable‘ amines supplier, with customized solutions business
Po
rtfo
lio o
f > 3
00 d
iffer
ent a
min
es
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 24
… is a uniquely positioned, innovation-driven and highly profitable growth business
… is rooted in the BASF Verbund, and a bridge to the market
… is focused on excellence in commodities, and also has solutions business
BASF Intermediates
► … is a robust and long-term value driver for BASF
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 25
Intermediates: Growth business with efficient steering
IFRS 10/11 effect on sales
– JV Nanjing and JV Jilin, both in China
– As of 2012 only accounted for at-equity
CAGR 2004 – 2013
– Sales: ~5.5%
– Fixed cost: ~1.5%
Consolidated sales vs. fixed costs Indexed
Key facts:
50
100
150
200
2004 2005 2006 2007 2008 2009 2010 2011 2012R 2013
Sales Fixed costs
* R = restated
*
BASF Investor Day Chemicals segment – Intermediates, May 22, 2014 26
Intermediates: Growth business with ambitious targets
Intermediates will continue to
– Invest in assets close to markets
– Invest in innovation
– Optimize assets / products and business models
– Grow top and bottom line
Deliver consistent and stable EBITDA growth
Consolidated sales in billion €
Targets:
0
1
2
3
4
5
6
2004 2012R 2013 2015E 2020E
* R = restated
*