Albert Heuser
President BASF (China)
Company Ltd.
June 07, 2013
Mobile Emissions Catalysts for Asia Frank Chen
Catalyst Research, Asia Pacific
Investor Day
Asia Pacific
Shanghai, June 5, 2013
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BASF Investor Day Asia Pacific, June 5-6 2013
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.
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BASF Investor Day Asia Pacific, June 5-6 2013
Production of passenger cars and LCVs* (in million units)
North America
EMEA Japan
South Korea
Note: ASEAN comprises Indonesia, Thailand, Vietnam, Malaysia, and Philippines;
13
18 23
30
5 5
8 10
Production 2011; Global production 77 million units
Total production in 2020; Global production 122 million units
3.7%
South America
4 7
6.4%
3.0%
China
17
33 7.6%
India
4
13 14.0%
2.5%
ASEAN
3 6
8.0%
0%
* Light commercial vehicles
OEM production in emerging markets will double by 2020
Growth rate p.a.
Other Asian countries <1million units Source: LMCA
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BASF Investor Day Asia Pacific, June 5-6 2013 Light Duty Heavy Duty Motorcycle
All OEMs face a major compliance challenge: Emissions reduction
Announced Regulations
Light Duty Heavy Duty Motorcycle
USA CA LEV III US Tier 3
US 2010 Global, 4a Global, 4b Global 5
US 10
Europe
Euro 5 Phase In Euro 6b Phase In Euro 6c Euro 7
Euro VI Euro VII
Global, 4a Global, 4b Global 5
Phase In Euro 4 Euro 5
Brazil Euro 5 Euro 6
Euro V Euro VI
Euro 3
Russia Euro 4 Euro 5 Euro 6
Euro IV Euro V Euro VI
India Euro 4 Euro 5
Euro IV Euro V
Euro 3
China Euro 4 Euro 5 Euro 6
Euro IV Euro V
Euro 3
South
Korea
Euro 5 Euro 6
Euro V Euro VI
Global 3 Global 4
Japan Post 2009 P.P Reg
Global, 4a Global, 4b Post 2009
Vietnam Euro 4 Euro 5
Euro 3
Thailand Euro 4 Euro 5
Euro 4
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Future Regulations
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BASF Investor Day Asia Pacific, June 5-6 2013
80
280
240
200
160
120
2020 2018 2016 2014 2010 2008 2006 2004 2002
95
164
125
130
229 241
158
143
2012
CO2 targets
(in g/km)
173 186
Fuel efficiency/CO2 targets present another significant challenge
Source: BCG
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BASF Investor Day Asia Pacific, June 5-6 2013
North America
Japan and Korea
China
India
Europe
South America
BASF – the market leader in Mobile Emissions Catalysts worldwide
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BASF Investor Day Asia Pacific, June 5-6 2013
Global R&D presence
~€140 million in catalysis
R&D spend in 2012
Focus on product
innovation and aligning
regional capabilities to
local market needs
>650 catalyst experts
globally
Supported by >10,000
scientists in global
Verbund
Key facts
Tokyo, Japan (NE Chemcat)
Seoul, Korea (Heesung)
Shanghai, China
Hannover,
Germany
Ludwigshafen,
Germany
Union & Iselin,
New Jersey
R&D sites
Beachwood,
Ohio
Nienburg, Germany
Guilin, China
Pasadena,
Texas
Huntsville,
Alabama
De Meern, Netherlands
Heidelberg,
Germany
A strong global R&D platform
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BASF Investor Day Asia Pacific, June 5-6 2013
Estimated annual sales of 25 million
passenger cars in China by 2020
BASF is market leader for mobile emissions
catalysts in China
BASF has leading position
among top 5 local OEMs
>20 million catalysts manufactured at
integrated Shanghai emissions catalysts and
R&D hub since 2000
>€65 million invested in Shanghai-based
operations to date
Targeting ~€50 million in incremental
Catalysts division investment in China
through 2016
A decade of progress in China
BASF catalysts site in Shanghai
BASF catalysts site in Shanghai
Strong proximity to the customer
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BASF Investor Day Asia Pacific, June 5-6 2013
Emission reduction standards gain
importance in emerging Asia
– Euro-4 standards have been enacted and
tighter Euro-5 requirements are on the way
Fuel quality in emerging Asia is different
from developed countries
Driving habits in emerging Asia differ from
developed countries
Shorter innovation cycles lead to more
frequent model introductions
Cars in China and India run at much lower
speeds
Emerging Asia presents unique challenges for mobile emissions catalysts
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BASF Investor Day Asia Pacific, June 5-6 2013
HC (hydrocarbons)
CO (carbon monoxide)
NOx (oxides of nitrogen)
Coating Base metal oxides + Platinum/Palladium/
Rhodium
H2O (water)
CO2 (carbon dioxide)
N2 (nitrogen) Three-Way Catalyst
(TWC)
Structure of Mobile Emissions Catalyst
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BASF Investor Day Asia Pacific, June 5-6 2013
Task
Equip new platform of
small to mid-sized car with
new generation of mobile
emissions catalysts
Engine size: 1.2 liter –
most popular engine size
in Asia
Challenges for BASF
Better performance
Lower cost
Shorter development time
from concept to results
Prestigious development project with a leading Chinese OEM
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BASF Investor Day Asia Pacific, June 5-6 2013
Shorten development time by using
proprietary aging lab
– Simulate 160,000 km road performance
– Fine tune quickly by local engine
dynamometer facility
Design unique catalyst to achieve better
emissions performance
– Tailor catalyst toward specific engine
requirements
– Minimize precious metal content by
optimizing Pd and Rh distribution
– Use more durable materials
Demonstrate performance and system
durability to customer
BASF leverages its local presence and R&D strengths in China with local OEM
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BASF Investor Day Asia Pacific, June 5-6 2013
NOx4) NMHC2)
THC1) CO/103)
Engineering target
Original EU IV catalyst
100,000 km
Newly developed catalyst
100,000 km
Newly developed catalyst
160,000 km
Performance of newly developed catalyst
vs. original Euro-4 catalyst and engineering target
1) total hydrocarbons 2) non-methane hydrocarbons 3) carbon monoxide 4) nitrogen oxides
BASFʼs innovative Catalystsʼ solutions provide better performance at lower cost
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BASF Investor Day Asia Pacific, June 5-6 2013
OEM requirements
Better performance
Lower cost
- New BASF catalyst shows better performance than original Euro-4 catalyst
- New BASF catalyst fulfills engineering targets and allows for safety margin
- New BASF catalyst requires less precious metals
- Significant cost saving for OEM
Shorter development time from concept to results
- Using BASFʼs expertise and proprietary aging lab significantly shortened
development time
- From development to demonstration in only eight months instead of 2 years
BASFʼs innovative Catalystsʼ solutions provide better performance at lower cost
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BASF Investor Day Asia Pacific, June 5-6 2013 15
Electronic specialties for LCD panels Jan Sueltemeyer
Dispersions & Pigments Asia Pacific
Investor Day Asia Pacific Shanghai, June 5, 2013
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BASF Investor Day Asia Pacific, June 5-6 2013
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.
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BASF Investor Day Asia Pacific, June 5-6 2013
Do you remember? … not too long ago
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BASF Investor Day Asia Pacific, June 5-6 2013
Do you remember? … not too long ago
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BASF Investor Day Asia Pacific, June 5-6 2013
TV trends
Larg
e S
ize
100 Hz
200 Hz
Lower power consumption (green trend)
3D display Smart TV
Flexible
Tomorrow 2008 2010
Slim & light
Cinema Ultra-high resolution
Conventional TV Internet TV Smart TV
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BASF Investor Day Asia Pacific, June 5-6 2013
LCD* panel market outgrows E&E industry
0
25
50
75
100
125
150
2005 2010 2015E
61
LCD Panel Market (in billion US$)
99
121 +7% p.a.
Source: DisplayBank Market Research
LCD panel market is highly innovation-driven leading to – new applications
(tablet PCs, smartphones, 3D TVs, etc.)
– shorter innovation cycles
Key requirements for LCD manufacturers are – improvement of image
quality – lowering of energy
consumption – reduction of production
costs
Key Facts
* LCD: Liquid crystal display
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BASF Investor Day Asia Pacific, June 5-6 2013
The entire LCD industry is located in Asia
Japan Sharp
JDI Panasonic
Korea Samsung
LG
Taiwan AUO
Innolux
China BOE Tianma CPT
All leading display producers are located in Korea, Taiwan and Japan
China is catching up fast
Today, there is no display production outside of Asia
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BASF Investor Day Asia Pacific, June 5-6 2013
BASFʼs electronics specialties business for LCD industry managed out of Asia
Taipei
Seoul
Switzerland Tokyo / Amagasaki
Global Business Management Marketing / Sales
Country sales team Product development / R&D
Production
Global business management steered out of Asia
Main focus on chemicals for the liquid crystal display industry – Pigments for color filters – Photoinitiators for UV curing
and photolithography – UV absorbers for light sensitive
components – Polymerizable liquid crystals for
optical films
Joint work between Europe and Asia to develop tailor made innovations for the Asian market
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BASF Investor Day Asia Pacific, June 5-6 2013
Structure of LCD panels
Backlight unit
Functional films
Liquid crystal cell
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BASF Investor Day Asia Pacific, June 5-6 2013
How do LCDs work? Close-Up of a Pixel
Transparent electrode
Glass
Liquid crystals
Thin film transistor
Polarizer
Black matrix Color filter
In LCD screens each pixel is made with three color filters: Red, Green and Blue
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BASF Investor Day Asia Pacific, June 5-6 2013
How do LCDs work? Close-Up of a Pixel
Transparent electrode
Glass
Liquid crystals
Thin film transistor
Polarizer
Black matrix Color filter
Polarizer
Each color filter is connected to a cell of liquid crystals to control the amount of light that can pass
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BASF Investor Day Asia Pacific, June 5-6 2013
Better image quality – Higher contrast ratio (white/black luminescence) – Improvement in color purity – Increase of brightness
Lower energy consumption – Reduction of backlight units through higher transparency of display components
New design opportunities – Reduction of LCD panel thickness to allow thinner displays
New features – 3D displays – High resolution – Smart TV
Lower production costs
Key demands of LCD producers
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BASF Investor Day Asia Pacific, June 5-6 2013
What is contrast Ratio?
TV set in daylight environment TV set in a dark room
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BASF Investor Day Asia Pacific, June 5-6 2013 TV set in a dark room
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BASF Investor Day Asia Pacific, June 5-6 2013
High contrast ratio Low contrast ratio
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BASF Investor Day Asia Pacific, June 5-6 2013
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
1997 2005 2011
Contrast ratio of Irgaphor® red pigments
99
1997 Launch of first Irgaphor® color
filter grade Applications: mobiles and
monitors
2005 2nd generation Irgaphor® color
filter grade Applications: TVs, mobiles and
monitors
2011 3rd generation Irgaphor® color
filter grade Applications: high-end TVs
and tablet PCs
Key Facts
BASFʼs innovative Irgaphor® color pigments drive huge improvement in image quality
Contrast ratio improved by >5 times
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BASF Investor Day Asia Pacific, June 5-6 2013
LCDs – BASF products in every pixel
Backlight unit
Functional films
Liquid crystal cell
Reflective film
Photospacers
Prism sheet
Optical films
Polarizer
Diffusion film
Polarizer
Optical films
Surface finishing
Light source
Glass substrate
Glass substrate
Protective layers
Color filter
Retardation film BASF solutions for LCDs Colorants: Irgaphor®
Photoinitiators: Irgacure®
Lightstabilizers: Tinuvin®
Liquid crystals: Paliocolor®
Dispersants: EFKA®
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BASF Investor Day Asia Pacific, June 5-6 2013 18
Capston Lau
Business Management Appliance Asia
Investor Day Asia Pacific Shanghai, June 5, 2013
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BASF Investor Day Asia Pacific, June 5-6 2013
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.
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BASF Investor Day Asia Pacific, June 5-6 2013
High-end models* (%)
Number of units (million)
*models with 3 doors or side-by-side
78
100
135
57
75
103
0
20
40
60
80
100
120
140
2005 2010 2015e0%
10%
20%
30%
40%
50%
60%
70%
Sources: Customer information, Euromonitor, BASF estimations
Global Asia-Pacific
Global sales constantly growing, driven by – replacement need – market penetration in
developing countries
Asian market of dominant importance, reaching regional share of ~75% until 2015
High-end segment catching up – 2005 ~8% share – 2015e ~13% share
Refrigerator sales continue to grow globally, high-end segment increasing
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BASF Investor Day Asia Pacific, June 5-6 2013
Asia 60%
Polyurethane appliance market 2012 by segment
Consumer refrigeration
70%
Europe 21%
Other 5 %
Commercial refrigeration 15%
Americas 19%
Polyurethane appliance market 2012 by region
Water heater 10%
~ 1,800kt ~ 1,800kt
Appliances is a major segment for polyurethanes, especially in Asia
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BASF Investor Day Asia Pacific, June 5-6 2013
OEMs demand cost conscious, pragmatic innovations from their suppliers
Strive for economies of scale
Appliance OEMs are striving for cost leadership AND differentiation potentials
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BASF Investor Day Asia Pacific, June 5-6 2013
Enhance design and feel of the refrigerator
Increase efficiency and weight characteristics
Decrease cost
Increase differentiation
BASF driving value in the appliance market
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BASF Investor Day Asia Pacific, June 5-6 2013
Elastollan®
LED optical waveguide
Permaskin®
Elastollan®
Shelves
Elastollan® Gasket
Elastollan® Soft Touch
Balindur™
Elastopor ®H
Elastocool ® Advanced
Elastofoam®I
COLO-FAST® WST ®
1
9
7
3
2
10
8
5
6
4
coolpure 1.1 – “Ten ways into a cool future”
Technics / nano / bionics / nature
Light / structure / energy
Reduction / monomaterials
Recyclability / sustainability
Product design trends:
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BASF Investor Day Asia Pacific, June 5-6 2013
Processed three-dimensional outer surface
Surface texture of the inside of the door
Back-printed with wood grain
Transparent polyurethane film, which can be back-printed with decors
Suitable for complex geometries
Freedom of design, enabling mass-customization
Replacement of materials, e.g. steel
Solvent-free alternative to conventional paintings
coolpure 1.1 – Permaskin®
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BASF Investor Day Asia Pacific, June 5-6 2013
Bottlerack, strayed light Swung shelves
New interior look-and-feel
Outstanding resistance, comparable to glass
Flexibility at low temperatures combined with high rigidity
Freedom of design, differentiation
Improved sound insulation properties
coolpure 1.1 – Elastollan® Shelves
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BASF Investor Day Asia Pacific, June 5-6 2013
Premium quality look-and-feel (Elastollan® Soft Touch door handle already successfully commercialized in automotive interior applications)
Lightfast and colour-stable material
High resistance to abrasion
No additional painting required
Lightfast and colour–stable soft touch
coolpure 1.1 – Elastollan® Soft Touch
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BASF Investor Day Asia Pacific, June 5-6 2013
Idea generation Global project kick-off
Trend studies
CAD files Final design
decision
Sneak preview at B/S/H/ board meeting
Going public at in-house fair Tianjin, China
HY2 2010 HY1 2011 HY2 2011 HY1 2012 HY2 2012 HY1 2013 …
Innovation workshops
Project milestones and next steps
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BASF Investor Day Asia Pacific, June 5-6 2013
Address customer need to differentiate via design with material driven innovation
Enable material substitution (e.g. steel, glass)
Provide proof-of-concept for new ways how to enhance energy efficiency
Workshops with Appliance OEMs generating very high interest globally
– Premium access for BASF to product designers and marketing
– Joint follow-up projects, value / solution oriented discussions
BASF speaks the language of the appliance industry
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BASF Investor Day Asia Pacific, June 5-6 2013 13