We add value as one company
Michael Heinz Member of the Board of Executive Directors Roadshow Copenhagen September 23, 2014
BASF Capital Market Story September 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 Capital Market Story September 2014 3
Chemistry as an enabler BASF has superior growth
opportunities: – sustainable innovations – investments – emerging markets
Ambitious financial targets
The #1 chemical company €74 billion sales, €7.2 billion
EBIT bSI in 2013 #1-3 in >75% of businesses,
present in >200 countries 6 integrated Verbund sites,
production in 60 countries
A track record of strong sales and earnings growth
14% average annual dividend increase, >3% yield in every single year*
> €72 billion market capitalization in Aug. 2014
Performance Perspective
* for 2004-2013
Ludwigshafen, Germany
Antwerp, Belgium
Nanjing, China
Kuantan, Malaysia Geismar,
USA Freeport, USA
Verbund site
Positioning
We create chemistry for a sustainable future
BASF Capital Market Story September 2014 4
Percentage of sales 2013*
* Not depicted here: ~6% of Group sales reported as ‘Other‘
BASF today – a well-balanced portfolio Total sales 2013: €74 billion
BASF Capital Market Story September 2014 5
Global reduction in carbon emissions of 6.1 million metric tons/a. and reduction of waste
Example Ludwigshafen: avoidance of 7 million metric tons of freight/a. = 280,000 fewer truckloads
Shared use of on-site facilities: fire department, security, waste water treatment and analytics
Verbund generates >€1 billion p.a. global cost savings*, supports sustainability
* Savings include only tangible synergies. Additional (intangible) benefits and retained profits are not included.
BASF Capital Market Story September 2014 6
Business review
BASF strategy & growth targets
Strategic levers
BASF Capital Market Story September 2014 7
BASF outperformed global chemical production by ~3 percentage points p.a. Sales to third parties billion €
33
79
72
74
16.6
20.7 -4.8
13.7 -6.6
3.7 -0.5 -2.0 0.6
20
40
60
80
2001 2012 2012 restated
2013
Volumes
Prices
Currencies M&A
Volumes Prices Currencies M&A
IFRS Impact
BASF Capital Market Story September 2014 8
Operational excellence Strong track record
BASF Group* 2001–2013 Index
50
100
150
200
250
300
350
2001 2006 2009 2012
CAGR 2001 – 2013
10 %
8 %
3 %
EBITDA
Sales
Fixed costs
* Excl. companies with major IFRS 10/11 restatements, i.e. BASF YPC Nanjing, Libya onshore, other Oil & Gas and Catalysts companies
2013
BASF Capital Market Story September 2014 9
0
1
2
3
4
2004 2005 2006 2007 2008 2009** 2010 2011 2012 2013 1H2014
Strong free cash flow generation
* Cash provided by operating activities less capex (in 2005 before CTA) ** 2009 adjusted for re-classification of settlement payments for currency derivatives
Free cash flow* in € billion
2.6
3.3 3.5
3.2
2.5
3.2
3.9 3.7
2.6
3.2
0.5
BASF Capital Market Story September 2014 10
0.851.00
1.50
1.95 1.951.70
2.202.50
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Attractive dividend yield
Dividend of €2.70 per share for 2013, an increase of 3.8%
2004-2013: Average annual dividend increase of ~14%
Attractive dividend yield of 3.5% in 2013**
Dividend yield above 3% in any given year since 2004
* Dividend yield based on share price at year-end
Dividend payments
3.7% 3.2% 3.1% 4.1% 3.8% 7.0% 3.9%
Dividend yield* 4.6%
2.60 2.70
3.7%
** Based on BASF share price of €77.49 on Dec. 30, 2013
Dividend per share in €
CAGR 14%
3.5%
BASF Capital Market Story September 2014 11
Average annual performance with dividends reinvested
0 3 6 9 12 15 18 21
Euro Stoxx 50
DAX 30
MSCI World Chemicals
+9.6%
Last 5 years September 2009 – August 2014
+20.8%
+6.1%
+11.6%
+13.9%
Last 10 years September 2004 – August 2014
BASF
+11.0%
+4.9%
+17.8%
Delivering consistent, long-term value
BASF Capital Market Story September 2014 12
We aim to increase our sales volumes excluding the effects of acquisitions and divestitures.
Nonetheless, sales will decline slightly compared with 2013 due to the divestiture of the gas trading and storage business planned for autumn 2014 and negative currency effects.
We expect a slight increase in EBIT before special items, especially as a result of considerably higher contributions from the Performance Products and Functional Materials & Solutions segments.
We aim to earn a high premium on our cost of capital once again in 2014.
Outlook 2014
GDP: +2.5% (previous: 2.8%)
Industrial production: +3.7%
Chemical production: +4.4%
US$ / Euro: 1.35 (previous: 1.30)
Oil price (US$ / bbl): 110
Assumptions 2014
Outlook 2014 confirmed
BASF Capital Market Story September 2014 13
Business review
BASF strategy & growth targets
Strategic levers
BASF Capital Market Story September 2014 14
Demographic challenges … set the stage for the future of the chemical industry
Nine billion people in 2050 but only one earth
Resources, Environment & Climate Food & Nutrition Quality of Life
Chemistry as enabler
BASF Capital Market Story September 2014 15
Grow at least 2 percentage points above chemical production
Earn a premium on cost of capital of at least €2.0 billion on average p.a.
Profitability targets Growth targets
2015
2020
Sales ~€80 billion
Sales ~€110 billion
EBITDA ~€14 billion EPS ~€7.50
EBITDA ~€22 billion
Key financial targets 2015 / 2020 are ambitious
BASF Capital Market Story September 2014 16
Business review
BASF strategy & growth targets
Strategic levers – Portfolio development
– Market approach – Innovations for a sustainable future – Investments – Acquisitions – Operational excellence
BASF Capital Market Story September 2014 17
Portfolio development Moving downstream towards customer industries
* Agriculture, Construction, Consumer Goods, Health & Nutrition, Electronics, Energy & Resources, Transportation ** Sales excluding Oil & Gas. Targets were published on November 29, 2011.
BASF Capital Market Story September 2014 18
Catalysts Construction chemicals Water-based resins Pigments, plastic additives Oil & Gas Personal care & food Battery materials Functional crop care Omega-3 fatty acids Enzymes …
BASF core business
Strong partnerships
Gazprom Monsanto Petronas Shell Sinopec Statoil Total
Selected transactions 2004 − today
Acquisitions
~ €14 billion sales
Divestitures
Printing systems Agro generics Vitamin premixes Styrenics Fertilizers Construction equipment,
flooring and wall systems Natural gas trading and
storage business …
~ €16 billion sales*
Portfolio development Towards more market driven and innovative businesses
* Without styrenics (transferred into Styrolution JV on Oct. 1, 2011). Natural Gas Trading: Closing expected in autumn 2014
BASF Capital Market Story September 2014 19
Monomers
Intermediates
Dispersions & Pigments
Performance Chemicals
Care Chemicals
Paper Chemicals
Coatings
Catalysts
Construction Chemicals
BASF sales by first customer industry*
> 15 %
> 10 %
< 10 %
> 15 %
Consumer goods
Transportation
Construction
Energy & Resources
Market approach Cross-divisional customer industry approach
* Excluding Oil & Gas, Crop Protection and Other. 2012 numbers
Petro- chemicals
Performance Materials
Bubble Size: BASF divisional sales by first customer industry*/**
** Nutrition & Health sales predominantly into Health & Nutrition market
BASF Capital Market Story September 2014 20
E-textiles
Solar roof with transparent organic solar panels and OLED modules
Multifunctional seat
Infrared-reflective coating
Infrared-reflective film
High performance foams
Lightweight tridion cell
All-plastic wheel
Cross-divisional approach BASF’s technology Verbund combined with customer know-how
Daimler & BASF concept car ‘Smartforvision’
BASF Capital Market Story September 2014 21
Customer Verbund - adidas and BASF Working together for disruptive innovation: Infinergy™
BASF Capital Market Story September 2014 22
Strong commitment to innovation Innovations for a sustainable future
1.4 1.5
1.6 1.7
1.8
0,0
0,5
1,0
1,5
2,0
2009 2010 2011 2012 2013
€1.8 billion R&D expenditure in 2013, further increase of R&D spending planned in 2014
~10,650 employees in R&D
~3,000 projects
Research Verbund: Cooperations with ~600 excellent partners from universities, start-ups and industry
Target 2015 and 2020:
– €10 billion in sales from innovations younger 5 years
– €30 billion in sales from innovations younger 10 years
R&D expenditures in € billion
Chemicals 10%
Performance Products 20%
Functional Mat. & Sol. 20%
Agricultural Solutions 26%
Oil & Gas 3%
Corporate Research 21%
Key facts
2.0
1.5
1.0
0.5
0
BASF Capital Market Story September 2014 23
Chemistry-based innovations Growth and technology fields
Growth fields
Resources, Environment & Climate
Food & Nutrition
Quality of Life White Biotechnology
Materials, Systems & Nanotechnology
Raw Material Change
Key customer industries
Health & Nutrition
Consumer Goods
Transportation
Energy & Resources
Electronics
Agriculture
Construction
Technology fields 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
BASF Capital Market Story September 2014 24
Growth field example: Enzymes Innovation-driven specialties for various markets
Become a major player in enzyme technology; sales target of >€400million (2020)
Textile / Leather
Oilfield Water Biofuels
Detergents
Processed food
Beverages
Bakery Feed
Existing business mainly with enzymes for animal nutrition
Acquired Henkel's detergent enzyme technology
Entered into research and license agreement with Dyadic to access C1-host technology
Successfully acquired enzyme biotechnology company Verenium
R&D pipeline is reinforced with several new projects
Enzymes know-how leveraged with chemical ingredients
Pulp & Paper
The fungus Aspergillus niger is a powerful production host for feed enzymes.
BASF Capital Market Story September 2014 25
Performance Products 15%
Oil & Gas 20%
€20 billion
Functional Materials & Solutions 12%
Capex budget 2014-2018
Other 13%
Chemicals 33%
Capex budget 2014-2018
Asia Pacific 18%
€20 billion
South America 4%
North America 25%
Europe 49%
Agricultural Solutions 7%
Other 4%
by segment by region
Investments Capex budget 2014-2018 by segment and region*
* Source: BASF Report 2013
BASF Capital Market Story September 2014 26
Expansion oil & gas activities
Aroma Ingredients Kuantan, Malaysia
Investments Major projects
Ammonia and gas-to-propylene in USA*
MDI plant Chongqing, China
Acrylic acid complex Camacari, Brazil
TDI plant Ludwigshafen, Germany
* Under evaluation
BASF Capital Market Story September 2014 27
Acquisitions … will contribute to profitable growth in the future
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 Capital Market Story September 2014 28
0
1,000
2,000
3,000
2013 2015
Former cost saving programs NEXT STEP
Operational excellence programs STEP program on track: ~€1 billion earnings contribution by 2015
Annual earnings contribution in € million
Targeted annual earnings contribution of ~€1 billion by end of 2015
Optimization of processes and structures in all regions, e.g. manufacturing, maintenance supply chain engineering, best-cost country
sourcing
Project timeline: 2012–2015
Program is on track
Total of ~€600 million achieved by the end of 2013
One-time cost & investments: ~€1 billion
STEP program
BASF Capital Market Story September 2014 29
Appendix I:
Q2 2014 Reporting
BASF Capital Market Story September 2014 30
BASF increases earnings considerably due to higher volumes
Business performance Q2’14 Q2’13 vs. Q2’13 Sales €18.5 billion €18.4 billion +1% EBITDA €2.7 billion €2.5 billion +10% EBIT before special items €2.1 billion €1.8 billion +12% EBIT €2.0 billion €1.8 billion +14% Net income €1.3 billion €1.2 billion +12% Reported EPS €1.41 €1.26 +12% Adjusted EPS €1.54 €1.40 +10% Operating cash flow €0.9 billion €2.0 billion (53%)
Sales development Period Volumes Prices Portfolio Currencies
Q2’14 vs. Q2’13 6% (2%) 1% (4%)
BASF Capital Market Story September 2014 31
Portfolio optimization
Strengthen competitiveness of Performance Products
Sale of 50% share in Styrolution to Ineos
Capacity expansions in Functional Materials and Solutions
Enlarged production footprint in Asia Pacific to support growing demand
BASF Capital Market Story September 2014 32
Restructuring in Performance Products Announced measures to strengthen competitiveness
Division Measures Leather and textile chemicals (March 18, 2013)
Establishment of global innovation center in China Optimization of various functions and relocation to Asia Pacific
Water, oilfield and mining chemicals (March 27, 2013)
Establishment of global business unit to realize synergies Divestment of industrial water management business
Plastic additives and pigments (April 23, 2013)
Adjustments: sites in the Basel area to adapt to changed market conditions Downsizing of R&D activities
Pigments (October 23, 2013)
Optimization of global production network Closure, restructuring, evaluation of strategic options for production assets
Paper Chemicals (January 23, 2014)
Shutdown of latex production in Europe Ongoing portfolio optimization
Nutrition & Health (April 25, 2014)
Adaption of product portfolio and organizational processes to market realities
Care Chemicals (June 5, 2014)
Measures to adapt to changed customer needs/market conditions: Home Care, Industrial & Institutional Cleaning, Formulation Technologies businesses
Ongoing efficiency projects in various businesses
Site closures and relocations Adaption of organizational setup to market needs
One-time costs in the magnitude of ~€250-300 million
Reduction of >2000 positions until end of 2017
Annual earnings contribution of ~€500 million from 2017 onwards
BASF Capital Market Story September 2014 33
Chemicals North America drives volume and profit growth
Intermediates 701
(2%)
Monomers 1,578 (2%)
Petrochemicals 2,019 +9%
€4,298 +3%
Q2’14 segment sales (million €) vs. Q2’13
Sales development Period Volumes Prices Portfolio Currencies
Q2’14 vs. Q2’13 9% (3%) 0% (3%)
EBIT before special items (million €)
495 527 510601 570
0
200
400
600
800
Q2 Q3 Q4 Q1 Q2
2014 2013
BASF Capital Market Story September 2014 34
Performance Products Restructuring measures increase earnings
Performance Chemicals
824 (3%)
Care Chemicals 1,204 (2%)
€3,924(3%)
Paper Chemicals 342 (8%)
Q2’14 segment sales (million €) vs. Q2’13
Nutrition & Health 520 (4)% Dispersions
& Pigments 1,034
0%
EBIT before special items (million €)
Sales development Period Volumes Prices Portfolio Currencies
Q2’14 vs. Q2’13 1% 0% 0% (4%)
2014 2013
394 376
216
427 435
0
200
400
600
Q2 Q3 Q4 Q1 Q2
BASF Capital Market Story September 2014 35
Functional Materials & Solutions Continued good demand from automotive industry
Catalysts 1,528 +4%
Construction Chemicals
541 (8%)
Coatings 756
+1%
€4,5180%
Q2’14 segment sales (million €) vs. Q2’13
Sales development Period Volumes Prices Portfolio Currencies
Q2’14 vs. Q2’13 6% 0% (1%) (5%)
Performance Materials 1,693 (0%)
EBIT before special items (million €)
2014 2013
293 300238
311356
0
200
400
600
Q2 Q3 Q4 Q1 Q2
BASF Capital Market Story September 2014 36
Agricultural Solutions Exchange rate driven sales and earnings decrease
Q2’14 segment sales (million €) vs. Q2’13
Sales development Period Volumes Prices Portfolio Currencies
Q2’14 vs. Q2’13 0% 2% 0% (6%)
0
200
400
600
Q2 Q20
500
1.000
1.500
2.000
Q2 Q2
1,666 433
485 1,727
EBIT before special items (million €)
2014 2013 2014 2013
BASF Capital Market Story September 2014 37
Oil & Gas Higher production volumes drive earnings
Exploration & Production
807 +54%
Natural Gas Trading 2,387 +3% €3,194
+13%
Q2’14 segment sales (million €) vs. Q2’13 EBIT bSI/Net income (million €)
Natural Gas Trading
Exploration & Production
Net income
Sales development Period Volumes Prices/Currencies Portfolio
Q2’14 vs. Q2’13 24% 16% 5%
382
322
477
587
59
280110
393
0
100
200
300
400
500
600
Q2/2013 Net Income Q2/2014 Net Income
323 477
BASF Capital Market Story September 2014 38
Review of “Other”
Million € Q2’14 Q2’13 Sales 855 1,072 EBIT before special items (328) (217) thereof Corporate research
Group corporate costs Foreign currency results, hedges and other measurement effects Other businesses
(97) (57)
(117)
37
(97) (58) (63)
37
Special items (12) 3
EBIT (340) (214)
BASF Capital Market Story September 2014 39
Operating cash flow in H1 2014 Million € H1’14 H1’13 Cash provided by operating activities 2,644 4,030 thereof Changes in net working capital Miscellaneous items
(1,375) (153)
(633) 646
Cash used in investing activities (2,301) (2,582) thereof Payments related to tangible / intangible assets (2,125) (1,884) Acquisitions / divestitures 355 (516) Cash provided by financing activities 189 (823) thereof Changes in financial liabilities Dividends
2781 (2592)
1,762 (2585)
BASF Capital Market Story September 2014 40
Balance sheet remains strong Balance sheet June 30, 2014 vs. December 31, 2013 (billion €)
Liquid funds
Accounts receivable
Long-term assets
37.1
9.4
1.8
Other liabilities
Financial debt
Stockholders’ equity
Dec 31 2013
June 30 2014
June 30 2014
Dec 31 2013
64.4
Inventories
Other assets
9.6
3.7
Highlights June 30, 2014 Short-term assets increased by
€2.6 billion: - Accounts receivables grew
seasonally by €1.0 billion - Liquid funds up by €0.6 billion
Net debt increased to €14.6
billion Equity ratio: 39%
38.5
10.4
2.4
9.8
3.7
68.4
3.6 Disposal group
Disposal group 2.8
27.8
20.9
64.4
1.3
26.9
22.9
1.6
68.4
17.0 14.4
BASF Capital Market Story September 2014 41
Appendix II:
Chemicals Day
BASF Capital Market Story September 2014 42
Balanced portfolio of products for internal supply and merchant market sales
Industrial gases Acetylene Purified ethylene
oxide Formaldehyde Ammonia Cracker products Butanediol Caprolactam PBT** base resin Acrylic acid MDI
Internal supply driven
TDI PolyTHF®
Amines Higher alcohols Polyalcohols and
specialties Formic acid Inorganic salts Glues and resins
Merchant market driven
** Polybutylene terephthalate
captive use only
BASF Capital Market Story September 2014 43
Sales to other BASF segments
Sales to 3rd parties
Chemicals segment grows by selling into the BASF Verbund and to the market
* IFRS 10 & 11 impact: -€1.3Bn; Impact of new segment structure: +€5.3Bn ** Without Catalysts (now part of Functional Materials & Solutions segment)
BASF Capital Market Story September 2014 44
0
100
200
300
400
500
2001 2002 2003 2004 2005 2006* 2007* 2008 2009 2010 2011 2012restated
2013
EBITDA margin Chemicals / oil price Index 2001 = 100
Chemicals with stable profitability, little correlation to oil price
EBITDA margin Chemicals (as % of sales)
Oil price
* Without Catalysts (now part of Functional Materials & Solutions segment)
BASF Capital Market Story September 2014 45
EBIT after cost of capital Chemicals
EBIT after cost of capital* in million €
restated
Chemicals earned a premium on cost of capital even during the 2008 / 2009 recession*** * EBIT after cost of capital concept was introduced in 2004.
*** The former Plastics segment also earned a premium on cost of capital during the 2008 / 2009 recession.
Chemicals is a strong earnings contributor
0
500
1.000
1.500
2.000
2004 2005 2006** 2007** 2008 2009 2010 2011 2012 2013
2,000
1,500
1,000
500
0
** Without Catalysts (now part of Functional Materials & Solutions segment)
BASF Capital Market Story September 2014 46
2001 2002 2003 2004 2005 2006* 2007* 2008 2009 2010 2011 2012restated
2013
Chemicals generates strong and steady free cash flow
Cash flow Chemicals in million €
* Without Catalysts (now part of Functional Materials & Solutions segment)
Free cash flow (EBITDA – additions to plant, property & equipment)
Since 2001, Chemicals contributed ~€17 billion of free cash flow to BASF Group
Operating cash flow (EBITDA)
2,000
3,000
4,000
1,000
-1,000
0
BASF Capital Market Story September 2014 47
Increasing usage of alternative feedstock in global chemicals market
BASF Capital Market Story September 2014 48
.
Europe Ongoing restructuring of olefins and polyolefins industry Focus on innovative chemistry Integrated production setups will remain competitive
North America New capacities based on shale gas Export of NGLs*/ LPG** and base-products
China Strong domestic demand will drive capacity additions Abundant coal reserves drive coal-to-chemicals investments Expected to remain a net importer of many basic chemicals
Middle East Diminishing feedstock advantage due to shale gas
(USA) and coal (China) Export hub for raw materials and base-products
South America Focus on renewable resources Will remain net importer of chemicals from the U.S.
Raw material supply and integration concepts will define competitiveness
* Natural Gas Liquids ** Liquefied Petroleum Gas
BASF Capital Market Story September 2014 49
Shale gas in the U.S.: Lower energy and feedstock cost
Increased U.S. shale gas production disconnected crude oil prices from natural gas prices in North America
Increased production of natural gas liquids (NGLs): ethane, propane, butane
NGL price drop drives shift to lighter cracker feed slates
– Improved profitability of light feed crackers
– Narrow cracker output
Game changer shale gas
Source: IHS Inc. The use of this content was authorized in advance by IHS. Any further use or redistribution of this content is strictly prohibited without written permission by IHS. All rights reserved. Natural gas price Germany: Statistisches Bundesamt “Grenzübergabepreis” Germany
BASF Capital Market Story September 2014 50
Natural Gas Liquids Ethane Propane Butane
► Cracker Feed
Shale gas is beneficial for methane and ethane based chemistry
Methane and ethane to retain their advantageous cost position in North America
Low transportability of ethane ► Shift to ethane crackers
Propane and butane easy to transport ► Export with link to global market
Very limited transportability of methane
Methane to remain an abundant product with low pricing in North America (despite LNG projects)
Methane ► Power plants ► Ammonia ► Methanol
Composition of shale gas
BASF Capital Market Story September 2014 51
Ammonia joint venture* enables low raw materials costs for BASF downstreams
World-scale producer economics plant with focus on captive demand only (BASF)
Site: BASF Verbund site Freeport, Texas
Capacity: 750 kt p.a.
Advantages of hydrogen & nitrogen based technology:
– Lower capital investment
– No greenhouse gas emissions
– Faster execution
Improved cost position for BASF’s downstream products
Caprolactam Isocyanates Amines
Yara
…
Long-term sourcing contracts
Yara-BASF joint venture
BASF Group
Ammonia
Nitrogen** Hydrogen**
merchant market
* Project under evaluation ** Hydrogen and nitrogen are available in the Freeport area
BASF Capital Market Story September 2014 52
Gas-to-propylene complex* covers internal demand at attractive conditions
U.S. Gulf Coast location
World-scale plant
Start-up: ~2019
Port Arthur cracker and new on-purpose propylene complex to cover entire captive propylene demand
Mid-term no sales to merchant market
Lower cost than alternative PDH technology
Cost leading gas-to-propylene technology covers supply gap
Propylene supply North America
Acrylic acid Oxo-alcohols Polyols …
Propylene Propylene (Port Arthur cracker)
Downstream products
Methanol
Methane (from shale gas)
Flexible feed (NGL’s, Naphtha)
* Project under evaluation
BASF Capital Market Story September 2014 53
Chemicals supplies key raw materials to BASF downstream segments
BASF Capital Market Story September 2014 54
Merchant Market
Value chains of the BASF
Verbund
Ethylene Propylene Butadiene
Close to entire cracker output in Ludwigshafen is used within Verbund
<5%
Raffinates Aromatics …
Cracker products Ludwigshafen
>95%
BASF-YPC Nanjing supply for captive demand:
2006: 60% 2014: 75% BASF SE, Ludwigshafen, Germany BASF Investor Day Chemicals segment – Key note speech, May 22, 2014 54
BASF Capital Market Story September 2014 55
Philosophy of transfer pricing Safe and flexible supply at competitive prices Transfer prices linked to market prices No cross-subsidizing Value driven management in all steps of the
value chain
Additional Verbund benefits Flexible planning along value chains High security of supply, low logistics costs,
no sales and sourcing costs Joint quality management Joint engineering and process development Cross-functional knowledge exchange Additional capacity at Verbund sites dilutes fixed costs
Chemicals is at the heart of the BASF Production Verbund
Additional Verbund benefits
Transfer pricing
Downstream divisions
Chemicals segment
BASF Capital Market Story September 2014 56
0%
2%
4%
6%
8%
10%
12%
14%
16%
0
50
100
150
200
250
300
350
400
2000 2001 2002 2003 2004 2005 2006* 2007* 2008 2009 2010 2011 2012 2013 2014 2015 2016restated
Consolidated sales indexed (2000 = 100)
Capex as % of sales
Capex focused on organic growth as well as on bottom-line improving projects
Capex as % of sales Chemicals segment
Consolidated sales Chemicals segment
Capex outlook
* Without Catalysts (now part of Functional Materials & Solutions segment)
BASF Capital Market Story September 2014 57
Chemicals enable growth of downstream businesses
Chemicals benefit from downstream growth
Investment projects mainly improve cost positions
Key success factors Operational and commercial
excellence Process innovation Focused and disciplined
capex plan Further Verbund integration
Chemicals will continue to contribute to BASF profit
Sales Chemicals in billion €
BASF’s Chemicals segment: The success story continues!
EBITDA Chemicals in billion €
0
5
10
15
20
25
30
35
2013 Target 2020
Sales to third parties
Intersegmental transfers EBITDA Chemicals
CAGR 2013-2020 4-5%
0
5
10
15
2013 Target 2020
EBITDA upside range
CAGR 2013-2020 6-7.5%
BASF Capital Market Story September 2014 58
BASF’s Chemicals segment is a strong cash and earnings contributor We will ► continue to strengthen the Verbund, create synergies and
add value ► maintain our high level of profitability through process
innovations and stringent cost management ► grow externally with the chemicals market
Our strategic focus is to enable and support growth of ► BASF’s downstream segments ► BASF in emerging markets
Shale gas is an opportunity for BASF
BASF Capital Market Story September 2014 59
Appendix III:
Overview BASF Care Chemicals
BASF Capital Market Story September 2014 60
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
BASF Capital Market Story September 2014 61
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
BASF Capital Market Story September 2014 62
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 €
BASF Capital Market Story September 2014 63
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 €
BASF Capital Market Story September 2014 64
Competitive edge through strong customer offers
Combination leads to larger share of customer attention resulting in stronger interaction
Marketing
Concepts
Customer
BASF Capital Market Story September 2014 65
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
BASF Capital Market Story September 2014 66
.
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
Simplification Tailored solutions Concepts Solution driven innovation Customer dialogue
BASF Capital Market Story September 2014 67
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
Simplification Tailored solutions Concepts Solution driven innovation Customer dialogue
BASF Capital Market Story September 2014 68
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
Simplification Tailored solutions Concepts Solution driven innovation Customer dialogue
BASF Capital Market Story September 2014 69
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 Moonlight Blue (Hair Color)
Ultrahold® Power
N N n
Validated conditioners typology system
>400 further innovation projects and concepts in the pipeline
Simplification Tailored solutions Concepts Solution driven innovation Customer dialogue
BASF Capital Market Story September 2014 70
.
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
Simplification Tailored solutions Concepts Solution driven innovation Customer dialogue
BASF Capital Market Story September 2014 71
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
Simplification Tailored solutions Concepts Solution driven innovation Customer dialogue
BASF Capital Market Story September 2014 72
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
Simplification Tailored solutions Concepts Solution driven innovation Customer dialogue
BASF Capital Market Story September 2014 73
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
74
BASF Capital Market Story September 2014
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
BASF Capital Market Story September 2014 75