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Charts and Speech accompanying the 3Q2011 Conference Call for investors and analysts on October 27, 2011
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BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011, 11:00 (CEST), Ludwigshafen
BASF 3rd Quarter 2011 Analyst Conference Call 1
BASF with good earnings in Q3Third Quarter 2011Financial highlightsOctober 27, 2011
Analyst Conference Call Script
Dr. Kurt Bock Dr. Hans-Ulrich Engel
The spoken word applies.
Page 2
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
BASF 3rd Quarter 2011 Analyst Conference Call 2
This presentation includes 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. This presentation contains a number of forward-looking statements including, 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 with respect to future events and financial performance. Actual financial performance of the entities described herein 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.
Forward-looking statements represent estimates and assumptions only as of the date that they were made. 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.
Forward-looking statements
BASF 3rd Quarter 2011 Analyst Conference Call 3
Sales €17.6 billion +12%EBITDA €2.7 billion (8%)EBITDA margin 15.4% 18.6%EBIT before special items (bSI) €2.0 billion (11%)EBIT bSI adjusted for non-comp. oil taxes €2.0 billion (1%)EBIT €1.9 billion (13%)Net income €1.2 billion (4%)EPS €1.30 (4%)Adjusted EPS €1.52 0%
Business performance Q3’11 vs. Q3’10
BASF with good earnings in Q3Third quarter 2011 highlights
Further sales growth in chemical activities mainly due to successful price increasesAcquired Cognis business continues to perform strongly; synergy targets increasedAgricultural Solutions on track for record year in sales and earningsEBIT before special items amounted to €2 billion. Adjusted for Libya, which contributed €355 million in last year’s quarter, EBIT before special items increased by 6% compared to Q3 2010.
Page 3
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
Kurt Bock Ladies and gentlemen,
Good morning and thank you for joining us.
[Chart 3: BASF with good earnings in Q3]
BASF again posted good results in Q3 2011. Sales rose by 12
percent to 17.6 billion euros compared to the same quarter last
year. Successful price increases in all our segments contributed
14 percentage points to sales growth. Another 5 percentage
points came from the acquired Cognis businesses. Volumes on
the other hand were slightly below the very strong third quarter of
the previous year – due to 25 percent lower volumes in the Oil &
Gas business as a result of the suspension of our oil production in
Libya in the beginning of this year. Currencies – in particular the
weakening of the U.S. dollar – had a negative sales effect of 4
percent.
Volumes in our chemical activities were stable year-over-year.
Adjusted for a special effect – resulting from the optimization of
our supply chain of cracker products in North America – volumes
in our chemical activities increased by 1 percent compared to last
year. Hans will explain this in more detail in a minute.
EBIT before special items amounted to 2 billion euros and thus
was 11 percent below the very strong result of Q3 2010. Adjusted
for Libya, which contributed 355 million euros in last year’s
quarter, EBIT before special items increased by 6 percent
compared with the third quarter of last year.
Page 4
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
Page 5
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
At 1.2 billion euros, net income came in slightly below the
previous year’s figure.
Adjusted earnings per share were 1.52 euros and matched the
level of Q3 2010.
Page 6
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
BASF 3rd Quarter 2011 Analyst Conference Call 4
Major milestones in our active portfolio management achieved
Styrolution JV set on track
Styrolution, 50-50 joint venture between BASF and INEOS, established on October 1, 2011With pro-forma sales of €6.4 billion in 2010* Styrolution is global market leader in its industryBASF received ~€600 million in October as compensation for its contributed business
Divestiture of fertilizer activities
Agreement with EuroChem signed to sell BASF‘s fertilizer assets in Antwerp BASF also plans to sell its 50%-stake in PEC-Rhin JV to EuroChemTotal transaction value ~€700 millionClosing expected by the end of Q1 2012
* unaudited
Page 7
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
[Chart 4: Major milestones in our active portfolio management
achieved]
In the last months, we achieved further important milestones to
optimize our portfolio.
On October 1, Styrolution, the 50-50 joint venture between
BASF and INEOS, began operating independently from its
parents. With pro-forma sales of 6.4 billion euros in 2010,
Styrolution is the global market leader in the styrenics industry.
Given the higher value of BASF’s assets, we received a payment
of 600 million euros at the beginning of October.
The new joint venture will be consolidated at-equity, and as of Q4
2011, the equity income will be reported in the financial result. In
addition, the disposal result will be booked as a special item in the
EBIT of ‘Other’ in the fourth quarter of this year.
At the end of September, we also reached an agreement with
EuroChem to sell our fertilizer activities in Antwerp, Belgium.
The total transaction value is in the range of 700 million euros.
The divestment is subject to approval by the appropriate antitrust
authorities, and we expect closing by the end of the first quarter of
2012.
Page 8
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
BASF 3rd Quarter 2011 Analyst Conference Call 5
Important investments to spur further profitable growth
Nanjing expansion on track
Joint investment of USD1.4 billion with Sinopec for first expansion phase of Nanjing Verbund siteSteam cracker expansion, butadiene extraction, non-ionic surfactants plants are now on-stream Majority of remaining plants expected to come on stream around end of 2011
Acrylic acid complex in Brazil
World-scale acrylic acid and SAP* production complex (Camaçari, Bahia)With more than €500 million BASF‘s largest investment in South AmericaRaw material and utilities supply secured via long-term contracts with BraskemConstruction will begin in Q4; start-up planned for 2014
* Superabsorbent polymers
Page 9
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
[Chart 5: Important investments to spur further profitable
growth]
In the past few weeks, we made significant progress with important
projects to spur organic growth in emerging markets.
At our Verbund site Nanjing, China, the first new production
facilities, which are part of the 1.4 billion U.S. dollar expansion,
have started operations. Along with the successful completion of
the steam cracker expansion, the newly constructed butadiene
extraction plant and the non-ionic surfactants plant are now up
and running. The majority of the remaining plants will come on-
stream around the end of this year.
In Brazil, we will soon begin construction on our new world-scale
production site for acrylic acid, butyl acrylate and superabsorbent
polymers. Our plants will be the first acrylic acid and
superabsorbents production facilities in South America. At more
than 500 million euros, it is the largest investment in BASF’s
century-long history in South America. Production is scheduled to
begin in the fourth quarter of 2014.
Page 10
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
BASF 3rd Quarter 2011 Analyst Conference Call 6
smart forvision –joint concept car by Daimler and BASF
Presented at the International Motor Show in Frankfurt in September 2011BASF solutions are based on three main technology platforms:1. Electrical energy efficiency
- OPVs, OLEDs* support range extension
2. Multifunctional lightweight construction- Composite body parts, wheel rims and car seats
3. Integrated temperature management- Cool pigment coating, temperature reflecting foil
Chemical solutions by BASF are playing a key rolein bringing electromobility quicker to the roads
* OPVs = Organic Photovoltaics, OLEDs = Organic Light Emitting Diodes
Innovations for the mobility of tomorrow
Page 11
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
[Chart 6: Innovations for the mobility of tomorrow]
With our innovations we are working on the solutions for tomorrow.
smart forvision – a joint concept car of Daimler and BASF – was
presented at the recent International Motor Show in Frankfurt in
September.
Thanks to the combination of smart’s automotive competence and
BASF’s material and system expertise, a vehicle has been
created, which showcases technologies for sustainable and
holistic electric mobility of the future. The smart forvision’s
innovations are based on three main technology platforms:
1. Electrical energy efficiency: A number of solutions such as our
organic dye solar cells as well as organic light-emitting diodes
(OLEDs) help to increase the electrical efficiency.
2. Multifunctional lightweight construction: Many of the parts
usually made from metal are now composed of fiber-reinforced
plastic – significantly reducing weight. The most exciting
example is the plastic wheel rim made of our engineering
plastic Ultramid.
3. Integrated temperature management: A novel transparent film
applied in the windshield and side windows reflects most of the
solar radiation and thus keeps the car interior cool.
Ladies and Gentlemen, we create chemistry. Our chemical solutions
are playing a key role in bringing electrical mobility quicker to the
roads, and hence to the consumer.
Page 12
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
BASF 3rd Quarter 2011 Analyst Conference Call 7
We expect to generate significantly higher salesWe aim to significantly exceed the 2010 EBIT before special itemsadjusted for non-compensable oil taxes (2010: €7.2 billion)We will earn a high premium on our cost of capital
Outlook 2011
Outlook 2011 confirmed
We aim to grow sales on average by two percentage points per year faster than chemical production growthWe strive to grow our earnings further year by year, and to achieve an EBITDA margin of 18% by 2012
Medium-term targets
We aim to continuously increase the annual dividend, or at least maintain it at the level of the previous year.
Dividend policy
Page 13
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
[Chart 7: Outlook 2011 confirmed]
Now, let me comment on current trading and the outlook for this
year.
In Q3, our business has developed positively. Demand from our
main customer industries remained on a high level. The pace of
growth, however, was – as expected – lower compared to the
exceptionally strong first half of this year. We anticipate a
continuation of this trend in the fourth quarter. Therefore, we now
expect worldwide growth of GDP and industrial and chemical
production in 2011 to be just under one percentage point lower
than our previous forecast.
Given the current uncertainties about the future development of
the economy, customers have become more cautious in their
ordering behavior in the last weeks. Everyone is closely
monitoring working capital.
At BASF, we will continue to focus our attention on protecting our
margins and controlling our fixed costs, as well as keeping
working capital at a minimum level. As a consequence, we are
managing our inventories accordingly.
Furthermore, I would like to point out that we have successfully
resumed our onshore oil production in Libya in last week. We are
currently producing about 20,000 barrels of oil per day –
compared to 100,000 barrels of oil a day before the stoppage in
February.
Page 14
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
Page 15
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
Now to the outlook: We confirm our outlook for a strong full year
2011.
For 2011, we expect to generate significantly higher sales than in
the record year 2010. As our oil production in Libya was
suspended for most of this year, EBIT before special items
excluding non-compensable oil taxes provides a much more
meaningful guidance for 2011. We expect to significantly exceed
the 2010 EBIT before special items excluding non-compensable
oil taxes, which amounted to 7.2 billion euros last year.
We will earn a high premium on our cost of capital once again in
2011.
With this, I’ll hand it over to Hans for more details on Q3.
Page 16
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
BASF 3rd Quarter 2011 Analyst Conference Call 8
ChemicalsSignificant sales growth driven by strong price increases
Intermediates671+4%
Inorganics356
+11%
Petrochemicals2,141+12%
€3,168+10%
617537
765674
621
0
200
400
600
800
Q3 Q4 Q1 Q2 Q3
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q3’11 vs. Q3’10 (3)% 18% 0% (5)%
Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €)
2010 2011
Page 17
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
Hans-Ulrich Engel
Good morning ladies and gentlemen.
I would like to highlight the financial performance of each segment
in more detail and focus on the respective business developments
in comparison to the third quarter of 2010.
[Chart 8: Chemicals: Significant sales growth driven by strong
price increases]
In Chemicals, the significant sales growth was driven by double-
digit price increases across all three divisions, which by far offset
the negative currency effects. Demand remained on a high level.
EBIT before special items was slightly above the very high level of
the previous year.
In Petrochemicals, higher raw materials costs were passed on
via price increases, leading to a strong rise in sales. Demand for
cracker products remained high, but the modification of a swap
transaction for a cracker product in North America led to a volume
decrease. This adjustment was earnings-neutral. Excluding this
effect, divisional volumes as well as segment volumes were
stable. In industrial petrochemicals, demand softened, primarily
for plasticizers in North America. Earnings reached the very good
level of the third quarter of last year.
Sales in Inorganics were significantly up, driven by price
increases and slightly higher volumes. Demand from automotive
customers was high, while we saw signs of weakening in the
electronic industry, primarily in Asia. Earnings grew.
Page 18
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
Page 19
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
Sales in Intermediates rose mainly due to significant price
increases. Last month, we lifted a force majeure for the
butanediol value chain, caused by a fire at our Ludwigshafen
acetylene plant in May. Earnings matched the previous year’s
figure.
Page 20
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
BASF 3rd Quarter 2011 Analyst Conference Call 9
PlasticsSales up mainly due to a strong Performance Polymers business
Polyurethanes1,480+2%
PerformancePolymers
1,321+16%
€2,801+8%
371
285
393 383
317
0
200
400
Q3 Q4 Q1 Q2 Q3
Sales development Period Volumes Prices Portfolio Currencies
Q3’11 vs. Q3’10 2% 10% 0% (4)%
Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €)
2010 2011
Page 21
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
[Chart 9: Plastics: Sales up mainly due to a strong Performance
Polymers business]
Driven by significant price increases and further volume growth,
sales in Plastics rose strongly despite negative currency effects.
Demand from the automotive industry remained high. EBIT before
special items was lower, mainly due to a weaker TDI business.
Performance Polymers had another very good quarter.
Caprolactam prices stayed at record levels and demand
continued to be strong in most other product lines. Engineering
plastics and our specialties, particularly Basotect and Ecoflex,
performed very well. Earnings went up substantially due to a
combination of higher volumes and better margins.
In Polyurethanes, sales were slightly higher. Demand in the
automotive industry stayed high, while it weakened in
construction. Our specialty elastomers and systems performed
again strongly. In TDI, volumes and prices declined, resulting
from improved product availability after the start-up of new
capacities in Asia and Europe by competitors. Due to the lower
contribution from our TDI business, earnings came in below the
high level of last year.
Page 22
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
BASF 3rd Quarter 2011 Analyst Conference Call 10
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q3’11 vs. Q3’10 (2%) 7% 23% (4)%
Performance ProductsStrong contributions from acquired Cognis businesses
370294
554513
440
0
100
200
300
400
500
600
Q3 Q4 Q1 Q2 Q3
PerformanceChemicals
904+9%
Care Chemicals1,265+85%
€3,991+24%
Paper Chemicals423-6%
Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €)
Nutrition & Health471+32% Dispersions
& Pigments928
+5% 2010 2011
Page 23
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
[Chart 10: Performance Products: Strong contributions from
acquired Cognis businesses]
Performance Products continued to perform strongly. Sales rose
substantially, driven by strong price increases and the inclusion of
the acquired Cognis businesses. EBIT before special items went up
significantly despite low double-digit million euro integration costs
for Cognis.
Price increases in Dispersions and Pigments drove up sales
and offset slightly lower volumes as well as adverse currency
effects. In pigments, customers started to draw down their
inventories, especially for high-value products. Higher raw
material costs could only partly be passed on. As a consequence,
earnings decreased.
In Care Chemicals, sales went up sharply mainly due to the
inclusion of Cognis. Price increases – especially for detergents
and formulators as well as for superabsorbents – nearly
compensated for higher raw materials costs. Earnings grew
substantially.
Sales in Nutrition and Health were sharply up, primarily as a
result of the acquired Cognis businesses. We were able to
significantly increase sales volumes, particularly in animal
nutrition and pharma. Prices were overall stable to slightly
improving, with vitamin prices still below last year, but showing an
upward trend. Earnings increased.
Page 24
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
Page 25
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
The business environment in Paper Chemicals continues to be
challenging. Sales declined as a result of lower volumes, partly
attributable to weaker demand and our measures to streamline
the product portfolio. Despite reduced fixed costs, earnings were
lower than a year ago.
In Performance Chemicals, price increases and the inclusion of
Cognis lifted sales. Declining volumes and currency effects had a
negative impact on sales growth. In plastic additives, volumes
decreased as customers increasingly focused on reducing their
stock levels. Fuel and lubricant solutions developed positively.
Earnings were significantly higher. The previous year’s results
included a one-time expense for valuation adjustments on
receivables.
Page 26
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
BASF 3rd Quarter 2011 Analyst Conference Call 11
TargetAcquisition EPS accretive as of 2012
Integration Costs€300 million one-time costs until end of 2013 − thereof €200 million incurred by the end of Q3 2011
€120 million inventory step-up fully incurred already − €60 million each incurred in Q4 2010 and Q1 2011
Synergies€290 million of additional annual EBIT targeted− €145 million cost synergies by the end of 2013− €145 million growth synergies by the end of 2015
Cognis integration –Synergy target increased to €290 million
Page 27
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
[Chart 11: Cognis integration – Synergy target increased to
€290 million]
Let me give you a short update on the Cognis integration, which is
in full swing. The biggest part of the structural integration will be
completed by the end of this year. The acquisition will be EPS
accretive by 2012.
One-time integration costs will total about 300 million euros by
2013 – thereof two-thirds already incurred by the end of the third
quarter.
We increased our synergy target from 275 million to 290 million
euros. We now expect 145 million euros each from cost and
growth synergies to be fully achieved in 2013 and 2015,
respectively.
For cost synergies, we anticipate a run-rate of roughly 60 million
euros by the end of this year, representing 40 percent of total cost
synergies.
Page 28
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
BASF 3rd Quarter 2011 Analyst Conference Call 12
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q3’11 vs. Q3’10 4% 11% 3% (6)%
Functional SolutionsStrong performance of Catalysts
Catalysts1,608+19%
ConstructionChemicals
5990%
Coatings700
+9%
€2,907+12%
158
33
142167 162
0
50
100
150
Q3 Q4 Q1 Q2 Q3
Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €)
2010 2011
Page 29
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
[Chart 12: Functional Solutions: Strong performance of
catalysts]
Sales in Functional Solutions increased, mainly driven by
continued high demand from the automotive industry. EBIT before
special items improved primarily as a result of the strong
performance of Catalysts.
In Catalysts, sales rose substantially with higher prices. Volumes
were up due to higher demand, not only for mobile emissions
catalysts, but also for chemical and refinery catalysts. At 674
million euros, the contribution from precious metals trading was at
the level of the previous year. Earnings improved strongly.
In Construction Chemicals, the business environment in North
America and Southern Europe remains challenging. However, in
the other parts of Europe as well as in Asia we saw a positive
trend in demand. As we could not fully pass on higher raw
material costs, earnings came in lower.
In Coatings continuing high worldwide demand for automotive
coatings as well as for decorative paints in Brazil drove up
volumes and sales. We were able to almost pass on higher raw
material costs to the market. Earnings were only slightly below
the good level of last year.
Page 30
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
BASF 3rd Quarter 2011 Analyst Conference Call 13
Agricultural SolutionsOn track for record year in sales and earnings
66
95
0
50
100
150
Q3 Q3
Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items (million €)
20112010
0
200
400
600
800
1.000
Q3 Q320112010
+9%
+44%
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q3’11 vs. Q3’10 12% 3% 0% (6)%
832908
Page 31
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
[Chart 13: Agricultural Solutions: On track for a record year in
sales and earnings]
Agricultural Solutions again had a very successful quarter. Sales
increased by 9 percent, currency-adjusted by 15 percent. We were
able to raise prices by 3 percent. As a result of strong demand in all
regions, we increased volumes by 12 percent.
In South America, we had a very good start to the growing
season. Demand was especially strong for our new AgCelence®
production system and for insecticides. Business with the
Clearfield® herbicide tolerance technology expanded rapidly.
In Europe, the fall season also began successfully. Demand for
canola herbicides was strong in France and Eastern Europe.
Weather-related factors in North America pushed the application
period for fungicides into the third quarter, resulting in higher
sales. In Asia, we again saw high growth. In India, fungicides
excelled.
Please also note that we just received registrations for our
fungicide blockbuster candidate Xemium® in major European
countries. We expect the first sales of Xemium® in France as
early as the fourth quarter of this year.
EBIT before special items jumped to 95 million euros. Due to our
strong sales growth in the emerging markets of the Southern
hemisphere, we have turned the third quarter into a steady
earnings contributor: In this seasonal industry, we have been
reporting positive quarterly EBIT since 2008.
Page 32
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
Page 33
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
As our year-to-date earnings are already above the full-year 2010
result, we are on track for a new record year in Agricultural
Solutions – both in terms of sales and earnings.
Page 34
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
BASF 3rd Quarter 2011 Analyst Conference Call 14
272 225
0
200
400
600
Q3 Q3
Exploration &Production534-39%
Natural GasTrading
1,661+23%
€2,195-1%
Sales developmentPeriod Volumes Prices/Currencies Portfolio
Q3’11 vs. Q3’10 (25)% 24% 0%
EBIT bSI Natural Gas TradingEBIT bSI Exploration & Production Net income
Q3’11 segment sales (million €) vs. Q3’10 EBIT before special items/ Net income (million €)
20112010
503227
573
350Non-compensableoil taxes 224
70 123
Oil & GasEBIT before SI on last year’s level (adjusted for non-compensable oil taxes)
Page 35
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
[Chart 14: Oil & Gas: EBIT before special items on last year’s
level (adjusted for non-compensable oil taxes)]
Sales in Oil & Gas were nearly stable despite the suspension of our
oil production in Libya. Higher oil and gas prices offset most of the
25-percent volume decline. EBIT before special items was
considerably below last year. However, adjusted for non-
compensable oil taxes, EBIT before special items matched the
previous year’s figure.
In Exploration & Production, volumes fell sharply primarily due
to the lack of oil production in Libya. As a consequence, sales
and earnings declined despite substantially higher crude oil and
natural gas prices. The average price for Brent was 113 U.S.
dollars per barrel, compared with 77 U.S. dollars per barrel in the
previous year.
Sales in Natural Gas Trading rose strongly, primarily as a result
of increased gas prices. Margins, however, were negatively
impacted by the time-lag effect, the delayed adjustment of sales
prices to purchase prices. This effect was compensated by a one-
time gain from contract adjustments with customers. Earnings,
therefore, were above last year’s level.
As already mentioned by Kurt, we are again producing oil in
Libya, on- and offshore. As we are still in the start-up phase of our
onshore operations, our focus is currently on the stabilization of
production at 20,000 barrels of oil per day and on lifting the first
shipment.
Page 36
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
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BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
Crude oil production from the offshore platform Al Jurf in the
Mediterranean Sea, in which Wintershall has a 6.75 percent
stake, began a few weeks ago.
We expect an EBIT contribution from Libya of less than 100
million euros for the remainder of this year.
Page 38
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
BASF 3rd Quarter 2011 Analyst Conference Call 15
Review of “Other”
Million € Q3 2011 Q3 2010Sales 1,637 1,452thereof Styrenics* 739 683
EBIT before special items (21) 58thereof Corporate research
Group corporate costs Currency results, hedges and other valuation effectsStyrenics, fertilizers, other businesses
(86)(58)104
82
(67)(54)104
77
Special items (33) (68)
EBIT (54) (10)
* Since January 1, 2011, Styrenics only includes the carved-out Styrenics businesses; the previous year’s values were adjusted accordingly.
Page 39
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
[Chart 15: Review of ‘Other’]
In “Other”, sales grew primarily as a result of higher prices in the
Styrenics business and raw material trading. A weaker U.S. dollar
led to foreign currency losses in Q3. At the same time, we reported
a gain from the reversal of provisions for our long-term incentive
(LTI) program, as a result of the lower share price. Special items in
‘Other’ include a settlement payment in a class action lawsuit in the
United States. Earnings were lower than last year.
Page 40
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
BASF 3rd Quarter 2011 Analyst Conference Call 16
Million € Jan - Sep 2011
Jan - Sep 2010
Cash provided by operating activities 5,028 5,307thereof Changes in net working capital (1,337) (783)
Cash used in investing activities (957) (1,175)thereof Payments related to tangible / intangible assets (2,101) (1,518)
Cash used in financing activities (4,105) (3,814)thereof Changes in financial liabilities
Dividends (1,727)(2,378)
(2,003)(1,811)
Operating cash flow strong at €2.0 billionFree cash flow again high at €1.2 billion Net debt further reduced by ~€650 million to €11.6 billion since end of Q2 2011
Third quarter 2011
Operating cash flow remains strong
Page 41
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
[Chart 16: Operating cash flow remains strong]
Let me now briefly conclude with our cash flow.
At 5 billion euros, we generated a very strong operating cash flow in
the first nine months of this year – thereof 2 billion euros coming
from the third quarter. Net working capital rose by 554 million euros
compared to the same period last year mainly due to an increase in
inventories – resulting from growing our business, higher raw
material costs and the build-up of natural gas volumes in our
storage facilities.
In the first nine months, we used 957 million euros in investing
activities. Capex amounted to 2.1 billion euros, considerably above
last year, but still below depreciation.
Free cash flow reached 2.9 billion euros in the first nine months of
this year, thereof 1.2 billion euros generated in the third quarter.
Since the end of 2010, we reduced net debt by 1.9 billion euros to
11.6 billion euros end of September, thereof roughly 650 million
euros reduction in Q3.
Thank you for your attention. We are now happy to take your
questions.
Page 42
BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
BASF 3rd Quarter 2011 Analyst Conference Call 17
BASF 3rd Quarter 2011 Analyst Conference Call
Macro-economic assumptions 2011
Previous forecast
GDP 3%-4%
Chemical production (excl. Pharma)
5%-6%
Industrial production 5%-6%
US$ / Euro 1.40
Oil price (US$ / bbl) 110
New forecast
2.5%-3%
4.5%-5%
4.5%-5%
1.40
110
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BASF 3rd Quarter 2011 Analyst Conference Call October 27, 2011
BASF 3rd Quarter 2011 Analyst Conference Call 19
Financial highlights
Million € Q3 2011 Q3 2010 Δ% Q2 2011 Δ%Sales
changes due to- volumes- prices- portfolio- currencies
17,607 15,781 +12%
(3)%+14%+5%(4)%
18,461 (5)%
EBITDA 2,709 2,934 (8)% 3,015 (10)%
EBIT before special items 1,964 2,213 (11)% 2,237 (12)%
EBIT before special itemsadjusted for non-compensable oil taxes 1,964 1,989 (1)% 2,237 (12)%
Special items (82) (58) - (20) -
EBIT 1,882 2,155 (13)% 2,217 (15)%
Net income 1,192 1,245 (4)% 1,454 (18)%
EPS (€) 1.30 1.35 (4)% 1.59 (18)%
Adjusted EPS (€) 1.52 1.52 0% 1.75 (13)%
BASF 3rd Quarter 2011 Analyst Conference Call
Cognis integrationGenerating €290 million of growth and cost synergies
Providing joint customer base with access to broader portfolioIncreasing solution capabilitiesExtending innovation capabilitiesLeveraging regional set-up
Cost synergiesRealizing procurement cost savingsConsolidating of administrative structuresImproving production efficiencyConsolidating IT landscape
Synergies (million €)
145
145
0
50
100
150
200
250
300
350
Cost synergies (by the end of 2013)Growth synergies (by the end of 2015)
Growth synergies