Agricultural Solutions – Profitable Growth with … Solutions – Profitable Growth with...

Agricultural Solutions – Profitable Growth with Innovative Products

Markus HeldtPresident Crop Protection

15th Credit SuisseAg Productivity Conference

March 10, 2010

Disclaimer

This presentation is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation.

This presentation has been prepared by BASF. No representation or warranty (express or implied) of any nature is given, nor is any responsibility or liability of any kind accepted, with respect to the truthfulness, completeness or accuracy of any information, projection, statement or omission in this presentation.

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Agricultural Solutions – a cornerstone in BASF’s portfolio

* Styrenics reported under ‘Other’

Total sales BASF Group in 2009:€50.7 billion

Chemicals

15%

Plastics*

14%

Performance Products18%

Inorganics

Petrochemicals

Intermediates

PerformanceChemicals

Dispersions &Pigments

PerformancePolymers

Polyurethanes CareChemicals

FunctionalSolutions14%

ConstructionChemicals

Coatings

Catalysts

AgriculturalSolutions7%CropProtection

Oil & Gas

22%Exploration & ProductionandNatural Gas Trading

Paper Chemicals

Why is Agricultural Solutions so important in our portfolio?

Agriculture is the only industry sector that has not been severely affected by the current economic crisis

Independent from chemical cycle

Above average contribution to BASF’s profitability

Market of high attractiveness driven by innovations

Highly promising pipeline

Cost synergies & excellent know-how transferby using Verbund advantages

Light in tangible fixed assets

Strong performing and resilient business

OutlookResults 2009Strategy Growth segments R&D pipeline New products

Strategy: Growth through innovation

Concentration on high value markets

Strong R&D investment to safeguard sustainable high profitability:

- Continuous development of new active ingredients to strengthen our pipeline

- Focus on innovative products optimally addressing the needs of our customers

Develop innovative business models/new market segments (e.g. Plant Health, SeedSolutions®, Pest Control Solutions)

Investment in capacity expansions

Focused acquisitions to balance our portfolio (e.g. Sorex acquisition)

Growth through innovation


Record performance in 2009Excellent growth despite challenging market conditions


million € FY 2009 FY 2008 Δ%Sales* 3,646 3,409 7

8

EBIT** 776 706 10

EBIT after cost of capital** 336 265 27

Assets (as of December 31) 4,681 4,352 8

Research and development expenses 355 325 9

Capex 175 87 102

EBITDA** 980 906

* sales change at constant exchange rates and continued portfolio in FY 2009: +4%(Volumes 0%, prices +5%, portfolio +1%, currencies +1%)

** before special items

26.926.623.2

20.1

26.927.6

21.3

0

5

10

15

20

25

30

2003 2004* 2005 2006 2007** 2008 2009

Committed to ambitious profitability target BASF remains benchmark in industry

OutlookResults 2009Strategy Growth segments R&D pipeline New productsResults 2009Strategy Growth segments R&D pipeline

*2004 onwards reporting according to IFRS-guidelines; **2007 onwards corporate cost excluded

EBITDA margin before special itemsin %

Sales (in million €) 3,176 3,354 3,298 3,079 3,137 3,409 3,646

706 776526EBIT before specialitems (in million €) 294 666 671 378

Sales by region 2009Higher prices drove sales growth


Total sales 2009 to third parties Key facts

Europe & North America:Lower application of crop protection products based on late season start; higher pricing.Asia Pacific:Strong volume growth in emerging markets of China and India.South America, Africa, Middle East:High disease pressure resulted in high fungicide demand. Recovery of sugarcane market droveinsecticide business.

Asia Pacific378 (+11%)

Europe1,520 (+1%)

South America,Africa, Middle East

838 (+9%)

North America910 (+4%)

€3,646

In brackets growth at constant exchange rates and continued portfolio in % vs. prior year

in million €

400

700

0

200

400

600

800

2006 2009

Sales in BRIC* countries Average crop protection expenditures

Source: int. estimates, FAO; *Average UK, France, Germany, Italy, Spain

Strong sales growth in BRIC countriesGlobal demand and technification drive rapid growth


+20%

* Brazil, Russia, India, China

West Europe* / USBRIC

in million € in €/ha

0 50 100 150 200

wheat

corn

soybean

Sales by indication 2009Strong performance of fungicides


Sales by indication

in million € Fungicides:Price increases in Europe and North America and strong demand in South America Herbicides:Lower demand for herbicides in North America offset by growth in Asia and Europe Insecticides:Positive effects from recovery of sugarcane market in Brazil and acquired business of Sorex Group in Europe and North America

Fungicides1,708 (+9%)

Herbicides1,165 (+0%)

Insecticides/Other773 (+2%)

€3,646

In brackets growth at constant exchange rates and continued portfolio in % vs. prior year

… in total profitability

2009

Top 10 active ingredientsFocus on high value innovative products


60%

70%

Share of Top 10 active ingredients

In 2009 our Top 10 active ingredients accounted for:

- 60% of total sales- 70% of total profitability

Portfolio with clear focus on high value innovative products

Young Top 10 portfolio: Average launch year 1991

Portfolio

50%

…in total sales

2009

60%

2003

2003

BASF outperforms market in highgrowth segments

*CAGR 2001-08Source: Internal source (CAGR, Profitability)


Above average growth* segments vs. BASF profitability

Strong performance in high growth segments

Above average growth segments represent 30% of our sales in 2009

Focus on segments with above average profitability

Investment directed to successful portfolio development

Portfolio managementProfitability vs. BASF‘s Ø

profitabilityin %

BASF growthMarket growth0 50 100 150 200

Sugarcane H

Cereals F

Grapes F

Sugarcane I

Soybean F

Corn F

SeedSolutions® business

*CAGR 2003-08 Source: PMD


Global seed treatment market 2008: €1.5bn Seed treatment at BASF

in million €

20082003

Growth rate* Protection and support of the germinating seed by pre-planting applicationsAttractive and fast growing market driven by high value GMO seed

BASF is a global player since 2003

Current market position: #3

BASF grows by leveraging Verbund technologies through innovative product offers

Product launches planned in SeedProtection, SeedVitalityand SeedTechnology

+10%

+5%

+20%

+13%

+2%

0 500 1.000 1.500

Asia

LAM

NAFTA

Europe

Global

0

50

100

150

200

250

Strong growth in SeedSolutions® segment


BASF SeedSolutions® sales 2003-2009

Since 2003 BASF has more than doubled the sales in this highly profitable market (CAGR: 17%)

New technologies and product launches will support sustainable growth in all regions

BASF seed treatment business and R&D activities focus on soybeans, corn, cereals and vegetables

Strong performancein € million

TARGET

+17%

201520092003

70

175

Fungicides Insecticides

>250

Agricultural Solutions is a strongly innovation driven business


R&D spending in 2010 planned on similar level

Total R&D expenditures 2009

Oil & Gas1%

Corporate Research

23%Agricultural

Solutions25%

PerformanceProducts20%


Chemicals9%Plastics9%

€1.4billion

Other1%

in billion €

Strong commitment to R&DCrop Protection


R&D expenditures Crop Protection Strategy

in million €

2006 2009

In 2009, intentional increase of R&D expenditures for innovative productsSafeguarding sustainable profitability by investing each year about 9-10% of sales in R&DFocus on high value products and marketsLeading position driven by innovative portfolio and continuous development of new active ingredients and formulations

+6%

0

100

200

300

400

Powerful R&D pipeline – peak sales potential increased by €100 million

* Launched: First registration in major market in 2002 (or elder than 5 years to current year), In launch: First registration in major market 1 to 5 years prior to current yearIn development: First registration in major market in current year or within next 5 years after current year

** thereof products launched and in launch reached >70% in 2009*** One of the herbicide tolerance projects is also included in the BPS pipeline communication

In development

In launch

Launched

Phase*

Field cropsTopramezone (H), F 500® seed treatment (F)

Field cropsTritosulfuron (H)

Specialty crops1 Insecticide

Specialty cropMetaflumizone (I)

Field crops, specialty cropsMetrafenone (F), Orysastrobin (F)

2005-2009

Field crops1 Herbicide (Kixor™), 2 Herbicide tolerance projects***

€700 million

Field crops, specialty crops, seed treatment2 Fungicides

2010-2015

Non-cropChlorfenapyr (I) €1,500 million**

Field crops, specialty crops F 500® (F), Boscalid (F), Dimoxystrobin (F),

2002-2004

Peak sales potential

Marketsegments

ProjectsLaunch year


Total € 2,200 million

Kixor™– novel herbicide sets benchmark Upgraded peak sales potential


Projected global weed control market

Highly attractive weed control market

BASF offers broad herbicide portfolio

Kixor™: highly effective against all important broadleaf weeds in key crops - important glyphosate

resistance management tool- Market launch during

growing season 2010

Peak sales potential further increased by €100 million

Key factsin billion €

will be sold in both the selective and non-selective herbicide markets

selective herbicides (conventional market)non-selective herbicides and herbicide trait fees (GMO market)

Kixor™ global peak sales potential: >€200 million

0

5

10

15

20

2007 2008 2013 2018 2020

-50

50

150

250

350

2006 2009

Fungicide Boscalid – further increase of global peak sales potential


Sales development Boscalid

New mode of action for efficient disease control

Originally developed for specialty crop market

Now strongly growing in field crops

Boscalid is used in - >100 crops- >70 countries- >200 indications

Peak sales potential further increased by €50 million

Key facts

Global peak sales potential: >€300 million

SpecialtyCrops

+ 40%

p.a.

FieldCrops

+ 5% p.a.

100(index)

180(index)

AgCelence® – pioneering a new market segment Plant Health


® delivers incremental value through a range of benefits beyond established disease control

Better stress tolerance: high water use efficiencyBetter growth performance: e.g. higher nitrogen uptakePlant strength: seedling vigor, uniform emergence, plant vigor

Yield increase of >10%results in higher return on investmentHigh quality crops

Production efficiency:harvest efficiency, storability, processability

AgCelence® Plant health effects Benefits for the farmer

Beyond efficient disease control, treated crops show:

Standard

0

100

200

300400

500

2007 2008 2009 2010 FC

0

100

200

300

2007 2008 2009 2010 FC

AgCelence® launched globallyIncreasing R&D efforts

AgCelence® will represent agrowing share of fungicide sales in the futureF500® is the core active ingredient of our Plant Health conceptF500® total peak sales potential €700 million

AgCelence® – helping farmers around the globe

Key facts


North America: Incremental AgCelence® sales

South America: Incremental AgCelence® sales

CAGR +35%

100

250

CAGR +69%480

in %

(index)

(index)

100(index)

(index)in %

Our R&D investments are paying offStrong track-record of launching innovative products

Innovation is key to success


R&D expenses 2009: €355 million (25% of BASF’s total R&D expenditures)

Continued sales growth with innovative new active ingredients launched since 2002

Compound annual growth rate 2002-2009 at 30%

High vitality of portfolio: In 2009 sales share of active ingredients launched since 2002 amounts to 30%

0

200

400

600

800

1,000

2002 2009

Sales in million €

CAGR 30%

30%

1,000

Active ingredients launched since 2002

Share of innovative new active ingredients in total sales

6%

Agricultural Solutions – a cornerstone in BASF’s portfolio

* Styrenics reported under ‘Other’

Total sales BASF Group in 2009:€50.7 billion

Chemicals

15%

Plastics*

14%

Performance Products18%

Inorganics

Petrochemicals

Intermediates

PerformanceChemicals

Dispersions &Pigments

PerformancePolymers

Polyurethanes CareChemicals


ConstructionChemicals

Coatings

Catalysts

AgriculturalSolutions7%CropProtection

Oil & Gas

22%Exploration & ProductionandNatural Gas Trading

Paper Chemicals

Plant Biotechnology


Future nutrition of growing world populationPlant biotechnology pipeline taps into huge market potential

* Value generated through the plant biotech trait across the respective value chain; 1 Partner CTC; 2 Partner: KWS

Development Discovery Stage I Stage II Stage III Stage IVIdentifying

genes & proof of concept

up to 6 years

Look forproof of

concept IIup to 4 years

Early product development

up to 3 years

Advancedproduct

development up to 2 years

Pre-Launch

up to 3 years

Market Value*

Superior agricultural productivity

Better andhealthier nutrition/feed

Plants as renewable raw materials

Improved amino acid

High oil

Healthier fatty acids (Omega-3&6)

Amylopectin

Herbicide tolerance

Fungal resistance

Yield & stress(corn, soybean, cotton, canola)

< $100 million

> $2 billion

< $100 million

$100-200 million

$300–500 million

Yield & stress(sugarcane1, sugar-beet2)


Crop Protection – Outlook 2010

Key factors affecting business development in 2010:- Remaining channel inventory- Development of important currencies (USD, JPY, BRL)

- Volatility and level of soft commodity prices - Weather conditions Positive momentum from- Launch of our new blockbuster herbicide Kixor™- Volume ramp-up of F500® in the AmericasExpansion of business in emerging marketsPrudent credit management strictly in place, esp. in emerging markets (Latin America, Eastern Europe)Continued high commitment to R&D

Profitable growth targeting 25% EBITDA margin


Rising sales despite challenging market conditionsAim to maintain high earnings level

Agricultural Solutions – Profitable Growth with … Solutions – Profitable Growth with...

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