BASF posts strong results...BASF Capital Market Story September 2011 1 BASF posts strong results...

1BASF Capital Market Story September 2011 1

BASF posts strong results

Markus Zeise

Director, Investor Relations

New York,

September 14, 2011

2BASF Capital Market Story September 2011

1 | Business review

2 | Focus on operational excellence

3 | Well positioned for profitable growth

4 | Outlook


Sales €18.5 billion +14%EBITDA €3.0 billion +5%EBITDA margin 16.3% 17.7%EBIT before special items (bSI) €2.2 billion +1%EBIT bSI adjusted for non-comp. oil taxes €2.2 billion +12%EBIT €2.2 billion +7%Net income €1.5 billion +23%EPS €1.59 +23% Adjusted EPS €1.75 +17%

Business performance

Q2’11

vs. Q2’10

BASF posts strong results Second quarter 2011 highlights

Robust sales and earnings growth in the chemicals business with volumes up 5%Excellent performance of the acquired former Cognis businessEarnings in Agricultural Solutions increased despite adverse weather conditionsSales growth in Oil & Gas was price driven. Net income rose by 74%


Strong segment performance in 1H 2011

Segment€

million

Sales Δ1H 2010

EBITDA EBITDA

margin

EBIT before SI

Δ1H 2010

Chemicals 6,668 +20% 1,773 26.6% 1,439 +25%

Plastics 5,616 +17% 980 17.5% 776 +24%

Performance Products 8,077 +34% 1,335 16.5% 1,067 +20%

Functional Solutions 5,584 +23% 496 8.9% 309 +12%

Agricultural Solutions 2,435 +3% 757 31.1% 674 +5%

Oil & Gas 5,916 +6% 1,310 22.1%* 1,076 (6%)

* Excluding non-compensable oil taxes: 17.4%


Important milestones in Q2 2011

Styrolution

Joint venture of BASF and INEOS to form the global market leader in styrenicsJoint venture contract signedFTC and EU antitrust approval receivedClosing subject to remaining approvals from antitrust authorities in other countries Closing of joint venture expected in Q4 2011

New TDI plant in Europe

TDI is a key component for polyurethane foams with growth rates above GDPBASF to expand its leading position in TDI with a new 300kt/a plant in Europe The world‘s largest single-train TDI plantSuperior technology and unique Verbund concept provide industry leading cost structureStart-up of production in 2014


*

Cash provided by operating activities less capex

(in 2005 before CTA)** 2009 adjusted for re-classification of settlement payments for currency

derivatives

Continuous strong cash flow

Cash Flow (billion €)

Cash provided by operating activitiesFree cash flow*

-1

0

1

2

3

4

5

6

7

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

3.0

1.8

**

H1


Average annual dividend increase of 14.5%(2001-2010)

Dividend yield above 3% in any given year since 2001

Attractive dividend yield of 3.7% in 2010*

3.9%

Key factsDividend per share (€)

2.20

0.65 0.70 0.700.85

1.00

1.50

1.95 1.951.70

0.0

0.5

1.0

1.5

2.0

2.5

2001 2004 2007 2010

0.50

1.00

1.50

2.00

3.1%

* Dividend yield based on share price at year-end

3.2% 3.1% 4.1% 3.8% 7.0%Yield* 3.7%

2.50

3.1% 3.9%

Attractive shareholder returns Record dividend


Delivering consistent, long-term value

Long-term performance September 2001 –

August 2011 (average annual performance with dividends reinvested)

+12.3%

-2.1%

+7.6%

-3 0 3 6 9 12 15

BASF

Euro Stoxx

50

DAX 30

MSCI World Chemicals

+1.1%


1 | Business review



4 | Outlook


Vertical and horizontal integration of production plants, energy and waste flows, logistics and site infrastructure

Know-how Verbund

Energy Verbund and combined heat and power plants lead to-

Savings of ∼2.6 million tons oil equivalent p.a.

-

Reduction of CO2

-emissions of ~6 million tons p.a.

10

Unique ‘Verbund’

concept Cost savings of >€500 million p.a. in Ludwigshafen alone

BASF site Ludwigshafen, Germany Verbund Concept


Fixed costs represent around 30% of total costs

Only slightly higher fixed costs, despite major acquisitions(Engelhard, Degussa Construction Chemicals, Ciba and Cognis)

Ciba and Cognis synergies as well as NEXT program will drive fixed costs down–

Cost synergies Ciba:>€450 million by 2012

–

Cost synergies Cognis:

€140 million by 2013

Stringent fixed cost management

Key facts

Fixed costs indexed EBITDA indexedSales indexed

BASF Group development 2001-2010

50

100

150

200

250

300

2001 2004 2007 2010

Index

~170%

~100%

~20%

Δ


> 500 individual projects to simplify processes, structures and production sites in all regions

Project timeline:2008-2011

Annual earnings contribution of €600 million in 2010 achieved

Targeted earnings contribution by 2012: ≥€1 billion

Completed restructuring programs

New efficiency program NEXT

Sustainable improvement of cost base Efficiency program NEXT on track

New

EXcellence

Targets

(NEXT)Annual earnings contribution (million €)

0

500

1,000

1,500

2,000

2,500

2003 2005 2007 2009 2012


1 | Business review



4 | Outlook


Leading positions in growth industries

and emerging markets

Ongoing portfolio

optimization

Excellent innovation platform

We strive to outperform global chemical production growth by at least 2 percentage points p.a.

Well positioned for profitable growth

Continue expansion in emerging markets, especially AsiaTranslate megatrends into business growth

Continue with active portfolio managementDrive portfolio closer to end customer

Product and system innovation as growth driversMegatrend innovations for long-term growth

Growth target:


Leading positions in growth industries and

emerging markets

15


Emerging markets Significant sales growth in emerging markets

Sales 2010 in emerging markets: €14.5 billion (27%)

Investments in emerging markets 2005-2010:€3 billion

Ongoing increase of - sales force- regional R&D

Emerging markets definition, according to Dow Jones:35 countries *

* Bahrain, Brazil, Bulgaria, Chile, China, Colombia, Czech Republic, Egypt, Estonia, Hungary, India, Indonesia, Jordan, Latvia, Kuwait, Lithuania, Malaysia, Mauritius, Mexico, Morocco, Oman, Pakistan, Peru, Philippines, Poland, Qatar, Romania, Russia, Slovakia, Sri Lanka, South Africa, South Korea, Taiwan, Thailand, Turkey, United Arab Emirates

Emerging MarketsNet sales in billion €BASF Group (w/o Oil & Gas)

0

10

20

30

40

50

60

2005 2010

CAGR 7%22%

27%CAGR 13%

Emerging Markets (Dow Jones definition)

Developed Markets


Emerging markets Recently announced major projects

MDI plant Chongqing, China Expansion Verbund site Nanjing*

Expansion Verbund site Kuantan*

Acrylic acid complex, Brazil Expanding gas production, Russia* 15% Stake in South Stream** Memoranda of Understanding signed


6.5

12.5

20

0

5

10

15

20

2005 2010* 2020

BASF’s profitable growth path in Asia Pacific

Sales by location of customers (in billion €)

* Excluding Cognis

+14% p.a.

Achievements 2005-2010

Sales growth +14% p.a.(vs. Asian market growth +10.5% p.a.)Record EBITDA of €1.7 billion in 2010, resulting in an EBITDA margin of 14%

Target 2011-2020

Well on track to double sales by 2020(based on sales of €9 billion in 2008)Outgrowing Asian Pacific chemical market by 2 percentage points p.a. through

–

Innovations out of Asia–

Investments 2011-2015: €2.3 billion–

Generating 70% of sales based on local manufacturing

–

Strengthening market focus through industry and customer target groups


Ongoing portfolio optimization

19


BASFcore

businesses

Powerful partnerships

Major acquisitions Major divestitures

Pharmaceuticals

Fibers

Printing systems

Polyolefins (Basell)

Polystyrene North America

Agchem generics

Premix

Crop protectionOil & Gas (Revus)Engineering Plastics Electronic ChemicalsCustom synthesisCatalysts (Engelhard)Construction Chem.Water-based resinsPigments (Ciba)Plastic additives (Ciba)Care Chem. (Cognis)Nutrition & Health (Cognis)

15 billion Euro(Sales)

9 billion Euro*

(Sales)

GazpromMonsantoPetronasShellSinopecTotal

* Not including

styrenics and fertilizer businesses

Selected transactions 2001

to date

Styrenics (Styrolution)(JV contract signed)

Fertilizers (Sale planned)

Pro-active portfolio management

Sale of shares in K+S(Proceeds for BASF ~€1 billion)


Cognis –

integration objectives

TargetsAchieve 20% EBITDA margin in the Performance Products segment by 2012Acquisition accretive as of 2012

CostsOne-time integration costs of €290 million until end of 2013 Inventory step-up of €120 millionCosts already incurred:−

2010: €80 million (thereof €60 million inventory step-up) −

H1/2011: €210 million (thereof €60 million inventory step-up)

SynergiesGenerate €275 million of additional EBIT p.a.−

€135 million p.a. growth synergies by the end of 2015−

€140 million p.a. cost synergies by the end of 2013


BASF + Cognis Improved market positions

PreviousBASF position

FutureBASF position

Personal care ingredients 3 1Home care ingredients 1 1

Functional nutritioningredients 6 3

Coating additives 7 3Heavy-duty driveline lubricants >

10 3

Mining chemicals 3 2


Active portfolio management pays off

Chemical activities

Agricultural Solutions

Oil & Gas, including non-deductible oil taxes

EBITDA by activity (in billion €, excluding Other)

0

2

4

6

8

10

12

2001* 2004 2007** 2010

Recent acquisitions reshaped portfolio–

Closer to end customers–

Innovation-driven–

Profitable growth above industry average

BASF’s EBITDA in 2010 (excluding Other) amounted to €11.7 billion

* Based on German GAAP**

As of 2007 according to new segment structure (excl. Styrenics and corporate costs)

Our diversified portfolio is a key strength


Excellent innovation platform

24


Electromobility

Xemium®Kaurit®

Light

CypoSol®

Elastopave®

Ecovio®

Natugrain®

TS X-SEED® PCI Geofug®


Focus on future markets BASF intensifying R&D around electromobility

Market trendsSustainable electromobility is key to climate friendly mobility High-performance batteries and innovative solutions for weight reduction and heat management are essential for efficient electromobility

BASF activitiesInvestment of three-digit million euro sum over the next five years for R&D and production of battery materials•

Current investment in innovative cathode materials plant in Elyria, Ohio to start up in mid-2012

Portfolio expansion by entering electrolytes and positioning BASF as future system supplier for high performance batteriesLightweight construction solutions and heat management systems further help to reduce energy consumption

Electromobility

–

leveraging BASF’s R&D and business platforms


Further increase in R&D spending planned for 2011

Innovation will spur further growth

Total R&D expenditures 2010 (billion €)

€1.5 billion R&D expenditures in 2010 (2009: €1.4 billion)

~9,600 employees in R&D

~3,000 projects and topics

Research Verbund: About 1,900 partnerships with universities, start-ups and industry partners

Strong commitment to R&D

Corporate Research22%

Agricultural Solutions

26%

Functional

Solutions12%

Performance

Products19%

Chemicals9%

Plastics10%

€1.5

billion

Other2%


0,0 0,00

5

10

15

20

4.53.5

Innovation pipeline worth €21 billion

* New or improved products or new applications, max. 5 years on market, including Growth Clusters

The pipeline NPV of €21 billion is a bottom-up aggregation of all R&D projects

High success rate due to stringent R&D controlling via Phasegate process

Expected Commercial Value:~50% of NPV (probability-weighted)

In 2010, sales of new products (5 years or younger) exceeded the target of €6 billion

Target 2015: up to €8 billion sales with new products

R&D contributes significantly to earnings growth

14% Performance Products7% Plastics3% Chemicals

8% Functional Solutions

46% Agricultural Solutions

2% Oil & Gas20% Corporate Research

2009 2010

€19 bn€21 bn

Net present value by segments (billion €)


1 | Business review



4 | Outlook


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

We forecast Brent oil price of $110/bbl (from $100/bbl) and US$/€ of $1.40 (from $1.35)We assume that oil production in Libya will not restart during 2011 →EBIT before special items from our Libyan oil production for the

full year 2011

will be about €1 billion lower compared with 2010

(thereof about €700 million of non-compensable oil taxes)

Assumptions

Medium-term targets

Outlook 2011

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 expect to achieve a high premium on our cost of capital

Targets 2011

as of July

28, 2011 2nd Quarter

2011 Reporting


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


BackupMacro-economic

assumptions

2011


Outlook BASF Group 2011 Expectations for global economy

2010

GDP 3.9%

Chemical production (excl. Pharma)

9.4%

Industrial production 7.4%

US$ / Euro 1.33

Oil price (US$ / bbl) 79.50

Forecast

2011

3-4%

5-6%

5-6%

1.40

110

as of July

28, 2011 (2nd

Quarter

2011 Reporting)


BackupBusiness development

Q2 2011


Chemicals Robust sales and earnings supported by price increases

Intermediates693+7%

Inorganics351

+8%

Petrochemicals2,348+18%

€3,392+14%

687617

537

765674

0

200

400

600

800

Q2 Q3 Q4 Q1 Q2

Sales developmentPeriod Volumes Prices Portfolio Currencies

Q2’11 vs. Q2’10 2% 20% 0% (8)%

Q2’11 segment sales

(million €) vs. Q2’10 EBIT before special items (million €)

20112010


Plastics Strong demand in all product lines resulted in increased earnings

Polyurethanes1,498+7%

Performance

Polymers

1,330+12%

€2,828

+9%

349 371

285

393 383

0

200

400

Q2 Q3 Q4 Q1 Q2

Sales development Period Volumes Prices Portfolio Currencies

Q2’11 vs. Q2’10 4% 12% 0% (7)%



20112010



Q2’11 vs. Q2’10 2% 6% 27% (5)%

Performance Products Strong earnings contributions from acquired Cognis business

471

370294

554513

0

100

200

300

400

500

600

Q2 Q3 Q4 Q1 Q2

PerformanceChemicals

908+13%

Care Chemicals1,353+100%

€4,095+30%

Paper Chemicals417(5)%



Nutrition & Health480+29%

Dispersions

& Pigments

937

+9% 20112010



Q2’11 vs. Q2’10 12% 8% 0% (7)%

Functional Solutions Strong demand from automotive drove earnings growth



Catalysts1,500+22%

Construction Chemicals

5770%

Coatings689

+6%

€2,766+13%

165 158

33

142167

0

50

100

150

Q2 Q3 Q4 Q1 Q220112010


Agricultural Solutions High global demand for agricultural products drove volume growth

320 331

0

100

200

300

400

Q2 Q2



20112010

0200400600800

1,0001,2001,400

Q2 Q220112010

0%+3%


Q2’11 vs. Q2’10 6% 0% 0% (6)%

1,211 1,205


148257

0

200

400

600

Q2 Q2

Oil & Gas Higher oil and gas prices compensated for lower volumes

Exploration &

Production563(34)%

Natural Gas

Trading

1,898+25%

€2,461

+4%

Sales developmentPeriod Volumes Prices/Currencies Portfolio

Q2’11 vs. Q2’10 (18)% 22% 0%

63

EBIT bSI

Natural Gas TradingEBIT bSI

Exploration & Production Net income


(million €) vs. Q2’10 EBIT before

special

items/ Net income

(million

€)

20112010

420269

515

332

95

Non-compensable

oil

taxes

209


Review of “Other”

Million € Q2 2011 Q2 2010Sales 1,714 1,471thereof Styrenics 811 785*

EBIT before special items (163) (301)thereof Corporate research

Group corporate costs Currency results, hedges and other valuation effects Styrenics, fertilizers, other businesses

(87) (59)

(118)

76

(78) (55)

(198)

67

Special items 27** (106)

EBIT (136) (407)

* Since January 1, 2011, Styrenics only includes the carved-out styrenics

businesses; the previous year’s values were adjusted accordingly

** Incl. €68 million from repeal of fine imposed by the EU on Ciba in 2009


Operating cash flow in H1 2011

Million € H1 2011 H1 2010Cash provided by operating activities 3,038 2,721thereof Changes in net working capital (1,178) (1,355)

Cash provided by investing activities 81 (599)thereof Payments related to tangible / intangible assets (1,265) (889)

Cash used in financing activities (2,764) (2,054)thereof Changes in financial liabilities

Dividends (486)

(2,278)(292)

(1,762)

Operating cash flow at €3.0 billion despite reclassification of €887 million gain from the sale of K+S stakeFree cash flow at €1.8 billion Net debt amounted to €12.3 billion, a reduction of €1.3 billion since end of 2010

First half 2011


Financial highlights

Million € Q2 2011 Q2 2010 Δ% Q1 2011 Δ%Sales

changes due to - volumes - prices - portfolio - currencies

18,461 16,214 +14%

+2% +13% +5% (6)%

19,361 (5)%

EBITDA 3,015 2,867 +5% 3,365 (10)%

EBIT before

special

items 2,237 2,206 +1% 2,732 (18)%

EBIT before special items

adjusted

for

non-compensable

oil

taxes 2,237 1,997 +12% 2,452 (9)%

Special items (20) (127) - (182) -

EBIT 2,217 2,079 +7% 2,550 (13)%

Net income 1,454 1,183 +23% 2,411 (40)%

EPS (€) 1.59 1.29 +23% 2.62 (39)%

Adjusted EPS (€) 1.75 1.50 +17% 1.94 (10)%


Balance sheet review

Balance sheet June 30, 2011 vs. end of 2010 (billion €)

Liquid funds

Accounts

receivable

Long-term

assets

22.7

15.0

21.7

34.5

10.2

1.5

Other

liabilities

Financial

debt

Stock-

holders’

Equity

Jun 30

2011

Jun 30

2011

Dec 31

2010

Dec 31

2010

59.3

32.5

10.9

1.8

59.3

23.0

14.1

22.2

Inventories

Other assets

9.5

4.6

8.7

4.5

59.459.4

Long-term assets decreased by €2.0 billion amongst others due to the sale of shares in K+S

Inventories increased by €0.8 billion reflecting the expansion of our business and raw material inflation

Net debt decreased by €1.3 billion to €12.3 billion

Accounts receivable were up by €0.7 billion as a result of the expansion of our business

Equity ratio at 39% (up 1 percentage point)


BackupBusiness overview

2010


Excellent segment performance 2010

Segment€

million

Sales Δvs. 2009

EBITDA EBITDA

margin

EBIT before SI

Δvs. 2009

Chemicals 11,377 +51% 3,000 26.4% 2,302 +126%

Plastics 9,830 +38% 1,721 17.5% 1,284 +123%

Performance Products 12,288 +31% 2,162 17.6% 1,554 +123%

Functional Solutions 9,703 +36% 861 8.9% 467 +123%

Agricultural Solutions 4,033 +11% 938 23.3% 749 (4%)

Oil & Gas 10,791 (5%) 2,977 27.6%* 2,430 +6%

* Excluding non-compensable oil taxes: 18.5%


BackupCapital expenditures


FunctionalSolutions

6%

Other (Infrastructure, R&D)

12%

By region

Oil & Gas* 35%

Chemicals15%

Alternative sitesunder review

2%South America, Africa, Middle East4%

North America14%

Europe**63%

By segment

AgriculturalSolutions4%

Plastics14%

Asia Pacific17%

€12.6

billion

€12.6

billionPerformance

Products14%

Planned capital expenditures 2011-2015

** Thereof ~€4.4 billion for Oil & Gas* Excluding investments in Nord Stream

BASF posts strong results...BASF Capital Market Story September 2011 1 BASF posts strong results...

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