Value - BASF...expectations, prospects, competitive environment, regulation and supply and demand....
Transcript of Value - BASF...expectations, prospects, competitive environment, regulation and supply and demand....
We add value as one company
Oil & Gas
Agricultural Solutions
Functional Materials
& Solutions
Performance Products
Chemicals
Value
Andreas Kreimeyer Member of the Board of Executive Directors Roadshow London August 1, 2013
BASF Capital Market Story August 2013
Cautionary note regarding forward-looking statements
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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 August 2013
Business review BASF Today Trends Purpose and strategic principles Targets Strategic levers BASF Tomorrow – Board priorities
BASF Strategy: We create chemistry__November 2011
Overview BASF
Business review
BASF strategy & growth targets
Strategic levers
BASF Capital Market Story August 2013 4
Facts & figures
Customers in more than 200 countries and in virtually all industries
No 1-3 market position in over 75% of our businesses
Unique Verbund concept for integrated production - Six Verbund sites in all major regions - Production sites in 60 countries
High-quality management team - Senior executives from 37 countries
International, interdisciplinary R&D network
BASF – The Chemical Company
BASF Capital Market Story August 2013
Chemistry as an enabler BASF has superior growth
opportunities: - sustainable innovations - investments - emerging markets
Ambitious financial targets
The #1 chemical company €72.1 billion sales, €6.6
billion EBIT bSI in 2012* #1-3 in >75% of businesses,
present in >200 countries 6 integrated Verbund sites,
production in 60 countries
10 years of strong sales and earnings growth
18% average annual total shareholder return**
16% average annual dividend increase, >3% yield in every single year***
Performance
We create chemistry for a sustainable future
Perspective
** July 2003 – June 2013 *** for 2003-2012
Ludwigshafen, Germany
Antwerp, Belgium
Nanjing, China
Kuantan, Malaysia Geismar,
USA Freeport, USA
Verbund site
Positioning
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* restated numbers, reflecting IFRS 10/11 changes
BASF Capital Market Story August 2013
BASF today – a well-balanced portfolio Total sales 2012: €72.1 billion*
Percentage of sales 2012**
** Not depicted here: ~5% of Group sales reported as ‘Other‘ * Restated numbers, reflecting IFRS 10/11 changes, new segment structure effective Jan. 1, 2013
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BASF – balanced regional portfolio Total sales 2012: €72.1 billion*
* Sales by location of customer
Sales by region*
1
2
3
4
1 Europe 58%
2 Asia Pacific 16%
3 North America 20%
4 South America, Africa, Middle East 6%
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BASF Capital Market Story August 2013
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 ∼1.5 million tons
oil equivalent p.a. - Reduction of CO2-emissions
of ~3.4 million tons p.a.
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Unique ‘Verbund’ concept Cost savings of >€500 million p.a. in Ludwigshafen alone
BASF site Ludwigshafen, Germany Verbund Concept
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BASF Capital Market Story August 2013
* Other industries: approximately 10-15% of total sales
10 – 15 %
5 – 10 %
< 5 %
> 15% Chemicals and plastics Energy and resources
Transportation Consumer goods
Construction Agriculture
Health and nutrition Electronics
Balanced cross-industry customer portfolio (direct customers, in percent of sales)
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BASF Capital Market Story August 2013
Delivering attractive shareholder returns
Dividend of €2.60 per share for 2012
2003-2012: Average annual dividend increase of 16%
Attractive dividend yield of 3.7% in 2012**
Dividend yield above 3% in any given year since 2002, total payout almost €17 billion
* 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% 3.1%
2.50
0.70 0.85 1.00
1.50
1.95 1.951.70
2.20
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
10
2.60
Dividend per share (in €)
3.7%
** Based on BASF share price of €71.15 on Dec. 28, 2012
BASF Capital Market Story August 2013
Delivering consistent, long-term value
Average annual performance with dividends reinvested
0 3 6 9 12 15 18 21
Euro Stoxx 50
DAX 30
MSCI World Chemicals
+9.5%
Last 5 years July 2008 – June 2013
+14.1%
-1.6%
+4.4%
+2.5%
Last 10 years July 2003 – June 2013
BASF
+11.2%
+3.8%
+18.4%
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BASF Capital Market Story August 2013
BASF Today The leading chemical company
Track record of outperforming global chemical production growth
Active management of portfolio towards higher returns and less cyclicality
Strong and profitable growth in emerging markets
Focus on innovative products and solutions
Benchmark in operational excellence with unique Verbund concept
Strong earnings power, high cash flow generation and a strong financial profile
Generation of long-term attractive shareholder returns
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BASF Capital Market Story August 2013
Business review BASF Today Trends Purpose and strategic principles Targets Strategic levers BASF Tomorrow – Board priorities
BASF Strategy: We create chemistry__November 2011
Overview BASF
Business review
BASF strategy & growth targets
Strategic levers
BASF Capital Market Story August 2013
Q2 2013: BASF maneuvers well through challenging environment
Sales development Period Volumes Prices Portfolio Currencies
Q2’13 vs. Q2’12 5% 0% 0% (2%)
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Business performance Q2’13 vs. Q2’12 H1’13 vs. H1’12
Sales €18.4 billion +3% € 38.1 billion +4%
EBITDA €2.5 billion (1%) € 5.3 billion (8%)
EBIT before special items €1.8 billion (5%) € 4.0 billion +3%
EBIT €1.8 billion +6% € 3.9 billion (8%)
Net income €1.2 billion (4%) € 2.6 billion (11%)
Reported EPS €1.26 (4%) € 2.83 (11%)
Adjusted EPS €1.40 (12%) € 3.07 (2%)
Operating cash flow €2.0 billion +6% € 4.0 billion +18%
BASF Capital Market Story August 2013
Regional Business Development H1 2013
* Sales by location of customer
Sales by region* H1’13 vs. H1’12 Europe €21.4 billion +5%
thereof Germany €7.6 billion (3%) North America €7.6 billion +4% Asia Pacific €6.2 billion 0% South America, Africa, €2.8 billion +3%
Middle East Total €38.1 billion +4%
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BASF Capital Market Story August 2013
2003 2004 2005 2006 2007 2008 2009** 2010 2011 2012 H1 2013
Strong free cash flow generation
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* 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 €
2.8 2.6
3.3 3.5 3.2
2.5
3.2
3.9 3.7
2.6 2.1
BASF Capital Market Story August 2013
We do not expect that global economic growth will accelerate in the second half of 2013
Nevertheless, BASF is targeting for 2013 to exceed the 2012 levels in sales and EBIT before special items in a volatile economic environment
Our focus on growth markets and innovation, in combination with our measures to improve operational excellence and raise efficiency, will contribute to this
We aim to earn a high premium on cost of capital in 2013
Outlook 2013
GDP: +2.0% (reduced from 2.4%)
Industrial production: +2.7% (reduced from 3.4%)
Chemical production: +3.1% (reduced from 3.6%)
US$ / Euro: 1.30 (unchanged)
Oil price (US$ / bbl): 105 (reduced from 110)
Assumptions 2013
Outlook 2013
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BASF Capital Market Story August 2013
Business review BASF Today Trends Purpose and strategic principles Targets Strategic levers BASF Tomorrow – Board priorities
BASF Strategy: We create chemistry__November 2011
Overview BASF
Business review
BASF strategy & growth targets
Strategic levers
BASF Capital Market Story August 2013
Key financial targets 2015 / 2020 are ambitious
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
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BASF Capital Market Story August 2013
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
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BASF Capital Market Story August 2013
Business review BASF Today Trends Purpose and strategic principles Targets Strategic levers BASF Tomorrow – Board priorities
BASF Strategy: We create chemistry__November 2011
Overview BASF
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 August 2013
Portfolio development We expand from chemicals to chemistry
Chemistry as key enabler for functionalized materials & solutions
Deep understanding of customer value chains required
New molecules
Improved applications
Functionalized materials & solutions
1960 1970 1980 1990 2000 2010 2020
Batteries, membranes ...
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BASF Capital Market Story August 2013
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.
Functionalized Materials & Solutions Customized Products Classical Chemicals
2020 in % of sales**
Chemical Industry First customer industries*
2010 in % of sales**
~ 40%
~ 30% ~ 70%
2001 in % of sales**
~ 50%
~ 60%
~ 50%
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BASF Capital Market Story August 2013
Engineering plastics Electronic chemicals Catalysts Construction chemicals Water-based resins Pigments Plastic additives Oil & Gas Personal care & food Battery materials Functional crop care Omega-3 fatty acids
BASF core business
Strong partnerships
Gazprom Monsanto Petronas Shell Sinopec Total
Selected transactions 2001 − today*
Acquisitions
~ €15bn sales ~ €10bn sales**
Divestitures
Pharma Fibers Printing systems Polyolefins Polystyrene Americas Agro generics Vitamins premix Fertilizers Styrenics (transferred into
Styrolution JV on Oct. 1, 2011)
Construction equipment, flooring systems
** without Styrenics
Portfolio development Towards more market driven and innovative businesses
24 * only closed deals have been considered
BASF Capital Market Story August 2013
Ongoing portfolio development
Crop protection investments (China, BR)
Aroma ingredients investment, Kuantan
Transactions with Statoil and Gazprom
Restructuring in Performance Products
Photo: Øyvind Hagen
BASF Capital Market Story August 2013
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
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* Excluding Oil & Gas, Crop Protection and Other ** Nutrition & Health sales predominantly into Health & Nutrition market
Petro- chemicals
Performance Materials
Bubble Size: BASF divisional sales by first customer industry (2012)*/**
BASF Capital Market Story August 2013
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: ‘Smartforvision’ Technology competencies combined with customer know-how
Daimler & BASF concept car ‘Smartforvison’
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BASF Capital Market Story August 2013
Joint development with adidas, illustrating our customer focus
New energy cushioning material, provides highest energy return in the running industry
Solid granular material* is ‘blown up’, turned into 1000’s of small energy capsules
With their unique cell structure, these energy capsules store and unleash energy more efficiently in every stride
New shoe is available in stores since February, 2013
Innovation with adidas: Infinergy™ Technology competencies combined with customer know-how
Key facts
Photo: adidas * TPU (Thermoplastic polyurethane) 28
BASF Capital Market Story August 2013
1.4 1.4 1.5
1.6 1.7
0,0
0,5
1,0
1,5
2,0
2008 2009 2010 2011 2012
€1.7 billion R&D expenditures in 2012, further increase planned for 2013
~10,500 employees in R&D
~3,000 projects
Research Verbund: Cooperations with 600 excellent partners from universities, start-ups and industry
Sales targets 2015 and 2020: - €10 billion from innovations introduced since 2011 - €30 billion from innovations introduced since 2011
Strong commitment to R&D Innovations for a sustainable future
Key facts R&D expenditures (billion €)
Chemicals 10%
Performance Products 20%
Functional Mat. & Sol. 20%
Agricultural Solutions 25%
Oil & Gas 2%
Corporate Research 23%
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BASF Capital Market Story August 2013
Health & Nutrition
Consumer Goods Construction Transportation Electronics Energy &
Resources Agriculture
Customer industries
Water solutions
Heat management
Enzymes Plant biotechnology
Batteries for mobility
Lightweight composites
Functional crop care
Medical Organic electronics
Growth Fields*
E-Power management
Wind energy
Chemistry as an enabler: Growth Fields Innovations for a sustainable future
Resources, Environment & Climate Food & Nutrition Quality of life
Chemistry as enabler
* including growth fields still under evaluation
Materials Systems & Nanotechnology
Raw Material Change
White Biotechnology
Techno-logy
fields
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BASF Capital Market Story August 2013
Battery materials will play a key role in advancing electromobility of the future Focus and target Focus: Advanced cathodes and electrolytes development for lithium-ion
batteries, as well as next-generation battery systems Target: Position BASF as a leading global solution provider for battery
and cell manufacturers
Business potential 2020 Overall market size: >€20 billion globally (~€16 billion in Asia Pacific) SRM size: >€5 billion globally (~€4 billion in Asia Pacific) BASF sales potential: >€500 million globally (~€350 million in Asia Pacif.)
Activities Acquisition of Novolyte Technologies, Merck’s electrolyte business,
Ovonic, equity position in Sion Power Sites in US, Europe, China. New electrode materials plant in Elyria, Ohio New electrolytes R&D laboratory and Application Technology Center for
Battery Materials starting up in Amagasaki, Japan, 2013 Ongoing collaboration with leading universities, institutes and industry
partners, as well as battery producers and OEMs
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BASF Capital Market Story August 2013
Future investments (€ billlion)
Thereof investments in emerging markets
Total investments
35-45%
15-20
30-40%
~15
2006 – 2010 2011 – 2015 2016 – 2020
10.9
~20%
Investments … will boost future organic growth
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BASF Capital Market Story August 2013
Expansion Verbund site Nanjing, China*
MDI plant Chongqing, China
* Memorandum of Understanding signed
TDI plant Ludwigshafen, Germany
Investments Major projects
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Expansion oil & gas activities
Aroma Ingredients Kuantan, Malaysia
Acrylic acid complex Camacari, Brazil
BASF Capital Market Story August 2013
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 …
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BASF Capital Market Story August 2013
Operational excellence STEP program on track: ~€1 billion earnings contribution by 2015
Annual earnings contribution (€ million)
0
1,000
2,000
3,000
2012 2015
Former cost saving programs NEXT STEP
Targeted annual earnings contribution of ~€1 billion by end of 2015
Project timeline: 2012–2015 Program is on track Measures to optimize processes and
structures in all regions, e.g. − manufacturing, maintenance − supply chain − engineering, best-cost country sourcing
One-time costs & investments: ~€1 billion
NEXT Program
STrategic Excellence Program ‘STEP’
NEXT program successfully completed Annual earnings contribution of
~€1 billion achieved in 2012
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BASF Capital Market Story August 2013
Appendix
Business development Q2 2013
BASF Capital Market Story August 2013
Chemicals Lower earnings due to weaker demand
Intermediates 716 (5%)
Monomers 1,618 (1%)
Petrochemicals 1,849 (6%)
€4,183 (4%)
Q2’13 segment sales (million €) vs. Q2’12
Sales development Period Volumes Prices Portfolio Currencies
Q2’13 vs. Q2’12 1% (4)% 0% (1%)
37
EBIT before special items (million €)
601 569445
650
495
0
200
400
600
800
Q2 Q3 Q4 Q1 Q2
2013 2012
BASF Capital Market Story August 2013
Performance Products Restructuring measures ongoing
Performance Chemicals
923 (2%)
Care Chemicals 1,232 +1%
€4,032(1%)
Paper Chemicals 370 (9%)
Q2’13 segment sales (million €) vs. Q2’12
Nutrition & Health 544 +7% Dispersions
& Pigments 963
(4%)
EBIT before special items (million €)
Sales development Period Volumes Prices Portfolio Currencies
Q2’13 vs. Q2’12 2% (2%) 1% (2%)
2013 2012
442
344
183
379 394
0
200
400
600
Q2 Q3 Q4 Q1 Q2
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BASF Capital Market Story August 2013
Functional Materials & Solutions Continued good demand from the automotive industry
Catalysts 1,463 0%
Construction Chemicals
589 (5%)
Coatings 752
+3%
€4,503+2%
Q2’13 segment sales (million €) vs. Q2’12
Sales development Period Volumes Prices Portfolio Currencies
Q2’13 vs. Q2’12 3% 2% (1%) (2%)
Performance Materials 1,699 +7%
216 231 228 239293
0
200
400
600
Q2 Q3 Q4 Q1 Q2
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EBIT before special items (million €)
2013 2012
BASF Capital Market Story August 2013
Agricultural Solutions Attractive offering meets strong demand
Q2’13 segment sales (million €) vs. Q2’12
Sales development Period Volumes Prices Portfolio Currencies
Q2’13 vs. Q2’12 14% 3% 3% (2%)
0
200
400
600
Q2 Q20
500
1.000
1.500
2.000
Q2 Q2
1,727 485 414 1,467
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EBIT before special items (million €)
2013 2012 2013 2012
BASF Capital Market Story August 2013
88
208
59
280
0
100
200
300
400
Q2/2012 Net Income Q2/2013 Net Income
Oil & Gas Higher production volumes drive earnings
Exploration & Production
525 (10%)
Natural Gas Trading 2,311 +17%
€2,836 +10%
Q2’13 segment sales (million €) vs. Q2’12 EBIT bSI/Net income (million €)
Natural Gas Trading
Exploration & Production
Net income
Sales development Period Volumes Prices/Currencies Portfolio
Q2’13 vs. Q2’12 10% 0% 0%
330
242 323
382
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BASF Capital Market Story August 2013
Review of “Other”
Million € Q2’13 Q2’12 Sales 1,072 968 EBIT before special items (217) (66) thereof Corporate research Group corporate costs Currency results, hedges and other valuation effects Other business
(97) (58) (63)
37
(94) (61)
92
25
Special items 3 (117)
EBIT (214) (183)
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BASF Capital Market Story August 2013
Strong operating cash flow in H1 2013 Million € H1’13 H1’12 Cash provided by operating activities 4,030 3,411 thereof Changes in net working capital Miscellaneous items
(633) 646
(633) (407)
Cash provided by investing activities (2,582) (1,035) thereof Payments related to tangible / intangible assets (1,884) (1,616) Acquisitions / divestitures (516) 430 Cash used in financing activities (823) (2,246) thereof Changes in financial liabilities Dividends
1,762 (2,585)
205 (2,446)
Net working capital impacted by lower inventories and higher accounts receivables Strong free cash flow of €2.1 billion, despite higher capex (+€268 million) Dividend payments to BASF SE shareholders amounted to €2.4 billion Net debt increased by €1.3 billion to €12.5 billion; equity ratio of 41%
First half 2013
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BASF Capital Market Story August 2013
Appendix
Impact of IFRS 10 & 11 changes on medium- and long-term sales & earnings targets of BASF Group
BASF Capital Market Story August 2013
Key financial targets 2015 / 2020 Impact of new IFRS 10/11 regulations
Sales (billion €)
* communicated during ‚We Create Chemistry‘ Investor Day on November 29, 2011
∆ = IFRS 10/11 impact
EBITDA (billion €)
~79 ~85
~115
~72 ~80
~110
0
20
40
60
80
100
120
∆ -7 ∆ -5
∆ -5
2012 2012 restated
2015* 2015 adjusted
2020* 2020 adjusted
~12.5
~15
~23
~10
~14
~22
0
5
10
15
20
25
2012 2012 restated
2015* 2015 adjusted
2020* 2020 adjusted
∆ -2.5
∆ -1
∆ -1 ∆ = IFRS 10/11 impact
The 2015 EPS target of €7.50 is unchanged
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BASF Capital Market Story August 2013
Appendix
Additional information from Investor Day Asia Pacific
(June 5-6, 2013)
BASF Capital Market Story August 2013
Customers from 17 countries
More than 100 production sites
148 sales offices*
~16,400 employees, thereof 800 R&D staff
Sales in 2012: ~€12.5 billion**
EBITDA in 2012: €1.2 billion***
BASF in Asia Pacific
* Some sites are not shown due to scale. Site and office numbers refer to companies of significant size where BASF holds a stake greater than 50% .
** Sales by location of customer
*** EBIT by location of company
All figures for 2012 have been adjusted to changes in IFRS 10 & 11
Regional headquarters
Verbund site
Production site
R&D/Technical center
Asia Pacific service center
Singapore
Hong Kong
Japan South Korea
Mongolia
China
Pakistan
India
Sri Lanka
Bangladesh
Thailand Vietnam Philippines
Indonesia
Taiwan
Malaysia
Australia
New Zealand
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BASF Capital Market Story August 2013
Chemical market in Asia Pacific is dominated by local players
1 Sinopec 44.9 Chemical Segment only
2 Mitsubishi Chemicals 29.7 estimated (business year April - March)
3 Formosa Chemicals 23.7 Formosa Petrochemical Corp. only
4 ChemChina 19.9 2011
5 Sumitomo Chemicals 18.3 estimated (business year April - March)
6 LG Chem 16.1
7 Toray 15.5
8 BASF 14.9 adjusted to changes in IFRS: €12.5 bn
9 Mitsui Chemicals 13.0 estimated (business year April - March)
10 Reliance Chemicals 12.8 Petrochemical segment only; business year April - March
Chemical Sales in Asia Pacific in 2012 (€ billion)
Top 10 chemical producers in Asia Pacific
Source: BASF, Company reports
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BASF Capital Market Story August 2013
Innovation ~3,500 R&D staff
Market €25 billion sales
Portfolio >€2 billion sales from
new biz and acquisitions
People ~9,000 new jobs
Investment 75% OMP ratio
Excellence €1 billion cost savings
We create chemistry in Asia Pacific: 2020 targets
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BASF Capital Market Story August 2013
2020 2012 restated
New Business & Acquisitions
Organic Growth
Sales contributions € billion
Asia Pacific Organic growth drives top line growth
2012 restated = adjusted to changes in IFRS 10 & 11
New Sales Target: €25 billion
€12.5 billion
CAGR ~9%
>€2 billion >€10 billion
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BASF Capital Market Story August 2013
Major investment projects Asia Pacific
MDI plant Location: Chongqing, China Planned start-up: 2014 Investment: ~€860 million
Isononanol (INA) plant Location: Maoming, China Planned start-up: 2015
Aroma ingredients complex Location: Kuantan, Malaysia Planned start-up: 2016 Investment: US$500 million (100%)
Expansion of Verbund site Location: Nanjing, China Feasibility studies ongoing Investment: up to US$1 billion (100%)
Polyurethanes, Surfactants & Dispersions Location: Dahej, India Planned start-up: 2014 Investment: €150 million
BASF Capital Market Story August 2013
Address specific R&D areas for BASF in Asia Pacific
Electronics Agro
Catalysts Polymers & Materials
Mining Water
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BASF Capital Market Story August 2013
Expand research capabilities in Asia Pacific with new R&D centers
R&D Center Korea (2013) Focus: electronics
R&D Center Singapore (2007) Focus: water, membrane, oilfield
R&D Center Australia (2012) Focus: mining
Innovation Campus Asia Pacific, Shanghai (2012) Focus: polymers & materials
Innovation Campus Asia Pacific, India (in planning) Focus: life science, agro
R&D Center Japan (2013) Focus: battery materials
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BASF Capital Market Story August 2013
Appendix
Additional information on transactions in Oil&Gas
BASF Capital Market Story August 2013
Oil & Gas business provides significant advantages for BASF
Oil & Gas
Strong contributor to BASF’s profitable
growth
Hydrocarbon hedge
Technological synergies through
BASF research Verbund
Significant cash flow
and long-term
profitability
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BASF Capital Market Story August 2013
A clear strategy for profitable growth Focus business on highly profitable upstream
activities and deliver medium-term earnings uplift Continue production growth
– Main growth focus is on Russia and in the North Sea – Develop Middle East and Caspian Sea Region to core region – Maintain production in Rest of Europe, North Africa and South America
Emphasize operations in core and development regions
Secure reserve/resource base by organic growth and acquisition through – Development of Achimov deposits Blocks IV and V in Western Siberia – Transaction with Statoil in Norway and takeover operatorship – Oil discoveries Hibonite (DK) and F 17a (NL)
Enter new strategic partnerships – e.g. Statoil (unconventionals and technology)
Become a leading player in selected technologies and leverage BASF know-how
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BASF Capital Market Story August 2013
Wintershall and Gazprom agree on asset swap relating to the Blocks IV and V in the Achimov formation of the Urengoi natural gas and condensate field
Wintershall to receive: − 25% plus one share in the Blocks IV and V in the Achimov formation
with the option to increase the share in the two deposits.
Gazprom to receive: − 50% share in Wintershall Noordzee, which is active in the exploration
and production of oil and gas in the southern North Sea (Netherlands, UK, Denmark)
− 50% shares (thus taking over 100%) in the gas trading companies WINGAS, WIEH and WIEE, including shares in the natural gas storage facilities in Rehden and Jemgum, Germany, as well as Haidach, Austria, and the gas storage operator astora
Closing expected by the end of 2013; effective date April 1, 2013. Transaction is subject to approval by the relevant authorities
Ownership of gas transportation business unaffected
Asset swap with Gazprom
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BASF Capital Market Story August 2013
Asset swap with Gazprom Strategic rationale
BASF invests in markets/products with unique selling
propositions - especially by applying advanced technologies
The Natural Gas Trading business became a commodity market with increasing pressure on margins and limited possibilities to add value
Focuses BASF’s Oil & Gas business on highly profitable upstream exploration and production activities and delivering medium-term earnings uplift
Provides access to attractive, condensate-rich Achimov assets
Significantly increases Wintershall’s resource base
Further strengthens the strategic partnership with Gazprom and Wintershall’s focus on Russia as a core region for Oil & Gas
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BASF Capital Market Story August 2013
Key field data: − Target field depth: ~3,600 meters − Total resources Blocks IV and V: 2.4 billion boe
− 274 billion m³* of natural gas − 74 million tons of condensate
BASF share (600 million boe) equivalent to approx. 20% of total BASF hydrocarbon resource base as at Dec 31, 2012
Plateau production potential of >8 billion m³* p.a. in total for the two additional blocks
Synergies through regional and technological expertise of both partners
Start of production is planned for 2016
* Russian Standard Conditions (RSC)
Asset swap with Gazprom Achimov Blocks IV and V – Next step for further growth
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BASF Capital Market Story August 2013
Transaction with Statoil
Wintershall enters into a cooperation with Statoil − Memorandum of Understanding signed in October 2012
Wintershall substantially expands production and reserves of oil and gas in the North Sea
Wintershall acquires equity in three producing fields from Statoil − Brage (32.7%), Gjøa (15%) and Vega (30%) − production of about 36,000 boepd − 100 million boe 2P reserves net to Wintershall (50% liquids; 50% gas)
Statoil receives − 15% share in the development project Edvard Grieg (Wintershall share today 30%) − $1.35 billion financial compensation. Plus up to $100 million contingent payment in case of successful future
development of Vega, depending on additional volumes
Closing expected on July 31, 2013; effective as of 1st January 2013
Joint research into innovative techniques for EOR and possible application of the biopolymer Schizophyllan, developed by Wintershall and BASF
Joint research into unconventional hydrocarbon resources (shale gas/oil) starting with Statoil’s 49% farm-in to the Wintershall “Rheinland” and “Ruhr” concessions in Germany. Intention to expand these joint activities in other countries
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BASF Capital Market Story August 2013
Transaction with Statoil Strategic rationale
Strengthen Wintershall’s position in Norway by accessing three producing oil and gas fields
Accelerate near-term oil production of Wintershall Norge from currently around 3,000 boepd to ~40,000 boepd
By taking over operatorship of Brage field, Wintershall gets first own-operated producing field in Norway
Asset swap significantly increases Wintershall’s operating cashflow and EBIT in Norway
Wintershall reduces near-term investment requirements through divestment of 15% stake in Edvard Grieg field
Statoil’s and Wintershall’s combined knowledge on EOR and unconventional hydrocarbons could lead to new business opportunities
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Transaction with Statoil Impact on portfolio of major fields
Catcher 20% share Premier*
Cladhan 33.5% share Sterling*
Edvard Grieg 30% share -15% out Lundin*
Astero 25% share Statoil*
Knarr 20% share BG*
Beta 15% share Suncore Energy*
Crathes/ Scolty 50% share EnQuest*
Maria 50% share Wintershall*
Skarfjell 35% share Wintershall*
Grosbeak 45% share Wintershall*
Vega 30% share Statoil*
Brage 32.7% share Wintershall to be operator
Gjøa 15% share GDF Suez*
Bergen
Assets In
Asset Out
Main Existing Assets
Broom 29% share EnQuest*
* Operator 62
BASF Capital Market Story August 2013
Appendix
Additional information on acquisition of Becker Underwood (closing in November 2012)
BASF Capital Market Story August 2013
Acquisition of Becker Underwood Transaction - at a glance
BASF acquires US-based Becker Underwood (BU) for a purchase price of $1.02 billion (€785 million) from Norwest Equity Partners. 100% cash consideration, no financing conditions.
BU is a global market leader in biological seed treatment and biological foliar crop protection. BU sales 2012E* $240 million (€185 million)
Closing is expected by year-end 2012, pending approval by the relevant merger control authorities.
The transaction strengthens BASF’s position as solution provider in Agro.
BU adds further momentum to BASF’s strongly growing Seed Solutions business and it complements BASF’s portfolio with biological crop protection solutions. BASF’s strong sales channels ensure broad market reach.
BASF’s Seed Solutions business will benefit from BU’s R&D platform and expertise.
* Becker-Underwood’s fiscal year ends September 30
1. Cornerstones
2. Rationale
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BASF Capital Market Story August 2013
1.
One of the strongest growing, most attractive markets in Crop Protection.
BASF’s Seed Solutions business has outgrown the market. Sales 2011: €248 million. 2007-2011: +24 % CAGR, average market growth 2007-2011: +11 % CAGR*
The transaction will further strengthen BASF’s Seed Solutions business. BASF will be able to provide innovative solutions covering seed protection as well as offerings beyond (e.g. inoculants or polymer coatings). Thus BASF will establish multiple touch points with key seed companies.
2.
Biological crop protection compounds become more important, especially in high value crops, such as fruits or vegetables.
BU‘s portfolio of biological fungicides and insecticides complements BASF‘s offering of chemical crop protection products. BASF will develop innovative combined solutions of chemical and biological crop protection.
Acquisition of Becker Underwood A good fit to BASF
* BASF estimate
Seed Treatment
Biological Crop Protection
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BASF Capital Market Story August 2013
Appendix
Additional information on acquisition of Pronova Biopharma (closing in January 2013)
BASF Capital Market Story August 2013
Pioneer and leading company in highly concentrated omega-3 fatty acids.
Sales of €214 million and an EBITDA of ~€90 million in 2011.
Sales in more than 50 countries with one blockbuster product, mainly sold as Omacor® by Abbott in Europe and as Lovaza™ by GSK in the US.
Excellent cost position due to two state of the art production sites in Norway and Denmark (total capacity: 2,500 tons p.a.).
Strong R&D know-how to develop the next generation of omega-3 solutions – a platform for pharmaceuticals, dietary supplements and clinical nutrition.
Pronova ̶ at a glance
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BASF Capital Market Story August 2013
Acquisition of Pronova Biopharma ASA completed by January 31st 2013
BASF now market leader in the profitable, growing markets of high concentrated fatty acids
Pronova completes our Verbund concept for fatty acids consisting of former Cognis and Equateq Sites: - Cost-effective use of side streams and intermediates between sites - Strong technology and cost position - Market access to both Pharma and Human Nutrition customers
Untapped market space for higher concentrated omega-3-fatty acids in the attractive Dietary Supplement segment
Pharma
Human Nutrition
Lampertheim
Sandefjord Callanish
Ballerup
Lysaker
Kalundborg
Brattvaag
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BASF Capital Market Story August 2013
Appendix
Additional information on restructuring of Performance Products
BASF Capital Market Story August 2013
Water and oilfield & mining activities merged into new global business unit on April 1, 2013
Leather & textile chemicals: concentration of R&D activities at Shanghai Innovation Campus
Plastic additives and pigments businesses: downsizing of Swiss operations and R&D activities
Total net headcount reduction of about 500 positions by the end of 2015
Restructuring measures to strengthen competitiveness of Performance Products
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BASF Capital Market Story August 2013 71