We add value as one company - BASF – United States...BASF Capital Market Story, May 2016 13 150...

BASF Capital Market Story, May 2016 1

We add value as one company

Martin LiedemitDeputy Head of

Investor Relations

Kepler Cheuvreux

One Stop Shop

Dublin

May 11, 2016


150 years

Cautionary note regarding

forward-looking statements

This presentation may contain forward-looking statements that are subject to risks and

uncertainties, including those pertaining to the anticipated benefits to be realized from the

proposals described herein. Forward-looking statements may include, in particular, statements

about future events, future financial performance, plans, strategies, expectations, prospects,

competitive environment, regulation and supply and demand. BASF has based these forward-

looking statements on its views and assumptions with respect to future events and financial

performance. Actual financial performance could differ materially from that projected in the

forward-looking statements due to the inherent uncertainty of estimates, forecasts and

projections, and financial performance may be better or worse than anticipated. Given these

uncertainties, readers should not put undue reliance on any forward-looking statements. The

information contained in this presentation is subject to change without notice and BASF does

not undertake any duty to update the forward-looking statements, and the estimates and

assumptions associated with them, except to the extent required by applicable laws and

regulations.


150 years

Chemistry as an enabler

BASF has superior growth

opportunities:

– sustainable innovations

– investments

– emerging markets

The #1 chemical company

€70.4 billion sales, €6.7

billion EBIT bSI in 2015

#1-3 in ~70% of businesses,

present in almost all

countries

6 integrated Verbund sites,

production in 60 countries

A track record of strong

sales and earnings growth

>3.5% dividend yield in

every single year from

2006-2015

~€66 billion market

capitalization on April 29,

2016

Perspective

Ludwigshafen,

Germany

Antwerp,

Belgium

Nanjing,

China

Kuantan,

MalaysiaGeismar,

Louisiana

Freeport,

Texas

Verbund site

Positioning

We create chemistry

for a sustainable future

Performance

20

30

40

50

60

70

80

90

2008 2009 2010 2011 2012 20142013 2015


150 years

Percentage of sales 2015*

* Not depicted here: ~4% of Group sales reported as ‘Other‘ ** Natural Gas Trading has been divested on Sep. 30, 2015.

BASF today – a well-balanced portfolioTotal sales 2015: €70.4 billion


150 years

Global reduction in carbon

emissions of 6 million metric

tons p.a. and reduction of

waste

Example Ludwigshafen site:

avoidance of 7 million metric

tons of freight p.a.

= 280,000 fewer truckloads

Shared use of on-site facilities:

fire department, security, waste

water treatment and analytics

Verbund: Unique competitive advantage

* Savings include only tangible synergies. Additional (intangible) benefits and retained profits are not included.

Verbund generates >€1 billion p.a. global cost savings* & supports sustainability


150 years

0

1

2

3

4

5

2006 2007 2008 2009** 2010 2011 2012 2013 2014 2015

Strong free cash flow development 2015

* Cash provided by operating activities less capex

** 2009 adjusted for re-classification of settlement payments for currency derivatives

Free cash flow*

(in billion €)

3.53.2

2.5

3.2

3.93.7

2.6

3.2

1.7

3.6


150 years

Priorities 2016

Focus on capex discipline:

─ Reduce capital expenditures to €4.2 billion in 2016

Cost control and operational excellence:

─ DrivE targeting ~€1 billion annual earnings contribution

from end of 2018 on

Portfolio optimization ongoing:

─ E.g. agreement to sell industrial coatings business to AkzoNobel

Strong commitment to innovation:

─ Maintain R&D spending at ~€1.95 billion in 2016


Q1 2016 reporting

Business development

Path forward: Our priorities


150 years

Sales development Volumes Prices Portfolio Currencies

Q1 2016 vs. Q1 2015 0% (6%) (22%) (1%)

Q1 2016: BASF with slightly lower earnings

compared to strong prior-year quarter

Financial figures Q1 2016 Q1 2015 Change

Sales €14.2 billion €20.1 billion (29%)

EBITDA €2.8 billion €2.9 billion (3%)

EBIT before special items €1.9 billion €2.1 billion (8%)

EBIT €1.9 billion €2.0 billion (6%)

Net income €1.4 billion €1.2 billion +18%

Reported EPS €1.51 €1.28 +18%

Adjusted EPS €1.64 €1.43 +15%

Operating cash flow €1.0 billion €2.4 billion (56%)


150 years

Milestones in Q1 2016

Start-up of butanediol plant at the integrated

PolyTHF complex in Korla, China

JV with Avantium intended for production of

furandicarboxylic acid (FDCA) in Belgium

Update of peak sales potential for product

launches in Agricultural Solutions

Joint operation of polyoxymethylene (POM)

with Kolon Plastics planned in Korea


150 years

Outlook 2016

Sales will be considerably below prior year, due to the divestiture of the natural gas trading

and storage activities and the lower oil and gas prices. Excluding the effects of acquisitions

and divestitures, we expect higher volumes in all segments.

We expect EBIT before special items to be slightly below the previous year driven by

drastically lower earnings of Oil & Gas. We plan higher earnings in our chemicals business

and in the Agricultural Solutions segment.

EBIT after cost of capital is expected to be significantly below prior year. However, we still

expect to earn a premium on our cost of capital.

Assumptions 2016

GDP growth: +2.3%

Growth in industrial production: +2.0%

Growth in chemical production (excl. pharma): +3.4%

Exchange rate: $1.10 per euro

Oil price (Brent): $40 per barrel

Outlook 2016 confirmed


Q1 2016 reporting




150 years

Components of growth

* 2010, 2011 indicative, adjusted for IFRS 10 & 11

59.6

70.4

+10.5-1.4 +2.6 -0.9

20

40

60

80

2010 2015

Volumes

PricesFX M&A

Sales* analysis 2010 – 2015

(in billion €)

(in billion €) Net sales 2010 Volumes Prices FX M&ASales CAGR

2010 - 2015

BASF Group

w/o Oil & Gas51.4

+2.8 (+1.1% CAGR)

-0.9 +2.6 +1.6 +2.3%

Oil & Gas 8.2+7.7

(+14.2% CAGR)-0.5 +0.0 -2.5 +9.6%

3.4%

CAGR


150 years

Functional crop care

Personal care & food

Omega-3 fatty acids

Enzymes

Battery materials

Specialty plastics

Selected assets in Oil & Gas

BASF

core business

Strong partnerships

Gazprom

Monsanto

Petronas

Shell

Sinopec

Statoil

Total

Yara

Selected transactions

2010 − until today

Acquisitions

~ €4.5 billion salesin emerging and innovation-driven

businesses

Divestitures

Styrenics

Fertilizers

Selected assets in Oil & Gas

Natural gas trading & storage

Custom synthesis business

Industrial coatings

Textile chemicals

PP/PE catalysts

~ €20 billion sales*

in businesses with limited fit and differentiation

potential

Portfolio development towards more

market-driven and innovative businesses

* Includes sales of non-consolidated businesses (Styrenics, VNG participation)


150 years

Steady earnings growth

* 2010, 2011 indicative, adjusted for IFRS 10 & 11; 2001 – 2009 as reported, without non-compensable foreign income taxes on oil production

EBIT and EBITDA*

(in billion €, 2001 - 2015)

3.7

4.7 4.6

7.0 7.2

8.48.9

7.7

6.5

9.9

11.2

10.010.4

11.010.6

0

2

4

6

8

10

12

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EBITEBITDA

0.7

2.2 2.2

4.5 4.8

5.56.0

4.6

2.8

6.7

8.0

6.7 7.27.6

6.2

CAGREBITDA

7.9 %CAGREBIT

16.6 %


150 years

50

100

150

200

250

300

350

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Strong track record in operational

excellence

EBITDA

Sales

* Excl. companies with major IFRS 10/11 restatements, i.e. BASF YPC Nanjing, Libya onshore, other Oil & Gas and Catalysts companies

BASF Group* 2001–2015

(Index; CAGR 2001–2015)

Fixed Costs

CAGREBITDA

9%

CAGRSales

6%

CAGRFixed Costs

3%


150 years

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2006 2009 2012 2015

2.90

We want to grow or at least

maintain our dividend at the

previous year’s level

Dividend of €2.90 per share,

an increase of 3.6%

Dividend yield of 4.1% in 2015

Dividend yield above 3.5%

in any given year since 2006

4.6%

Attractive shareholder return

Key facts 2015

Dividend per share (€)

0.50

1.00

1.50

2.00

* Dividend yield based on share price at year-end

4.1% 3.8% 7.0% 3.9% 3.7%Yield* 3.7%

2.50

3.5%

3.00

4.0% 4.1%

1.50

1.95 1.95

1.70

2.20

2.50 2.60 2.70

Dividend policy

2.80


150 years

Average annual performance with dividends reinvested

0 3 6 9 12 15

Euro Stoxx 50

DAX 30

MSCI World Chemicals

+5.3%

Last 5 yearsMay 2011 – April 2016

+4.3%

+3.3%

+6.0%

+5.9%

Last 10 yearsMay 2006 – April 2016

BASF

+6.6%

+0.7%

+12.0%

Delivering consistent, long-term value


Q1 2016 reporting




150 years

.

Moderate GDP growth expected for 2016

– recovery in the medium term

1.8 1.7 1.8

2015 2016 2016-2018

6.2 5.7 5.8

2015 2016 2016-2018

-2.1 -1.7

0.6

2015 2016 2016-2018

2.4 2.1 2.4

2015 2016 2016-2018

European Union

United States

South America

Emerging Asia

Source: BASF

GDP growth in key regions

(in % per year)

2.4 2.3 2.7

2015 2016 2016-2018

World


150 years

Chemicals remains a growth industry

…more food needed

by 2050…more primary energy

consumption

by 2050

…of the world

population will live in

cities by 2050

Agriculture Health &

nutrition

Energy &

resources

Transportation Construction

& housing

Consumer

goods

Chemistry as enabler for current and future needs

…people

by 2050

Electrical &

Electronics

70% 50% ~10

bn30%


150 years

Emerging markets driving chemical

production growth above global GDP

0

1,000

2,000

3,000

4,000

5,000

2010 2015 2020 2025

+0%

+4%

+0%

+3%

+1%

+5%

+2%

+4%

+1%

+2%

+2%

Global GDP

CAGR:

2.6%

Global GDP

CAGR:

3.0%

Real chemical production excl. pharma

(in billion US$**)

CAGR*

3.7%

CAGR*

3.7%

CAGR*

3.8%

+5%

+3%

+3%

+1%

+2%

+2%

Global GDP

CAGR:

3.1%

+6%

Asia Pacific

South America

Middle East, Africa

Western Europe

Eastern Europe

North America

* Real chemical production excluding pharmaceuticals; ** Measured in value of 2010


150 years

Grow sales and earnings faster than global chemical production,

driven by

– Continued focus on innovations

– Capital expenditures

– Acquisitions

– Operational excellence and Verbund advantages

Focus on cash generation / conversion

Continue with our progressive dividend policy

Focus on pruning our portfolio

Maintain industry-leading position in sustainability

The path forward:

Our priorities


150 years

Managing volatility: BASF almost perfectly

hedged on hydrocarbon price changes

BASF production and consumption of oil and gas

(in million boe, 2015)

BASF hydrocarbon consumption almost equals hydrocarbon production

Production of oil, liquids and gas Consumption of oil derivatives and gas

153

>100

Natural

gas

Oil and

liquids

Natural gas for energy

and as raw material

Naphtha and

other oil-based

raw materials

40

113


150 years

0

100

200

300

400

500

2001 2002 2003 2004 2005 2006* 2007* 2008 2009 2010 2011 2012restated

2013 2014 2015

EBITDA margin Chemicals / oil price

Index 2001 = 100

Chemicals with stable profitability,

little correlation to oil price

EBITDA margin Chemicals

(as % of sales)

Oil price

* Without Catalysts (now part of Functional Materials & Solutions segment)


150 years

Strategic lever:

Continuous portfolio development

Specialties and

solutions

Differentiated

commodities

target(in % of sales*)

~ 50% ~ 50%

Keep a balanced portfolio

Divestment of

businesses

e.g. due to

loss of

differentiation

Divestment of

businesses

e.g. due to

lower market

attractiveness

Commoditization leads to

restructuring

Growth

fields

Innovation

pipeline

Acquisitions

* Excluding Oil & Gas sales

Attractive markets

Differentiation by process

technologies and integration

Attractive markets

Differentiation by customer

proximity and innovations


150 years

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 …

Strategic lever:

Acquisitions


150 years

Strategic lever:

Capital expenditures

Differentiated commodities

With proprietary technology and/or Verbund advantages

Focus on:

– emerging markets

– backward integration in the U.S.

– upgrading our asset base in Europe

Specialties and solutions

Incremental investments for new products

Regional expansion of businesses

Oil & Gas

Focus investment budget by active portfolio optimization to secure free cash flow

Keep reserve-to-production ratio of approx. 10 years


150 years

Investments for organic growth

Performance

Products

16%

Oil & Gas

24%

€19.5

billion

Functional

Materials &

Solutions

12%

Capex budget 2016-2020

Other

14%

Chemicals

30%

Capex budget 2016-2020

Asia Pacific

18%

€19.5

billion

South

America*

9%

North America

26%

Europe

46%

Agricultural

Solutions

4%

Other

1%

by segment by region

* Including Africa and Middle East


150 years

Strategic lever:

Innovations

Allow for creativity

Balance incremental und disruptive innovations

Manage innovation pipeline efficiently on all levels

Build on our global R&D Verbund

Leverage external collaborations even more

Align R&D activities with business models:

– Differentiated commodities

• Focus on improving processes and addressing raw material change

• Launch selected product innovations

– Specialties and solutions

• Develop new, tailored offerings in close collaboration with customers

• Pursue solution-oriented approach

Keep annual R&D spending at ~3% of sales*

* Without Oil & Gas


150 years

€1.95 billion R&D expenditures

in 2015; to be maintained in

2016

~10,000 employees in R&D

~3,000 projects

Ranked No.1 in the

Patent Asset Index™

~1,000 new patents in 2015

Research Verbund:

Cooperations with more than

600 excellent partners from

universities, start-ups

and industry

Strong commitment to innovationInnovations for a sustainable future

Key facts

1.6

1.71.8 1.9 1.95

0.0

0.5

1.0

1.5

2.0

2011 2012 2013 2014 2015

R&D expenditures

(billion €)

Chemicals

11%

Performance Products

20%

Functional Mat. & Sol.

20%

Agricultural Solutions

26%

Oil & Gas

2%

Corporate Research

21%

2.0

1.5

1.0

0.5

0


150 years

0

50

100

150

BASF Competitors

FWC™

Combines functionality of a 3-way

conversion catalyst with

integrated filter on a ceramic

substrate

Reduces gaseous emissions

Precious metal-based catalytic

coating removes exhaust gases

from engine emissions**

Removes particulates

Filters & combusts particulates

Complies with emissions limits

Helps automakers meet new

Euro 6c regulatory standards

FWC™ introduced in 2013

Sustains BASF’s leading

technology position

Leading position: Global mobile emissions catalysts patents*

* 2009 – 2013 ** Hydrocarbons, carbon monoxide, nitrogen oxides

*** https://www.basf.com/en/company/news-and-media/science-around-us/catalytic-converter.html

FWC™ reduces emission of gaseous pollutants and particulates

HC

CO

NOx

N2

H2O

CO2

Particulates

Innovation: Four-Way Conversion

Catalyst (FWC™)


150 years

Innovation: Green Sense®

Concrete for sustainable construction

En

vir

on

me

nta

l Im

pa

ct

Hig

h

Reference

Concrete

High Low

Lo

w

Total Cost of Ownership

BASF’s Green Sense® Concrete

system consists of:

1) Innovative admixture products

2) Concrete mix services

3) Eco-efficiency analysis

Replaces up to 70% of cement

with recycled materials

Superior eco-efficiency

Applied in the construction of

landmark projects, e.g. One

World Trade Center, NYC


150 years

Innovation: Trilon® MChelating agent for more sustainable detergents and cleaners

Trilon® M – alternative to phosphate for automatic

dish washing

High sustainability performance: bio-degradable and

eco-friendly

Fast growing global market demand driven by

regulatory changes and consumer demand

2010: Capacity expansion to 120,000 tons

2015: Start-up of a new Trilon® M world-scale plant in

Theodore, Alabama

Compared with alternative chelating agents Trilon® M

Is readily bio-degradable

Meets eco-label requirements

Has better eco-toxicology profile

Shows high performance


150 years

Innovation: SAVIVA™ Highly efficient Superabsorbent Polymers (SAP)

SAVIVA™ – based on a pioneering SAP technology

platform

SAVIVA™ the next generation of SAP

Round-shaped particles with micro-pores initiates

innovative liquid distribution mechanism

Compared to other SAPs SAVIVA™ leads to:

Efficiency gains:

– SAP reduction

– Fluff reduction

– Reduction of storage, packaging and transportation

costs

Improved sustainability:

– Better carbon footprint due to SAP and weight

reduction

– Enabler for future diaper designs offering a new

level of comfort and dryness

SAVIVA™ round shaped particle


150 years

Lower production cost than

industry average

Efficiency gains:

– run-time extension

– higher throughput

– lower energy consumption

Proprietary technology,

new process protected by

280 active patent families

4 out of 6 production sites

already equipped: Ludwigs-

hafen, Antwerp, Nanjing and

Camaҫari (Brazil)

Innovation: New acrylic acid technologyBASF with best-in-class acrylic acid process

80

85

90

95

100

BASFnew process

BASFclassic process

Industry average

Acrylic acid production technology benchmark

(Industry average costs = 100; normalized)Key facts

Source: BASF estimate


150 years

2.2% 0.2%

Novel methodology to screen

and steer our portfolio*

26.6% Accelerators:

– outgrow their markets

by 2-10%

– deliver margins >10%

above the average

– represent >60% of BASF’s

R&D pipeline

71% Performers

<1% Challenged products

* More than 60,000 product applications analyzed representing €64.9 billion in sales or 95.4% of BASF’s portfolio.

Increase the share of Accelerators from 23% in 2014 to 28% by 2020

Strategic lever: Sustainability

Sustainable Solution Steering

26.6%

71.0%

Substantial sustainability

contribution in the value chain

Meets basic sustainability

standards in the market

Specific sustainability issue

which is actively addressed

Significant sustainability concern,

action plan in development

Sustainable

Solution

Steering


150 years

0

1,000

2,000

3,000

4,000

2015 2018

Annual earnings contribution

(in million €) Targeted annual earnings

contribution of €1 billion from

end of 2018 on

Optimization of processes and

structures in all regions, e.g.

– manufacturing

– incremental capacities

– productivity increase

Project timeline: 2016–2018

DrivE program

Strategic lever: Operational excellence

DrivE with ~€1 bn earnings contribution

NEXT 2008-2011 DrivE 2016-2018

STEP 2012-2015


150 years

Profitability of BASF will grow faster than

global chemical production

Sales growth

Slightly faster than the global chemical production

EBITDA growth

Well above global chemical production

Remain a strong cash provider

Continuously generate high levels of free cash flow

Financial targets for next years

Deliver attractive returns

Earn a significant premium on cost of capital

Progressive dividend policy

We want to grow or at least maintain our dividend


Appendix I – Q1 2016 reporting


150 years


Q1 2016 vs. Q1 2015 (3%) (16%) 0% 0%

Intermediates

646

(12%)

Monomers

1,307

(18%)

Petrochemicals

1,196

(22%)

€3,149

(19%)

EBIT before special items

million €

726

548

633

249

465

0

200

400

600

800

Q1 Q2 Q3 Q4 Q1

20162015

Sales Q1 2016 vs. Q1 2015

million €

ChemicalsLower margins and higher fixed costs result in considerably

decreased earnings


150 years


Q1 2016 vs. Q1 2015 1% (4%) (2%) (1%)

Performance

Chemicals

955

(10%)

Performance ProductsIncrease in earnings by 6%, supported by successful

restructuring

Care

Chemicals

1,204

(7%)

€3,783

(6%)Nutrition

& Health

488

(5%)

Dispersions

& Pigments

1,136

(2%)

515

304 319

228

547

0

200

400

600

Q1 Q2 Q3 Q4 Q1

Sales Q1 2016 vs. Q1 2015

million €


million €

20162015


150 years

Catalysts

1,467

(8%)

Coatings

738

(6%)

€4,408

(4%)

Performance

Materials

1,670

(2%)

431458

371 389456

0

200

400

600

Q1 Q2 Q3 Q4 Q1


Q1 2016 vs. Q1 2015 5% (7%) 0% (2%)


million €

20162015

Construction

Chemicals

533

+6%

Functional Materials & SolutionsGood demand from the automotive and construction industries

Sales Q1 2016 vs. Q1 2015

million €


150 years

1,8981,780

0

1,000

2,000

Q1 Q1


Q1 2016 vs. Q1 2015 (5%) 2% 0% (3%)

2016201520162015

(6%)

574 591

0

200

400

600

Q1 Q1

+3%

Agricultural SolutionsSlight earnings increase in a challenging market environment

Sales

million €


million €


150 years

Sales development Volumes Prices/Currencies Portfolio

Q1 2016 vs. Q1 2015 2% (4%) (86%)

Oil & GasSignificantly lower sales and earnings

4,249

744

6110

1,000

2,000

3,000

4,000

5,000

Q1 Q1

20162015

* Including transportation business

161

359

47

276

66

-100

100

300

500

EBIT bSI Net income EBIT bSI Net income

Natural Gas TradingExploration & Production

437

276

EBIT before special items, net income

million €

Sales

million €

*

20162015

Q1 Q1

(88%)

Natural Gas TradingExploration & Production

4,993

*

* Including transportation business


150 years

Review of ‘Other’

million € Q1 2016 Q1 2015

Sales 477 688

EBIT before special items (219) (613)

Thereof Corporate research costs (99) (101)

Costs of corporate headquarters (55) (55)

Foreign currency results, hedging and

other measurement effects 68 (382)

Other businesses 18 35

Special items (26) (82)

EBIT (245) (695)


150 years

Cash flow Q1 2016

million € Q1 2016 Q1 2015

Cash provided by operating activities 1,046 2,390

Thereof changes in net working capital (1,248) 309

miscellaneous items (39) 5

Cash used in investing activities (1,258) (1,502)

Thereof payments related to tangible / intangible assets (1,001) (1,278)

acquisitions / divestitures 0 26

Cash used in / provided by financing activities 1,997 (400)

Thereof changes in financial liabilities 1,996 (299)

dividends (4) (101)


150 years

Dec 312015

Mar 312016

3.13.8

Balance sheet remains strong

Balance sheet March 31, 2016 vs. December 31, 2015

billion €

Liquid funds

Accountsreceivable

Long-termassets

9.5

Otherliabilities

Financialdebt

Stockholders’equity

Inventories

Other assets

9.7

2.2

10.7

9.6

4.0

27.8

20.9

1.3

28.4

22.4

2.0

15.114.4

46.3

70.873.7

45.6

Dec 312015

Mar 312016

70.8 73.7

24.1

15.2

31.5

26.0

16.8

30.9

Total assets increased by

€2.9 billion, mainly due to

higher cash position and

seasonally-driven increase in

accounts receivable

Long-term assets slightly lower

caused by currency effects

Provisions for pension

obligations increased by

€2.0 billion as a result of

lower interest rates

Net debt slightly declined to

€12.8 billion

Equity ratio: 42%


150 years

We add value as one company - BASF – United States...BASF Capital Market Story, May 2016 13 150...

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