BASF – creating chemistry for sustainable mobility
Kurt Bock Chairman & CEO
Wayne Smith Member of the Board of Directors
London
September 5, 2012
BASF Investor Day Automotive September 5, 2012 2
BASF Investor Day Automotive September 5, 2012 3
Investor Day ‘Strategy 2020’ November 2011
The future of the chemical industry: many growth opportunities
Nine billion people in 2050 but only one Earth
Chemistry as enabler
Growth of chemical production
above GDP
60% of chemical production in
emerging countries
Sustainability and innovation as main
driver
Innovation focus on materials & solutions
BASF Investor Day Automotive September 5, 2012 4
Investor Day ‘Strategy 2020’ November 2011
Our purpose
We create chemistry for a sustainable future.
BASF Investor Day Automotive September 5, 2012 5
Investor Day ‘Strategy 2020’ November 2011
Growth above market with increasing share from emerging markets
*
BASF definition: Developed markets include EU15, Norway,
Switzerland, North America, Japan, Australia, New Zealand
** Sales excluding Oil & Gas
Emerging marketsDeveloped markets*
2020in % of sales**
~55% ~ 45%
2010 in % of sales
(€53bn**)
~ 66% ~ 34%
2001 in % of sales
(€28 bn**)
~ 78% ~ 22%
BASF Investor Day Automotive September 5, 2012 6
Investor Day ‘Strategy 2020’ November 2011
We expand from chemicals to chemistry
Chemistry as key enabler for functionalized materials & solutionsDeep understanding of customer value chains required
New molecules
Improved applications
Functionalized materials & solutions
1960 1970 1980 1990 2000 2010 2020
Batteries, membranes ...
BASF Investor Day Automotive September 5, 2012 7
Investor Day ‘Strategy 2020’ November 2011
Moving downstream towards customer industries
* Agriculture, Construction, Consumer Goods, Health & Nutrition, Electronics, Energy & Resources, Transportation
** Sales excluding Oil & Gas
Functionalized Materials & SolutionsCustomized ProductsClassical Chemicals
Chemical Industry First customer industries*
2020in % of sales**
~30% ~ 70%
2010 in % of sales**
~ 40% ~ 60%
2001 in % of sales**
~ 50% ~ 50%
BASF Investor Day Automotive September 5, 2012 8
Investor Day ‘Strategy 2020’ November 2011
We add value as one companyPeople Verbund
Customer Verbund
Technology Verbund
Production Verbund
BASF Investor Day Automotive September 5, 2012 9
Investor Day ‘Strategy 2020’ November 2011
Striving for strong profitable growthSales* (in billion €)
64
2010 Target 2020
Target 2015
Investments
Acquisitions
CAGR ~6%
Innovations
Investments
AcquisitionsInnovations
~85
~115
We will outperform chemical production by 2 percentage points p.a.* Potential impact of IFRS changes not included
BASF Investor Day Automotive September 5, 2012 10
Trends in the automotive industry
BASF –
leading partner to automotive
BASF at the forefront of new technologies
BASF’s ambition to grow further
BASF Investor Day Automotive September 5, 2012 11
Automotive is a demanding industry – Only the fittest will prosper
StructureConcentrated industry
Global scale with local focus
Demanding high performance & cost efficiency
Tiered supplier structure
3-5 year innovation cycle
BASF strengths offer opportunities
Global footprintLocal knowledge and local presence
Innovation powerLong standing andtrustful relationships
TrendsRegulatory framework for safer and cleaner transportation
Emerging markets grow over-proportionally
Increasing model variety
Stronger collaboration among OEMs and tier- suppliers
Standardization of platforms across segments and brands will continue
BASF Investor Day Automotive September 5, 2012 12
Source: LMCA
Car production outgrew GDP for the last 30 years
40
80
160
120
1980 1985 1990 1995 2000 2005 2010 2015 2020
CAGR 3%
+40 million cars in last 30 years
Global annual car production (in million)
BASF Investor Day Automotive September 5, 2012 13
40
80
160
120
1980 1985 1990 1995 2000 2005 2010 2015 2020
CAGR ~5%
CAGR 3%
Unit growth expected to further accelerate
Global annual car production (in million)
+40 million cars in next 10 years
+40 million cars in last 30 years
Source: LMCA
BASF Investor Day Automotive September 5, 2012 14
Cars/1000 people in 2011
Cars on the road in China would grow by ~100 million
What happens if the vehicle penetration in China catches up with Brazil?
Source: LMCA
BASF Investor Day Automotive September 5, 2012 15
OEM production in emerging markets will doubleProduction of passenger cars and LCVs* (in million units)
North America
EMEAJapan
South Korea
Note: ASEAN comprises Indonesia, Thailand, Vietnam, Malaysia, and Philippines; Other Asian countries <1million unitsSource: LMCA
1318 23
30
5 5
810
Production 2011; Global production 77 million units
Total production in 2020; Global production 122
million units
3.7% p.a.
South America
47
6.4% p.a.
3.0% p.a.
China
17
337.6% p.a.
India
41314.0%
p.a.
2.5% p.a.
ASEAN
3 68.0% p.a.
0% p.a.
* Light commercial vehicles
BASF Investor Day Automotive September 5, 2012 16
Emerging country OEMs will grow faster..
Chinese and Indian OEMs will gain importance as regional playersThe main part of the future growth will come from mature global OEMs
0
20
40
60
80
100
120
140
2011 2020
Global vehicle production (in million units)
Established OEMs Emerging country OEMs
13
27
77
122
4.5%
8.5%
64
95
5.2% p.a.
Source: LMCA
BASF Investor Day Automotive September 5, 2012 17
2011
Ford
Hyundai.Kia
Suzuki
Fiat-Chrysler
BMW
Daimler
Honda
Volkswagen
Renault-Nissan
8.0
3.5
1.8
5.4
3.2
2.2
2.9
4.3
3.08.0
3.46.6
2.9
1.21.8
0.81.7
2.5
2.3
8.7
million units12.2
12.0
11.0
10.3
10.0
7.6
6.1
6.1
5.4
4.7
3.1
3.0
2.5Source: LMCA
Toyota 4.47.6
PSA 1.13.6
SAIC 1.71.4
General Motors
..but established OEMs will maintain lead with more than ¾ of total vehicle production in 2020
2020
BASF Investor Day Automotive September 5, 2012 18Light Duty Heavy Duty Motorcycle
USA CA LEV III US Tier 3
US 2010 Global, 4a Global, 4b
EuropeEuro 5 Euro 6 Euro 7
Global, 4a Euro VI Global, 4b Euro VIIEuro 4 Euro 5
BrazilEuro 5 Euro 6
Euro V Euro VI
RussiaEuro 4 Euro 5 Euro 6Euro IV Euro V Euro VI
IndiaEuro 4 Euro 5 Euro 6Euro IV Euro V Euro VIEuro 3 Euro 4 Euro 5
China Euro 4 Euro 5 Euro 6Euro IV Euro V
Euro 3 Euro 4 Euro 5
South Korea
Euro V Euro VI Euro VII
Japan Global, 4a Global, 4b
Vietnam Euro 3 Euro 4
Thailand Euro 42010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Phase in
Announced Regulations Future Regulations
All OEMs face a major challenge: Emission reduction
BASF Investor Day Automotive September 5, 2012 19
80
280
240
200
160
120
202020182016201420102008200620042002
95
164125
130
229241
158
143
2012
CO2 targets(in g/km)
173186
All OEMs face a major challenge: Emission reduction
Source: BCG
BASF Investor Day Automotive September 5, 2012 20
Weight reduction Emission reduction
New powertrains
Heat management
Safety
Haptics (Touch & Feel)
Appearance
Design
The key focus areas of car manufacturers –today and tomorrow
BASF Investor Day Automotive September 5, 2012 21
Chemical content of cars will rise – Innovative chemistry is an enabler
Chemical content today equals ~€850* per car, and is rising!
Cars in 1950
Cars of today
Cars in future
Chemical content
Chemical content in a standard car
* Including Precious metals
BASF Investor Day Automotive September 5, 2012 22
Chemical market for automotive will almost double
0
40
80
120
2011 2015* 2020*
65
111
Chemical market for automotive (in billion €)
82
* Precious metals constant at 2011 pricesSource: LMCA/BCG/BASF
~6% p.a.
BASF Investor Day Automotive September 5, 2012 23
Trends in the automotive industry
BASF – leading partner to automotive
BASF at the forefront of new technologies
BASF’s ambition to grow further
BASF Investor Day Automotive September 5, 2012 24
BASF – a leading partner to the automotive industry
BASF sales in 2011 to the automotive industry are €9.5* billion
No. 1 chemical supplier to the automotive sector
−
No. 1 mobile emission catalyst supplier
−
No. 1 in topcoats for exterior coatings
−
No. 1 in plastic solutions for lightweight
Frontrunner in developing new solutions for the cars of tomorrow
−
R&D spending for automotive in 2011 ~€200 million
Preferred development partner for leading OEMs
* Includes Precious Metals
BASF Investor Day Automotive September 5, 2012 25
Acting as one company BASF has the broadest offering to automotive industry
Suspension:Jounce bumper,
Top mount,Coil Spring isolator
Lubricants, engine coolants
Spoiler, lower bumper stiffener
HeadrestsRoof module
Carpet, Floor mats
Seats, handrests, armrests
Steering wheel
ABS cable
Door side part
Dashboard
Headliner
Hatrack
Air-filter housing
Window encapsulation
Coatings, Pigments
Fuel additives
Leather and textile chemicals
Brake fluids
Engine encapsulation
Battery materials
Catalysts
Cross beam
Air intake manifold, charge-air lines
Oil pan
Wheel rim
BASF Investor Day Automotive September 5, 2012 26
BASF is the No.1 chemical partner for the automotive industry
Top 100 suppliers Automotive (2011) Supplier ranking
Confirmed by three leading automotive industry publications ‘BASF is the No. 1 chemical partner’:
Source: Automobilproduktion, July 24, 2012
Rank Company Sales (in €
billion)
1 Bosch 30.4
2 Continental 29.1
17 9.5
41 DuPont
46 PPG Industries
51 Lanxess
61 Bayer
69 Evonik
BASF Investor Day Automotive September 5, 2012 27
Building on our cross-divisional customer industry approach
BASF sales by first customer industry*
Bubble Size: BASF divisional sales by first customer industry (2011)**
* Excluding Oil & Gas and Other ** Excluding Agricultural Solutions, Health & Nutrition, Oil & Gas and Other
> 15 %
< 10 %
< 10 %
> 15 %
Inorganics Petro-chemicals
ConstructionChemicals
Dispersions& Pigments
Catalysts Intermediates Coatings CareChemicals
Performance Polymers
Poly- urethanes
PerformanceChemicals
Paper Chemicals
Consumer goods
Transportation
Construction
Energy & Resources
BASF Investor Day Automotive September 5, 2012 28
Automotive industry structure requires close collaboration among all players
OEMs increase level of external sourcing OEMs influence sourcing decisions at tier-suppliersOEMs build exclusive R&D partnerships with key suppliers to ensure future innovation powerSuppliers gradually increase added value and get involved in design at early stageSuppliers provide techno-logical leadership, extensive module and system integration skills
Component supplierTier-2
Parts supplierTier-3+
Module/ system supplier
Tier-1
OEM
Aftermarket
BASF Investor Day Automotive September 5, 2012 29
Industry structure* BASF products
Coatings Coolants & Brake FluidsPlastics for OEMswith own processing
Plastics Catalysts Coatings for car parts
Plastics Catalysts Coatings for car parts Pigments
Plastics Pigments Solvents
Refinish coatings Coolants & Brake FluidsFuel additives
Component supplierTier-2
Parts supplierTier-3+
Module/ system supplier
Tier-1
OEM
*
Based on business model, not real supply chain
** Includes Precious Metals
BASF Group Sales 2011
BASF AutomotiveSales**€9.5 billion
10%
60%
30%
€73.5 bn
Aftermarket
BASF’s offering is an unparalleled fit to the whole automotive value chain
BASF Investor Day Automotive September 5, 2012 30
BASF’s cross divisional approach adds value to our customers
PerformanceChemicals
R & DCoatings
EngineeringPlastics
SouthAmerica
Poly- urethanes
Europe
Asia PacificCatalysts
Dispersions & Pigments
NorthAmerica
Communi-cations
Intermediates
Breadth of portfolio
Global coverage
InnovationCommunications
BASF Investor Day Automotive September 5, 2012 31
BASF has global automotive presence and is near to all major OEMsAutomotive Production sites and R&D centers
Source: company data
BASF Investor Day Automotive September 5, 2012 32
BASF is working with all global and emerging country OEMs
BASF Investor Day Automotive September 5, 2012 33
Through tailor-made customer eventsBring together BASF experts from different operating units, regions and R&D with customersDemonstration of BASF’s comprehensive product and solutions portfolioMore than 100 innovation workshops, high-level meetings, and Tech Days across all regions within the last three years
A win-win-situation for all
Strengthens business relationshipsLeads to numerous joint development projects such as concept cars smart forvision and HED7 Numerous commercial projects for near- and mid-term realization evolved
ZF Friedrichshafen
Hyundai
Early involvement – more than 100 innovation workshops in last 3 years
BASF Investor Day Automotive September 5, 2012 34
BASF and Hyundai.Kia – taking the partnership to a new level
BASF senior management and global key account teams jointly present BASF auto competencies to Hyundai.Kia
BASF Management kick off
Large exhibition where BASF presents its comprehensive product and solutions portfolio
Tech fair in Korea at Hyundai. Kia site
25 joint innovation work teams met quarterly at R&D centre of Hyundai.Kia in Korea
Forming 25 joint innovation work team
Roadshows held in Europe, NAFTA and Asia
Roadshows at Hyundai. Kia production sites
Demonstrate the innovation power in form of a concept car
Kick-off concept car project
2005
200620042007
2008
2010presented at
Geneva Motor Show
BASF Investor Day Automotive September 5, 2012 35
Index 2003 = 100%
Hyundai.Kia and BASF growing successfully
Hyundai increase in car production by 225%
BASF increase in sales by ~550%
BASF Investor Day Automotive September 5, 2012 36
2007
~70
~77
BASF 3rd party sales to automotive industry (in billion €)
Automotive production (in million)
2011 2007
7.6
2011
9.5~2.4% 6%
BASF has grown twice as fast as the automotive production
BASF Investor Day Automotive September 5, 2012 37
Trends in the automotive industry
BASF –
leading partner to automotive
BASF at the forefront of new technologies
BASF’s ambition to further grow
Video
BASF Investor Day Automotive September 5, 2012 39
BASF evolved from a raw material supplier to a solution provider
Past Today Future
Cost and complexity reduction
Raw Material Know-How
Part Substitution
Cost reduction
System and value chain know-how
Functional IntegrationSystem SolutionsSingle Solutions
BASF Investor Day Automotive September 5, 2012 40
Delivering innovative solutions from across the BASF portfolio
System solution provider
Selective Catalytic Reduction (SCR)
on filter
Process innovator
Integrated coatings process
Lightweight construction: Plastic wheels
Enhanced driving and interior comfort:
Cellasto®
Engineering and design expert
System supplier
BASF Investor Day Automotive September 5, 2012 41
Safety
Weight reduction
Emission reduction
New powertrains
Heat management
Haptics (Touch & Feel)
Appearance
Design
Innovation focused to meet industry needs
Multifunctional lightweight construction
Integrated temperature management
Energy storage and management
BASF Investor Day Automotive September 5, 2012 42
Multifunctional lightweight construction Global competence in seating
Innovative combination and unique network of cross divisional material expertise:
Seat – one of the most heavy, complex and value-intensive applications in the car‘s interior
BASF bundled material and simulation competence
BASF provides products and solutions for:
−
weight reduction
−
improved safety
−
better haptics
−
freedom of design
Several projects with OEMs as well as major Tier 1 suppliers (Opel, Faurecia, Daimler, Hyundai)
Weight –
Design –
Safety –
Haptics
BASF Investor Day Automotive September 5, 2012 43
Integrated temperature management Insulation / heat management solutions
Status: lab
Status: commercialStatus: pilot
* Infrared
** Near Infrared
NIR** reflective polymerfilm for car windows
Polymer foams for thermal insulation
Thermal engine encapsulation for optimized heat management
Functional pigmentsfor high IR* reflectivity
Status: pilot
BASF Investor Day Automotive September 5, 2012 44
BASF – developing a leading position in battery material solutions
Business potential 2020 BASF SRM* includes cathodes and electrolytes
: > €5 billionSales potential for BASF: > €500 million
Existing activitiesChemicals & materials for lithium-ionWork on battery concepts for Generation IVIntensive collaborating with leading universities
& industry partners
TargetsPosition BASF as system supplier for cell
manufacturersUtilize technology and business synergiesExpand electrolyte activities
* Strategic relevant market
BASF Investor Day Automotive September 5, 2012 45
Trends in the automotive industry
BASF –
leading partner to automotive
BASF at the forefront of new technologies
BASF’s ambition to grow further
BASF Investor Day Automotive September 5, 2012 46
Automotive to contribute significantly to BASF 2020 growth targets
2020
17.0
5.0
12.0***
2015
12.3
4.1
8.2**
2011
9.5
3.5
6.0*
2007
7.6
2.8
4.8
Growth targets (in billion €)
BASF Automotive chemical salesBASF precious metal sales (trading and mobile emissions catalyst production)
+5.7%
+6.7%
+5.7%
+8.0%
+5.7%
+4.0%
* Incl. sales of €400 million related to cross-divisional initiatives; ** Incl. sales of €600 million related to cross-divisional initiatives; *** Incl. sales of €600 million related to cross-divisional initiatives and sales of €500 million related to battery
47
BASF Investor Day Automotive September 5, 2012 4848
Hyundai concept car HED7 Introduction of Thomas Bürkle