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BASF 2nd Quarter 2011 Analyst Conference Call 1
BASF posts strong results
Second Quarter 2011 Financial highlightsJuly 28, 2011
BASF 2nd Quarter 2011 Analyst Conference Call 2
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
BASF 2nd Quarter 2011 Analyst Conference Call 3
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%
BASF 2nd Quarter 2011 Analyst Conference Call 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 Verbundconcept provide industry leading cost structureStart-up of production in 2014
BASF 2nd Quarter 2011 Analyst Conference Call 5
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-2012Portfolio expansion by entering electrolytes and positioning BASF as future system supplier for high performance batteriesLightweight construction solutions and heat managementsystems further help to reduce energy consumption
Electromobility – leveraging BASF’s R&D and business platforms
BASF 2nd Quarter 2011 Analyst Conference Call 6
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
BASF 2nd Quarter 2011 Analyst Conference Call 7
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
BASF 2nd Quarter 2011 Analyst Conference Call 8
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)%
Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items (million €)
20112010
BASF 2nd Quarter 2011 Analyst Conference Call 9
Sales developmentPeriod Volumes Prices Portfolio Currencies
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)%
Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items (million €)
Nutrition & Health480+29%
Dispersions & Pigments
937+9% 20112010
BASF 2nd Quarter 2011 Analyst Conference Call 10
Sales developmentPeriod Volumes Prices Portfolio Currencies
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 Q2
Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items (million €)
20112010
BASF 2nd Quarter 2011 Analyst Conference Call 11
Agricultural Solutions High global demand for agricultural products drove volume growth
320 331
0
100
200
300
400
Q2 Q2
Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items (million €)
20112010
0200400600800
1,0001,2001,400
Q2 Q220112010
0%+3%
Sales developmentPeriod Volumes Prices Portfolio Currencies
Q2’11 vs. Q2’10 6% 0% 0% (6)%
1,211 1,205
BASF 2nd Quarter 2011 Analyst Conference Call 12
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 (19)% 23% 0%
63
EBIT bSI Natural Gas TradingEBIT bSI Exploration & Production Net income
Q2’11 segment sales (million €) vs. Q2’10 EBIT before special items/ Net income (million €)
20112010
420269
515
332
95
Non-compensable oil taxes 209
BASF 2nd Quarter 2011 Analyst Conference Call 13
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
BASF 2nd Quarter 2011 Analyst Conference Call 14
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
BASF 2nd Quarter 2011 Analyst Conference Call 15
BASF 2nd Quarter 2011 Analyst Conference Call 1616
Back-Up
BASF 2nd Quarter 2011 Analyst Conference Call 17
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% (7)%
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)%
BASF 2nd Quarter 2011 Analyst Conference Call 18
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 31 2011
Jun 31 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)
BASF 2nd Quarter 2011 Analyst Conference Call 19
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− €135 million growth synergies by the end of 2015− €140 million cost synergies by the end of 2013