BASF Factbook 2007
Published in June 2007
�
3 BASF–TheChemicalCompany
6 FinancialOverview
12 Strategy
16 Verbund
20 RecentAcquisitionsandPartnerships
26 Innovation
30 BusinessSegments
32 Chemicals 34Inorganics|36Catalysts|38Petrochemicals|40Intermediates
42 Plastics 44Styrenics|46PerformancePolymers|48Polyurethanes
50 PerformanceProducts 52ConstructionChemicals|54Coatings|56FunctionalPolymers| 58PerformanceChemicals
60 AgriculturalProducts&Nutrition 62AgriculturalProducts|64FineChemicals
66 Oil&Gas
70 Other
71 InvestorRelationsTeam
BASF–TheChemicalCompany
2 3
Withapproximately95,000employees,morethan�50pro-ductionsitesaswellascustomersandbusinesspartnersinover200countries,BASFistheworld’sleadingchemicalcompany–TheChemicalCompany.
Ourportfoliorangesfromchemicals,plastics,performanceproducts,agriculturalproductsandfinechemicalstocrudeoilandnaturalgas.Asareliablepartnertovirtuallyallindustries,weprovidehigh-valueproductsandintelligentsystemsthathelpcustomerstobemoresuccessful.
In2006,theBASFGrouppostedsalesof€52,6�0millionandincomefromoperationsof€6,750million.
Ourgoalistouseourproductsandservicestosuccessfullyshapethefutureofourcustomers,businesspartnersandemployees.Throughprof-itablegrowthweaimtoconsistentlyincreasethevalueofourcompany.
Wedevelopnewtechnologiesandusethemtomeetthechallengesofthefutureandopenupadditionalmarketopportunities.Wecombineeconomicsuccesswithenvironmentalprotectionandsocialresponsibility.Thisisourcontributiontoabetterfutureforusandforcominggenerations.
BalancedportfolioSales2006 %
Chemicals 22.0
Plastics 24.3
PerformanceProducts �9.3
Agriculture&Nutrition 9.4
Oil&Gas 20.3
Other 4.7
Salesbyregion2006%
Europe 60
NorthAmerica(NAFTA) 22
AsiaPacific �4
SouthAmerica,Africa,MiddleEast 4
PublisherBASFAktiengesellschaftInvestorRelations67056Ludwigshafen,GermanyProjectmanagementThiloBischoffConceptanddesignXEOGmbH,Düsseldorf,GermanyPhotographyBASFArchive,Corbis,FOTOFINDER,gettyimages,Masterfile
Forward-lookingstatementsThispublicationcontainsforward-lookingstatementsundertheU.S.PrivateSecuritiesLitigationReformActof�995.Thesestatementsarebasedoncurrentexpectations,estimatesandprojectionsofBASFmanagementandcurrentlyavailableinformation.Theyarenotguaranteesoffutureperformance,involvecertainrisksanduncertaintiesthataredifficulttopredictandarebaseduponassumptionsastofutureeventsthatmaynotprovetobeaccurate.Manyfactorscouldcausetheactualresults,performanceorachievementsofBASFtobemateriallydifferentfromthosethatmaybeexpressedorimpliedbysuchstatements.SuchfactorsincludethosediscussedinBASF’sForm20-FfiledwiththeSecuritiesandExchangeCommission.Wedonotassumeanyobligationtoupdatetheforward-lookingstatementscontainedinthispublication.
BASF–TheChemicalCompanyBASF–TheChemicalCompany
4 5
�865–�90� �90�–�925 �925–�945 �945–�953 �953–�965 �965–2004 Since2004
Since�865,wehavebeenshapingthefuturewithchemistryandcombininginnovationwithtradition.Weareproudofwhoweareandwhatwedo:BASF–TheChemicalCompany.Chemistryisourstrength.Itmakesusandourcustomerssuccessful–todayandinthefuture.
Dr.MartinBrudermüller,chemist,�9yearsatBASF,isbasedinHongKong,China,andisresponsibleforAsiaPacific.
Dr.KurtBock,businesseconomist,�6yearsatBASF,overseesFinance,GlobalProcurement&Logistics,InformationServices,CorporateControlling,CorporateAudit,andSouthAmerica.
PeterOakley,economist,30yearsatBASF,coversAgriculturalProducts,FineChemicals,SpecialtyChemicalsResearch,andBASFPlantScience.
Dr.JürgenHambrecht,chemist,3�yearsatBASF,coordinatesBoardactivitiesasChairman,andisresponsibleforLegal,Taxes&Insurance,StrategicPlanning&Controlling,GlobalHR–ExecutiveManagement&Development,CommunicationsBASFGroup,andInvestorRelations.
KlausPeterLöbbe,economist,40yearsatBASF,isbasedinFlorhamPark,NewJersey,andisresponsibleforNorthAmerica(NAFTA)andCatalysts.
Dr.JohnFeldmann,chemist,�9yearsatBASF,isresponsibleforOil&Gas,Styrenics,PerformancePolymersandPolyurethanes,aswellasPolymerResearch.
EggertVoscherau,economist,38yearsatBASF,servesasViceChairmanandIndustrialRelationsDirector.HeisresponsibleforHumanResources,Environment,Safety&Energy,OccupationalMedicine&HealthProtection,Corporate&GovernmentalRelationsaswellasEuropeincludingtheLudwigshafenVerbundSite,andtheAntwerpVerbundSite.
Dr.StefanMarcinowski,chemist,28yearsatBASF,servesasResearchExecutiveDirector.HeoverseesInorganics,Petrochemicals,Intermediates,ChemicalsResearch&Engineering,CorporateEngineering,ScienceRelations&InnovationManagement,andBASFFutureBusiness.
Dr.AndreasKreimeyer,biologist,2�yearsatBASF,isresponsibleforConstructionChemicals,Coatings,FunctionalPolymers,andPerformanceChemicals.
TheBoardofExecutiveDirectorsofBASFAktiengesellschaftconsistsofninemembers(fromlefttoright):
FriedrichEngelhornfoundsBadischeAnilin&SodaFabriktoproducecoaltardyes.Soonthereafter,thecompanygainsaleadingpositionintheworlddyesmarketwithmethyleneblue,alizarinandindigo.
ThesynthesisofammoniabytheHaber-Boschprocesspavesthewayfortheproductionofsyntheticnitrogenfertilizers.In�9�9theNobelPrizeinchemistryisawardedtoFritzHaber.
BASFbecomespartofIGFarben-industrieAG.Advancesinhigh-pressuretechnologyenabletheproductionofsyntheticgasolineandrubberandproductsfromacetylene.in�93�theNobelPrizeinchemistryisawardedtoCarlBosch.
ReconstructionaftertheseveredamageduringtheSecondWorldWartakesanumberofyears.BASFisreestablishedasanindependentcompanyin�952.
Germany’seconomicmiraclepavesthewayfortheplasticsera.BASFexpandsintomarketswithproductssuchaspolystyrene,Styropor®,nylonandpolyethylene.
BASFdevelopsintoatransnationalcompanywithproductionsitesinEurope,NorthandSouthAmericaandAsia.
BASFistheworld’sleadingchemicalcompany–TheChemicalCompany.In2005,thenewVerbundsiteinNanjing,China,beginsoperation.Itrepresentsthelargestsingleinvest-mentprojectinBASF’shistory.In2006,BASFbuysEngelhardCorpo-ration,itsbiggesteveracquisition.
6 7
FinancialOverview
FinancialOverview
Ten-yearsummary
Million€ 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Salesandearnings1
Sales 28,520 27,643 29,473 35,946 32,500 32,2�6 33,36� 37,537 42,745 52,6�0
Incomefromoperationsbeforedepreciationandamortization(EBITDA)
4,759 4,884 4,67� 5,986 4,�42 5,�05 5,��0 7,685 8,233 9,723
Incomefromoperations(EBIT)beforespecialitems
– 2,553 2,950 3,400 2,293 2,88� 2,993 5,230 6,�38 7,257
Incomefromoperations(EBIT) 2,73� 2,624 2,009 3,070 �,2�7 2,64� 2,658 5,�93 5,830 6,750
Incomefromordinaryactivities 2,726 2,77� 2,606 2,827 609 2,64� 2,�68 4,347 5,926 6,527
Extraordinaryincome – – – – 6,�2� – – – – –
Incomebeforetaxesandminorityinterests 2,726 2,77� 2,606 2,827 6,730 2,64� 2,�68 4,347 5,926 6,527
Incomebeforeminorityinterests �,639 �,664 �,245 �,282 5,826 �,599 976 2,�33 3,�68 3,466
Netincome �,654 �,699 �,237 �,240 5,858 �,504 9�0 2,004 3,007 3,2�5
Capitalexpendituresanddepreciation1
Additionstotangibleandintangibleassets 2,564 3,722 3,253 6,93� 3,3�3 3,055 3,4�5 2,�63 2,523 �0,039
Thereofproperty,plantandequipment 2,229 2,899 2,764 3,63� 3,037 2,677 2,293 2,022 2,�88 4,068
Depreciationoftangibleandintangibleassets 2,028 2,260 2,662 2,9�6 2,925 2,464 2,452 2,492 2,403 2,973
Thereofproperty,plantandequipment �,732 �,843 2,0�8 2,245 2,307 2,0�2 �,95� 2,053 2,035 2,482
Numberofemployees
Atyear-end �04,979 �05,945 �04,628 �03,273 92,545 89,389 87,�59 8�,955 80,945 95,247
Annualaverage �05,885 �06,928 �07,�63 �05,784 94,744 90,899 88,�67 85,022 80,992 88,�60
Personnelcosts1 5,790 6,0�0 6,�80 6,596 6,028 5,975 5,89� 5,6�5 5,574 6,2�0
Keydata1
Earningspershare(€) 2.67 2.73 2.00 2.02 9.722 2.60 �.62 3.65 5.73 6.37
Cashprovidedbyoperatingactivities 3,29� 3,744 3,255 2,992 2,3�9 2,3�3 4,878 4,634 5,2503 5,940
Paymentsrelatedtointangibleassetsandproperty,plantandequipment
2,229 2,722 2,939 2,906 2,8�� 2,4�0 2,07� 2,057 �,948 2,4��
Freecashflow �,062 �,022 3�6 86 (492) (97) 2,807 2,577 3,3023 3,529
Returnonsales(%) 9.6 9.5 6.8 8.5 3.7 8.2 8.0 �3.8 �3.6 �2.8
Returnonassets(%) �2.6 ��.9 �0.2 9.9 3.� 8.4 7.4 �3.2 �7.7 �7.5
Returnonequityaftertax(%) �4.6 �3.2 9.� 9.0 36.62 9.3 6.0 �2.9 �8.6 �9.2
Freecashflow/sales(%) 3.7 3.7 �.� 0.2 (�.5) (0.3) 8.4 6.9 7.7 6.7
Appropriationofprofits
NetincomeofBASFAG4 943 �,074 �,007 �,265 5,904 �,045 �,�03 �,363 �,273 �,95�
Transfertoretainedearnings4 307 38� 304 50 5,�53 247 334 449 – –
Dividend 636 693 695 �,2�4 758 789 774 904 �,0�5 �,484
Dividendpershare(€) �.02 �.�2 �.�3 �.30 �.30 �.40 �.40 �.70 2.00 3.00
+0.705
NumberofsharesasofDecember31(inthousands)6
622,063 623,794 620,985 607,399 583,401 570,316 556,643 540,440 514,379 499,680
�Startingin2005,theaccountingandreportingoftheBASFGroupisperformedinaccordancewithInternationalFinancialReportingStandards(IFRS).The2004figureshavebeenreportedinaccordancewithIFRS.Thefiguresforyearsuptoandincluding2003werepreparedaccordingtoGermanGAAP.
2Includingextraordinaryincome3Beforeexternalfinancingofpensionobligations4CalculatedinaccordancewithGermanGAAP5Specialdividendofstockholders’equitychargedwith45%corporateincometax6Afterdeductionofrepurchasedsharesintendedtobecanceled
8 9
FinancialOverview
Ten-yearsummary1
Balancesheet(GermanGAAP) Balancesheet(IFRS)
Million€ 1997 1998 1999 2000 2001 2002 2003 Million€ 2004 2005 2006
Intangibleassets 3,607 3,720 8,922
Property,plantandequipment �3,063 �3,987 �4,902
Investmentsaccountedforusingtheequitymethod �,�00 244 65�
Intangibleassets �,497 �,965 2,�47 4,538 3,943 3,464 3,793 Otherfinancialassets 938 8�3 �,�90
Tangibleassets 9,076 �0,755 �2,4�6 �3,64� �4,�90 �3,745 �3,070 Deferredtaxes �,337 �,255 622
Financialassets 2,�32 �,826 �,507 3,590 3,360 3,249 2,600 Otherreceivablesandmiscellaneouslong-termassets 473 524 6�2
Fixedassets 12,705 14,546 16,070 21,769 21,493 20,458 19,463 Long-termassets 20,518 20,543 26,899
Inventories 3,876 3,703 4,028 5,2�� 5,007 4,798 4,�5� Inventories 4,645 5,430 6,672
Accountsreceivable,trade 4,299 4,0�7 4,967 6,068 5,875 5,3�6 4,954 Accountsreceivable,trade 5,86� 7,020 8,223
Otherreceivables �,765 �,856 2,2�� 3,369 2,384 2,947 3,�59 Otherreceivablesandmiscellaneousshort-termassets 2,�33 �,586 2,607
Deferredtaxes 45 �,077 �,225 �,270 �,373 �,204 �,247
Marketablesecurities �,003 746 5�8 364 383 �32 �47 Marketablesecurities 205 �83 56
Cashandcashequivalents 843 757 990 506 360 23� 48� Cashandcashequivalents 2,086 908 834
Currentassets 11,831 12,156 13,939 16,788 15,382 14,628 14,139 Short-termassets 14,930 15,127 18,392
Totalassets 24,536 26,702 30,009 38,557 36,875 35,086 33,602 Totalassets 35,448 35,670 45,291
Subscribedcapital �,590 �,595 �,590 �,555 �,494 �,460 �,425
Capitalsurplus 2,567 2,590 2,675 2,746 2,9�4 2,948 2,983 Subscribedcapital �,383 �,3�7 �,279
Paid-incapital 4,�57 4,�85 4,265 4,30� 4,408 4,408 4,408 Capitalsurplus 3,028 3,�00 3,�4�
Retainedearnings 7,4�8 8,695 9,002 8,85� �2,222 �2,468 �2,055 Retainedearnings ��,923 ��,928 �3,302
Currencytranslationadjustment 20� 39 549 662 532 (330) (972) Othercomprehensiveincome (60) 696 325
Minorityinterests 255 33� 329 48� 360 396 388 Minorityinterests 328 482 53�
Stockholders’equity 12,031 13,250 14,145 14,295 17,522 16,942 15,879 Stockholders’equity 16,602 17,523 18,578
Provisionsforpensionsandsimilarobligations 4,�24 �,547 �,452
Otherprovisions 2,376 2,79� 3,080
Pensionsandotherlong-termprovisions 4,824 5,56� 5,8�2 6,209 6,809 6,233 6,205 Deferredtaxes 948 699 �,44�
Taxandothershort-termprovisions 2,463 2,�85 2,826 3,334 3,332 2,764 2,982 Financialindebtedness �,845 3,682 5,788
Provisions 7,287 7,746 8,638 9,543 10,141 8,997 9,187 Otherliabilities �,079 �,043 972
Long-termliabilities 10,372 9,762 12,733
Financialindebtedness �,�26 �,3�6 �,294 7,892 2,835 3,6�0 3,507
Accountspayable,trade �,972 �,87� 2,3�6 2,848 2,467 2,344 2,056 Accountspayable,trade 2,372 2,777 4,755
Otherliabilities 2,�20 2,5�9 3,6�6 3,979 3,9�0 3,�93 2,973 Provisions 2,364 2,763 2,848
Liabilities 5,218 5,706 7,226 14,719 9,212 9,147 8,536 Taxliabilities 644 887 858
Financialindebtedness �,453 259 3,695
Provisionsandliabilities 12,505 13,452 15,864 24,262 19,353 18,144 17,723 Otherliabilities �,64� �,699 �,824
Thereoflong-termliabilities 6,094 6,898 7,529 9,059 9,955 9,2�� �0,285 Short-termliabilities 8,474 8,385 13,980
Totalstockholders’equityandliabilities 24,536 26,702 30,009 38,557 36,875 35,086 33,602 Totalstockholders’equityandliabilities 35,448 35,670 45,291
Equityratio(%) 49 50 47 37 48 48 47 Equityratio(%) 47 49 4�
Gearingratio(%) �04 �02 ��2 �70 ��0 �07 ��2 Gearingratio(%) ��4 �04 �44
Netdebt 283 559 304 7,386 2,475 3,379 3,026 Netdebt �,2�2 3,033 8,649�Startingin2005,theaccountingandreportingoftheBASFGroupisperformedinaccordancewithInternationalFinancialReportingStandards(IFRS).The2004figureshavebeenreportedinaccordancewithIFRS.Thefiguresforyearsuptoandincluding2003werepreparedinaccordancewithGermanGAAP.
FinancialOverview
�0 ��
FinancialOverview
Regionalresults1
Salesbylocationofcompany
Million€ 1997 1998 1999 2000 2001 2002 2003 Million€ 2004 2005 2006
Europe �9,897 �8,508 �9,��9 22,203 �9,399 �8,987 20,372 Europe 22,536 25,093 3�,444
ThereofGermany �3,558 �2,�88 �2,7�8 �4,457 �3,4�7 �3,3�5 �4,070 ThereofGermany �5,2�6 �7,�00 22,963
NorthAmerica(NAFTA) 5,940 6,2�0 6,783 8,44� 7,772 7,932 7,2�4 NorthAmerica(NAFTA) 8,�65 9,542 ��,4�5
AsiaPacificArea,Africa
�,408 �,620 2,087 3,�75 3,487 3,950 4,303 AsiaPacific 4,9�� 6,042 7,450
SouthAmerica �,275 �,305 �,484 2,�27 �,842 �,347 �,472 SouthAmerica,Africa,MiddleEast
�,925 2,068 2,30�
Total 28,520 27,643 29,473 35,946 32,500 32,216 33,361 Total 37,537 42,745 52,610
Salesbylocationofcustomer
Million€ 1997 1998 1999 2000 2001 2002 2003 Million€ 2004 2005 2006
Europe �7,44� �6,672 �6,996 20,�03 �7,984 �7,697 �9,�20 Europe 2�,343 23,755 29,529
ThereofGermany 7,352 7,0�� 6,934 7,897 7,2�2 6,944 7,073 ThereofGermany 7,382 8,865 ��,062
NorthAmerica(NAFTA) 5,966 6,249 6,733 8,4�9 7,654 7,808 7,�63 NorthAmerica(NAFTA) 8,�82 9,479 ��,522
AsiaPacificArea,Africa
3,437 3,082 3,862 4,924 4,674 5,05� 5,3�3 AsiaPacific 5,309 6,500 8,�02
SouthAmerica �,676 �,640 �,842 2,500 2,�88 �,660 �,765 SouthAmerica,Africa,MiddleEast
2,703 3,0�� 3,457
Total 28,520 27,643 29,473 35,946 32,500 32,216 33,361 Total 37,537 42,745 52,610
Incomefromoperations(EBIT)
Million€ 1997 1998 1999 2000 2001 2002 2003 Million€ 2004 2005 2006
Europe 2,302 2,033 �,258 2,577 �,926 2,357 2,224 Europe 4,236 4,385 5,485
ThereofGermany �,555 �,30� 542 �,864 �,347 �,690 �,642 ThereofGermany 3,�3� 3,0�9 4,�25
NorthAmerica(NAFTA) 350 5�5 48� 99 (678) 23 �0 NorthAmerica(NAFTA) 286 855 869
AsiaPacificArea,Africa
7 60 �44 �6� (28) 203 2�8 AsiaPacific 36� 297 �8�
SouthAmerica 72 �6 �26 233 (3) 58 206 SouthAmerica,Africa,MiddleEast
3�0 293 2�5
Total 2,731 2,624 2,009 3,070 1,217 2,641 2,658 Total 5,193 5,830 6,750�Startingin2005,theaccountingandreportingoftheBASFGroupisperformedinaccordancewithInternationalFinancialReportingStandards(IFRS).The2004figureshavebeenreportedinaccordancewithIFRS.Thefiguresforyearsuptoandincluding2003werepreparedaccordingtoGermanGAAP.EffectiveJanuary�,2005,companiesinAsiaarereportedintheregion“AsiaPacific.”SouthAmerica,whichwaspreviouslyreportedseparately,isnowreportedtogetherwiththegeographicregionsAfricaandMiddleEastintheregion“SouthAmerica,Africa,MiddleEast.”The2004figureshavebeenreportedinaccordancewiththis.
FinancialOverview
FactorsinfluencingsalesContributiontosalesgrowth(%)
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Volumes 8.9 �.7 5.8 6.5 (0.3) 7.8 7.6 9.4 2.5 5.5
Prices 0.6 (6.0) (3.9) ��.3 (�.4) (5.2) 2.� 6.6 ��.0 8.3
Currencies 4.8 (0.5) �.6 6.6 (0.5) (2.9) (7.3) (4.4) �.0 (0.2)
Acquisitions/divestitures 0.� �.7 3.� (2.4) (7.4) (0.6) �.2 0.9 (0.6) 9.5
Total 14.4 (3.1) 6.6 22.0 (9.6) (0.9) 3.6 12.5 13.9 23.1
Shareholderreturns
Million€ 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Sharebuybacks 256 700 �,300 500 500 726 �,435 938
Dividends 636 693 695 789 758 789 774 904 �,0�5 �,484
Specialdividends 425
Total 636 693 951 1,914 2,058 1,289 1,274 1,630 2,450 2,422
Sharepriceatyear-end(€/share) 32.82 32.49 5�.90 48.�7 4�.75 36.08 44.58 53.00 64.7� 73.85
Dividendyield(%) 3.� 3.4 2.2 4.2� 3.� 3.9 3.� 3.2 3.� 4.�
Payoutratio(%) 38 4� 56 98� �32 52 85 45 34 46
Price/Earningsratio(P/Eratio) �2.3 ��.9 26.0 23.8 4.32 �3.9 27.5 �4.5 ��.3 ��.6
Freecashflowyield(%)3 5.2 5.0 �.0 0.3 (2.0) (0.5) ��.3 9.0 9.4 9.6�Includingspecialdividendofstockholders’equitychargedwith45%corporateincometax2Includingextraordinaryincome3Freecashflowpershareatyear-enddividedbysharepriceatyear-end
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Million €
0
500
1,000
1,500
2,000
2,500
Sharebuybacks Dividends Specialdividends
Europe
NorthAmerica(NAFTA)
AsiaPacific
SouthAmerica,Africa,MiddleEast
Salesbylocationofcompany2006
Salesbylocationofcustomer2006
Incomefromoperations(EBIT)2006
Cashreturnedtoshareholders
Sensitivities
CurrencyimpactonBASFGroup
AnnualimpactofUS$change(US$exchangerate–�€-cent)
Million€
Sales +250
EBIT +40
(asofJune2007)
OilpriceimpactonsegmentOil&Gas
AnnualimpactofUS$�/bblriseinannualaverageoilprice(Brent)
Million€
Sales +�00
EBIT +45
Netincome +�0
(asofJune2007)
DividendpolicyWeaimtoincreaseourdividendfurtherinthefutureandplantoatleastmaintainthedividendatthepreviousyear’slevel.
SharebuybackInordertoincreaseourearningspershareandoptimizeourbalancesheetstructure,weplantobuybacksharesforatotalof€3billionin2007and2008.
CalculationofEBITaftercostofcapital2006
Million€
EBITBASFGroup 6,750
LessEBITforactivitiesnotassignedtothesegments¹ (�22)
Lessnoncompensableforeignincometaxesforoilproduction �,282
Lesscostofcapital2 3,464
EBITaftercostofcapital 2,�26�Thisnetexpenseisalreadyprovidedforinthecostofcapitalpercentage2�0%ontheaverageoperatingassetsofthesegments
�2 �3
Inordertogrowprofitably,wewanttofocusevenmorecloselyonourcustomers’needs.Todothis,wedevelopthebestbusinessmodelssuitedtoourcustomers.
Wewanttoincreasethecompany’svaluebyearningapremiumonourcostofcapital.
In2006wegeneratedapremiumof€2,�26milliononourcostofcapital.
BASF’semployeesarecrucialtothecompany’ssuccess.Weneedtheirskills,theirideas,theirexperi-enceandtheircommitment.
ForBASF,sustainabledevelopmentmeanscombiningbusinesssuc-cess,environmentalprotectionandsocialresponsibility.
Investmenthighlights
#�chemicalcompanyworldwidewithbalancedportfolioandclearlong-termstrategy
CompetitiveadvantagebasedonuniqueVerbundconceptandoperationalexcellence
Superiorgrowthopportunitiesthroughstrongpositioningingrowthmarkets,acquisitionsincorebusinessesandexcellentinnovationplatform
Sustainablevaluecreationbasedonsoundbalancesheetandfinancialstrength
GrowingabovechemicalmarketOurtarget:profitablegrowth
Salesgrowthof2percentagepointsaboveaverageinchemicalmarket
Strategy
StrategyChemistryoffersenormousopportunities.Itstandsforthefuturethatweareactivelyshapingastheworld’sleadingchemicalcompany.Weareexpandingourstrengthsandmakingourportfoliomoreresilienttocyclicaltrends.
Wewillcontinuetoconcentrateonprofitablegrowthinourcoreactivities:inourchemicalbusinesses,inagriculturalproductsandnutrition,andinoilandgas–throughorganicgrowth,innovationandacquisitions.Weareinnovativeandactsustainablytoensurethatwewillalsoremaintheworld’sleadingchemicalcompanyinthefuture.Thisiswhyweplantofurtherexpandourresearchanddevelopmentactivities,focusingonmarket-driveninnovations,newbusinessmodelsandnewfieldsofknowledge.Tofurtherimproveourmarketpositionwewillcontinuetooptimizeourportfolioandimplementmeasurestorestructureourbusinessesandreducecosts.
2002 2003 2004 2005 20062001
Volume growth in %
10
8
6
4
2
0
-2
-4
BASF
European chemicals*(excl. BASF)
U.S. chemicals**
Source:Companyreports*Europeanpeers:Akzo,Bayer,Ciba,Clariant,DSM,Rhodia,Syngenta**U.S.peers:Dow,PPG,DuPont,Rohm&Haas
Fourstrategicguidelinesdescribeourpathtothefuture.Thecombinationofthesefourguidelinesmakesussuccessful:
Earnapremiumonourcostofcapital
Helpourcustomerstobemoresuccessful
Formthebestteaminindustry
Ensuresustainabledevelopment
�4 �5
Ourgoalistoacquirebusinessesthat�.Generategrowthabovetheindustryaverage2.Areinnovation-driven3.Offeraspecialvaluepropositiontocustomers4.Reduceearningscyclicality
Financialacquisitioncriteria�.PositivecontributiontoEPS:
accretivebyyearthreeatthelatest2.Minimumdiscountrate:
9%appliedonearningsaftertax3.Additionalreturnrequirements
dependingoncountryrisk
OutlookPortfoliochangesandoperationalexcellencehavestrengthenedourearningspower.Weareconfidentofearningatleastourcostofcapitalinanygivenyear.
Oil and Gas
Petro-chemicals
CommodityChemicals
SpecialtyChemicals
Agrochemicals/Biotechnology
Pharmaceuticals
2006In the 80s
SabicHoechst
Bayer
BASF
Dow
DuPont
Ticona,Celanese
BASF
Dow Invista
DuPont
Syngenta
Astra,Zeneca
FormosaPlastics
SabicLanxess
BayerCrop Sc.
BayerHealthcare
BayerMat.Sc.Clariant
SanofiAventis
ICI
ICI
StrategicpositioningofBASF
Prioritiesforuseofcash�.Investmentinorganicgrowth2.Acquisitionsto“strengthen
thestrengths”3.Dividends4.Sharebuybacks
Chemicals–Costleadershipthroughefficientproductiontechnologiesand
backwardintegration–Generatingvalueforcustomersthroughhigh-valueproductsand
systemsolutions
Plastics–Highlyefficientcoststructureinmanufacturingandmarketing
processesincommodityplastics–Widerangeofhigh-valueproductsandsystemsolutionsin
specialtyplastics
PerformanceProducts–High-valueperformancechemicalsandsystemssolutions–Closedevelopmentandmarketingcooperationwithcustomers
AgriculturalProducts&Nutrition–AgriculturalProducts:Aleadingpipelineandportfolioofinnovations
withfocusonhigh-valuemarkets,segmentsandcrops–Nutrition:Broadrangeofhigh-valueproducts,leanstructures,
streamlinedportfolio
Oil&Gas–E&P:Focusonexistingcoreregionsandtechnologicalspecialization–“GasforEurope”-concept,gasdistribution,transportationandstorage:
cooperationwithGazprom
Activeportfoliomanagement1997–2006
MajoracquisitionsCropprotection(AHP,Fipronil,seedtreatment)
Superabsorbents
Oil&Gas(Dutchgasactivities)
Engineeringplastics
Electronicchemicals
Customsynthesis
Catalysts/pigments(Engelhard)
Constructionchemicals
Water-basedresins
€13billion(sales)
MajordivestituresPharmaceuticals
Fertilizers
Refineries
Decorativepaints
Fibers
Printingsystems
Polyolefins(BASELL)
PolystyreneNorthAmerica
Agchemgenerics
€11billion*(sales)
BASFCore
Businesses
Powerfulpartnerships
Total:NAFTARegionOlefinComplex
Shell:Ellba
Gazprom:Wingas,Achimgaz,YuzhnoRusskoye,NordStream
Sinopec
Petronas
*Includingnon-consolidatedsalesfromBASELL
Mixofcyclicalandnon-cyclicalbusinesses
TheBASFportfolioiswellbalanced,combiningfivesegments:Chemicals,Plastics,PerformanceProducts,AgriculturalProducts&Nutrition,andOil&Gas.Thisportfoliomixisoneofourstrengthsandwewillcontinuetobuildonit.
Strategy
Constantlyimprovingourcostbase
Annualized cost savings in million €
02003 2004 2005 2006 2007 2008
500
1,000
1,500
Global efficiency improvement program€210 million by 2007 expected€300 million by 2008 expectedAntwerp, Belgium>€70 million as of end 2006Europe€250 million as of end 2006NAFTAUS$400 million as of mid 2006Ludwigshafen, Germany€480 million as of mid 2005Plant and site closures27 in 2005 and 2006
*ExcludinginvestmentsinNordStreamandYuzhnoRusskoye**Thereof�9percentagepointsOil&Gas
Furthergrowththroughinvestments2007–2011(€10.7billion*)
Chemicals
Plastics
PerformanceProducts
AgriculturalProducts&Nutrition
Oil&Gas*
Other(e.g.infrastructure,R&D)
Byregion
59%
�6%
�8%
7%
22%
22%
�8%
7%
�9%
�2%
Europe**
NorthAmerica(NAFTA)
Asia
Sitealternativestobechecked
Bysegment
BASFsalesbyindustryPercentageofsalesin2006*
>�5% Chemical(notanindustrywithendusers)|Energy
�0–�5% Automotive|Construction
5–�0% Agriculture
<5%Electrical/electronics|Health|Cosmetics|Leather/shoes|Furniture|Paper|Textiles|Packaging|Detergentsandcleaners
*Otherindustries:approximately�0%oftotalsalesin2006
Resiliencetoindustry-specificdemandfluctuations
BASF’sstrengthisnotonlythatithasanextremelybroadproductrange,butalsothatitsuppliesalmosteveryindustryandgivesimportantincen-tivesforinnovations.Thisbalancemakesthecompanyrelativelyresilienttofactorsaffectingindividualindustries.
Superiorgrowthopportunities
Goodpositioningrowthmarkets
StrongpresenceinAsia
Enhancepositioninhighgrowthbusinesses
Activeportfoliooptimization
Acquisitionsincorebusinesses
Strategicpartnerships
Excellentinnovationplatform
Market-driveninnovation
Fivegrowthclusters
Excellentplatformtoenablefaster-than-marketgrowth
�6 �7
Verbund
VerbundOurVerbundisoneofBASF’sgreatestassetswhenitcomestousingresourcesefficiently.OurglobalVerbundisthefoundationforBASF’scompetitivenessinallregions.
Freeport
Geismar
Antwerp
Ludwigshafen
Nanjing
Verbund siteMajor chemical production site
Kuantan
Size,scaleandglobalpositioning
Cost-efficientproductionthroughsixworld-scaleVerbundsitesinallmajorregions
Preferredpartnerofchoicethroughproximitytocustomers
Top3marketpositionin75%ofallproductsandmarkets
AtourVerbundsites,productionplants,energyandwasteflows,logistics,
andsiteinfrastructureareallintegrated,sothatchemicalprocessescon-
sumelessenergy,producehigherproductyieldsandconserveresources.
ThankstoitsVerbundstructure,BASFsavesaround€500millioneach
yearatitsLudwigshafensitealone.
BylinkingplantsinaProductionVerbund,wecancreateefficientvalue-
addingchainsstartingwithbasicchemicalsandextendingtohigher
valueproductslikecoatingsandcropprotectionproducts.Inaddition,
by-productsfromoneplantcanbeusedasrawmaterialselsewhere.
Productionplantsareconnectedbyanintricatenetworkofpipesthat
providesanenvironmentallyfriendlymethodoftransportingrawmaterials
andenergyquicklyandsafely.
TheVerbundprinciplealsoappliestoenergy.IntheEnergyVerbund,the
excessheatgivenoffinchemicalreactionsisimmediatelyconvertedinto
steamandisfedintothesteamnetworksothatitcanbemadeavailableto
otherplants.Thisway,approximately�.6milliontonsoilequivalentissaved
globallybyBASF.In2006,emissionsofgreenhousegasespermetricton
ofsalesproductwerereducedbymorethan�2%comparedto2002.
TheVerbundprinciplealsoextendstoresearchandknowledgemanage-
mentandtocooperationbetweenBASFemployees,asitalsodoesto
cooperationwithcustomersanddialoguewithneighborsatoursites.
WestrengthenedourKnow-howandResearchVerbundlastyearthrough
acquisitionsandthedevelopmentofadditionalresearchcapacitiesinour
fourtechnologyplatforms.
�8 �9
VerbundVerbund
Advantagesforeconomicperformanceandtheenvironment
Extremelyefficientuseofrawmaterialsandenergy
Conservationofnaturalresources
Reductionofemissionsandwaste
InnovationsforBASFandourcustomers
PartnersintheVerbundnetwork
Productionplants
Researchunits
Customers
Sitecommunity
MainrawmaterialsfortheVerbund
ThemajorrawmaterialsthatfeedBASF’sVerbundproductionsitesarehydrocarbon-basedrawmaterialssuchasnaphthaandLPG(liquefiedpetroleumgas).ThesearefeedstocksforthesteamcrackersthatareoperatedinLudwigshafen,Germany;Antwerp,Belgium;PortArthur,Texas,UnitedStatesandNanjing,China.BASFmonitorsthemarketfornaphthaandhedgesitsexposurebyusingswapsandoptions.Otherimportanthydrocarbon-basedrawmaterialsarenaturalgas,benzene
andpropylene.FurtherrawmaterialsforBASFincludecyclohexane,ammonia,titaniumdioxideandmethanol.ForitsGermanoperations,BASFprimarilysourcesitsnaturalgasfromRussiabymeansoflong-termnaturalgassupplycontracts.IntheUnitedStates,BASFsecuresitsnaturalgasrequirementsbasedonshorter-termsupplycontractsrelatedtonationalsourceswithvarioussuppliers.
Majorrawmaterials–Ammonia–Benzene–Butadiene–Cyclohexane–LPG/Condensate
–Methanol–Naphtha–Naturalgas–Propylene–Titaniumdioxide
VerbundsiteNanjing,China
(Average tons/hour)
–1,000 –500 0 500 1,000
Steamconsumption
Steamproduction
Exothermic processes
Own energy power station
Endothermic processes
Example:VerbundenergysavingsinAntwerp,Belgium
Throughintelligentcombinationofproductionprocesses,theadditionalneedforenergyinourAntwerpsiteisminimal.
LinkingplantsinaProductionVerbundtocreateefficientvalue-addingchainsfrombasicchemicalstohighervalueproducts
Benefits
–Highlyefficientproduction=costleadership=significantcostsavings:approx.€500millionp.a.inLudwigshafenalone
–Resourceefficiencyandwastereduction=leadershipinsustainability=energysavings:approx.�.6milliontonsoilequivalentp.a.globally
–Integralknowledgemanagement=leadershipininnovations(>�,000patentsp.a.)
–Customerorientation=supplierofchoice
UniqueVerbundconcept:BASF’sinnovativeapproachtoverticalintegrationandresourceefficiency
Concept
–Integratedproduction
–Securedrawmaterialsupply
–Efficientuseofby-products
–Minimizationofgreenhousegasemissions
–Commoninfrastructure
–Combinedlogistics
–Integralresearchplatforms:GlobalR&DVerbund
–Integralcustomerinteraction
Oil&Gas BasicChemicals IntermediatesPlastics&Performance
ChemicalsAgrochemicals&FineChemicals
VerbundsiteNanjing:initialprojectscopemetrictons/year
Ethylene;propylene 600,000;300,000
Aromatics 300,000
LDPE(low-densitypolyethylene) 400,000
EO/EG(ethyleneoxide/ethyleneglycol) 300,000
AA(acrylicacid) �60,000
AE(acrylicesters) 2�5,000
OXO(oxoalcohols) 250,000
metrictons/year
Formicacid 50,000
Propionicacid 30,000
Methylamine 36,000
DMF(dimethylformamide) 40,000
Syngas(synthesisgas) 25,200Nm3/hOXO
2�,500Nm3/hH2
5,�00Nm3/hCO
Powerplant �80MW
Naphtha Oxygen Natural gas
Ethylene
Propylene
Crude C4
CO/H2
CO/H2
CO
CO
NH3MeOH
Propionicacid
Aromatics
Poly-ethylene
Ethyleneoxide
Oxoalcohols
Acrylic acid
Formicacid
Dimethylformamide
Methylamines
Syngas
Ethyleneglycol
Nonionicsurfactants
Butylglycolether
Butadiene
2-Propylheptanol
Polyisobutene& derivatives
Isobutene
SAP
Acrylates
Crackerexpansionto 750 kt/a
PlannedextensionofvaluechainsinNanjing,China
Example:ExtensionoftheNanjingVerbundsite
Plannedextension
Existingstate-of-the-artVerbundsiteinNanjing
20 2�
RecentAcquisitionsandPartnerships
RecentAcquisitionsandPartnershipsBASFpursuesanactiveportfoliomanagement.Overthepastyears,wehavecontinuouslychangedourportfoliothroughacquisitions,divestituresandpartnerships.
Growingthroughacquisitions
Ourgoalistoacquireprofitablebusinessesthat
–Generategrowthabovetheindustryaverage
–Areinnovation-driven
–Offeraspecialvaluepropositiontocustomers
–Reduceearningscyclicality
–Meetourfinancialcriteria:
-PositivecontributiontoEPS:accretivebyyearthreeatthelatest
-Minimumdiscountrate:9%appliedonearningsaftertax
-Additionalreturnrequirementsdependingoncountryrisk
Activeportfoliomanagement1997–2006
Majoracquisitions
Cropprotection(AHP,Fipronil,seedtreatment)
Superabsorbents
Oil&Gas(Dutchgasactivities)
Engineeringplastics
Electronicchemicals
Customsynthesis
Catalysts/pigments(Engelhard)
Constructionchemicals
Water-basedresins
€13billion(sales)
Majordivestitures
Pharmaceuticals
Fertilizers
Refineries
Decorativepaints
Fibers
Printingsystems
Polyolefins(BASELL)
PolystyreneNorthAmerica
Agchemgenerics
€11billion*(sales)
BASFCore
Businesses
Powerfulpartnerships
Total:NAFTARegionOlefinComplex
Shell:Ellba
Gazprom:Wingas,Achimgaz,YuzhnoRusskoye,NordStream
Sinopec
Petronas
*Includingnon-consolidatedsalesfromBASELL
RecentacquisitionsandpartnershipshelpshapeBASF’sfutureportfolio
–Morethan�5,000newemployeesin2006asaresultofacquisitions–Acquisitionsin2006contributed€4,230milliontoBASFGroup’ssales–Integrationofthenewbusinesseslargelycompletedbymid-2007
ProfitablegrowthremainsBASF’smostimportantgoal.Inordertoachievethisandtosuccessfullyshapethefuture,BASFinvestedinattractivebusinessesin2006.
22 23
Contributionofacquisitionsin2006Million € (unaudited figures) Sales EBITbefore
specialitemsEBIT
Engelhard since acquisition (June 6, 2006) 2,678 126 15
Degussa Construction Chemicals since acquisition (July 1, 2006) 1,120 80 21
Johnson Polymer since acquisition (July 1, 2006) 158 1 (4)
Atmorethan4%ofsales,theexpectedsynergiesfromtheacquisitionsarehigherthaninitiallyexpected.By20�0,totalsynergiesof€290millionareexpected.Integrationcostsoccurmainlyin2006and2007.
Synergiesfromacquisitions
Million€ Stand-alonesales2005 Synergiesby2010 Remarks
Engelhard 3,897* �60 Integrationcostmainlyin2006and2007|50%ofsavingstoberealizedby2007|80%ofsavingstoberealizedby2008|Includes€40millionofgrowthsynergies
DegussaConstructionChemicals
�,968 �00 Integrationcostmainlyin2006and2007|35%ofsavingstoberealizedby2007|70%ofsavingstoberealizedby2008|Includes€30millionofgrowthsynergies
JohnsonPolymer 3�0* 30 Integrationcostmainlyin2006and2007|60%ofsavingstoberealizedby2007|90%ofsavingstoberealizedby2008|Includes€�0millionofgrowthsynergies
Total 6,175 290
€615
€1,968
€310
Integrationofacquisitions
EngelhardCatalysts,incl.MaterialServices
DegussaConstructionChemicals
JohnsonPolymer
EngelhardAppearanceandPerformanceTechnologies
EngelhardVenturesBusinessesandothers
Inorganics
Catalysts
Petrochemicals
Intermediates
Chemicals
Styrenics
PerformancePolymers
Polyurethanes
Plastics
ConstructionChemicals
Coatings
PerformanceChemicals
FunctionalPolymers
PerformanceProducts
AgriculturalProducts
FineChemicals
AgriculturalProducts&Nutrition
Oil&Gas Oil&Gas
Other
*Source:Companyreports,€�=US$�.�797asofDecember30,2005
Sales2005inmillion*
€3,214
€67
RecentAcquisitionsandPartnerships RecentAcquisitionsandPartnerships
AcquisitionofEngelhardTheacquisitionoftheU.S.-basedcompanyEngelhardCorporationhasmadeBASFtheworld’sleadingsupplierintheexpandingcatalystsmarket,whichisgrowingataround5%peryear.Thepurchasepricefortheshareswasapproximately€3.8billion.
Excellentstrategicfit:
–Marketleaderingrowingautomotivecatalystmarket
–LeveragesBASF’sstrongknow-howandexcellentcustomerrelationshipswithautomotiveindustry
–ExpandsBASF’sownpigmentsbusiness
–StrongR&Dplatformincludingworld-classproprietarytechnology
–Contributestoreducedearningscyclicality
Sales2005: US$4,597millionEBITDA2005: US$43�million
BASF’scatalystbusinessisexpectedtogrowabovethechemicalmarketbasedonlegislationchangesandinnovativeproducts.
AcquisitionofDegussaConstructionChemicalsTheconstructionchemicalsmarketisadynamicallygrowingmarketwithavolumeofapproximately€29billion,relativelystablemarginsandhighpotentialforinnovation.ThecashofferfortheconstructionchemicalsbusinessofDegussawasaround€2.2billion.BASFhasbecomeaworldleaderintheconstructionchemicalsmarketbyacquiringthisbusiness.
Excellentstrategicfit:
–Strongmarketgrowth(4–5%p.a.)
–Highmargins
–Resilienttoeconomiccycles
–Accesstoadditionalcustomers(forwardintegration)
Sales2005: €�,968millionEBITDA2005: €269million
TheBASFConstructionChemicalsdivisionisexpectedtogrowabovemarketbasedoninnovationandstrongpresenceinallregions.
AcquisitionofJohnsonPolymerJohnsonPolymerisoneoftheworld’sleadingproducersandsuppliersofwater-basedresinsforthegraphicartsandcoatingsindustries.ByacquiringJohnsonPolymer,BASFhasinvestedinaprofitableandinnovativebusiness.Thecashofferforthedebt-freebusinesswas€379million.
Excellentstrategicfit:
–5%p.a.growthofwater-basedresinsmarket
–ComplementarytoBASF’sexistingportfolioofresins,technologiesandcustomerbase
–Significantcross-sellingopportunities
–StrongR&Dplatformincludingworld-classproprietarytechnology
–Contributestoreducedearningscyclicality
BASF’sresinbusinessisexpectedtogrowabovemarketbasedonsuperiorwater-basedtechnology.
BASF’smostimportantacquisitionsin2006ataglance
Gazprom–Since�993partnerinnaturalgastradingactivities.Thejointventures
(e.g.Wingas)buyandsellnaturalgas,buildandoperatenaturalgastransmissionsystemsandstoragefacilitiesandmarkettransportationandstoragecapacities.
–FurtherjointprojectsincludeAchimgaz,YuzhnoRusskoyeandNordStream(formoredetailspleaseseepages68and69).
Monsanto–ThecooperationwithMonsantoisdescribedindetailonpages24
and25.
Petronas–40%partnerinBASFPETRONASChemicalsSdn.Bhd.inKuantan,
Malaysia.
–ThejointventureoperatesaVerbundsitewithanacrylicscomplex,acomplexfortheproductionofsyngas,oxo-alcohols,phthalicanhydrideandplasticizersaswellasabutanediolplant.
Sinopec–50%partnerinBASF-YPCCompanyLtd.,theintegratedpetrochemicals
siteinNanjing,China,withatotalinvestmentofUS$2.9billioninthefirstphase.
–BASFandSinopecplantoexpandthesitewithaninvestmentvolumeofUS$900million.
Total–ViaATOFINAPetrochemicalsInc.40%partnerinBASFFINAPetro-
chemicals,whichoperatestheworld’slargestsingle-trainliquidssteamcracker.
–PartnerinSabinaPetrochemicalsLLC,ajointventurebetweenShellChemicalL.P.,BASFCorporationandATOFINAPetrochemicalsInc.,whichoperatesaworld-scaleC4olefinscomplexadjacenttothesteamcracker.
Partnerships
StrategicpartnershipswithotherleadingplayersareanimportantpillarinBASF’sactiveportfoliomanagement.Thesepartnershipshelpimprovetheprofitabilityoftheoverallportfolio.AmongthemostimportantpartnersforBASFare:
*€�=US$�.�797asofDecember30,2005
24 25
RecentAcquisitionsandPartnerships
JointR&DpipelinewithMonsantofocusedonhighyieldandstresstolerance
Focus Establishmentofajointtechnologyandcommercializationcollaborationthatcombinestheexpertiseofbothcompaniesforthecropscorn(maize),soybeans,cottonandcanola(oilseedrape).
Discovery Eachcompanymaintainsindependentdiscoveryprograms,whichwillgenerateleadstobenominatedfordevelopmentinjointR&Dpipeline.
Development Nominatedprojectsarejointlyfundedat50:50costsharingwithapotentialtotalofUS$�.5billionthroughallphasesofdevelopment.
Commercialization EmergingproductsarecommercializedbyMonsantounderabroadlicensingapproachtoseedcompaniesacrossMonsanto’sexistingthreecommercialchannels.Valuefromcommercializationissharedat60%forMonsantoand40%forBASF.
BASFhasaveryfocusedstrategyinplantbiotechnology–Creatingatechnologyplatformforhigh-throughputgeneidentification
–Establishingapipelineforhigh-qualityleadgenevalidation
–Focusingonmostattractiveagronomicandoutputtraitsof2ndand3rdgenerationfromtheverybeginning
–Developingtailor-madesolutionsforseedandmarketaccess
Today
–BASFisanattractivepartner
–BASFholdsanextraordinarytechnologypositionduetoitsnovelcombinationof‘metabolicprofiling’and‘phenotypicscreening’
–BASFrunsastrongearly-discoverypipelineidentifyinghighlypromisingleadgenes
Monsantohasthemostsuccessfultrackrecordintheindustrydeliveringtraitsbroadlytocommercialmarkets–MonsantoistherecognizedgloballeaderinAg-biotechnology
productsandsolutions
–Monsantohasanestablisheddevelopmentpipeline
–Monsantohasin-depthexperiencewithregulatoryprocesses
–Monsantohasastate-of-the-artgermplasmnetwork
Targetingtheneedsofmodernagriculture:cooperationofBASFandMonsanto
CombiningBASF’sexceptionaldiscoverypipelinewithMonsanto’simpressiveseeddistributionnetworkacceleratesinnovationandcreatesstrongermarketpenetration.
More–becauseincreasingandsecuringyieldisbeneficialtofarmersandconsumersworldwide.
Better–becausewecombinethebestplanttraits.
Faster–becausecropswithimprovedtraitswillbeavailabletofarmerssooner.
Thevaluecreationpotentialofa�0%yieldincreasevariesbetweencrops.Thetotalvalueofthe2006U.S.cornharvestwasaboutUS$34billion.Thetableillustratestowhatextentyieldofferssignificantvaluetofarmersandtraitproviders.Valuedriverswillbetheearningssplitbetweenfarmersandcompanies,marketshareandcoststomarket.
AllofBASF’sactivitiesinplantbiotechnologyareincorporatedinBASFPlantScience.BASFPlantSciencehasastrongearly-stagepipelinefocusingonthreemainareas:
Moreefficientagriculture–Example:Monsantocollaborationcoveringyieldandstress/droughttoleranceprojects
Better,healthiernutrition/feed–Example:Polyunsaturatedfattyacids(PUFAs)PUFAsarenutritionalsupplements.Someareforbabyfood,otherspreventageing,reducecardiovasculardiseasesandarteriosclerosis.Recommendationistotake�to2gramperday.Mainsourcestoday:fish,fishoil,algae.ProjecttargetistogrowPUFAsinoilcrops.Marketpotential:US$2billionby2020.
Plantsforuseasrenewablerawmaterials–Example:AmflorapotatoproducingamylopectinEuropeproducesabout2millionmetrictonsofpotatostarcheachyear,ofwhichalargeportionisusedforindustrialapplicationssuchaspaper,yarnsorglue.ItspureamylopectinstarchmakesAmfloraarenewablerawmaterialthathelpstosavematerial,energyandcosts.Marketpotential:peaklicensingincomeof€20–30millioninfiveyearsaftermarketintroduction.
MaincropsintheU.S.andCanada
Crop Areaharvested2006(millionacres)
Yield2006 Production2006 Averagefarmprice2006
Totalvalue(MillionUS$)
Add.valueof10%(MillionUS$)
Cotton �3 (pounds/acre)8�9
(millionpounds)�0,40�
(US$/pound)0.5
4,889 489
Corn 7� (bushel/acre)�49
(millionbushel)�0,5�9
(US$/bushel)3.2
33,662 3,366
Soybeans 75 (bushel/acre)43
(millionbushel)3,�85
(US$/bushel)6.2
�9,750 �,975
Oilseedrape/Canada �3 (ton/acre)�
(milliontons)9
(CN$*/ton)304.8
2,478 248
Sources:CottonComSoy:USDA2006Data;Canola:CanolaCouncilofCanada *CN$�=US$0.9
100 Trait acreage in million ha101
Specialties
Specialtytraits
Compositionaltraits
Yield
Pest resistance
Herbicidetolerance
Energycrops
Mass marketTrait valuein billion US$
10
1
Output traits (future)
Input traits(today)
Globalmarketforbiotechnologicaltraits
TheglobalmarketforbiotechnologicaltraitshasanestimatedmarketpotentialofUS$50billionby2025.BASFexpectstogainasignificantmarketshare.
26 27
Innovation
InnovationResearchandinnovationareessentialtoensureprofitablegrowthandtoshapethefuturesustainably.Innovativeproducts,improvedprocessesandintelligentsystemsolutionsplayamajorroleinensuringBASF’ssuccessandthesuccessofourcustomers.
Productinnovations–Targetedsalesfrompipeline
Opportunity fields Business cases Lab phase Pilot phase & launch
2004 2005 2006 2007 (plan)2003
982 986 1,064 1,277 1,400
CorporateResearchDivision R&D0
1500
1250
1000
750
500
250
TheincreaseofR&Dspendingin2006and2007(plan)isduetotheacquisitionsof2006andthefivegrowthclusters(forfurtherinformationseepages28and29).
R&Dexpendituresinmillion€
–Weexpecttogenerateannualsalesofover€4billionasof20�0fromneworimprovedproductsandapplicationsthathavebeenonthemarketforamaximumoffiveyears
–Asof20�5,weexpectthisfiguretoriseto€5billion
–About�0to20%ofthisisexpectedtobetop-linegrowth
Focusonmarket-driveninnovations
ProductInnovations
ProcessInnovations
SystemSolutions
Tailor-madebusinessmodels
Newfieldsoftechnology
28 29
Strongandgrowingpatentportfolio
2004 2005 200620032002
89,000 94,000 95,000 101,000 124,000
Patent portfolio per year
0
50
25
75
100
125
Aspartofourresearchstrategy,wecombinekeytechnology-driventopicsofrelevancetothefutureinfivegrowthclusters:energymanagement,rawmaterialchange,nanotechnology,plantbiotechnologyandwhitebiotechnology.Thesearecross-sectionaltechnologiesthattranscendtheconventionaldemarcationlinesbetweenspecialistareas.InterdisciplinaryandinternationalcooperationensurethatBASF’sinnovativestrengthcontinuestogrow.
–R&Dexpendituresforgrowthclustersmorethan€900millionfrom2006–2008(approx.30%fundedbydivisions,70%corporatefunding)
–Firstprojectsoutofgrowthclusterstocometomarketby2007
–Targetedannualsalesfromgrowthclusters20�0:€500–€�,000million20�5:€2,000–€4,000million
Businessmodel Productinnovation Processinnovation
Biology
Chemistry
Physics
EnergyManagement
WhiteBiotechnology
PlantBiotechnology
Nano-technology
RawMaterialChange
InnovationmatrixatBASF
EstablishedtechnologieswithinBASFaredevelopedfurtherbyourtechnologyplatforms,theirapplicationtodevelopedmarketsispushedbymarketingandtechnologyplatformstogether.Newbusinessdevelopmentisresponsiblefortappingnewmarketswithestablishedtechnologies.Ourexploratoryresearchopensnewtechnologiesformarketswearealreadyactivein.BASFPlantScience,BASFFutureBusiness,BASFVentureCapitalandBASFFuelCellsopenupnewtechnologiesforemergingbusinessfields. Te
chno
log
y NewtoBASF
Exploratoryresearch
BASFPlantScience
BASFFutureBusiness
BASFVentureCapital
BASFFuelCells
Estab-lishedatBASF
Technologyplatforms
Marketing
Newbusinessdevelopment
EstablishedatBASF NewtoBASF
Market
EnergymanagementBASFresearchersaredevelopingnewtechnologiesandmaterialsinareassuchasrenewableenergysources,energystorageandenergyconver-sion,forexamplefororganicsolarcellsandinnovativestoragemediaforhydrogen.
–Developmentofnewbusinessareasbasedoneconomicallyattractiveproductsandsystemsolutions,combininginternalknow-howandcollaborationwithcompetencecentersworldwide
–Expenditures2006–2008:approx.€80million
–Projects:membraneelectrodeassemblyforfuelcells,OLED(organiclightemittingdisplays)forlighting,photovoltaic,batterymaterials,newmaterialsforgasstorage,thermoelectric
RawmaterialchangeBASFexpertsareworkingonidentifyingcost-effectiveprocessesfortheutilizationofalternativerawmaterialssuchasnaturalgas,coalorrenew-ableresourcesandareevaluatingtheseprocessesaccordingtotechno-logical,economicandenvironmentalcriteria.
–Increasedusageofalkanes(naturalgas=C�–C4)andcoalasfeedstocksforestablishedvalue-addedchainsandusageofrenewableresources(e.g.sugar)asbasisforselectedproducts
–Technologicalleadershipwithalternativecost-competitiverawmaterialsources,usingspecialin-housecompetenceintheareasofsynthesis,catalysis,unitoperationsandprocessdevelopment
–Expenditures2006–2008:approx.€�00million
–Projects:Olefinsfromalkanes,coaltochemicals,utilizationofnon-foodbiomaterialssuchasbioethanol,sugarandglycerol
NanotechnologyBASFisoneoftheworld’sleadingcompaniesinthefieldofchemicalnanotechnologyandalreadyappliesitinestablishedfieldsofactivitysuchaspolymerdispersionsandcatalysts.Thisexpertiseiscontinuouslyexpandedthroughintensiveresearchintonanostructuredmaterialsandnanoparticles.
–Innovationforconstruction,households,automotive,personalcare,electronicsandenergy
–Expertiseinmanufacturingandapplicationofnanostructuredmaterialsandsurfaces,formulationsaswellasprocessengineering
–Strategicpartnershipstocomplementownstrengthsandtoincreasecertaintyofsuccess
–Developmentofnewmarketsandclients,competitiveadvantagethroughimprovedproductproperties
–Expenditures2006–2008:approx.€�80million
–Projects:Advancedmaterialsforinsulation,scratch-resistantcoatings,metal-organicframeworks(MOFs)forgasstorage,nanocomposites,OLEDsandsuperhydrophilic/-hydrophobicsurfaces
White(industrial)biotechnologyBASFcombinesitswide-rangingexpertiseinenzymecatalysisandfermentationtechnologywithitscorecompetenciesinchemistryandmaterialsciencestocreatenovelsolutionsforthechemicalindustry.Thefocusisonnewsustainableprocessesandenhancedbio-basedproductsforBASF’scustomers.
–Newproducts,processesandsystemsolutionsthroughfermentationandenzymetechnology
–Productionofchemicalsandpolymersbasedonrenewableresources
–Marketgrowthpotentialaboveaverage,broadknow-howinenzymecatalysisandfermentation,applicationknow-how
–Expenditures2006–2008:approx.€�60million
–Projects:Buildingblocksforpharmaceuticalindustry,naturalcompounds,feedadditives,productsforhygieneandcosmetics
PlantbiotechnologyExpertsfromBASFPlantSciencearedevelopingplantsformoreefficientagriculture,improvednutritionandforuseasrenewablerawmaterials.
–StrategicimportanceunderlinedbyrecentcooperationwithMonsanto:goalsarehigher-yieldingcropsandcropsthataremoreresistanttoadverseenvironmentalconditionssuchasdroughtforthecropscorn(maize),soybeans,cottonandcanola(oilseedrape)(seepage24)
–ComplementsBASF’sstrongpositioninagriculturalandfinechemicalsmarkets
–Expenditures2006–2008:atleast€400million
–Selectedprojects:Higheryieldandimprovedstresstolerance,potatoeswithimprovedstarchcomposition,oilseedswithhealthyfattyacids,nutritionallyenhancedcorn
WhenfoundingmetanomicsHealthin2003,BASFstartedtoadapttheknow-howonmeasuring,modelingandmasteringmetabolicnetworkstohumansandanimals.Thisopensupamultitudeofapplicationsintheareasoftoxicology,drugdevelopment,diseaseprognosticsanddiagnosticsaswellashealthandnutrition.
Focusonfivegrowthclusters
Innovation
DistributionofR&Dspending2006%
AgriculturalProducts&Nutrition 32
PerformanceProducts 23
Corporateresearch 20
Chemicals �4
Plastics ��
TotalR&Dexpenditures2006:€�.3billion
ApproximatelyonethirdofR&Dexpendituresareforenergyefficiencyandclimateprotection
Operationalunitsfinanceapprox.80%ofR&D
74%ofR&DexpendituresinGermany;�7%inNorthAmerica
>8,000employeesinR&Dworldwideatapprox.70sites
�,400R&Dcollaborationsworldwide;thereof,>40%withindustrialpartners,>50%outsideGermany
BusinessSegmentsOurbusinessportfolioiswellbalancedandoffersstronggrowthopportunities.Itconsistsoffivesegmentswith�4operatingdivisions.
34Inorganics36Catalysts38Petrochemicals40Intermediates
32Chemicals
44Styrenics46PerformancePolymers48Polyurethanes
52ConstructionChemicals54Coatings56FunctionalPolymers58PerformanceChemicals
42Plastics 50PerformanceProducts
62AgriculturalProducts64FineChemicals
60AgriculturalProducts&Nutrition
66Oil&Gas
30 31
33
BusinessSegments
Segmentsalesin2006Million€
Inorganics �,�34
Catalysts 2,4��
Petrochemicals 5,754
Intermediates 2,273
ChemicalsThesynergiesofVerbundensureourcompetitivenessinproducingorganicandinorganicbasicchemicals,aswellasintermediatesandcatalysts.Integratedproductionplants,innovativeprocessesandtheadvantagesofmodernlarge-scaleplantshelpusachieveourgoalofcostleadershipandoperationalexcellence.WeparticipateinthemajorgrowthmarketsvianewVerbundsites.Weenhanceourportfoliowithhigher-valueproductsthroughinnovationsandacquisitions.
Segmentdata¹
Million€ 2002 2003 2004 2005 2006
Salestothirdparties 5,3�7 5,752 7,020 8,�03 ��,572
ShareoftotalBASFsales(%) �6.5 �7.2 �8.7 �9.0 22.0
ThereofInorganics 695 738 785 945 �,�34
Catalysts – – 59 72 2,4��
Petrochemicals 2,902 3,264 4,�89 5,084 5,754
Intermediates �,720 �,750 �,987 2,002 2,273
Intersegmentaltransfers 2,598 2,680 3,395 3,826 4,483
Salesincludingintersegmentaltransfers 7,9�5 8,432 �0,4�5 ��,929 �6,055
Incomefromoperationsbeforedepreciationandamortization(EBITDA) �,�42 928 �,857 �,942 2,235
EBITDAmargin(%) 2�.5 �6.� 26.5 24.0 �9.3
Incomefromoperations(EBIT)beforespecialitems 676 500 �,377 �,488 �,704
EBITbeforespecialitemsmargin(%) �2.7 8.7 �9.6 �8.4 �4.7
Incomefromoperations(EBIT) 635 393 �,284 �,326 �,380
EBITmargin(%) ��.9 6.8 �8.3 �6.4 ��.9
Incomefromoperations(EBIT)aftercostofcapital – – – 7�7 479
Assets 4,997 4,720 5,2�9 6,�46 �0,473
Researchanddevelopmentexpenses 98 �08 98 ��4 �78
Additionstoproperty,plantandequipmentandintangibleassets 495 527 60� 639 3,539�Startingin2005,theaccountingandreportingoftheBASFGroupisperformedinaccordancewithInternationalFinancialReportingStandards(IFRS).The2004figureshavebeenreportedinaccordancewithIFRS.Thefiguresforyearsuptoandincluding2003werepreparedaccordingtoGermanGAAP.
FactorsinfluencingsalesContributiontosalesgrowth(%)
2002 2003 2004 2005 2006
Volumes 26 �2 �3 5 9
Prices (6) 5 �0 8 6
Currencies (4) (�0) (5) 0 (�)
Acquisitions/divestitures 2 � 4 2 29
Total 18 8 22 15 43
34 35
BASF’sInorganicsdivisionmanufacturesabroadrangeofchemicalproductsofwhichapproximately50%areusedcaptively.Theproductssoldtoexternalcustomersareusedworldwideinmanydifferentindustries.TheInorganicsdivisionissuccessfulinmanagingacomplexportfolioconsistingofcommodities(mainlyforcaptiveuseinBASF’sVerbund)andspecialties(typicallyuniqueproductswithstrongmarketexpertise,significantgrowthpotentialandhighmarketshares).
MainproductsElectronicmaterials(high-puritychemicalsandformulationsforthesemiconductorandflatpaneldisplayindustries)|Inorganicspecialties(carbonylironpowder,metalinjectionmolding/Catamold®,boranes,alcoholates,hydroxylaminefreebase)|Inorganicchemicals(basicinorganicfeedstocks,inorganicsalts)|Gluesandimpregnatingresins(basicinorganicfeedstocks,melamine,ureasolutionforuseastruckfueladditive/AdBlue®,gluesandresinsforthewoodworkingindustry)
BASFmarketpositionElectronic materials:leadingmarketpositionsinAsiaandEurope|Inorganic specialties:leadingmarketpositionsinEuropeandNAFTA|Inorganic chemicals:#�ininorganicsaltsinEurope|Glues and impreg-nating resins:#�ingluesinEurope,amongtop3inimpregnatingresinsandmelamineinEurope
MaincompetitorsArkema|Degussa|DSM|Gentek|Nordkemi|Yara
Mostinteresting,fastestgrowingmarketsElectronicsindustryinAsia|Pharmaceuticalindustryglobally|BiodieselindustryinEurope
Estimated market growth (2007–2012): Electronicmaterialsglobal+8%|Inorganicspecialtiesglobal+6%|InorganicchemicalsEurope+2%andgluesandimpregnatingresinsEurope+2%
BASFleverstooutperformthesemarketsStrongtechnologypositionfornewspecialtiesandnewapplicationsforestablishedspecialties|Partnershipswithinnovativecustomers|Costleadershipincommoditiesthroughworld-scaleplantsandVerbundintegration
FocusofR&DElectronicmaterials,inorganicspecialtiesaswellasgluesandresinsarethemainfocusofinnovationinInorganics.Inelectronicmaterialsandinorganicspecialtiesthefocusisonnewproductdevelopment.Gluesandresinsfocusonnewproductsandengageinprocess-improvinginnovationprojects.
Inorganics
2004 2005 200620032002
Million €
695 738 785 945 1,134
0
1
2
Salesdevelopment
Highlyprofitablebusinessmixofcommoditiesandspecialties
Keydriversofprofitability
Marginsinmajorcommodityfeedstocks(e.g.ammoniaandcausticsoda)
Costleadershipandcompetitivenessalongthevariousinorganicvaluechains
Growthandinnovationwithspecialtiesincustomerindustries(e.g.electronicsandpharmaceuticals)
KeycapabilitiesofBASF
Costleadershipincommoditiesthroughworld-scaleplantsandVerbundintegration
Strongtechnologyplatformfordevelopingnewspecialtiesandfindingnewapplicationsforestablishedspecialties
Buildingpartnershipswithinnovativecustomers
Innovationexamples1. Carbonyl Iron Powder:Usedinmagnetorheo-logicalfluids(MRF)forshockabsorption(4WD-clutch,adaptivebridgedampers).2. CMP Slurries:Chemical-mechanicalplanariza-tionofcopperlayers,basedoncleaningissuesforthesemiconductorindustry.3. Advanced Kaurit® brands:Meetmajorchal-lengesofthewoodworkingindustryintermsofreducedformaldehydeemissions,oraddvalueforendconsumersintermsofreducedelectro-staticchargeandimprovedscratchresistance.
1
2
3
Salesbymajorindustries2006%
Computerandelectronics 29
Chemicals 22
Construction �2
Plasticsandrubber 6
Others 3�
Salesbyregion2006%
Europe 66
NorthAmerica(NAFTA) 8
AsiaPacific 22
SouthAmerica,Africa,MiddleEast 4
Acquisitions/JVs/Investments(2004–2006)
Productgroup Description Year
Electronicmaterials AcquisitionoftheelectronicmaterialsbusinessfromMerckKGaA(Germany)
2005
Electronicmaterials Start-upcleanroomlaboratoryinLudwigshafen,Germany,forprocesschemicalsforthesemi-conductorindustry
2006
Catalysts AcquisitionofEngelhardandtransferofcatalystbusinessfromInorganicsdivisiontonewlyestablishedCatalystsdivision
2006
Investments(from2007onwards)
Productgroup Description Year
Electronicmaterials Start-upoftheElectronicMaterialsCenterEuropeinLudwigshafen,Germany
2007
MajorcapacitiesofBASF
Ammonia Ludwigshafen,Germany 875kt
Ammonia Antwerp,Belgium 650kt
Causticsoda Ludwigshafen,Germany 360kt
Chlorine Ludwigshafen,Germany 360kt
Formaldehydecondensationproducts
Ludwigshafen,Germany 750kt
Methanol Ludwigshafen,Germany 450kt
Sulfuricacid Ludwigshafen,Germany 550kt
Sulfuricacid Antwerp,Belgium 220kt
Urea Ludwigshafen,Germany 545kt
36 37
2004 2005 200620032002
59 72 2,411
Million €
0
1
2
3
4
Salesdevelopment* Salesbymajorindustries2006%
Motorvehicles 45
Chemicals �6
Petroleumandcoal �4
Plasticsandrubber 7
Others �8
Salesbyregion2006%
Europe 39
NorthAmerica(NAFTA) 36
AsiaPacific �5
SouthAmerica,Africa,MiddleEast �0
Catalysts
1
2
3
BASF’sCatalystsdivisionistheglobalmarketleaderincatalysis.ItconsistsofthecatalystsandpreciousmetalsoperationsofEngelhardCorp.,acquiredinJune2006,andBASF’sexistingcatalystsbusiness.Thedivisiondevelopsandproducesemission-controlcatalystsandmarketsthemworldwide.Thedivisionexpandsitsleadingroleincatalysttechnologythroughcontinuousprocessandproductinnovation.
MainproductsThree-waycatalysts|Dieseloxidationcatalysts|Catalyzedsootfilter|Selectivecatalyticreductiontechnology|Refiningcatalysts(NaphthaMax™)|Gas-to-liquidscatalysts|Chemicalcatalysts|Polypropylenecatalysts(Lynx™)
BASFmarketpositionEmission-controlcatalysts:#�|Refinerycatalysts:#3|Chemicalcatalysts:#�
MaincompetitorsEmission-control catalysts: JohnsonMatthey,Umicore|Refinery catalysts:Grace,Albemarle,CRI|Chemical catalysts:Süd-Chemie,Degussa,HaldorTopsoe
Mostinteresting,fastestgrowingmarketsLight-andheavy-dutydieselemission-controlcatalysts|Gas-to-liquidscatalysts|Refinerycatalysts|Catalystsforconversionofalternativerawmaterialsintoenergy|CatalystmarketsinChina,India,MiddleEast
Combiningthestrengthsoftwocatalystpioneerstoexpandtheworld’sleadingcatalystbusiness
Keydriversofprofitability
Technologyinnovation
Tighteningofcleanairregulationsdrivingdemandfornewemission-controlcatalysts
Risingrawmaterialcostsandalternativerawmaterialsourcesdrivingprocesscatalystdemand
Productionefficiency
Strictworkingcapitalmanagement
KeycapabilitiesofBASF
Technologyleadershipinemission-controlandprocesscatalysis
Fundamentalunderstandingofpreciousmetalmarkets
Partnershipswithindustryleaders
StrongpositioninAsiathroughjointventures
Innovationexamples1. Catalyzed Soot Filter: Firsttrapsparticulatesfromdieselengines,thenusespatentedcatalysttechnologytoburnthem.
2. NaphthaMax II™: Catalystthatsignificantlyboostsgasolineyieldfromcrudeoilrefining.
3. Novel Metal Zeolites: Newhigh-performancematerialsfordieselcatalystapplications.
Estimatedglobalcatalystsmarketgrowth
TargetsforBASFCatalysts–Growthtarget(2007–20�2):7%p.a.–Maintainhighmargins
CAGR* = 5%
2007 2012
10.0
12.9
+7.5% p.a.
+4.0% p.a.
+4.0% p.a.
Strategically relevant markets**
Emission-controlcatalysts
Refinery catalysts
Chemical catalysts
*Compound annual growth rate **Excluding precious metals
Billion €
*BASFcatalystbusinessasof2004andEngelhardcatalystbusinessasofJune6,2006
Mobileemission-controlmarketshare43%BASFmarketshareinAsiaincludingour
jointventuresinKoreaandJapan
Currentlyserving>50%ofglobaltransplantbusinessfromJapanandKorea
LeveragingBASF’sregionalstrengthespeciallyinrapidlygrowingChinesemarket
BASFisthemarketleaderforautomotivecatalystsinAsia
BASFleverstooutperformthesemarketsLargestglobalcatalystR&Dcapability|Recognizedpreciousmetalsexpertise|Operationalexcellenceincatalystproductionanduse|Strongcustomerrelationships|UnrivaledpositioninAsiaPacific
FocusofR&DInnovationinCatalystsiscrucialforallourproductgroups.Forprocesscatalystsnewandimprovedproductsarepriorities.Forenvironmentaltechnologiesthefocusliesonimprovedproductstomeetnewexhaustgasstandardsespeciallyfordiesel.
Acquisitions/JVs/Investments(2004–2006)
Productgroup Description Year
Environmentalcatalysts AcquisitionofReeCatmotorcyclecatalysts,China
2006
Investments(from2007onwards)
Productgroup Description Year
Environmentalcatalysts DieselcapacityexpansioninHuntsville,Alabama
2008
Environmentalcatalysts CapacityexpansioninChennai,India 2008
Environmentalcatalysts NewmanufacturingplantinMoscowregion,Russia
2008
Refinerycatalysts CapacityexpansioninSavannah/Attapulgus,Georgia
2008
Polyolefincatalysts CapacityexpansioninPasadena,Texas,andTarragona,Spain
2008
Chemicalcatalysts CapacityexpansioninDeMeern,theNetherlands
2008
38 39
ThePetrochemicalsdivisionistheprofitablecornerstoneofBASF’spetrochemical-basedvaluechainsthroughouttheregions.Thedivisionmanufacturesandmarketsabroadportfolioofcrackerproducts,industrialgases,alkyleneoxides,gylcols,solventsandplasticizers.Majorimportanceisattachedtoprovidinghighlycompetitive,intelligentsolutionsfortherawmaterialrequirementsofexternalandinternalcustomers.
MainproductsEthylene|Propylene|Butadiene|Alkyleneoxidesandglycols|Aromatics|Solvents(Solvenon®)|Plasticizers(Palatinol®)|Hexamoll®DINCH
BASFmarketpositionOxoC4alcohols#�|Plasticizers#2|Ethyleneoxideandethyleneglycols#2inEurope
MaincompetitorsCracker products:ExxonMobilChemical,Sabic,ShellChemicals|Solvents:Dow,Eastman,Oxea|Plasticizers:ExxonMobilChemical,Eastman,Oxeno,UPC,Aekyung|Alkylene oxides and glycols:Dow,Sabic,ShellChemicals,Ineos
Mostinteresting,fastestgrowingmarketsPlasticizersandsolventsinAsia,especiallyChina|GlycolsandethyleneoxidederivativesinAsia
Estimated market growth (2007–2012): Solvents+3%|Plasticizers+2.5%|Alkyleneoxidesandglycols+4%
BASFleverstooutperformthesemarketsPlasticizers:Innovativeproducts,e.g.Hexamoll®DINCH|Solvents:Newcompetitiveproducts(2-PH)andoptimizedproductionstructure|General:Leadingtechnologyposition
FocusofR&DThefocusofR&DactivitiesisondevelopingnewandimprovedprocessesbyadaptingandoptimizingfeedstockstosupplyourVerbundvaluechainsatcompetitivecosts.Productinnovationisprimarilyfocusedonplasticizers.
Acquisitions/JVs/Investments(2004–2006)
Productgroup Description Year
Butadiene NewplantinPortArthur,Texas� 2004
Ethylene,propylene,aromatics,ethyleneglycols,oxoalcohols
Start-upofproductioninNanjing,China2
2005
2-Ethylhexanol CapacityexpansionFreeport,Texas 2005
Cyclohexane NewplantinMannheim,Germany 2006
2-Propylheptanol Conversionof2-EHPasadena,Texas
2006
Investments(from2007onwards)
Productgroup Description Year
Ethylene,propylene,benzene SteamcrackerexpansioninAntwerp,Belgium
2007
Plasticizers NewplantinPasadena,Texas 2007
Hexamoll®DINCH CapacityexpansioninLudwigs-hafen,Germany
2007
Ethylene,propylene,butadiene,ethyleneoxide,oxoC4,glycolether
2ndphaseinNanjing,China2 2009
�BASF24%,2BASF50%
Petrochemicals
2004 2005 200620032002
Million €
2,902 3,264 4,189 5,084 5,754
0
2
4
6
8
Salesdevelopment
PetrochemicalsaretheheartofouruniqueVerbundconcept
Keydriversofprofitability
Costleadership
Economiesofscale
Leadingprocesstechnology
Efficientproductionprocess
Highcapacityutilization
KeycapabilitiesofBASF
World-scaleproductionfacilities
Productionclosetocustomersingrowthregions
Strongmarketpositionandapplicationknow-how
Costbenefitsfrombackwardintegration(Verbund)andleadingtechnologyposition
Innovationexamples1. Product innovation – Monopropylene Glycol: Designofnewprocessbasedonglycerin,by-productofbiodiesel,nearlycompleted.Switchfromoiltoglycerinasrawmaterialbasisveryattractiveandcompetitive.Feasibilityofworld-scaleplantunderevaluation.2. Process innovation – New production process for plasticizers:Highercapacities,reducedalcoholloss,reducedwastewater.3. Product/process innovation – DPHP Plasticizer:Broadapplicationpropertiesandcost-effectiverawmaterialsource.
1
2
3
Divestitures/Shutdowns(2004–2006)
Productgroup Description Year
Phthalicanhydride,Diethylhexyl-phthalate(DEHP)
ClosureofproductionatFeluy,Belgium
2005
2-Ethylhexanol(2-EH) ClosureofproductioninLudwigs-hafen,Germany
2005
MajorcapacitiesofBASF
Ethylene (Propylene) PortArthur,Texas� 935kt (830kt)
Antwerp,Belgium 800kt (450kt)
Ludwigshafen,Germany 620kt (350kt)
Nanjing,China2 600kt (300kt)
Tarragona,Spain – (350kt)
Benzene Ludwigshafen,Germany 300kt
Antwerp,Belgium 250kt
Nanjing,China2 �30kt
PortArthur,Texas� ��0kt
Ethyleneoxide(equivalents) Antwerp,Belgium 420kt
Ludwigshafen,Germany 285kt
Nanjing,China2 250kt
Geismar,Louisiana 220kt
OxoC4alcohols Ludwigshafen,Germany 560kt
Freeport,Texas 300kt
Kuantan,Malaysia� 250kt
Nanjing,China2 250kt
Plasticizers(incl.Hexamoll®DINCH) Ludwigshafen,Germany 360kt
Pasadena,California �25kt
Kuantan,Malaysia �00kt
Cornwall,Canada 35kt�BASF60%,2BASF50%
Salesbymajorindustries2006%
Chemicals 23
Petroleumandcoal 20
Plasticsandrubber �3
Construction �0
Motorvehiclesandparts 6
Foodandbeverage 4
Agriculture 3
Others 2�
Salesbyregion2006%
Europe 36
NorthAmerica(NAFTA) 49
AsiaPacific �3
SouthAmerica,Africa,MiddleEast 2
40 4�
TheIntermediatesdivisionmanufacturesapproximately600productswhicharesoldworldwide.Theyaregenerallyquiteresilienttoeconomiccyclesandareoftentheresultofmulti-stepproductionprocesseswithinBASF.Customerstypicallypurchasethemasprecursorsfortheirdownstreamchemicals.BesidesexternalsalesthedivisionsellsitsproductswithinBASF,withinternaltransfersaccountingfor25%ofthedivision’stotalsales.
MainproductsAmines:Ethanolaminesandderivatives|Alkylamines,aromaticamines|Specialties|GastreatmenttechnologyButanediol and derivatives: Tetrahydrofurane,PolyTHF®|Gamma-buty-rolactone,N-MethylpyrrolidonePolyalcohols and specialties:�,6-Hexanediol(HDO®)|Neopentylglycol(Neol®)|Carbonates,specialacetylenicsAcids and specialty intermediates:Formicacid|Propionicacid,2-ethyl-hexanoicacid|Specialtieslikephosgenederivatives
BASFmarketpositionBASFisamongthetopthreeproducersworldwideofthemainproductsofitsfourstrategicintermediates’businessunits(seeabove).
MaincompetitorsAmines:Taminco,Dow,Huntsman|Butanediol and derivatives:ISP,Invista,Lyondell,Dairen,Mitsubishi,newentrants,esp.Chinese|Polyalcohols and specialties:Eastman,Ube|Acids and specialty intermediates:Kemira,Perstorp
Mostinteresting,fastestgrowingmarketsSpandexinAsia|Oilfieldchemicals|Specialtycoatings/resins|Epoxy
Estimated market growth (2007–2012): Amines+4%|Butanediolandderivatives+6%|Polyalcoholsandspecialties+4%|Acidsandspecialtyintermediates+3%
FocusofR&DInnovationinIntermediatesiskeyforallproductgroupstogrowbusinessesandimproveprofitability.Whereasforbutanediolandderivativesthefocusliesonprocessimprovements,amines,polyalcohols,acidsandspecialtiesdevelopmanynewproductsusingvaluechainintegration,ourbroadtechnologicalstrengthandclosecustomerpartnerships.
Acquisitions/JVs/Investments(2004–2006)
Productgroup Description Year
PolyTHF® NewplantinCaojing,China 2005
Formic/Propionicacid,methylamines,DMF NewplantinNanjing,China 2005
Investments(from2007onwards)
Productgroup Description Year
Alkylethanolamines NewplantinGeismar,Louisiana
2007
Cyclododecanone NewplantinLudwigshafen,Germany
2009
Intermediates
2004 2005 200620032002
Million €
1,720 1,750 1,987 2,002 2,273
0
1
2
3
4
Salesdevelopment
Afterrestructuring,highlyprofitablewithstronginnovationpipeline
Keydriversofprofitability
‘Valueovervolume’strategy
Achievingtechnologicalandcostleadership
Offeringcustomizedinnovativeproducts
Globalproductionpresence
KeycapabilitiesofBASF
Globalset-up
Leadingmarketpositions
Technologyleadership
Economiesofscale,costleaderatVerbundsites
Highlyqualifiedandexperiencedpersonnelwithstrongmarketknowledgeandtechnicalcapabilitiestoprovidesuperiorsolutionstoourcustomers
Innovationexamples1. Gas Scrubber (Castor):Aspartofthe“Castor”researchprojectsponsoredbytheEuropeanUnion(EU),BASFisdevelopinginnovativesolventsenablingefficientremovalofcarbondioxide(CO2)frompowerplantexhaustgases.
2. Processing of cellulose with ionic liquids: IncooperationwiththeUniversityofAlabamaandholdingkeyintellectualpropertyrightsunderlicense,BASFisinvestigatingtheprocessingofcelluloseintechnicallyusefulconcentrationsthroughtheuseofionicliquids.
3. CDon (cyclododecanone): BASFisbuildingaproductionplantinLudwigshafen,Germany,forCDon.Theinnovativeprocessconsistsofthreestagesinsteadofthefivepreviouslyrequired.
4. Tekion: BASFandtheU.S.-basedcompanyTekionInc.arecollaboratingonthedevelopmentofreplaceableformicacidcartridgesforuseinTekion’smicrofuelcelltechnologyformobileelectronicdevices.
Salesbymajorindustries2006%
Chemicals 22
Transportationincl.automotive �2
Plasticsandrubber ��
Agriculture �0
Construction 9
Foodandbeverage 8
Pharmaceuticals 5
Others 23
Salesbyregion2006%
Europe 5�
NorthAmerica(NAFTA) �7
AsiaPacific 27
SouthAmerica,Africa,MiddleEast 5
1
2
3
4
Divestitures/Shutdowns(2004–2006)
Productgroup Description Year
THF,gamma-Butyrolactone,N-Methylpyrrolidone
ClosureinFeluy,Belgium 2005
Tetrahydrofurane,PolyTHF® ClosureinYokkaichi,Japan 2006
Divestitures/Shutdowns(from2007onwards)
Productgroup Description Year
Tetrahydrofurane MothballinginCaojing,China
2007
MajorcapacitiesofBASF
�,4-Butanediol 505kt
�,6-Hexanediol(HDO®) 42kt
Alkylamines 22�kt
Ethanolaminesandderivatives 270kt
Formicacid 230kt
Neopentylglycol(Neol®) �45kt
PolyTHF® �85kt
Propionicacid ��0kt
43
BusinessSegments
PlasticsBASFisagloballyleadingsupplierofplastics–theeco-efficientmaterialsofthefuture.Instandardplastics,wehaveaportfoliooffocusedproductlinesandhighlyefficientmarketingprocesses.Inourbusinesswithspecialties,weofferawiderangeofhigh-valueproducts,systemsolutionsandprocesses.Inclosecooperationwithourcustomers,weconstantlyextendthisrangeandaddnewapplications.
Segmentsalesin2006Million€
Styrenics 4,994
PerformancePolymers 2,932
Polyurethanes 4,849
Segmentdata¹
Million€ 2002 2003 2004 2005 2006
Salestothirdparties 8,477 8,787 �0,532 ��,7�8 �2,775
ShareoftotalBASFsales(%) 26.3 26.3 28.� 27.4 24.3
ThereofStyrenics 3,387 3,626 4,450 4,5�8 4,994
PerformancePolymers 2,270 2,239 2,587 2,909 2,932
Polyurethanes 2,820 2,922 3,495 4,29� 4,849
Intersegmentaltransfers 436 54� 677 47� 526
Salesincludingintersegmentaltransfers 8,9�3 9,328 ��,209 �2,�89 �3,30�
Incomefromoperationsbeforedepreciationandamortization(EBITDA) �,��4 794 �,�93 �,504 �,7�5
EBITDAmargin(%) �3.� 9.0 ��.3 �2.8 �3.4
Incomefromoperations(EBIT)beforespecialitems 593 363 752 �,03� �,2�6
EBITbeforespecialitemsmargin(%) 7.0 4.� 7.� 8.8 9.5
Incomefromoperations(EBIT) 582 296 694 �,0�5 �,�92
EBITmargin(%) 6.9 3.4 6.6 8.7 9.3
Incomefromoperations(EBIT)aftercostofcapital – – – 378 5�4
Assets 6,�74 5,598 6,�87 6,639 6,9��
Researchanddevelopmentexpenses �38 �42 �36 �35 �45
Additionstoproperty,plantandequipmentandintangibleassets 636 539 473 490 63��Startingin2005,theaccountingandreportingoftheBASFGroupisperformedinaccordancewithInternationalFinancial
ReportingStandards(IFRS).The2004figureshavebeenreportedinaccordancewithIFRS.Thefiguresforyearsuptoandincluding2003werepreparedaccordingtoGermanGAAP.
FactorsinfluencingsalesContributiontosalesgrowth(%)
2002 2003 2004 2005 2006
Volumes �2 9 9 � 5
Prices (5) 5 �5 9 4
Currencies (3) (9) (5) � 0
Acquisitions/divestitures 0 (�) � 0 0
Total 4 4 20 11 9
44 45
Styrenics
2004 2005 200620032002
Million €
3,387 3,626 4,450 4,518 4,994
0
2
4
6
8
Salesdevelopment Salesbymajorindustries2006%
Electricalandelectronics 22
Packaging 22
Construction 20
Others 36
Salesbyregion2006%
Europe 47
NorthAmerica(NAFTA) �9
AsiaPacific 27
SouthAmerica,Africa,MiddleEast 7
KeydriversofprofitabilitySteeringglobalcapacitiesConsistentorientationaccordingtobusinessmodelsSupplyanddemandbalanceforstyrenemonomersCostcompetitivenessalongthestyrenemonomersvaluechainAbilitytoinnovateCompetitiverawmaterialsourcing
KeycapabilitiesofBASFClearfocusonbusinessmodelsspecialtiesandcommoditiesState-of-the-arttechnologyandprocessexpertiseGlobalcustomerofferingwithattractiveproductandserviceportfolioInnovationplatform
Innovationexamples1. Product innovation – Palusol®, new sandwich panels for fire doors:Fire-protectionpanelsasasandwichsystem(SW)inconjunctionwithhigh-densityfiberpanels(HDF).ThePalusol®panelscanbegluedtootherdoorcomponents.Certifiedtoresistfirefor20to90minutes.
2. Business model innovation – PermaSkin®: Tailor-madesystemcombiningtheLuran®Smaterial,acustom-formulatedadhesivesystemplusapplicationandtechnologyknow-how.The3-dimensionaljointandsolidtimberproductsareusede.g.forframesandreliefsurfaces,doorinfillpanelsandMDFtabletops.
3. Product innovation – Basotect® TG:Firstthermosetfoamthatcanbeshapedunderheat.Basotect® UL:Abletomeetaircraftcon-structionrequirementsintermsofsoundpro-tectionandweightreduction.Basotect® UF:Forcushioningmattressesandupholsteringsofas.Veryfire-resistant,facilitatingcompliancewiththestringentsafetyregulationsofAmericanconsumer-protectionauthorities.
4. Process innovation –Neopor® the new ex-pandable polystyrene: Representsthebasisforanewgenerationofthermalinsulationmate-rials.Thesilver-grayfoamedgranulesareusedtomanufactureinsulationpanelsforwallsandroofs.Thegranulescontainspecial,smallgraphiteparticleswhichreflectheatwaveslikeamirror,thusreducingheatlossinthehouse.
BASF’sStyrenicsdivisionisoneofthelargestproducersofpolymersbasedonstyrenemonomer,includingstandardmaterialsandtailor-madespecialties.Foamablematerialsbasedonpolystyreneareidealforefficientinsulationofbuildings.Specialtyfoamsareusedinawidevarietyofareasincludingautomotive,aircraftconstructionandfurniture-making.Standardpolymerscanbefoundinabroadrangeofapplicationsincludingpackaging,appliancesandofficeequipment.
MainproductsPolystyrenePS|ExpandablepolystyreneEPS(Styropor®andNeopor®)|ExtrudedpolystyreneXPS(Styrodur®)|Styrene-acrylonitrilecopolymersSAN(Luran®)|Acrylonitrile-butadiene-styrenecopolymers(Terluran®)|Acrylonitrile-styrene-acrylatecopolymersABS(Luran®S)|Methacrylate-acrylonitrile-butadiene-styrenecopolymers(Terlux®)|Styrene-butadiene-blockcopolymersSBC|Melamineresinfoam(Basotect®)
BASFmarketpositionCommodities:Styrene#�|Expandablepolystyrene#�|Polystyrene#2|ABS/SAN#3|Specialties:Foamsamongtop3|Thermoplastics#�
MaincompetitorsPS: Dow,Total,Nova-Innovene|ABS/SAN:ChiMei,LG,Formosa,Lanxess|EPS:Loyal,Xingda,Taita|SM:Shell,Dow,Total
Mostinteresting,fastestgrowingmarketsInsulationmaterialtosaveenergy;supportedbyproductssuchasStyropor®andNeopor®|Strongdemandforspecialtiese.g.Ecoflex®,Ecovio®andBasotect®
Estimated market growth (2007–2012): PS+�–2%|SBC+4–5%|ABS/SAN+5%|SM+3%|Specialties>�0%
BASFleverstooutperformthesemarketsLeveragingeconomiesofscaleforcommoditiesanduniquevaluepropo-sitionsforspecialties|Innovationinproducts,applications,processesandbusinessmodels
FocusofR&DForspecialties,thefocusliesonnewproductandapplicationdevelopmentforcustomerindustriessuchasbuildingandconstruction(e.g.insulationmaterialsforenergysavings),medicaltechnologyandpackaging(e.g.biodegradablematerial).DevelopingnewandimprovedprocessesandtechnologiesaretheprioritiesinR&Dforthestyreniccommoditiesbusiness.
Acquisitions/JVs/Investments(2004–2006)
Productgroup Description Year
Styrenecopolymers ProductionstartofnewplantinAntwerp,Belgium
2004
Styrenecopolymers AcquisitionofLanxessbusinessinEuropeandSouthAmericaandRepsolbusinessinEurope
2006
Divestitures/Shutdowns(2004–2006)
Productgroup Description Year
Polystyrene SaleofbusinessinUSAandCanada 2005
Styropor® ClosureofproductioninSouthBrunswick,NewJersey
2005
Polystyrene ShutdownofplantinTarragona,Spain 2006
MajorcapacitiesofBASF
Styrene 2,600kt
Polystyrene �,500kt
Styropor®,Neopor® 780kt
Terluran®,Luran®,Luran®S 760kt
Leadingsupplierofstandardstyrenepolymersandspecialtythermoplasticsandfoams
1
2
3
4
46 47
BASF’sPerformancePolymersdivisionisoneoftheworld’sleadingsuppliersofengineeringplastics,extrusionpolymersandfiberintermediates,whichcanbefoundinabroadspectrumofindustriesincludingautomotive,electricalandelectronics,foodpackaging,textileandcarpetfibersaswellashomeandleisure.
MainproductsPAcompounds,extrusion,spinningpolymers(allUltramid®)|PBT(Ultradur®),POM(Ultraform®)|PES/PSU(Ultrason®)|Adipicacid|Caprolactam
BASFmarketpositionEngineeringplastics#2|Extrusion#�
MaincompetitorsEngineering plastics:DuPont,Rhodia,Lanxess,Ticona,GEP|Capro-lactam:DSM,CPDC,Ube|Ultramid® (spinning polymers):LiPeng,ZigShen,Honeywell|Ultramid® (extrusion polymers):Ube,DSM,Lanxess
Mostinteresting,fastestgrowingmarketsEngineeringplasticsinemergingAsianmarkets|Ultramid®andUltradur®inautomotiveandE&Eapplications|Extrusioninfoodpackaging
Estimated market growth (2007–2012): Engineeringplastics+5%|PApackaging,monofilamentapplications+4%
BASFleverstooutperformthesemarketsStrongcustomerfocusinR&D|Innovationinproducts,applicationsandprocessdevelopment|Closecustomerrelationshipswithabilitytoservekeycustomersglobally|Globallybestbusinessforcommodities|Newprocesstechnologies
FocusofR&DInnovationsfocusondevelopingnewapplicationsforengineeringplasticsinclosecooperationwithcustomers,developingengineeringplasticsandpackagingmaterialswithenhancedpropertiesandsecuringcompetitive-nessofourvaluechains.
Acquisitions/JVs/Investments(2004–2006)
Productgroup Description Year
PAcompounds AcquisitionofLeunaMiramid 2005
PA,POM,andPBTcompounds
AcquisitionofLATI’sengineeringplasticsactivitiesinNorthAmerica
2005
PBT NewPBTplantatKuantan,Malaysia;50:50jointventurebetweenBASFandToray
2006
Compounds NewcompoundingplantinAltamira,Mexico 2006
Investments(from2007onwards)
Productgroup Description Year
Compounds NewcompoundingplantinPudong/Shanghai,China
2007
PA6 Newproductionlineforpolyamide6polymersinFreeport,Texas
2007
Ultrason® ExpansionofUltrason®(PES/PSU)capacityinLudwigshafen,Germany
2007
Ultraform® ExpansionofUltraform®(POM)capacityinLudwigshafen,Germany
2008
PerformancePolymers
Salesbyregion2006%
Europe 47
NorthAmerica(NAFTA) 29
AsiaPacific 22
SouthAmerica,Africa,MiddleEast 2
2004 2005 200620032002
Million €
2,270 2,239 2,587 2,909 2,932
0
1
2
3
4
Salesdevelopment
Leadingsupplierofengineeringplastics,extrusionpolymersandfiberintermediates
Keydriversofprofitability
Costleadership
Portfolioshifttohighervalue-addedproducts
Globaloptimizationalongtheentirevaluechain
Disciplinedcapitalexpenditure
KeycapabilitiesofBASF
Operationalexcellence(reliability,costleadership)
Globalintegrationofproductionandsupplypatterns
Innovationinproductandapplicationdevelopments
Technicalandengineeringcompetence
Closecustomerrelationshipsandabilitytoservekeycustomersglobally
Divestitures/Shutdowns(from2007onwards)
Productgroup Description Year
Polyamide6 ShutdownofPA6productionfacilitiesinEnka,NorthCarolina
2007
MajorcapacitiesofBASF
Polyamide 670kt
Compounding 465kt
PBT 80kt
POM 40kt
Ultrason® 6kt
Caprolactam 740kt
Salesbymajorindustries2006%
Automotive 25
Textile �9
Packaging �0
Electricalandelectronics �0
Carpet 9
Others 27
2002
Split 60:40 Split 37:63
2006
Engineering plastics (injection molding and extrusion)
Intermediates,fiber polymers, fibers (2002 only)
Portfolioshifttohighervalue-addedproducts
Innovationexamples1. Plastic replaces magnesium construction: AudiQ7fittedwithairbaghousingmadeofBASF’spolyamide(Ultramid®),sufficientlyelasticundercoldconditionsbutalsorigidenoughathightemperatures,easiertoprocessthanmagnesiumandexhibitsgoodflame-retardantbehavior.
2. First thermoplastic truck-engine oil sump in Mercedes Actros:Thesumpisalargecompo-nent,usuallymadefromeitherlightalloyorSMC.
3. Ultradur® High Speed (New super flow PBT through nanotechnology):DuetosignificantlyreducedmeltviscosityofPBT(polybutyleneterephthalate)itflowsatleasttwiceasfastascomparablestandardUltradur®grades.
4. Novel plastic part developed using integrative simulation method:Thelowerbumperstiffener(LBS)isafunctionalparttodiminishtheriskofseriouskneeinjuryintheeventofacollisionwithapedestrian.
1
2
3
4
48 49
BASF’sPolyurethanesdivisionisoneoftheworld’sthreelargestproducersofpolyurethanes:importantspecialtyplasticsusedtoproduceawidespectrumofrigid,flexible,foamedandcompactcomponentsforconsumerproducts.
MainproductsPUbasicproducts(isocyanatesMDIandTDI,polyetherols,polyesterols)|PUsystems|PUspecialelastomers(thermoplasticPU,microcellularPU)
BASFmarketpositionMDIamongtop2|TDIamongtop2|PEOLamongtop3|PUSpecialties#�
MaincompetitorsMDI:BayerMaterialScience,HuntsmanPolyurethanes,Dow|TDI:BayerMaterialScience,Dow,Borsodchem|PO/PEOL:Dow,BayerMaterialScience,Shell|Specialties:BayerMaterialScience,Dow,HuntsmanPolyurethanes,Lubrizol
Mostinteresting,fastestgrowingmarketsPUglobally|MDIglobally|PUAsia|PUEasternEurope
Estimated market growth (2007–2012): PUEurope+4–5%|PUAsia+6–7%|PUAmericas+3–4%|PUGlobal+5–6%
BASFleverstooutperformthesemarketsWorld-scaleproductionplantsinallmajorregionswithdebottleneckingpotential|Innovative,cost-leadingHPPOtechnology|Successfulsystemhouseconcept
FocusofR&DProcessinnovationaimstooptimizeexistingproductionprocessesanddevelopnew,highlyefficientprocessesofferingconsiderablecostadvan-tages.AnexampleistheinnovativeHPPOprocess,forwhichwehavestartedconstructionofaworld-scaleplantinAntwerp,Belgium,togetherwithDowChemical.Inpolyurethaneproductandsystemdevelopmentweworkcloselywithourcustomerstoimproveexistingsolutionsandfindnewones.FurthermorewearedevelopingnewapplicationssuchasElastocoast®,aPU-basedsolutiontoprotectdamsanddykesagainststorms.
Acquisitions/JVs/Investments(2004–2006)
Productgroup Description Year
Systems AcquisitionofFoamEnterprises,USAandothersmalleracquisitionsandjointventures(e.g.RSA,Lagomat)
2004to2006
TDIbusiness AcquisitionofcustomerlistfromHuntsman 2005
MDI ExpansioninvestmentinAntwerp,Belgium 2005
TDI/MDI Start-upinCaojing,China 2006
Investments(from2007onwards)
Productgroup Description Year
Systems AcquisitionPCC,TheNetherlands 2007
MDI ExpansioninvestmentinAntwerp,Belgium 2007
HPPO JointventureinvestmentinAntwerp,Belgium 2008
PEOL ExpansionatGeismar,Louisiana 2008
MDI2 InvestmentinChinaunderexamination >20�0
TDI JointventureinvestmentinEuropeunderexamination
20��
Polyurethanes
2004 2005 200620032002
Million €
2,820 2,922 3,495 4,291 4,849
0
2
4
6
8
Salesdevelopment
Keydriversofprofitability
SupplyanddemandbalanceMDI,TDI,PO
Costleadershipalongtheentirevaluechain
Accesstocost-leadingandreliabletechnologies–capacitytooperate
Mainrawmaterialsbenzene,toluene,propylene
Sizeandsetupofspecialtybusiness
KeycapabilitiesofBASF
Globallybalancedstrongmarketpositionwithlocalproduction
Cost(integratedworld-scaleplants)andtechnologyleadership(isocyanatesandHPPO)
WorldleaderinPUspecialties(systems,TPU,Cellasto)
Capacitytoinnovate(productsandtechnologies)
Innovationexamples1. HPPO: Innovativeprocesstoproducepropyleneoxide,smallerplantfootprint,smallerspecificinvestment,waterasonlyby-product.2. Elastocool®: Innovativeconceptforthecon-sumerrefrigerationindustry.
3. Elastocoast®: PUadhesivefilmforgravelstones(rocks,sandetc.),esp.forcoastalprotection.
4. Elastollan®: NewUV-stablegenerationwhichistransparenteveninextremelythicksections.
GlobalPUsystemhouses2006
*Establishmentin2007
Strongfocusonspecialtybusinessthroughsystemhouses
Salesbymajorindustries2006%
Furniture 25
Automotive 22
Construction 20
Electricalandelectronics 7
Footwear 7
Textile 7
Others �2
Salesbyregion2006%
Europe 37
NorthAmerica(NAFTA) 3�
AsiaPacific 26
SouthAmerica,Africa,MiddleEast 6
Divestitures/Shutdowns(2004–2006)
Productgroup Description Year
SystemssiteOlching,Germany
Closure 2005
SystemssiteCarrollton,Texas
Closure 2006
MajorcapacitiesofBASF
MDI �,280kt
TDI 560kt
Polyetherols 675kt
Propyleneoxide 375kt�
�Ofwhich205ktareonlyforPolyurethaneapplications
1
2
3
4
5�
BusinessSegments
PerformanceProductsOurinnovativesystemsfromperformancechemistrycontributetothefunctionalityandperformanceofmanyeverydayproducts,fromcars,paperandconstructionmaterialstodetergentsandbabies’diapers.Wewanttobethekeycontactforourcustomers.Oursuccessisbasedonnewproducts,systemsolutionsandapplicationsthatwedevelopinclosecooperationwithourcustomers.Here,thekeytosuccessisourpowerfulresearchanddevelopmentorganizationthataimstosolveourpartners’problemsquickly,flexiblyandinlinewiththeirneeds.
Segmentsalesin2006Million€
ConstructionChemicals �,�20
Coatings 2,337
FunctionalPolymers 3,387
PerformanceChemicals 3,289
Segmentdata¹
Million€ 2002 2003 2004 2005 2006
Salestothirdparties 8,0�4 7,633 8,005 8,267 �0,�33
ShareoftotalBASFsales(%) 24.9 22.9 2�.3 �9.3 �9.3
ThereofConstructionChemicals – – – – �,�20
Coatings 2,�37 2,0�5 2,022 2,�80 2,337
FunctionalPolymers 2,534 2,47� 2,755 3,�98 3,387
PerformanceChemicals 3,343 3,�47 3,228 2,889 3,289
Intersegmentaltransfers 326 30� 29� 352 390
Salesincludingintersegmentaltransfers 8,340 7,934 8,296 8,6�9 �0,523
Incomefromoperationsbeforedepreciationandamortization(EBITDA) �,�34 907 �,503 �,227 �,��7
EBITDAmargin(%) �4.2 ��.9 �8.8 �4.8 ��.0
Incomefromoperations(EBIT)beforespecialitems 653 568 850 890 848
EBITbeforespecialitemsmargin(%) 8.� 7.4 �0.6 �0.8 8.4
Incomefromoperations(EBIT) 646 478 �,�28 863 669
EBITmargin(%) 8.� 6.3 �4.� �0.4 6.6
Incomefromoperations(EBIT)aftercostofcapital – – – 382 (7�)
Assets 5,2�8 4,656 4,538 4,863 9,727
Researchanddevelopmentexpenses 222 240 2�7 2�4 288
Additionstoproperty,plantandequipmentandintangibleassets 288 236 304 347 4,490�Startingin2005,theaccountingandreportingoftheBASFGroupisperformedinaccordancewithInternationalFinancial
ReportingStandards(IFRS).The2004figureshavebeenreportedinaccordancewithIFRS.Thefiguresforyearsuptoandincluding2003werepreparedaccordingtoGermanGAAP.
FactorsinfluencingsalesContributiontosalesgrowth(%)
2002 2003 2004 2005 2006
Volumes 6 2 8 0 2
Prices (4) 0 � 7 2
Currencies (4) (7) (4) � 0
Acquisitions/divestitures 0 0 0 (5) �9
Total (2) (5) 5 3 23
52 53
ThenewBASFdivisionConstructionChemicalsprovidesoptimalsystemsolutionsforconcreteandinnovativeprod-uctsfortheconstruction,flooringandfaçadesmarkets.BASFConstructionChemicalsisaworldleaderinadynamicmarketofferingmajorinnovationpotentialandrelativelyhighmarginsresilienttoeconomiccycles.
MainproductsCorporate brands: PCI–marketleaderCentralEuropefortilingadhesiveandrepairproductsCategory brands: Sonneborn®–sealants|Heck®,Senergy®andFine-stone®–EIFS(exteriorinsulatingandfinishsystems)|Ucrete®–func-tionalflooring|Pozzolith®–admixtureforconcreteandshotcrete|Glenium®–admixturesfortheprecastindustry|Conipur®–worldleaderinoutdoorsportsurfaces
BASFmarketpositionAdmixture systems:global#�|Construction systems:EuropeandMEAtop2,sportsflooringglobal#�
MaincompetitorsAdmixture systems:Sika,W.R.Grace,Mapei|Construction systems:RPM,Mapei,Bostik,Sika
Mostinteresting,fastestgrowingmarketsForbothadmixturesystemsandconstructionsystems:AsiaPacific,EasternEurope,MiddleEast/Africa(5–7%annualgrowth)
Estimated market growth (2007–2012): Admixturesystems+5%|Constructionsystems+4%
BASFleverstooutperformthesemarketsFocusongrowthmarkets,megatrendsandleadcustomers|FurthergrowthpotentialwithinBASFVerbund(e.g.globalpresence,R&D,back-wardintegration)
FocusofR&DThemaintargetsaretoimprovethedurabilityofconcrete,developcustom-izedand/orlower-costconcreteplasticizersandproducecompletelynewpolymersbasedonnovelmoleculararchitectures.Fundamentalresearchintomineralogyandtheinteractionofpolymersandhydraulicbindersarecrucialforfuturesuccess.Furthermorewearefocusingonreactiveresins,non-reactive/water-basedpolymersandnewformulationsaswellassteadyimprovementfrombatchtocontinuousproductionprocesses.
ConstructionChemicals
2004 2005 200620032002
Million €
1,120*
0
1
2
Salesdevelopment
Keydriversofprofitability
Productsmatchingabroadvarietyofcustomerneeds
Reliabilityofproductperformance
Qualityofsalesandtechnicalservice
Anticipatingfuturemarkettrends
KeycapabilitiesofBASF
Customerorientation,proximitytomarket,experiencedstaff,highflexibility,establishedbrands
FurtherpotentialwithinBASFVerbund(e.g.globalpresence,R&D,backwardintegration)
Innovationexamples1. Nanolight®: Improvedadhesivestrengthfortiling,verywidematerialapplicationrange,superiorworkability.
2. Glenium® ACE: Savesenergyandreducescuringtimesinprecast(prefabricated)concrete-partsindustry,decreasesprocess-relatedhealthhazards.
3. Nanocrete®:Easilyuseablerepairmortarswithimprovedshrinkagecompensationandadhesiveproperties.
4. Degadeck®:Reducesapplicationtimesandisworkableinvariousambientconditions.Im-provedlifespanofstructure.
5. Degaseal®:Offerssuperioradhesiontovariousmaterials,collectsnodustduringapplicationandshortensfinishing.
1
2
3
Leadingsolutionproviderinconstructionchemicals
Salesbyregion2006%
Europe 50
NorthAmerica(NAFTA) 28
AsiaPacific �4
SouthAmerica,Africa,MiddleEast 8
Salesbychannel2006%
Concreteproducers/professionals 50
Professionaldistributors/retailers 35
Contractorsandothers �0
Do-it-yourself 5
4
5
*SinceacquisitionofDegussaConstructionChemicalsasofJuly�,2006
Investments(from2007onwards)
Productgroup Description Year
Concreteadmixtures AcquisitionofHiConinSichuan,China 2007
Constructionsystems–flooring
InvestmentintintingconceptinSchaffhausen,Switzerland
2007
Constructionsystems–sealants
InvestmentinpolyurethanesealantsinColorado,USA
2007
ConstructionChemicalsbusinessportfolio
Operatingdivision Segment
AdmixtureSystems Cementadditives
Concretepolymers
Manufacturedconcreteproducts
Precast
Readymix
Sitemix
Undergroundconstructions
ConstructionSystems Buildingsystems
Expansionjoints
Flooring
Sealantsandadhesives
Sportsflooring
Tilefixingsystems
Wallsystems
Woodprotection
Specialtycompanies(partiallyintegrated)
(e.g.BASFConstructionChemicals)
Industry
Chemicalrawmaterialsuppliers
(e.g.BASF)Producersofprofessional
andDIY*products(e.g.BASF
ConstructionChemicals)
Constr.material
distr.
Profes-sionals
DIY*stores DIY*
ForwardintegrationintoConstructionChemicals
EBITmargin Medium Higher Lower
*Do-it-yourself
Basicchemicals
Inter-mediates Polymers Formu-
lationPackaging&branding
Sales&distr.
Endcustomer
54 55
BASF’sCoatingsdivisionoffersinnovativeandenvironmen-tallyfriendlyproductsfortheautomotiveindustry,includ-ingbothfinishesandrefinishes,andforparticularsegmentsoftheindustrialcoatingsmarket.BASFalsosellsdecorativepaintsmainlyinSouthAmericaforinteriorandexterioruseinresidentialandcommercialbuildings.Wecombineprotectionandaestheticswitheco-efficiencyintailor-madecustomerproductsandprocesses.
MainproductsOEMAutomotiveE-Coat(CathoGuard®)|Primer(StarBloc®)|BaseCoat(ColorPro®)andClearCoat(ProGloss®)|Water-basedautomotiverefinishcoatings(Glasurit®,R-M®)|Decorativepaints(Suvinil®)|Universal,chromate-freecoilcoatingprimer(COILTEC®)
BASFmarketpositionGlobal#3inOEMautomotivecoatings|Global#3inautomotiverefinishcoatings|Global#3incoilcoatings|DecorativepaintsSouthAmerica#�
MaincompetitorsAutomotive OEM Coatings:DuPont,PPG,KansaiPaint|Automotive refinish coatings:DuPont,PPG,Akzo|Industrial coatings:Akzo,Valspar,DuPont|Decorative paints South America:ICI,SherwinWilliams
Mostinteresting,fastestgrowingmarketsAutomotiveAsiaPacific|AutomotiveEasternEurope|DecorativepaintsSouthAmerica
Estimated market growth (2007–2012): AutomotiveOEMcoatings+2%|Automotiverefinishcoatings+�%|Industrialcoatings+4%|DecorativepaintsSouthAmerica+4%
BASFleverstooutperformthesemarketsLeadingapplicationknow-how|Globalproductionandmarketpresence|Technicalsupportoncustomersite|Innovativeproductsandprocesses
FocusofR&DOurinnovationeffortsfortheautomotiveindustryarefocusedonclosepartnershipswithourcustomersinordertoformulatee.g.newcoatingssolutionsforintegratedprocesses,uniqueeco-efficientcolors,andex-tremelydurableclearcoatsbyusingthelatestcrosslinkingtechnologies(e.g.nanoarchitectures,UVtechnology).Additionalresearchtopicsareimprovedproductsfornewtechnologymarkets(e.g.windenergy)andecologicalrequirements(e.g.chromate-freecoilcoatingprimer).
Globalpassengercarproduction
Source:GlobalInsight,June2007
Coatings
2004 2005 200620032002
Million €
2,137 2,015 2,022 2,180 2,337
0
1
2
3
4
Salesdevelopment
Coatingscombineprotectionandaestheticswitheco-efficiencyintailor-madecustomerproductsandprocesses
Keydriversofprofitability
Combinationofprotectionandaestheticsasvalueindicator
Managingrawmaterialpricepressure,esp.solventsandresins
Valuepricingofadditionalservicesalongthesupplychain
Efficientdistributionchannelsinend-usermarkets
Innovationtransferintothemarket
KeycapabilitiesofBASF
Strongpremiumbrandsinend-usermarkets
Innovativelong-termcooperationwithleadingOEMcustomers
End-userservicescreatingadditionalvalueandlong-termrelationships
Servicesandtoolswithinautomotiveindustryforhandlingofcolorcomplexity
Leveragingstrongmarketpositionandapplicationknow-howfrommaturemarketsintogrowingmarkets
Innovationexamples1. Integrated Process II: Reductionofoneproc-essstepbyintegrationofprimerfunctionalityintoBaseCoat.
2. UV-curing Refinish BaseCoat: Eco-friendlyandeconomicalfastcuringresultinginhighscratchresistance,extremehardnessanddurability.
3. Coil Coatings with effect pigments: Combinedfunctionalityofprotectionanddecorationbyadaptationofeffectcolorsfromspraycoatings.
4. Magnetic Paint: Innovativeproductshowingpaintasadecorativeelementandpotentialsub-stituteforwallpapersandborders,distributedtogetherwithWaltDisney-licensedmagnets.
Million units
40
80
20
60
0
2006 2007 2008 2009 2010
67 70 73 76 78
Others
NorthAmerica(NAFTA)
EasternEurope
WesternEurope
Asia
Salesbymajorindustries2006%
AutomotiveOEM 52
Automotiverepairandmaintenance 23
Construction 2�
Others 4
Salesbyregion2006%
Europe 46
NorthAmerica(NAFTA) 24
AsiaPacific �2
SouthAmerica,Africa,MiddleEast �8
Acquisitions/JVs/Investments(2004–2006)
Productgroup Description Year
Automotiverefinish ACEbusinessofAkzo 2004
Coatings Remaining50%ofjointventurewithNOF,Japan 2005
Industrialcoatings CoilcoatingsofRhenania,Europe 2005
Investments(from2007onwards)
Productgroup Description Year
AutomotiveOEM NewplantinPavlovskiPosad,Russia 2007
Coatings ResinexpansioninDemarchi,Brazil 2008
Divestitures/Shutdowns(2004–2006)
Productgroup Description Year
Industrialcoatings WoodcoatingsEuropesoldtoAkzo 2004
BASFproductionsites
Europe Münster,Germany Clermont,France
Würzburg,Germany Guadalajara,Spain
Schwarzheide,Germany Burago,Italy
Deeside,UnitedKingdom Verbania,Italy
NorthAmerica Belvidere,NewJersey Decatur,Alabama
Greenville,Ohio Tultitlán,Mexico
Southfield,Michigan Windsor,Canada
SouthAmerica SaoBernardo,Brazil Tortuguitas,Argentina
AsiaPacific Totsuka,Japan Shanghai,China
Ako,Japan Mangalore,India
1
2
3
4
56 57
Divestitures/Shutdowns(2004–2006)
Productgroup Description Year
Polymerdispersions ClosureofPhilippinesplant 2006
Divestitures/Shutdowns(from2007onwards)
Productgroup Description Year
Superabsorbents ClosureofAberdeen,Mississippi,andPorts-mouth,Virginia,sites 2007
Processchemicals ClosureofplantinKazumi,Japan 2007
MajorcapacitiesofBASF
Acrylicacid Ludwigshafen,Germany 305kt
Freeport,Texas 230kt
Antwerp,Belgium �60kt�
Nanjing,China �60kt
Kuantan,Malaysia �60kt
Superabsorbents BASFCorp.,USA �60kt
Antwerp,Belgium ��5kt2
Mannheim,Germany 25kt
Rayong,Thailand 20kt
�Expansion2008to320kt2Expansion2007to�75kt
BASF’sFunctionalPolymersdivisionisoneoftheworld’slargestproducersofacrylicacidanditsdownstreamprod-ucts,mainlysuperabsorbentsanddispersions.Functionalpolymersoffertailor-madefunctionalityincustomerproductsandprocessestohelpourcustomersachieveproductdifferentiation.ProductionislargelyintegratedintotheVer-bund,givingthedivisionanadvantageovernon-integratedplayers,andalsoincludesregionalunitsoperatingclosetocustomers.
MainproductsAcrylicacid|Acrylicesters|Specialacrylates|Superabsorbents(Hy-Sorb®)|Polymerdispersions(Acronal®)|Paper-processingchemicals| Paperdyes|Polymerdispersionsforpapercoating|Kaolinpigments
BASFmarketpositionAdhesiveandconstructionpolymersEuropean#�|Paperchemicalsglobal#3|Acrylicmonomersglobal#�|Superabsorbentsglobal#2
MaincompetitorsAcrylic monomers:Rohm&Haas,NipponShokubai,Dow,Arkema,FPC|Superabsorbents:Degussa,NipponShokubai,SanDia|Polymer disper-sions:Rohm&Haas,Celanese,APP/WPS,Dow|Paper coating binders:Dow|Paper-processing chemicals:Hercules,Ciba,Kemira,Nalco,Eka,Akzo
Mostinteresting,fastestgrowingmarketsAcrylicmonomers|SuperabsorbentsAsia|Polymerdispersionsforadhesives|Polymerdispersionsforconstruction|Polymerdispersionsforarchitecturalcoatings
Estimated market growth (2007–2012): Acrylicmonomers+3.5%|Superabsorbents+4%|Polymerdispersions+4%
BASFleverstooutperformthesemarketsLong-termcooperationwithleadingandinnovativecustomers|Invest-mentsbyBASFtoaccompanycustomergrowth|Strongapplicationknow-how|Specificbusinessmodelstomeetcustomers’requirements|Costandtechnologyleadership
FocusofR&DR&Dactivitiesfocusontailor-madesystemsolutionsinordertoimproveproductsandprocessesofourcustomersaswellasonprocessdevelop-mentforacrylicacid,superabsorbentsanddispersions.Polymerresearchintocolloids,water-baseddispersionsandpolymersolutionsiskeytosuccess.Nanotechnology,forexample,enablesustodevelopinnovativebindersforarchitecturalcoatings.
Acquisitions/JVs/Investments(2004–2006)
Productgroup Description Year
Acrylicacid StartofproductioninNanjing,China 2005
Kaolin PapercoatingpigmentsfromEngelhard 2006
Investments(from2007onwards)
Productgroup Description Year
Superabsorbents NewplantinFreeport,Texas 2007
Superabsorbents ExpansioninAntwerp,Belgium 2007
Acrylicacid ExpansioninAntwerp,Belgium 2008
FunctionalPolymers
2004 2005 200620032002
Million €
2,534 2,471 2,755 3,198 3,387
0
1
2
3
4
Salesdevelopment
Keydriversofprofitability
Supplyanddemandbalanceforacrylicmonomers
Costleadership–competitivenessalongtheentirevaluechain
Time-to-marketforinnovations
Long-termpartnershipswithcustomersalongtheacrylicacidvaluechain
KeycapabilitiesofBASF
Costbenefitsfrombackwardintegration(Verbund)
World-scaleproductionfacilities
Preferredpartnerforinnovativecustomerswithleadingtechnologyposition
Leveragingstrongmarketpositionandapplicationknow-howfrommaturemarketsingrowingAsianmarkets
Innovationexamples1. COL.9®: Environmentallyfriendly,water-basedbinderforarchitecturalcoatingswithgreatlyimproveddirt-pick-upresistancefor“ever-clean”facades.
2. Micronal®: PhaseChangeMaterials:Polymershellsfilledwithwaxthathavetheabilitytoab-sorbandreleaseenergyandthusalloweffectivecontrolofbuildingtemperature.
3. Polyvinylamine: Innovativepolymer,increasingthestrengthofpaperandboardwithouttheuseofhigher-pricedrawmaterials.
4. Superabsorbents: BASFisdevelopinghighlyinnovativesuperabsorbentmaterialsfornext-generationdiapersinstrongR&Dcollaborationswithitscustomers.
5. Acronal® Optive: High-performancebinderforthearchitecturalcoatingsmarketwiththeabilitytomeetcurrentandfutureU.S.VOCregulationswithoutanylossinproductperformance.
1
2
3
4
5
Tailor-madefunctionalityincustomerproductsandprocesseswithFunctionalPolymers
Salesbymajorindustries2006%
Chemicals 23
Paper �9
Adhesives �4
Hygiene �3
Coatings �0
Construction 9
Packaging 8
Others 4
Salesbyregion2006%
Europe 48
NorthAmerica(NAFTA) 29
AsiaPacific �5
SouthAmerica,Africa,MiddleEast 8
58 59
BASF’sPerformanceChemicalsdivisionisthecorespe-cialtychemicalsdivisionofBASFandoneoftheworld’slargestmanufacturersofhigh-valueperformancechemicals.Performancechemicalsaddsuperiorperformancetoourcustomers’productsbydeliveringeffectsfordifferentiationintheirmarkets.PerformanceChemicalsisaconsistentearningscontributortotheBASFGroupwithlowcyclicality.
MainproductsInorganicandorganicpigments(Sicotan®,Paliogen®,Heliogen®,Mearlin®)|VOC-compliantresins(Joncryl®,Laromer®,Basonat®)|Nonionicsurfac-tants(Lutensol®,Plurafac®,Pluronic®)|Water-solublepolymers(Sokalan®)|Chelatingagents(Trilon®)|Enginecoolants(Glysantin®)|Fuelperfor-mancepackages(Keropur®)|Tanningagents(Basyntan®,Relugan®)|Auxiliariesforfabriccoloration(Helizarin®)
BASFmarketpositionAmongtopthreeplayersinmostrelevantindustries
MaincompetitorsPigments:Ciba,Clariant,Merck|Resins:Bayer,Cytec,Rohm&Haas|Mineral Oil Additives:Infineum,Lubrizol,Afton|Automotive Fluids:Shell,Arteco,Clariant|Performance Chemicals for Detergents and Cleaners:Shell,Sasol,Dow|Textile Auxiliaries:Clariant,Huntsman,CHT|Leather Auxiliaries:Clariant,Lanxess,TFL
Mostinteresting,fastestgrowingmarketsEstimated market growth (2007–2012): VOC-compliantcoatingresins:water-based+5–6%;UV-curing+8–9%|Lightstabilizersforplastics+4%|Pigmentpreparationsforcoatings+4%|Highlyreactivepolyiso-buteneforhigh-performancelubricants+6–7%|Oilfieldsolutions+4–6%|GreaterChinamarketfordetergentsandcleaners,paper,textileandotherformulators+9%|Environmentallyfriendlysurfactantsandchelatingagents+5%|AsianandSouthAmericanmarketsforautomotiveleather+6–9%|AppareltextilemarketsinChinaandIndia+5–6%
PerformanceChemicals
2004 2005 200620032002
Million €
3,343 3,147 3,228 2,889 3,289
0
1
2
3
4
Salesdevelopment
Keydriversofprofitability
Innovativenessandapplicationknow-how
Customerproximityandmarketfocus
FocusonsegmentsandregionsgrowingaboveGDP
Profoundunderstandingofcustomers’valuechains
Competitivecoststructure
KeycapabilitiesofBASF
UseofglobalBASFR&Dnetworktotransformcustomerandconsumerneedsintochemicalsolutions
IntegrationintoProductionVerbundandBASFvaluechains
Comprehensivetechnicalandapplicationknow-how,competentandindividualserviceclosetoourcustomers
Expertiseinenvironmentaltechnologies
Innovationexamples1. Lumogen Black® – New Pigments for Solar Heat Management: Cutssolarheatbuild-upfromincidentsunlightinhalf;increasescomfortanddurabilityofoutdoorconstructionelements;blackcarsstaycoolinthesun;increasesservicelifeofdecorativecoatingsandprinting.
2. Lutensol XL/XP® – Eco-friendly, APEO-free surfactants based on special alcohols from BASF Verbund: Widerangeofapplicationsfromcleanerstoindustrial;excellentsoilremoval–upto30%higherspecificperformanceversusstate-of-the-artsurfactants;superiorcost-performanceratio.
3. Design-MDF coloring process: BASF’sspecialcolorantsandprocessingmaterialsenablepro-ductionofthrough-coloredmedium-densityfiberboards(MDF);surfacedamageremainsalmostinvisible;newdesignpossibilitiesforinteriorandfurnituredesign;jointdevelopmentwithwood-basedpanelmanufacturerGlunzAG,Germany.
4. Belmadur® Technology: Enhancespropertiesofsoftdomesticwoodstoattaintropicalwoodperformanceproperties:significantlyharder,greaterdimensionalstability,higherdurability;forparquetflooring,windowframes,weather-resistantgardenfurniture.
BASFleverstooutperformthesemarketsStrategicallianceswithkeycustomersforinnovationleadership|IntegrationintoBASFKnow-howandResearchVerbund|Strongproductionpositionandmarketpresenceinmajorgrowthcountries|Comprehensiveproductportfolios
FocusofR&DDevelopingintelligentsolutionsinclosecooperationwithourcustomersiskeyforPerformanceChemicals:8�%ofourR&Dspendingisdirectlymarket-driven.Inparticular,weaimfornew,fastgrowingmarkets,wherewecanleveragethediversityofourcompetencies.
Acquisitions/JVs/Investments(2004–2006)
Productgroup Description Year
Resins AcquisitionofJohnsonPolymer 2006
Pigments IntegrationofpigmentbusinessacquiredwithEngelhard
2006
Oilfieldchemicals IntegrationofoilfieldbusinessacquiredwithDegussaConstructionChemicalsandEngelhard
2006
Investments(from2007onwards)
Productgroup Description Year
Resins Start-upofpolyisocyanateplant(Basonat®)inShanghai,China
2007
Mineraloiladditives ThreecapacityexpansionsforpolyisobuteneinAntwerp,Belgium,andLudwigshafen,Germany
2007/08start-up
Water-solublepolymers Newplantforpolyacrylatepolymers(Sokalan®)inShanghai,China
2008start-up
Leatherauxiliaries Newplantforspecialtychemicalsforleathertanning(Basyntan®,Tamol®)inShanghai,China
2008start-up
1
2
3
4
ThecorespecialtychemicalsdivisionofBASF–aconsistentearningscontributorwithlowcyclicality
Salesbymajorindustries2006%
Coatings 20
Leatherandtextile �6
Detergentsandcleaners �5
Automotiveandoilindustry ��
Plastics 8
Others 30
Salesbyregion2006%
Europe 53
NorthAmerica(NAFTA) 2�
AsiaPacific �8
SouthAmerica,Africa,MiddleEast 8
Divestitures/Shutdowns(2004–2006)
Productgroup Description Year
Printingsystems Divestitureofprintingsystemsbusiness 2004/05
Masterbatch DivestitureofmasterbatchbusinessinAustralia,Brazil,MalaysiaandIndonesia
2004
Pigments ShutdownofpigmentproductioninMuelheim(Cologne),Germany
2005
Leatherandtextile Restructuringofproductionworldwide ongoing
Divestitures/Shutdowns(from2007onwards)
Productgroup Description Year
Surfactants DivestitureofWibarco,Germany,closingexpected
2007
MajorproductionsitesofBASFBASF’sperformancechemicalsareproducedat44sitesworldwide.Ourmostimportantsitesarelistedbelow.
Europe Ludwigshafen,Germany S,P,R,M,L&T
Antwerp,Belgium S,M
NorthAmerica Geismar,Louisiana S,M
Wyandotte,Michigan R
AsiaPacific Shanghai/Pudong,Caojing,China
R,S,L&T
Thane,India S,L&T
SouthAmerica Guaratinguetá,Brazil S,M,P,L&T
Abbreviations:S=SurfactantsandPolymers,P=Pigments,R=Resins,M=MineralOilAdditives,L&T=LeatherandTextilesAuxiliaries
6�
BusinessSegments
AgriculturalProducts&NutritionProductsfromthissegmentprotectcropsandthussafeguardharvests.Wearestrengtheningourcompetitivenesswithinnovativecropprotectionproducts.Ourbroadrangeofhigh-valueproductsforhealth,nutritionandbeautymakesusapreferredpartnerforcustomersinthepharmaceuticalandcosmeticindustriesandintheareasofhumanandanimalnutrition.Inplantbiotechnology,wefocusonplantsformoreefficientagriculture,healthiernutritionandforuseasrenewablerawmaterials.
Segmentsalesin2006Million€
AgriculturalProducts 3,079
FineChemicals �,855
FactorsinfluencingsalesContributiontosalesgrowth(%)
AgriculturalProducts FineChemicals
2002 2003 2004 2005 2006 2002 2003 2004 2005 2006
Volumes (�2) 6 9 (�) (�) 7 3 6 3 2
Prices(3) (8) (4) (�) (3)
(4) 0 (4) (7) (3)
Currencies (4) (9) (4) � 0
Acquisitions/divestitures 0 �0 � 0 (3) 0 0 0 � 8
Total (15) 8 6 (2) (7) (1) (6) (3) (3) 7
Segmentdata¹ AgriculturalProducts FineChemicals
Million€ 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006
Salestothirdparties 2,954 3,�76 3,354 3,298 3,079 �,970 �,845 �,793 �,732 �,855
ShareoftotalBASFsales(%) 9.2 9.5 8.9 7.7 5.9 6.� 5.5 4.8 4.� 3.5
Intersegmentaltransfers 2� 24 26 29 25 36 20 30 28 �7
Salesincludingintersegmentaltransfers 2,975 3,200 3,380 3,327 3,�04 2,006 �,865 �,823 �,760 �,872
Incomefromoperationsbeforedepreciationandamortization(EBITDA) 456 625 887 907 663 �37 256 206 89 �84
EBITDAmargin(%) �5.4 �9.7 26.4 27.5 2�.5 7.0 �3.9 ��.5 5.� 9.9
Incomefromoperations(EBIT)beforespecialitems 99 294 666 67� 378 ��8 �33 97 22 57
EBITbeforespecialitemsmargin(%) 3.4 9.3 �9.9 20.3 �2.3 6.0 7.2 5.4 �.3 3.�
Incomefromoperations(EBIT) 6� 234 602 68� 447 (6) �25 56 (58) (66)
EBITmargin(%) 2.� 7.4 �7.9 20.6 �4.5 (0.3) 6.8 3.� (3.3) (3.6)
Incomefromoperations(EBIT)aftercostofcapital – – – �59 (48) – – – (�93) (226)
Assets 5,092 5,523 4,985 5,�56 4,458 �,392 �,303 �,308 �,48� �,596
Researchanddevelopmentexpenses 285 239 272 303 334 82 70 90 70 70
Additionstoproperty,plantandequipmentandintangibleassets 88 �,�33 �00 74 88 �57 �40 �53 222 378�Startingin2005,theaccountingandreportingoftheBASFGroupisperformedinaccordancewithInternationalFinancialReportingStandards(IFRS).
The2004figureshavebeenreportedinaccordancewithIFRS.Thefiguresforyearsuptoandincluding2003werepreparedaccordingtoGermanGAAP.
62 63
AgriculturalProducts
2004 2005 200620032002
Million €
2,954 3,176 3,354 3,298 3,079
0
1
2
3
4
Salesdevelopment
Leadinginnovator:solutionsformodernagriculture
Keydriversofprofitability
Newproductsfromresearchpipelineorfromacquisitions
Alignmentofresourcesaswellasproductandserviceofferingtocustomers’needsinhigh-valueandinnovation-drivenmarkets
Effectivemanagementofassetsandcosts
KeycapabilitiesofBASF
StrongR&Dengine,buildingontrackrecordofsuccessfulinnovations
Focusonhigh-valuemarketsandproducts
Strictportfoliomanagement
Innovationexamples1. Boscalid active ingredient: Successfullylaunchedfungicide.
2. Plant Health:Valuecreationbeyonddiseasecontrolthroughyieldandqualitybenefits.
3. New active ingredients ready for launch: Orysastrobinricefungicideandmetaflumizonespecialtycropsinsecticide.
4. Enhanced application technologies such as AquaCap™: Microencapsulationforlong-lastingweedcontrol.
5. New products from BASF Technology Ver-bund, such as Interceptor™: Thelong-lastinginsecticidenetsformalariacontrol.
Plant biotechnology complementing BASF’s Agricultural Products division: BASFPlantScienceisworkingonmostattractiveagro-nomicandoutputtraitsofsecondandthirdgenerationwithR&Dexpendituresofatleast€400millionin2006–2008mainlyreportedunder“Other” (seepages24,29).
BASF’sAgriculturalProductsdivisiondirectsmajorresourcestowardsmeetingtheneedsofthehigh-valueagriculturalmarketsinWesternandCentralEurope,NorthAmerica,BrazilandJapan.Thedivisionaimstosustainitsroleasaleadinginnovatorbycontinuingitsextensiveresearchanddevelopmentactivities.
MainproductsF500®fungicide|Boscalidfungicide|Epoxiconazolefungicide|Fipronilinsecticide|Imidazolinoneherbicides
BASFmarketpositionHerbicides#5|Fungicides#3|Insecticides#3
MaincompetitorsHerbicides:Monsanto,Syngenta,Bayer|Fungicides:Syngenta,Bayer|Insecticides/other:Bayer,Syngenta,Dow
Mostinteresting,fastestgrowingmarketsInnovation-drivenindications:fungicides,insecticides|Strategic/high-valuemarkets:EU,USA,Canada,Brazil,Japan|Promisingopportunitymarkets:CentralandEasternEurope,China,India|Energycrops:corn(maize),sugarcane,oilseedrape(canola)|Fruitandvegetables|Non-crop
Estimated market growth (2007–2012): Fungicides+2%|Insecticides+�–2%|Herbicides–�%
BASFleverstooutperformthesemarketsFocusonhigh-valuemarketsandproducts|Innovativesolutions|Leadingshareofbusinessfrompatent-protectedsolutions
FocusofR&DSignificantR&Dactivitiesfocusingonfungicides,insecticidesandselectedherbicides,wherefurthermarketgrowthandhighdemandforinnovationisexpected.
Divestitures/Shutdowns(2004–2006)
Productgroup Description Year
Phenoxyherbicides,tri-forine,imazamethabenz,phorate,difenzoquat
Divestitureofassets(noproduction) 2004to2005
Productionsite Employeebuy-outofcompleteproductionsiteinResende,Brazil
2005
Formulationsite DivestitureofformulationsiteinCibitung,Indonesia,andHsingFeng,Taiwan
2005
MicroFlo Divestitureofmajorassets(U.S.market) 2006
Manufacturingsite ClosureofagrochemicalsynthesisinThane,India
2006
Terbufos Divestitureofworldwideassets(noproduction)
2006
Divestitures/Shutdowns(from2007onwards)
Productgroup Description Year
Cinidon-ethyl Divestitureofworldwideassets(noproduction) 2007
PowerfulagrochemicalR&DpipelineHigherpeaksalespotentialthroughnewdevelopmentprojects
Stage Projects Majorcrops/markets
Peaksalespotential
Launch 4Fungicides Cereals,soybeans,specialtycrops
€�,000 million*
2Herbicides Cereals,corn
�Insecticide Non-crop
Indevelopment 4Fungicides Cereals,specialtycrops €800million
�Herbicide Corn,non-crop
�Herbicidetolerance Soybeans
2Insecticides Specialtycrops,non-crop
*Thereof~50%reachedin2006
B CABASF Competitors
Sales of products with patented actives as % of total company sales 2005
0
50
100
1
2
3
4
5
Off-patent
Patented
Salesbymajorproductgroups2006%
Herbicides 39
Fungicides 38
Insecticides/other 23
Salesbymajorindustries2006%
Agriculture 90
Non-Agricultural* �0
*Aqua-culture,forestry,homeandgarden,industrialweedcontrol,ornamentals,publichealth,turf,urbanpestcontrol
Salesbyregion2006%
Europe 45
NorthAmerica(NAFTA) 29
AsiaPacific 9
SouthAmerica,Africa,MiddleEast �7
64 65
FineChemicals
1
2
3
Onprofitabletrackaftermajorrestructuring
Keydriversofprofitability
Costleadershipformajorproductsinstandardquality
Innovativecustomersolutionsforproductapplicationsincosmetics
Flexiblecapacityandproprietarytechnologyforproductsincustomsynthesis
KeycapabilitiesofBASF
Backwardintegrationintocitralvaluechainofvitaminsandaromachemicals
State-of-the-artformulationtechnologiesforvitamins,carotenoidsandotheractiveingredients
CompetenceinR&DthroughBASFplatforms
Innovationexamples1. Uvinul® T Lite™ MAX:ProvidessuperiorUVprotectioncombinedwithalightweightskinfeel.
2. Luviquat® Xquisit:Ournewconditioningpoly-merforbeautifulhair.Thisinnovativecomponentforshampoosmakeshaireasiertocombandprovidesasmoother,silkierfeel.Withoutanyfurtheradditives.
3. Ludiflash®: AninnovativepharmaceuticalexcipientformulationbasedonBASFpolymers(polyvinylpyrrolidoneandpolyvinylacetate),allowingreliableandcost-effectivemanufactureoforallydisintegratingtablets.Ludiflash®resultsinextremelyfastdisintegrationinthemouthandasmoothandpleasantmouthfeel.Tabletscanbetakenwithoutwater.
BASF’sFineChemicalsdivisiondevelops,producesandmarketsabout�,000productsforhealth,nutritionandpersonalcare.Asaresultoftargetedresearchanddevelop-ment,weareapreferredpartnerofcustomersfromthecosmeticandpharmaceuticalindustriesaswellasforhumanandanimalnutrition.TheproductsofferedbyBASFFineChemicalsincludevitamins,carotenoids,enzymesandorganicacids,activepharmaceuticalingredients,excipientsandcustom-synthesizedproducts,aromachemicalsandcosmeticingredients.
MainproductsVitamins(vitaminA,E,B2)andcarotenoids|Aromachemicals(citral,THL)|Hairstylingpolymers|UVfilters|Excipients|API(caffeine)
BASFmarketpositionInallimportantproductgroupsfornutrition,pharmaandcosmeticsolutions,weareamongthetop3players.
MaincompetitorsCosmetic solutions:ISP,DSM,Symrise|Human nutrition: DSM,severalChineseplayers|Animal nutrition: DSM,severalChineseplayers|Pharma solutions: Lonza,Degussa,Shasun,ISP
Mostinteresting,fastestgrowingmarketsBASFismarketleaderforUVfiltersandcitral-basedaromachemicals.Bothproductgroupshaveexcellentgrowthperspectiveswithinourcos-meticsportfolio.Withintheattractivepharmaceuticalmarketweexpectthecustomsynthesisbusinesstohavethehighestgrowthpotential.BASFisconcentratingitspharmaceuticalactivitiesinthisfield.
Estimated market growth (2007–2012): Cosmeticsolutions+4%|Humannutrition+�%|Animalnutrition+2%|Pharmasolutions+5%
BASFleverstooutperformthesemarketsManagementofGMPandotherregulatedproductsincludingtraceability|Highlyeffectiveandefficientinnovationmanagementsystemtocollect,assessandrealizenewideasfornewproductsandprocesses.
FocusofR&DTheFineChemicalsdivisionisshiftingthefocusofR&Dactivitiesfromprocesstoproductinnovation.Thecoreelementofoursystematicideagenerationfornewproductsistointensifycooperationwithourcustomersinthecosmetics,nutritionandpharmaceuticalbusinesses.Continuousprocessinnovationensurestechnologicalandcostleadershipinourmajorcitral-basedproductlines,vitaminA,vitaminEandcarotenoids.
Acquisitions/JVs/Investments(2004–2006)
Productgroup Description Year
Pharmasolutions AcquisitionofOrgamol 2005
Cosmeticsolutions PartsofEngelhard’sAppearanceandPerfor-manceTechnologiesbusiness
2006
Divestitures/Shutdowns(2004–2006)
Productgroup Description Year
Humannutrition ClosureofvitaminCproductioninGrenaa,Denmark
2005
Divestitures/Shutdowns(from2007onwards)
Productgroup Description Year
Animalnutrition SeveralpremixcompaniessoldtoNutreco 2007
Animalnutrition ClosureoflysineproductioninGunsan,Korea 2007
Animalnutrition ClosureofanimalresearchstationOffenbach/Queich,Germany
2007
2004 2005 200620032002
Million €
1,970 1,845 1,793 1,732 1,855
0
1
2
Salesdevelopment Salesbymajorindustries2006%
Animalnutrition 40
Cosmeticsolutions 25
Pharmasolutions 20
Humannutrition �5
Salesbyregion2006%
Europe 46
NorthAmerica(NAFTA) 26
AsiaPacific �9
SouthAmerica,Africa,MiddleEast 9
67
BusinessSegments
Oil&GasAsthelargestGermanproducerofoilandgas,webenefitfromourmanyyearsofexperienceinexplorationandproductionandourfocusonareasthatarerichinoilinEurope,NorthAfrica,SouthAmericaaswellasRussiaandtheCaspianSeaarea.TogetherwithourpartnerGazprom,wearemakinguseoftheopportunitiesthatarearisingfromincreasingdemandandtheliberalizationoftheEuropeangasmarketsthroughmarketing,transportingandstoringnaturalgas.
FactorsinfluencingsalesContributiontosalesgrowth(%)
2002 2003 2004 2005 2006
Volumes 6 �3 7 7 7
Prices/currencies (�3) (�) 3 38 33
Acquisitions/divestitures � 2 0 0 0
Total (7) 14 10 46 40
Segmentdata¹
Million€ 2002 2003 2004 2005 2006
Salestothirdparties 4,�99 4,79� 5,263 7,656 �0,687
ShareoftotalBASFsales(%) �3.0 �4.4 �4.0 �7.9 20.3
Thereofnaturalgastrading 2,�73 2,627 2,78� 4,�57 6,�32
Intersegmentaltransfers 363 498 546 723 �,062
Salesincludingintersegmentaltransfers 4,562 5,289 5,809 8,379 ��,749
Incomefromoperationsbeforedepreciationandamortization(EBITDA) �,504 �,734 2,098 2,859 3,766
EBITDAmargin(%) 35.8 36.2 39.9 37.3 35.2
Incomefromoperations(EBIT)beforespecialitems �,2�0 �,365 �,653 2,4�0 3,245
EBITbeforespecialitemsmargin(%) 28.8 28.5 3�.4 3�.5 30.4
Incomefromoperations(EBIT) �,2�0 �,365 �,643 2,4�0 3,250
Thereofnaturalgastrading 30� 3�� 340 3�6 605
EBITmargin(%) 28.8 28.5 3�.2 3�.5 30.4
Noncompensableforeignincometaxesforoilproduction 427 505 668 �,072 �,282
Incomefromoperations(EBIT)aftercostofcapital2 – – – 9�� �,478
Assets 3,648 3,7�� 4,063 4,895 5,434
Explorationexpenses ��3 �23 �95 �73 �67
Additionstoproperty,plantandequipmentandintangibleassets 920 323 388 624 545�Startingin2005,theaccountingandreportingoftheBASFGroupisperformedinaccordancewithInternationalFinancial
ReportingStandards(IFRS).The2004figureshavebeenreportedinaccordancewithIFRS.Thefiguresforyearsuptoandincluding2003werepreparedaccordingtoGermanGAAP.
2Noncompensableforeignincometaxesforoilproductionarededucted
Segmentsalesin2006%
Explorationandproduction 43
Naturalgastrading 57
68 69
Oil&Gas
Salesbyregion2006%
Europe 93
NorthAmerica(NAFTA) �
AsiaPacific 2
SouthAmerica,Africa,MiddleEast 4
2004 2005 200620032002
Million €
4,199 4,791 5,263 7,656 10,687
0
3
6
9
12
Salesdevelopment
StrengththroughfocusedE&PactivitiesandgastradinginEurope
Keydriversofprofitability
Oilprice
Explorationsuccess,successfulacquisitionsandfarm-ins
Selectivetechnologydevelopmentanddeployment
Leanorganization
Integratedasset-basedgasbusiness
KeycapabilitiesofBASF
Focusoncoreregions
Technologyforthedevelopmentofcomplexreservoirsandlongstandingexperienceinenhancedoilrecovery(EOR)
PartnershipwithGazprom
Modernhigh-performancegastransportationandstoragesystemintheheartoftheEuropeangasmarket
Recentprojects1. Nord Stream – Northern European Gas Pipeline: –MajorinfrastructureprojecttosupplyWestern
EuropewithRussiangas(55billionm³/2pipelines).
–Gazpromholding5�%,BASF24.5%,E.ON24.5%injointventure
–Totalinvestment€9billion(�00%),BASFshare€2.8billion
–Projectedstart-up20�0
2. Achimgaz:–Totalreserves:200billionm³gas,
40milliontonscondensate–Developmentcost:€�.�billion(�00%),
BASFshare€0.6billion–Projectedproductionstart2007
3. Asset swap with Gazprom:–600billionm³gasreservesinYuzhno
Russkoye,Russia–Developmentcost€�.9billion(�00%),
BASFshare€0.7billion–Projectedproductionstartin2008–BASFwith25%lessoneshareand�0%
non-votingshareswillsignificantlyimproveitsreservebaseandlong-termproductionvolumes
–GazpromwillextenditsWINGASparticipation(50%lessoneshare,upfrom35%)
–Gazpromwillparticipatewith49%shareinaWintershallsubsidiaryforonshoreE&PinLibya
Wintershallisactiveintwosectors:oilandnaturalgasexplorationandproduction(E&P)aswellasnaturalgasdistributionandtrading.InEurope,thebusinessisdrivenbytheintegrationoftheE&Pbusinessandthegasdistributionandtradingbusiness.Upstream,Wintershallexplores,developsandproducesgasinandaroundEurope,withourmidstreambusiness(WINGAS)bringingthegastomarket.BeyondEuropetheE&Pbusinessisfocusedonfouradditionalcoreregions:NorthAfrica,SouthAmerica,RussiaandtheCaspianSea.
MainproductsOil&gas(E&P)|Naturalgastrading(marketing,transportation,storageofnaturalgas)
Mostinteresting,fastestgrowingmarketsEstimated market growth (2007–2012): Oildemand,world(E&P)�.5–2%p.a.|Gasdemand,world(E&P)2.5–3%p.a.|Gas,relevantmarket�.3%p.a.(naturalgastrading)
BASFleverstooutperformthesemarketsTechnologyfordevelopingcomplexoilandgasreservoirs(e.g.extendedreachdrilling,enhancedoilrecovery)|PartnershipwithGazprom,accesstogasresources|Integratedupstream/midstreamplayer|SecurityofsupplywithinfrastructureintheheartofEurope(turntableforgas;ownershipoflargestgasstoragefacilityinWesternEurope)|Leanorganization
BASFbenefitsfromOil&GasbusinessLong-termsecurityofgassupplyinEurope|Hydrocarbonhedge|Significantcashflow|Sustainableprofitability
Acquisitions/JVs/Investments(2004–2006)
Productgroup Description Year
E&P F�6Platform,TheNetherlands 2005
Gastrading AcquisitionofSaltfleetbygasfield,UnitedKingdom(plannedconversiontogasstorage)
2005
E&P YuzhnoRusskoye,Russia 2006
E&P Carinaaries,newplatform,Argentina 2006
E&P Mittelplate,offshoreGermany,highercapacitydrillingrig
2006
Gastrading ExtensionofSTEGAL,WEDALpipelinesinGermany
2006
Investments(from2007onwards)
Productgroup Description Year
Gastrading 50%ofHydroWINGAS,UnitedKingdom 2007
Gastrading Haidachgasstoragefacility,Austria 2007
Gastrading NordStreampipelineprojectwithGazprom 20�0
Europe–Traditionalstrengthinoilandgas–Basefortechnologicalexpertise
Russia–DevelopmentofSiberiangas–Acquisitionofnewprojects
CaspianSea–ExplorationinRussianand
Turkmensectors
NorthernAfrica–EstablishedoilproductioninLibya–Additionalgrowthopportunities
SouthAmerica–Establishedproductionin
Argentinaandfurtherexploration
Europe
Russia
Caspian Sea
Northern Africa
South America
Core region Operating company Production and/or Exploration
1
2
3
Explorationandproduction–Coreregionstrategy
MagdalenaMoll+4962160-48002
Head of IR
ChrisBeumelburg+19732456013
IR Manager– U.S. Investors and Analysts– North America
Dr.HelkeHillebrand+4962160-20905
IR Manager– Investors and Analysts Asia– Agricultural Products & Nutrition
CarolinTrieloff+4962160-43263
Junior IR Manager
JuliaJörder+4962160-95023
Executive Assistant
ThiloBischoff+4962160-21843
IR Manager – Investors and Analysts Rest of Europe– Chemicals, Performance Products
MarkusZeise+4962160-47016
IR Manager– Investors and Analysts Germany – Oil & Gas
NicoleTremmel+4962160-40308
Event Manager
Dr.VolkerSeidl+4962160-40415
IR Manager– UK Investors and Analysts – Plastics
AndreaWentscher+4962160-42296
Junior IR Manager
JenniferInsabella+4962160-94297
Event Manager
InvestorRelationsTeam
Thefollowingpublicationsarealsoavailable:
FinancialReporting
FinancialReport2006
AnnualReport2006onForm20-F
QuarterlyReports
SustainabilityReporting
CorporateReport2006(coveringtheissueseconomy,environmentandsocialresponsibility)
FactsandFigures2007
OtherFinancialdata1
Million€ 2002 2003 2004 2005 2006
Salestothirdparties �,285 �,377 �,570 �,97� 2,509
Intersegmentaltransfers 564 6�8 462 468 450
Salesincludingintersegmentaltransfers �,849 �,995 2,032 2,439 2,959
Incomefromoperationsbeforedepreciationandamortization(EBITDA)
(382) (�34) (59) (295) (�7)
Incomefromoperations(EBIT)beforespecialitems (468) (230) (�65) (374) (�9�)
Incomefromoperations(EBIT) (487) (233) (2�4) (407) (�22)
Assets 8,565 8,09� 9,�48 6,490 6,692
Researchanddevelopmentexpenses �97 �83 �73 227 262
Additionstoproperty,plantandequipmentandintangibleassets 47� 5�8 �44 �27 368�Startingin2005,theaccountingandreportingoftheBASFGroupisperformedinaccordancewithInternationalFinancial
ReportingStandards(IFRS).The2004figureshavebeenreportedinaccordancewithIFRS.Thefiguresforyearsuptoandincluding2003werepreparedaccordingtoGermanGAAP.
Businessactivitiesnotallocatedtoanyoperatingdivisionareshownas‘Other’andinclude,amongotherthings:–Saleoffeedstock–Remainingfertilizeractivities–Engineeringandotherservices–Rentalincomeandleases
Theincomefromoperationsrecordedunder‘Other’alsoincludescostofresearchrelatedtotheBASFGroup.‘Other’furtherincludesforeigncurrencyresultsfromfinancialindebtednessthatarenotallocatedtothesegments,hedgingofforecastedforeignsales,aswellasfromcurrencypositionsthataremacro-hedged.
Million€ 2002 2003 2004 2005 2006
R&Dexpenses �97 �8� �68 225 258
Foreigncurrencytransactionsandhedging (�43) (�) 54 (97) 86
Miscellaneousincomeandexpenses (�47) (5�) (�00) (85) 50
Compositionofassets
Million€ 2005 2006
Assetsallocatedtootheractivities �,735 2,050
Financialassets,e.g.participations �,057 �,84�
Marketablesecurities,cashandcashequivalents �,09� 890
Prepaidexpenses,definedbenefitassets 424 556
Otherreceivables,deferredtaxes 2,�83 �,355
Totalassetsof‘Other’ 6,490 6,692
BusinessSegments
70 71
ReportsandotherpresentationsareavailableontheInternetat:
corporate.basf.com
Printedcopiesofpublicationscanbeordereddirectlyfromouronlinemediashop:
corporate.basf.com/mediaordersbye-mail:[email protected]:+4962�60-0
TheregisteredtrademarksinthispublicationareownedbyBASFAktiengesellschaftorbyBASFGroupcompaniesorassociatedcompanies.
Importantdates
Interimreportsecondquarter2007August�,2007
Interimreportthirdquarter2007October30,2007
Fullyearresults2007February2�,2008
AnnualMeetingApril24,2008,Mannheim
Ex-dividenddateApril25,2008
BASFAktiengesellschaftInvestorRelations
Phone:+4962�60-48230Fax:+4962�60-22500e-mail:[email protected]
BASFCorporationBASFInvestorRelationsU.S.
�00CampusDriveFlorhamPark,NJ07932,USAPhone:+�97324560�3Fax:+�97324567�[email protected]
BASF–TheChemicalCompany
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