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BASF Factbook 2007 Published in June 2007
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Page 1: BASF Factbook 2007

BASF Factbook 2007

Published in June 2007

Page 2: BASF Factbook 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

Page 3: BASF Factbook 2007

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

Page 4: BASF Factbook 2007

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.

Page 5: BASF Factbook 2007

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

Page 6: BASF Factbook 2007

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

Page 7: BASF Factbook 2007

�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

Page 8: BASF Factbook 2007

�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

Page 9: BASF Factbook 2007

�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

Page 10: BASF Factbook 2007

�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.

Page 11: BASF Factbook 2007

�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

Page 12: BASF Factbook 2007

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.

Page 13: BASF Factbook 2007

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

Page 14: BASF Factbook 2007

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.

Page 15: BASF Factbook 2007

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

Page 16: BASF Factbook 2007

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

Page 17: BASF Factbook 2007

BusinessSegmentsOurbusinessportfolioiswellbalancedandoffersstronggrowthopportunities.Itconsistsoffivesegmentswith�4operatingdivisions.

34Inorganics36Catalysts38Petrochemicals40Intermediates

32Chemicals

44Styrenics46PerformancePolymers48Polyurethanes

52ConstructionChemicals54Coatings56FunctionalPolymers58PerformanceChemicals

42Plastics 50PerformanceProducts

62AgriculturalProducts64FineChemicals

60AgriculturalProducts&Nutrition

66Oil&Gas

30 31

Page 18: BASF Factbook 2007

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

Page 19: BASF Factbook 2007

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

Page 20: BASF Factbook 2007

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

Page 21: BASF Factbook 2007

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

Page 22: BASF Factbook 2007

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

Page 23: BASF Factbook 2007

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

Page 24: BASF Factbook 2007

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

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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

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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

Page 27: BASF Factbook 2007

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

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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

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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

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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

Page 31: BASF Factbook 2007

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

Page 32: BASF Factbook 2007

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.

Page 33: BASF Factbook 2007

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

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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

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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

Page 36: BASF Factbook 2007

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

Page 37: BASF Factbook 2007

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

Page 38: BASF Factbook 2007

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

72


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