Marc Ehrhardt Dr. Stefanie Wettberg - BASF€¦ · Broad and resilient portfolio 2016: Sales of...

We create chemistry for a sustainable future

Creditor Roadshow

London

June 13, 2017

Marc EhrhardtPresident Finance

Dr. Stefanie WettbergHead of Investor Relations

BASF Creditor Story, June 2017 2

Cautionary note regarding

forward-looking statements

This presentation contains forward-looking statements. These forward-looking statements are based

on current estimates and projections of the Board of Executive Directors and on currently available

information. These forward-looking statements are not guarantees of the future developments and

results outlined therein. Rather, they depend on a number of factors, involve various risks and

uncertainties, and are based on assumptions that may not prove to be accurate. Such risk factors

particularly include those discussed on pages 111 to 118 of the BASF Report 2016. The BASF

Report is available online at basf.com/report. BASF does not assume any obligation to update the

forward-looking statements contained in this presentation.


Agenda

At a glance1

Strategic levers2

Financing highlights3

Segments4


Growth above chemical industry average – driven by innovative and sustainable products

and solutions

Unique Verbund concept – competitive advantage based on integrated sites, operational

excellence and best-in-class technologies

Broad and resilient portfolio – with global market access and strong customer relationships

Earnings growth and strong cash flow generation – based on operational and financial

strength

Long-term value creation with progressive dividend policy – grow or at least maintain

dividend at the previous year’s level

BASF shares – an attractive investment


Chemicals – a growth industryGlobal annual growth rate of ~3.6%*

…more food needed

by 2050

…more primary energy

consumption by 2050

…of the world population

will live in cities by 2050

Agriculture Health & Nutrition

Energy & Resources

Automotive &Transport

Construction &Housing

Consumer products

…people by 2050

Electric & Electronics

Chemistry as enabler to meet current and future needs

70% 50%~10 bn 30%

* Forecast average annual real change 2017-2019; BASF Report 2016, p.121


Broad and resilient portfolio2016: Sales of €57.6 billion; EBITDA of €10.5 billion

Percentage of sales 2016*

* Not depicted here: ‘Other’ 3% of Group sales and EBITDA €(1.0) billion


Global market access through regional presence

Kuantan

Hong Kong

Nanjing

Freeport

Florham Park

Geismar

Ludwigshafen

Antwerp

São Paulo

Regional centersSelected sites

Verbund sites

Selected research

and development sites

Asia Pacific

Europe

South America

North America

Sales €14,042 million

EBIT €1,113 million

Employees 17,583



Employees 70,784



Employees 18,156


EBIT €432 million

Employees 7,307

Sales by location of customer; EBIT by location of company


Verbund – unique competitive advantageActively managed in line with market requirements

Annual cost savings of more than €1 billion through integrated production

Verbund concept supports sustainability, reduces waste and avoids CO2 emissions of 6 million tons p.a.

Energy savings

>€300 million p.a.

People, Customers, Technology, Production


Stepwise increase of earnings level

EBIT and EBITDA*

billion €, 2001 - 2016

3.7

4.7 4.6

7.0 7.28.4

8.9

7.7

6.5

9.9

11.2

10.010.4

11.010.6 10.5

0

2

4

6

8

10

12

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

EBIT EBITDA

0.7

2.2 2.2

4.5 4.85.5

6.0

4.6

2.8

6.7

8.0

6.7 7.27.6

6.2 6.3

CAGREBITDA

7%CAGREBIT

16%

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

Avg. EBITDA level in depicted years


BASF Group Q1 2017Sales and earnings considerably above prior-year quarter

Financial figures Q1 2017 Q1 2016 Change

Sales €16.9 billion €14.2 billion 19%

EBITDA €3.5 billion €2.8 billion 25%

EBIT before special items €2.5 billion €1.9 billion 29%

EBIT €2.5 billion €1.9 billion 31%

Net income €1.7 billion €1.4 billion 23%

Reported EPS €1.86 €1.51 23%

Adjusted EPS €1.97 €1.64 20%

Operating cash flow €833 million €1,046 million (20)%

Sales development Volumes Prices Portfolio Currencies

Q1 2017 vs. Q1 2016 8% 8% 1% 2%


billion €, 2001 - 2016

2.3 2.3

4.94.6

5.3

5.9 5.8

5.0

5.7

6.5

7.16.6

8.1

7.0

9.4

7.7

0

1

2

3

4

5

6

7

8

9

10

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Free cash flowOperating cash flow

-0.5 -0.1

2.8 2.6

3.3 3.53.2

2.53.2

3.9 3.7

2.6

3.2

1.7

3.6 3.6

6.3%

Strong cash flow development


Cash flow development Q1 2017

million € Q1 2017 Q1 2016

Cash provided by operating activities 833 1,046

Thereof Changes in net working capital (1,985) (1,248)

Miscellaneous items 58 (39)

Cash used in investing activities (1,215) (1,258)

Thereof Payments made for tangible / intangible assets (767) (1,001)

Acquisitions / divestitures (22) 0

Cash provided by financing activities 831 1,997

Thereof Changes in financial liabilities 811 1,996

Dividends 6 (4)

Free cash flow 66 45


Sales growth – slightly faster than global chemical production

Deliver attractive returns – earn a significant premium on cost of capital

EBITDA growth – well above global chemical production

Remain a strong cash provider – continuously generate high levels of free cash flow

Progressive dividend policy – grow or at least maintain dividend at previous year’s level

Financial targets for the coming years


Innovations for a sustainable future

Investments in organic growth

M&A opportunities and portfolio pruning measures

Our priorities

Operational excellence and cost discipline

We aim to grow sales and earnings faster than global chemical production

in the coming years, driven by


Outlook 2017 for BASF Group confirmed

Assumptions 2017

Outlook 2017**

We expect BASF Group sales to grow considerably in the 2017 business year.

We want to slightly raise EBIT before special items compared with 2016.

BASF Group EBIT is also expected to grow slightly in 2017.

We are likely to once again earn a significant premium on our cost of capital in 2017.

GDP growth: +2.3%

Growth in industrial production: +2.3%

Growth in chemical production* +3.4%

Exchange rate: US$1.05 per euro

Oil price (Brent): US$55 per barrel

* Excluding pharma; ** For sales, “slight” represents a change of 1–5%, while “considerable” applies to changes of 6% and higher. For earnings, “slight” means a change of 1–10%,

while “considerable” is used for changes of 11% and higher.


Agenda

At a glance1

Strategic levers► Portfolio development

► Investments

► Innovation

► Sustainability

► Operational excellence

2


Segments4


Continuous global portfolio development

target(in % of sales*)~50% ~50%

Maintaining a balanced portfolio

Divestment of

businesses,

e.g., due to loss

of differentiation

Divestment of

businesses,

e.g., due to lower

market attractiveness

Commoditization leads to

restructuring

Growth fields

Innovation

pipeline

Acquisitions

Specialties and solutions Differentiated commodities

Attractive markets

Differentiation by process

technologies and integration

Attractive markets

Differentiation by customer

proximity and innovations

* Excluding Oil & Gas sales


Portfolio development towards more market-driven and

innovative businesses

Strong Partnerships

Gazprom

PETRONAS

Sinopec

Total

Selected transactions

2010 − today

BASF

core business

~€5.4 billion sales

in emerging and

innovation-driven businesses

Acquisitions

Functional crop care

Personal care & food

Omega-3 fatty acids

Enzymes

Battery materials

Specialty plastics

Selected assets in Oil & Gas

Refinish coatings

Surface treatment

Divestitures

~€20.7 billion sales

in businesses with limited fit

and differentiation potential

Styrenics

Fertilizers

Selected assets in Oil & Gas

Natural gas trading & storage

Custom synthesis business

Textile chemicals

Polyolefin catalysts

Industrial coatings


Clear acquisition criteria

We want to acquire businesses which …

provide a return on investment above

the WACC

are EPS accretive by year three at the

latest

We want to acquire businesses which …

generate profitable growth above the industry

average

are innovation-driven

offer a special value proposition to customers

reduce earnings cyclicality

Acquisition

criteria

Strategic acquisition criteria Financial acquisition criteria


Chemetall – a global leader in surface treatment

products and services

Key facts

One of the strongest globally managed

brands in the sector

Proprietary manufacturing technologies,

rigorous product quality and

performance standards

Leading market positions in the

automotive, aerospace and cold

forming segments

Long-standing, service-intensive

customer relationships

Track record of strong growth and high

profitability

An excellent strategic fit for BASF Coatings

Significant global presence and record of accelerated expansion in emerging markets

BASF Coatings site Chemetall site


Investments in organic growthInvestments of ~€3.9 billion planned for 2017

Performance

Products

21%

Oil & Gas

23% €19.0 billion

Capex budget 2017-2021

(by segment)

Other

13%

Chemicals

24%

Capex budget 2017-2021

(by region)

Asia Pacific

16%

North America

22%

Agricultural

Solutions

4%

Other**

3%

Functional Materials

& Solutions

15%

€19.0 billion

South America*

10%

* Including Africa and Middle East, ** Alternative sites currently being investigated

Europe

49%

Oil & Gas Europe


Investment projects with startup in 2017

Aroma ingredients complex

Kuantan, Malaysia

BASF and PETRONAS further

expand joint activities in Malaysia

Investment: around €500 million

Ammonia plant

Freeport, Texas

BASF and Yara are building world-

scale ammonia plant in the U.S.

750,000 tons per year;

hydrogen-based process

Engineering plastics

Schwarzheide, Germany

Expansion of annual capacity

by 70,000 tons

Increasing BASFʼs global compounding

capacity to more than 700,000 tons


Oil & Gas

2%

Innovation will drive future growth

Agricultural

Solutions

26%

Chemicals

10%

Performance Products

20%

Corporate Research

21%

Key facts

€1.86 billion R&D expenditures in 2016

R&D expense to sales ratio ~3%

~10,000 employees in R&D

~3,000 projects

~850 new patents in 2016

Research Verbund:

Cooperations with more than 600

excellent partners from universities,

startups and industry

In 2016, sales of >€10 billion with

products launched during last 5 years

R&D expenditures 2016

€1.86 billion

Functional Materials

& Solutions

21%


Innovations for a sustainable futureExamples with significant contributions to sustainability

FWC™ Four-Way Conversion

catalyst removes particulates

Acronal® MB – from biomass to

dispersions

Trilon M® phosphate alternative

for dishwashing detergentsSLENTITE® high-performance

insulation material

Green Sense® resource-efficient

concrete production

ecovio® biodegradable polymer

solution


Sustainable Solution Steering®

Novel methodology to screen and steer our portfolio

4.2% 0.3%

>60,000 product applications analyzed

(€53.2 billion sales, 95.9% of BASF’s

portfolio)

27.2% Accelerators

– outgrow their markets

– deliver margins above the average

– represent majority of BASF’s R&D

pipeline

68.3% Performers

<1% Challenged products

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

27.2%

68.3%

Substantial sustainability

contribution in the value chain

Meets basic sustainability

standards on the market

Specific sustainability issues

which are being actively addressed

Significant sustainability concern,

action plan developed

Sustainable

Solution

Steering

Percentage of

sales 2016


0

1.000

Earnings contribution 2016 2017-2018 Total

Operational excellenceDrivE with ~€1 billion targeted earnings contribution

DrivE program – Drive Efficiency

Targeted annual earnings contribution of

€1 billion from end of 2018 on

Optimization of processes and structures

in all regions, including

– manufacturing

– incremental capacities

– productivity increase

Project timeline: 2016–2018

€350 million

€650 million

Goal €1 billion

Annual earnings contribution DrivE

million €

1,000


Strong track record in operational excellence

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

50

100

150

200

250

300

350

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

EBITDA

Sales

Fixed Costs

CAGREBITDA

8%

CAGRSales

4%

3%

CAGRFixed Costs

BASF Group* 2001–2016

indexed; CAGR 2001–2016


Digitalization will support BASF’s growth and efficiency

Digital Business Models

Smart Innovation

Smart Supply Chain

Smart Manu-facturing

Growth

Digital business models

Customer connectivity

Digitalization in R&D

New revenue streams

Increased supply share

Higher innovation output

Predictive maintenance

Augmented reality in production

Smart supply chain

Increased capacity

Increased work efficiency

Reduced working capital

Efficiency


Agenda

At a glance1

Strategic levers2


Segments4


Earnings growth and strong cash flow generation – based on operational and financial

strength

Financing highlights

Sound capital structure – with strong commitment to keep a solid A rating

Diversified financing strategy – with well-balanced bond profile in terms of maturity, investor

base, and currencies


Financing strategy

Diversified debt financing instrumentsas of March 31, 2017

€20 billion debt issuance

program (for long-term debt

financing)

US$12.5 billion commercial

paper program (for short-term

debt financing)

Two broadly syndicated

backup lines of €3 billion each

(maturing in 2020 and 2022)

Financing strategy highlights

€16.3 billion

* Last confirmation Moody’s: May 30, 2017, S&P: August 10, 2016, Scope: September 6, 2016.

Our target: Keep a solid A rating (current ratings*: S&P A / Moody’s A1 / Scope A)

Bank loans

17%

Commercial paper

6%

Other bonds

20%

€-denominated bonds

57%


* Nominal values, excluding industrial revenue and pollution control bonds of BASF Corporation.

Profile as of May 31, 2017 billion €*

Well-balanced bond and corporate loan maturity profile

1.1

0.9

0.60.5

1.0

1.3

0.8

1.8

1.3

0.40.5

0.3

1.3

0.30.2

0.4

0.7

0.7

0.5

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2030 >20322031202920272026 2032202820222020 2023

1.7

0.7

1.0

1.2

202520242021201920182017

Bonds issued / corporate loans drawn after December 31, 2016Bonds / corporate loans outstanding until December 31, 2016


Overview of bonds (1/3) as of May 31, 2017

Bond Term Issuer Volume ISIN Code

0.925% USD Bond with

Warrant2017/2023 BASF SE USD600 million

Bond with Warrant

(DE000A2BPEU0)

Bond

(DE000A2BPEV8)

Warrant

(DE000A2BPEW6)

2.5% USD Bond 2017/2022 BASF SE USD500 million XS1551001768

1.75% GBP Bond 2017/2025 BASF SE GBP300 million XS1548422846

1.45% EUR Bond 2017/2032 BASF SE EUR300 million XS1551001768

2.67% NOK Bond 2017/2029 BASF SE NOK1.60 billion XS1539109790

0.0% EUR Bond 2016/2020 BFE* EUR1.00 billion DE000A188WV3

0.75% EUR Bond 2016/2026 BFE* EUR500 million DE000A188WW1

2.37% HKD Bond 2016/2031 BASF SE HKD1.30 billion XS1539109790


0.875% EUR Bond 2016/2031 BASF SE EUR500 million DE000A2BPA51

* BASF Finance Europe N.V.







3.89% USPP Series A 2013/2025 BASF SE USD250 million N/A

4.09% USPP Series B 2013/2028 BASF SE USD700 million N/A

4.43% USPP Series C 2013/2034 BASF SE USD300 million N/A

3.675% NOK Bond 2013/2025 BASF SE NOK1.45 billion XS0932079717

EUR Floating Rate Note 2013/2020 BASF SE EUR300 million XS0931272776


EUR Floating Rate Note 2013/2018 BASF SE EUR300 million XS0903325206






3% EUR Bond 2013/2033 BASF SE EUR500 million XS0885399583

1.875% EUR Bond 2013/2021 BASF SE EUR1.0 billion XS0883560715

2.0% EUR Bond 2012/2022 BASF SE EUR1.25 billion DE000A1R0XG3

1.5% EUR Bond 2012/2018 BASF SE EUR1.0 billion XS0836260975


4.875% EUR Bond 2003/2018 Ciba Specialty Chemicals

Finance Luxembourg S.A.EUR500 million XS0170386998


Strong balance sheet

Total assets increased by €2.6 billion

due to higher accounts receivable

Net debt increased by €0.5 billion to

€14.9 billion

Equity ratio increased from 42.6%

to 43.7%

Balance sheet March 31, 2017 vs. December 31, 2016

billion €

Liquid funds*

Accountsreceivable

Long-termassets

Inventories

Other assets

Otherliabilities

Financialdebt

Equity

27.6 27.7

16.3 16.8

32.6 34.6

Dec 31, 2016 Mar 31, 2017

1.9 1.93.0 3.5

11.0 13.1

10.010.2

50.650.4

Dec 31, 2016 Mar 31, 2017

76.579.1

* Including marketable securities

76.579.1


BASF Creditor Relations Team

Frank Wilhelmi

Head of Corporate Finance Group

Dr. Lars Budde

Senior IR Manager

Creditor Relations

Contact Details:

Email: [email protected]

Phone: +49 621 60 91386

Websites: www.basf.com/bonds

www.basf.com/anleihenThomas Langguth

Corporate Finance Group

Niklas Friese

Corporate Finance Group


Agenda

At a glance1

Strategic levers2


Segments4


ChemicalsConsiderably higher earnings driven by increased margins and volumes

Intermediates

752

+16%

Monomers

1,699

+44%

Petrochemicals

1,654

+38%

€4,105

+36%

Sales Q1 2017 vs. Q1 2016*

million €

EBIT before special items*

million €

457 458 488

629

958

0

200

400

600

800

1,000

Q1 Q2 Q3 Q4 Q1


Q1 2017 vs. Q1 2016 10% 24% 0% 2%

2016 2017

* Effective January 1, 2017, the Monomers and Dispersions & Pigments divisions’ activities for the electronics industry were combined into the global Electronic

Materials business unit and allocated to the Dispersions & Pigments division in the Performance Products segment. The 2016 figures have been adjusted accordingly.


Performance ProductsSales increased, earnings impacted by lower margins

Performance Chemicals

1,013

+6%

Nutrition & Health

486

0%

Dispersions & Pigments

1,399

+11%

Care Chemicals

1,362

+13%

€4,260

+9%


Q1 2017 vs. Q1 2016 7% 2% (2%) 2%

555512 473

237

515

0

200

400

600

800

Q1 Q2 Q3 Q4 Q1

EBIT before special items*

million €

2016 2017

Sales Q1 2017 vs. Q1 2016*

million €

* Effective January 1, 2017, the Monomers and Dispersions & Pigments divisions’ activities for the electronics industry were combined into the global Electronic

Materials business unit and allocated to the Dispersions & Pigments division in the Performance Products segment. The 2016 figures have been adjusted accordingly.


Functional Materials & Solutions Earnings grew significantly, mainly driven by continued strong demand from automotive

Coatings

999

+35%

Catalysts

1,689

+15%

Construction

Chemicals

560

+5%

Performance Materials

1,950

+17%

€5,198

+18%

456

535497

458

531

0

200

400

600

800

Q1 Q2 Q3 Q4 Q1

EBIT before special items

million €


Q1 2017 vs. Q1 2016 8% 3% 4% 3%

2016 2017

Sales Q1 2017 vs. Q1 2016

million €


1,780 1,855

0

1,000

2,000

Q1 2016 Q1 2017

Agricultural SolutionsSales increased slightly, earnings impacted by less favorable product mix

+4%591

533

0

200

400

600

800

Q1 2016 Q1 2017

EBIT before special items

million €


Q1 2017 vs. Q1 2016 2% 0% 0% 2%

-10%

Sales Q1 2017 vs. Q1 2016

million €


Oil & GasSales and earnings up, mainly due to higher prices

611

829

0

500

1,000

Q1 2016 Q1 2017

Sales Q1 2017 vs. Q1 2016

million €

+36%

66

170

47

140

0

100

200

300

Q1 2016 Q1 2017

EBIT before special items, net income

million €

Sales development Volumes Prices/Currencies Portfolio

Q1 2017 vs. Q1 2016 12% 24% 0%

EBIT before special items Net income


Review of “Other”

million € Q1 2017 Q1 2016

Sales 610 477

EBIT before special items (250) (219)

Thereof Costs of corporate research (81) (99)

Costs of corporate headquarters (52) (55)

Foreign currency results, hedging and other measurement effects (31) 68

Other businesses 5 18

Special items 7 (26)

EBIT (243) (245)

BASF Creditor Story, June 2017 45BASF Investor Day 2015 – Keynote speech 45

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