We add value as one company

Transcription

1 We add value as one company Amber Usman Investor Relations Asia Pacific Roadshow Taiwan December 8, 2014 BASF Capital Market Story December

2 Cautionary note regarding forward-looking statements This presentation may contain forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. Forward-looking statements may include, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand. BASF has based these forward-looking statements on its views and assumptions with respect to future events and financial performance. Actual financial performance could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. The information contained in this presentation is subject to change without notice and BASF does not undertake any duty to update the forwardlooking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations. BASF Capital Market Story December

3 We create chemistry for a sustainable future Positioning Performance Perspective Geismar, USA Freeport, USA Ludwigshafen, Germany Antwerp, Belgium Nanjing, China Kuantan, Malaysia Verbund site The #1 chemical company 74 billion sales, 7.2 billion EBIT bsi in 2013 #1-3 in >75% of businesses, present in >200 countries 6 integrated Verbund sites, production in 60 countries A track record of strong sales and earnings growth 14% average annual dividend increase, >3% yield in every single year* ~ 65 billion market capitalization as of November, 2014 Chemistry as an enabler BASF has superior growth opportunities: sustainable innovations investments emerging markets BASF Capital Market Story December 2014 * For

4 BASF today a well-balanced portfolio Total sales 2013: 74 billion Percentage of sales 2013* BASF Capital Market Story December 2014 * Not depicted here: ~6% of Group sales reported as Other 4

5 Verbund generates > 1 billion p.a. global cost savings*, supports sustainability Global reduction in carbon emissions of 6.1 million metric tons/a. and reduction of waste Example Ludwigshafen: avoidance of 7 million metric tons of freight/a. = 280,000 fewer truckloads Shared use of on-site facilities: fire department, security, waste water treatment and analytics BASF Capital Market Story December 2014 * Savings include only tangible synergies. Additional (intangible) benefits and retained profits are not included. 5

6 BASF in Asia Pacific Mongolia China Pakistan Bangladesh Thailand India South Korea Taiwan Hong Kong Vietnam Philippines Malaysia Sri Lanka Singapore Indonesia Japan Customers from 17 countries More than 100 production sites 130 sales offices* 16,708 employees, thereof ~700 R&D staff Sales in 2013: billion** EBITbSI in 2013: 842 million Australia Regional headquarters Verbund site Production site R&D/Technical center Asia Pacific service center New Zealand * Some sites are not shown due to scale. Site and office numbers refer to companies of significant size where BASF holds a stake greater than 50%. ** Sales by location of customer BASF Capital Market Story December

7 Sales Asia Pacific 2013 Sales* by segment Sales by sub-region Agricultural Solutions 4% Performance Products 26% 12.5 billion Other 9% Chemicals 31% Functional Materials & Solutions 30% South Korea 8% South Asia 10% Japan 12% ASEAN 22% 12.5 billion Australia, New Zealand (ANZ) 4% Greater China 44% South Asia: India, Pakistan, Bangladesh, Sri Lanka ASEAN: Singapore, Philippines, Vietnam, Thailand, Indonesia, Malaysia BASF Capital Market Story December 2014 *Sales to third parties by location of customers 7

8 Business review Strategic Levers BASF Capital Market Story December

9 Q3 2014: BASF with higher sales and earnings despite declining demand Business performance Q3 14 vs. Q3 13 Q1-Q3 14 vs. Q1-Q3 13 Sales 18.3 billion +3% 56.3 billion +1% EBITDA 2.5 billion +1% 8.2 billion +4% EBIT before special items 1.8 billion +9% 6.0 billion +5% EBIT 1.8 billion +8% 6.1 billion +8% Net income 1.0 billion (5%) 3.8 billion +3% Reported EPS 1.14 (5%) % Adjusted EPS 1.27 (1%) % Sales development Period Volumes Prices Portfolio Currencies Q3 14 vs. Q3 13 7% (4%) 0% 0% Q1-Q vs. Q1-Q % (3%) 0% (2%) BASF Capital Market Story December

10 Important corporate developments Recent transaction with Statoil Acquisition of participations in oil & gas fields in Norway Purchase price amounts to US$1.25 billion Increase of production to ~60,000 boepd in Norway Additional reserves and resources of ~170 million boe Strengthening of R&D platforms Future set up of global research platforms: Process Research & Chemical Engineering, led out of Europe Bioscience Research, led out of North America (from 2015) Advanced Materials & Systems Research, led out of Asia (from 2016) Restructuring of Performance Products BASF to sell textile chemicals business to Archroma Paper Chemicals division to be dissolved, product lines moved to other divisions Strategic options for parts of kaolin business in evaluation Total earnings improvement of ~ 500 million by 2017 BASF Capital Market Story December

11 Strong free cash flow generation Free cash flow* in billion ** Q1-Q * Cash provided by operating activities less capex (in 2005 before CTA) BASF Capital Market Story December 2014 ** 2009 adjusted for re-classification of settlement payments for currency derivatives 11

12 Growing dividend with attractive yield Dividend per share ( ) Dividend payments Dividend of 2.70 per share for 2013, an increase of 3.8% : Average annual dividend increase of ~14% Attractive dividend yield of 3.5% in 2013** Dividend yield above 3% in any given year since Dividend Policy We want to grow or at least maintain our dividend Dividend yield* 3.2% 3.1% 4.1% 3.8% 7.0% 3.9% 3.7% 4.6% 3.7% 3.5% BASF Capital Market Story December 2014 * Dividend yield based on share price at year-end ** Based on BASF share price of on Dec. 30,

13 Delivering consistent, long-term value Average annual performance with dividends reinvested Last 10 years November 2004 October 2014 Last 5 years November 2009 October % BASF +18.1% +4.2% Euro Stoxx % +8.9% DAX % +10.2% MSCI World Chemicals +13.7% BASF Capital Market Story December

14 Outlook 2014 Outlook 2014 We aim to increase our sales volumes excluding the effects of acquisitions and divestitures. Nonetheless, sales will decline slightly compared with 2013 due to the divestiture of the gas trading and storage business planned for autumn 2014 and negative currency effects. Despite the challenging environment, we strive for a slight increase in EBIT before special items. Assumptions 2014 GDP: 2.3% (previous: 2.5%) Industrial production: 3.4% (previous: 3.7%) Chemical production: 4.0% (previous: 4.4%) US$ / Euro: 1.35 (unchanged) Oil price (US$ / bbl): 105 (previous: 110) BASF Capital Market Story December

15 Update on key assumptions of the We create chemistry strategy Growth ( We create chemistry *) Growth (today s view) Global GDP 3.4% p.a. 2.6% p.a. Chemical production (excl. pharma) 4.9% p.a. 4.0% p.a. Industrial production 4.6% p.a. 3.4% p.a. * Rebased figures, new base year 2010 BASF Capital Market Story December

16 Projection 2015 EBITDA / EBITDA impact (billion ) Expected sales and EBITDA in line with financial market expectations for 2015 Market expectation for 2015 EBITDA between billion. BASF aims to achieve upper end of range Detailed outlook for 2015 provided on Feb. 27, 2015 BASF Capital Market Story December

17 Business review Strategic levers Portfolio development Market approach Innovations for a sustainable future Investments Acquisitions Operational excellence BASF Capital Market Story December

18 BASF outperformed global chemical production by ~3 percentage points p.a. Sales to third parties billion IFRS Impact Currencies 13.7 M&A Volumes Prices Currencies M&A Prices Volumes restated 2013 BASF Capital Market Story December

19 Portfolio development Moving downstream towards customer industries * Agriculture, Construction, Consumer Goods, Health & Nutrition, Electronics, Energy & Resources, Transportation BASF Capital Market Story December 2014 ** Sales excluding Oil & Gas. Targets were published on November 29,

20 Portfolio development Towards more market driven and innovative businesses Acquisitions Catalysts Construction chemicals Water-based resins Pigments, plastic additives Oil & Gas Personal care & food Battery materials Functional crop care Omega-3 fatty acids Enzymes ~ 14 billion sales BASF core business Selected transactions 2005 today Strong partnerships Gazprom Monsanto Petronas Shell Sinopec Statoil Total Divestitures Agro generics Vitamin premixes Styrenics Fertilizers Construction equipment, flooring and wall systems Natural gas trading and storage business Textile chemicals ~ 19 billion sales* BASF Capital Market Story December 2014 *Incl. Natural Gas Trading: Closing expected in autumn 2014; Excl. textile chemicals until closing 20

21 Restructuring in Performance Products Announced measures to strengthen competitiveness Measures Leather and textile chemicals (March 18, 2013 & October 16, 2014) Water, oilfield and mining chemicals (March 27, 2013) Plastic additives and pigments (April 23, 2013) Pigments (October 23, 2013) Paper Chemicals (January 23, 2014 & September 24, 2014) Nutrition & Health (April 25, 2014) Care Chemicals (June 5, 2014) Further measures Establishment of global innovation center in China Divestiture of textile chemicals Establishment of global business unit to realize synergies Divestment of industrial water management business Adjustments at sites in the Basel area to adapt to changed market conditions Downsizing of R&D activities Optimization of global production network Closure, restructuring and evaluation of strategic options for production assets Latex plant in EU shut down. Kaolin: Strategic options under evaluation From Jan. 1, 2015: Division dissolved, new set-up follows value chains Adaption of product portfolio and organizational processes to market realities Set of measures to adapt to changed customer needs and market conditions within its Home Care, Industrial & Institutional Cleaning and Formulation Technologies businesses Ongoing Reduction of >2,400 positions until end of 2017 Annual earnings contribution of ~ 500 Million from 2017 onwards One-time costs in the magnitude of ~ Million BASF Capital Market Story December

22 Market approach Cross-divisional customer industry approach BASF sales by first customer industry* Bubble Size: BASF divisional sales by first customer industry* / ** Consumer goods > 15 % Transportation > 15 % Construction > 10 % Energy & Resources < 10 % Monomers Dispersions & Pigments Care Chemicals Coatings Construction Chemicals Petrochemicals Intermediates Performance Chemicals Paper Chemicals Catalysts Performance Materials BASF Capital Market Story December 2014 * Excluding Oil & Gas, Crop Protection and Other numbers ** Nutrition & Health sales predominantly into Health & Nutrition market 22

23 Cross-divisional approach BASF s technology Verbund combined with customer know-how Lightweight tridion cell High performance foams Solar roof with transparent organic solar panels and OLED modules E-textiles Infrared-reflective film Infrared-reflective coating Multifunctional seat All-plastic wheel Daimler & BASF concept car Smartforvision BASF Capital Market Story December

24 Customer Verbund - adidas and BASF Working together for disruptive innovation: Infinergy BASF Capital Market Story December

25 Strong commitment to innovation Innovations for a sustainable future R&D expenditures in billion Corporate Research 21% Oil & Gas 3% Agricultural Solutions 26% Functional Mat. & Sol. 20% Performance Products 20% Chemicals 10% Key facts 1.8 billion R&D expenditure in 2013, further increase of R&D spending planned in 2014 ~10,650 employees in R&D ~3,000 projects Research Verbund: Cooperations with ~600 excellent partners from universities, start-ups and industry Target 2015 and 2020: 10 billion in sales from innovations younger 5 years 30 billion in sales from innovations younger 10 years BASF Capital Market Story December

26 Expand research capabilities in Asia Pacific with new R&D centers R&D Center Korea (2013) Focus: electronics R&D Center Japan (2013) Focus: battery materials Innovation Campus Asia Pacific, Shanghai (2012) Focus: polymers & materials R&D Center Singapore (2007) Focus: water, membrane, oilfield R&D Center Australia (2012) Focus: mining Global R&D Center India (2014) Focus: life science, agro BASF Capital Market Story December

27 Chemistry-based innovations Growth and technology fields Global needs Key customer industries Growth fields Technology fields Batteries for Mobility Resources, Environment & Climate Transportation Agriculture Enzymes E-Power Management Functional Crop Care Materials, Systems & Nanotechnology Food & Nutrition Construction Energy & Resources Heat Management for Construction Lightweight Composites Raw Material Change Organic Electronics Quality of Life Consumer Goods Electronics Plant Biotechnology Water Solutions White Biotechnology Wind Energy Health & Nutrition... BASF Capital Market Story December

28 Investments Capex budget by segment and region* Capex budget by segment Capex budget by region Performance Products 15% Functional Materials & Solutions 12% Agricultural Solutions 7% Other 13% 20 billion Chemicals 33% Oil & Gas 20% Asia Pacific 18% South America 4% Other 4% North America 25% 20 billion Europe 49% BASF Capital Market Story December 2014 * Source: BASF Report

29 Investments Major projects Ammonia and gas-to-propylene in USA* MDI plant Chongqing, China Acrylic acid complex Camacari, Brazil TDI plant Ludwigshafen, Germany Aroma Ingredients Kuantan, Malaysia Expansion oil & gas activities BASF Capital Market Story December 2014 * Under evaluation 29

30 Major investment projects Asia Pacific Planned start-up Current investment projects under execution Korla Butanediol Poly THF Nanjing Acrylic Acid Superabsorbent N-Butyle Acrylate Ethylene oxide Neopentylglycol DMAPA, PEA Dahej Polyurethanes Dispersions and Surfactants Production clusters Selected production sites Chennai Catalysts Rudong Agro Chemicals Shanghai Coatings Resins Catalysts Ultramid Polyamide Engineering Plastics TDI Expansion Chongqing MDI Taoyuan Catamold Maoming Isononanol Kuantan Citral > 21,000 engineers and construction workers are executing projects worth ~ 3 billion euros BASF Capital Market Story December

31 Acquisitions will contribute to profitable growth in the future We want to acquire businesses which Generate profitable growth above the industry average Are innovation-driven Offer a special value proposition to customers Provide a minimum return on investment of 8% p.a. after tax Are EPS accretive by year three at the latest Reduce earnings cyclicality Strategic acquisition criteria Financial acquisition criteria BASF Capital Market Story December

32 Operational excellence programs ~ 1.3 billion earnings contribution from STEP by 2015 Annual earnings contribution in million 4,000 3,000 2,000 1,000 0 Former cost saving programs NEXT STEP STEP program Targeted annual earnings contribution increased from 1 billion to ~ 1.3 billion by end of 2015 Optimization of processes and structures in all regions, e.g. manufacturing, maintenance supply chain engineering, best-cost country sourcing Project timeline: Between 0.9 and 1 billion by the end of 2014 expected One-time cost : ~ 1 billion BASF Capital Market Story December

33 Operational excellence Strong track record BASF Group* Index CAGR % 8 % 3 % EBITDA Sales Fixed costs * Excl. companies with major IFRS 10/11 restatements, i.e. BASF YPC Nanjing, Libya onshore, other Oil & Gas and Catalysts companies BASF Capital Market Story December

34 Appendix I: Chemicals Day BASF Capital Market Story December

35 Chemicals segment grows by selling into the BASF Verbund and to the market Sales to other BASF segments Sales to 3 rd parties * IFRS 10 & 11 impact: - 1.3Bn; Impact of new segment structure: + 5.3Bn BASF Capital Market Story December 2014 ** Without Catalysts (now part of Functional Materials & Solutions segment) 35

36 Chemicals with stable profitability, little correlation to oil price EBITDA margin Chemicals / oil price Index 2001 = Oil price EBITDA margin Chemicals (as % of sales) * 2007* restated 2013 BASF Capital Market Story December 2014 * Without Catalysts (now part of Functional Materials & Solutions segment) 36

37 Chemicals is a strong earnings contributor EBIT after cost of capital* in million 2,000 1,500 1, ** 2007** restated EBIT after cost of capital Chemicals Chemicals earned a premium on cost of capital even during the 2008 / 2009 recession*** * EBIT after cost of capital concept was introduced in ** Without Catalysts (now part of Functional Materials & Solutions segment) BASF Capital Market Story December *** The former Plastics segment also earned a premium on cost of capital during the 2008 / 2009 recession.

38 Chemicals generates strong and steady free cash flow Cash flow Chemicals in million 4,000 3,000 2,000 1, , * 2007* restated Operating cash flow (EBITDA) Free cash flow (EBITDA additions to plant, property & equipment) 2013 Since 2001, Chemicals contributed ~ 17 billion of free cash flow to BASF Group BASF Capital Market Story December 2014 * Without Catalysts (now part of Functional Materials & Solutions segment) 38

39 Shale gas in the U.S.: Lower energy and feedstock cost Game changer shale gas Increased U.S. shale gas production disconnected crude oil prices from natural gas prices in North America Increased production of natural gas liquids (NGLs): ethane, propane, butane NGL price drop drives shift to lighter cracker feed slates Improved profitability of light feed crackers Narrow cracker output Source: IHS Inc. The use of this content was authorized in advance by IHS. Any further use or redistribution of this content is strictly prohibited without written permission by IHS. All rights reserved. Natural gas price Germany: Statistisches Bundesamt Grenzübergabepreis Germany BASF Capital Market Story December

40 Chemicals supplies key raw materials to BASF downstream segments BASF Capital Market Story December

41 Principles for internal supply driven and merchant market driven products Internal supply driven Merchant market driven Reliable supply of key raw materials Access to chemicals not available in the market Economic advantages through superior technologies and Verbund Capture value of attractive chemicals markets Top-3 position in target market BASF Capital Market Story December

42 Close to entire cracker output in Ludwigshafen is used within Verbund Cracker products Ludwigshafen Ethylene Propylene Butadiene Raffinates Aromatics <5% >95% Merchant Market Value chains of the BASF Verbund BASF-YPC Nanjing supply for captive demand: 2006: 60% 2014: 75% BASF SE, Ludwigshafen, Germany 42 BASF Capital Market Story December

43 Chemicals is at the heart of the BASF Production Verbund Additional Verbund benefits Chemicals segment Downstream divisions Transfer pricing Additional Verbund benefits Flexible planning along value chains High security of supply, low logistics costs, no sales and sourcing costs Joint quality management Joint engineering and process development Cross-functional knowledge exchange Additional capacity at Verbund sites dilutes fixed costs Philosophy of transfer pricing Safe and flexible supply at competitive prices Transfer prices linked to market prices No cross-subsidizing Value driven management in all steps of the value chain BASF Capital Market Story December

44 Chemicals segment accounts for one third of all capex Capex budget by segment Performance Products 15% Agricultural Solutions 7% Functional Materials & Solutions 12% Other 13% 20 billion Chemicals* 33% Oil & Gas 20% High capex intensity commands extraordinary focus on capex allocation and project control Extensive use of cash-cost benchmarking Preparation of solid business cases for all projects ensures sound decision-making Projects approved only if cost of capital is earned even at hypothetical marginal producer price level BASF Capital Market Story December 2014 * Including gas-to-propylene project U.S. Gulf Coast, TDI Ludwigshafen, MDI Chongqing, Isononanol Maoming 44

45 Capex in line with revenues to support top and bottom-line growth Consolidated sales indexed (2000 = 100) Capex as % of sales Consolidated sales Chemicals segment Capex outlook 16% 14% 12% % 200 8% 150 6% 100 4% 50 0 Capex as % of sales Chemicals segment * 2007* restated 2% 0% BASF Capital Market Story December 2014 * Without Catalysts (now part of Functional Materials & Solutions segment) 45

46 Major Investment projects in the Chemical segment Ammonia and gas-to-propylene in USA* MDI plant Chongqing, China Isononanol plant Maoming, China TDI plant Ludwigshafen, Germany Acrylic acid complex Camacari, Brazil Polyamides plant Caojing, China BASF Capital Market Story December 2014 * Under evaluation 46

47 BASF new process BASF classic process Cash costs Cost curve case study: Acrylic acid China Acrylic Acid cash cost curve, China average cash costs 2015 in US$/kg Continuous process innovation leads to best-in-class technology Proprietary BASF technology, with best-in-class process Significant cost synergies due to two parallel projects (Nanjing, Camacari) Acrylic acid will supply downstream units (superabsorbent polymers; acrylates) Production capacity BASF Capital Market Story December 2014 Source: BASF estimate 47

48 Cost curve case study: TDI Europe TDI cash cost curve, Europe average cash costs 2015 in US$/kg New Ludwigshafen TDI plant will provide superior cost structure in Europe Leading single-train technology New TDI plant strengthens and benefits from Ludwigshafen Verbund Schwarzheide plant to be closed after start-up of new plant New TDI plant re-balances competitive environment of European TDI market BASF Capital Market Story December 2014 Source: BASF estimate 48

49 BASF North America BASF Europe Cash costs Cost curve case study: Caprolactam Caprolactam cash cost curve average cash costs 2015 in US$/kg BASF caprolactam production focused on captive demand BASF plants well positioned on cost curve Best-in-class cost position in Europe Constant process improvement ongoing Worldscale caprolactam plants supply downstream demand of polyamide 6 applications Further cost improvement in North America after start-up of ammonia JV with Yara Production capacity BASF Capital Market Story December 2014 Source: BASF estimate 49

50 Shale gas is a major opportunity for BASF BASF # 2 chemical producer in the U.S.* Low energy costs (energy bill dropped by 55% compared to 2007**) Converted Port Arthur cracker with high feed flexibility Substantial profit improvement BASF will maximize opportunity of low-cost methane Strengthen profitability of the Verbund Grow selected C1 value chains BASF Capital Market Story December 2014 * Based on sales to local customers ** U.S. data only, normalized costs for natural gas for energy production 50 50

51 Shale gas is beneficial for methane and ethane based chemistry Natural Gas Liquids Ethane Propane Butane Cracker Feed Composition of shale gas Methane Power plants Ammonia Methanol Low transportability of ethane Shift to ethane crackers Very limited transportability of methane Propane and butane easy to transport Export with link to global market Methane to remain an abundant product with low pricing in North America (despite LNG projects) Methane and ethane to retain their advantageous cost position in North America BASF Capital Market Story December

52 Ammonia joint venture* enables low raw materials costs for BASF downstreams Hydrogen** Long-term sourcing contracts Nitrogen** Improved cost position for BASF s downstream products World-scale producer economics plant with focus on captive demand only (BASF) Yara-BASF joint venture Ammonia Yara merchant market Site: BASF Verbund site Freeport, Texas Capacity: 750 kt p.a. Advantages of hydrogen & nitrogen based technology: Caprolactam Isocyanates BASF Group Amines Lower capital investment No greenhouse gas emissions Faster execution BASF Capital Market Story December 2014 * Project under evaluation ** Hydrogen and nitrogen are available in the Freeport area 52

53 Gas-to-propylene complex* covers internal demand at attractive conditions Propylene supply North America Methane (from shale gas) Methanol Flexible feed (NGL s, Naphtha) Cost leading gas-to-propylene technology covers supply gap U.S. Gulf Coast location World-scale plant Start-up: ~2019 Propylene Propylene (Port Arthur cracker) Port Arthur cracker and new on-purpose propylene complex to cover entire captive propylene demand Acrylic acid Oxo-alcohols Polyols Downstream products Mid-term no sales to merchant market Lower cost than alternative PDH technology BASF Capital Market Story December 2014 * Project under evaluation 53

54 Appendix II: Oil & Gas BASF Capital Market Story December

55 Share of Oil & Gas in BASF portfolio Average EBITDA* (billion p.a.) Oil & Gas 2.3 (24%) Cumulative capex** (billion ) Oil & Gas 6.4 (31%) BASF Group w/o Oil & Gas 7.4 (76%) BASF Group w/o Oil & Gas 14.5 (69%) Key facts : Oil & Gas: Solid profit contributor to BASF Group Oil & Gas accounted for ~30% of BASF Group capex Oil & Gas will remain a significant contributor to BASF s total EBITDA Capex share of Oil & Gas business in BASF s portfolio will decline * Excluding non-deductible oil taxes; restated figures from 2012 onwards in accordance with changes in IFRS ** Including additions to property, plant, equipment resulting from acquisitions, capitalized exploration, restoration obligations BASF Capital Market Story December 2014 and IT investments; restated figures from 2012 onwards in accordance with changes in IFRS 55

56 Strong earnings contribution from Oil & Gas Net income Oil & Gas (million ) 2,000 1,780 1,500 1, ,064 1,201 1, * Q1-Q * Positive impact from special income due to the deconsolidation of Gascade Gastransport GmbH and BASF Capital Market Story December 2014 the disposal of a share in the Edvard Grieg oilfield (BASF Report 2013, pp ) 56

57 Strong free cash flow contribution to BASF Group Cash flow Oil & Gas* (million ) 2,000 1,500 1, Operating cash flow Oil & Gas Free cash flow** Oil & Gas 40% of operating cash flow to BASF Group (avg ) BASF Capital Market Story December 2014 * Wintershall cash flow ** Free cash flow: Operating cash flow less payments related to property, plant and equipment and intangible assets 57

58 Oil & Gas Focus on upstream activities Oil & Gas value chain Upstream Midstream Downstream Exploration / Development / Production Transport Storage / Trading Focus on attractive E&P activities Maintain gas transport business Exit natural gas storage and trading business BASF Capital Market Story December

59 Clear strategy for further profitable growth Long-term profitable growth Focus Technology Partnerships E&P Core regions Limited exploration risk BASF technology Verbund Enhanced oil recovery (EOR) Strategic partnerships with regional resource holders Growing at the source BASF Capital Market Story December

60 Four core regions and one development region Europe Russia. North Africa Middle East South America Operating company Current activities Core region Development region BASF Capital Market Story December

61 Regional footprint 2013 Production by region 2013 Production Europe 18% North Africa/ Middle East 9% 132 million boe Russia 53% Russia stands for roughly 50% of total production In 2013, natural gas accounted for approx. 75% of total production South America 20% Proved 1P reserves by region 2013 Europe 13% North Africa/ Middle East 9% South America 13% 1.5 billion boe Russia 65% Reserves Russia provides strong reserve base Gas accounts for approx. 75% of total reserves BASF Capital Market Story December

62 Oil & Gas Excellent further growth opportunities Production volumes (million boe) Key facts 200 ~190 Continue to significantly invest in core and development regions >160 Capex* of ~ 4 billion between 2014 and 2018, thereof 70% Europe and Russia 15% North Africa/Middle East % South America target 2018 target South America Russia Europe North Africa/Middle East BASF Capital Market Story December 2014 * Without capex in non-consolidated participations 62

63 Reserves and R/P 1P Reserves* (million boe) R/P (years) Key facts 1,600 1,400 1,200 1, ** R/P ratio increased to 11 years Total 1P reserves amounted to ~1.5 billion boe (2013) Gas accounts for approx. 75% of total reserves Strong contribution to reserve replenishment from assets in Norway and Russia Reserve Replacement Rate (RRR, in percent) Oil Natural gas R/P * According to SEC guidelines; Libya onshore 51% BASF Capital Market Story December 2014 ** 2013 adjusted to new conversion factor from m 3 gas to barrel of oil equivalent (5,600 scf = 1 boe instead of 6,000 scf = 1 boe) 63

64 Active portfolio management Focus on promising projects Acquisitions (closing dates) Norway 25% in Maria Divestitures (closing dates) Own/joint-operated Non-own operated Argentina 50% in Aguada Federal Norway 32.7% in Brage Norway 15% in Gjøa 30% in Vega 24% in Aasta Hansteen*, Add. 5% in Gjøa, 19% in Asterix Russia** 25% in Achimov IV/V Norway Add. 24.5% in Vega Norway Add. 2.5% in Brage 15% in Luno II Expected closing Norway Shares of 14 licences Germany 15.79% of VNG UK North Sea 14 licenses Germany** 50% of WINGAS WIEH, WIEE, Astora Netherlands** 50% of Wintershall Noordzee * Including 13.2% in Polarled Pipeline ** Closing expected in autumn 2014; transaction financially retroactive to April 1, 2013 BASF Capital Market Story December

65 Status of the asset swap with Gazprom Timeline Oct. signing of framework agreement Dec. approval by EU Commission Autumn expected closing Planned production start area IV/V Nov. signing of legally binding basic agreement Effective date: April 1 Implementation of the swap (e.g. developing new company structure) Dec. signing of final agreement Activities to be divested contributed in total ~ 12 billion to sales and ~ 500 million to EBITDA of BASF Group in 2013 BASF Capital Market Story December

66 Russia Production ramp up Achimgaz Production development Achimgaz Block IA* (%) Wells in production Pilot phase Full field development Plateau production Plateau production by 2018: Up to 8 billion m 3 p.a.* BASF Capital Market Story December 2014 * 100% share. Russian Standard Conditions (RSC) 66

67 Recent transaction with Statoil Strategic rationale of the transaction To strengthen Wintershall s position in Norway by increasing participation in producing oil and gas fields To participate jointly with Statoil in promising development project Aasta Hansteen To get access to additional reserves and resources (2P/2C) of ~170 million boe and assets with material exploration perspectivity To increase production of Wintershall Norge from currently around 40,000 boe/day to about 60,000 boe/day To expand position as field operator in Norway and to gain experience with subsea operations by taking over operatorship in the Vega field* To significantly increase Wintershall s EBIT and future operating cash flow BASF Capital Market Story December 2014 * Pipeline project will provide route for produced gas from Aasta Hansteen field to onshore processing facilities 67

68 Recent transaction with Statoil Transaction summary Wintershall expands its oil and gas production and reserves in Norway Intensification of the cooperation with Statoil, the leading Norwegian oil and gas major, on exploration and development projects Wintershall acquires shares in assets from Statoil containing reserves and resources (2P/2C) of ~170 million boe and a stake in the Polarled pipeline project* Purchase price of US$1.25 billion plus up to US$50 million if Aasta Hansteen field development is executed according to current project plan Effective date January 1, 2014 Closing expected by the end of 2014 BASF Capital Market Story December 2014 * Pipeline project will provide route for produced gas from Aasta Hansteen field to onshore processing facilities 68

69 Production growth from solid project pipeline (major projects) Achimgaz (FFD) Achimov Blocks IV / V* Norway Knarr Edvard Grieg Aasta Maria Hansteen Skarfjell F 17 Area Ravn Hibonite Vega Pleyade CMA1 extension Unconventionals Fenix Block 4N Shuwaihat Length of development phase Length of development phase BASF Capital Market Story December 2014 * Closing expected autumn

70 Natural Gas Transportation Natural gas transportation business generates stable earnings Gas pipelines in operation Nord Stream in operation South Stream offshore (planned) South Stream onshore (planned) Production fields Yuzhno Russkoye 2 Key facts Nord Stream (offshore) Wintershall share: 15.5% Capacity: 55 billion m 3 /a NEL 20 bn. m³/a OPAL 36 bn. m³/a Germany Slovenia Serbia Nord Stream 55 bn. m³/a Poland Hungary Romania Belarus Ukraine Black Sea Jamal 33 bn. m³/a Russia Transgas 95 bn. m³/a Georgia Caspian Sea Achimov fields 1 Both lines in operation Total capex: 7.4 billion South Stream (offshore) Wintershall share: 15% Planned capacity: 63 billion m³/a via 4 pipelines Total capex (offshore): > 10 billion Start-up: End of 2015 Bulgaria South Stream 63 bn. m³/a BASF Capital Market Story December 2014 * Start of production is planned not before

71 OPAL Natural Gas Transportation Pipeline network well connected to major European distribution hubs NBP Bacton Zeebrügge France TTF Balgzand ZBH Düsseldorf Brüssel Aachen Belgium GASCADE pipelines Major european distribution hubs Netherlands Emden Bunde Krefeld Köln Ludwigshafen Hameln Kassel Kiel Greifswald Hamburg Schwerin NEL Gaspool STEGAL Erfurt Nürnberg NetConnect Berlin Czech Republic Burghausen Frankfurt/O. Brandov Prag Poland JAMAL Key facts GASCADE Wintershall share: 50% Length: 2,400 km In operation since 1992 OPAL Wintershall share: 40% Capacity: 36 billion m³/a Length: 472 km In operation since 2011 NEL Wintershall share: 25.6% Capacity: 20 billion m³/a Length: 441 km In operation since 2012/2013 BASF Capital Market Story December

72 Oil & Gas Outlook Financial performance Sales to 3 rd parties: EBIT before special items: Net income: billion billion billion Sales expected to be considerably below 2013 due the asset swap with Gazprom. Slight increase in EBIT before special items due to the first all-year inclusion of the acquired activities from Statoil** and the expansion of the Achimgaz production. Production volumes Total production: 132 mmboe Production expected on similar level despite the suspension of the onshore production in Libya. Sales volumes Natural gas sales: 52 billion m³ Divestment of natural gas trading and storage activities planned for autumn Investments/ Expenditures Investments* 2013: thereof E&P: ~ billion ~ billion Investments*** : (Predominantly in E&P) ~ 4.0 billion thereof Natural Gas Trading: ~ billion Macroeconomic assumptions Average oil price (brent): Average exchange rate: $109 per barrel $1.33 per Forecast 2014: $105 per barrel $1.35 per * Incl. tangible assets from acquisitions, activated exploration expenditures, without capex in non-consolidated participations BASF Capital Market Story December 2014 ** Former Statoil transaction with closing in 2013 *** Without tangible assets from acquisitions and activated exploration expenditure, without capex in non-consolidated participations 72

73 BASF Capital Market Story December