BASF Investor Day Asia Pacific 2013 - BASF.com
BASF Investor Day Asia Pacific 2013 - BASF.com
BASF Investor Day Asia Pacific 2013 - BASF.com
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We create chemistry in <strong>Asia</strong> <strong>Pacific</strong><br />
“grow smartly”<br />
Martin Brudermüller, Vice Chairman of <strong>BASF</strong> SE<br />
Albert Heuser, President Greater China & Functions <strong>Asia</strong> <strong>Pacific</strong><br />
Gops Pillay, President South & East <strong>Asia</strong>, ASEAN, ANZ<br />
<strong>Investor</strong> <strong>Day</strong><br />
<strong>Asia</strong> <strong>Pacific</strong><br />
Shanghai, June 5, <strong>2013</strong>
Cautionary note regarding<br />
forward-looking statements<br />
This presentation may contain forward-looking statements that are subject to risks and<br />
uncertainties, including those pertaining to the anticipated benefits to be realized from the<br />
proposals described herein. Forward-looking statements may include, in particular,<br />
statements about future events, future financial performance, plans, strategies,<br />
expectations, prospects, <strong>com</strong>petitive environment, regulation and supply and demand.<br />
<strong>BASF</strong> has based these forward-looking statements on its views and assumptions with<br />
respect to future events and financial performance. Actual financial performance could differ<br />
materially from that projected in the forward-looking statements due to the inherent<br />
uncertainty of estimates, forecasts and projections, and financial performance may be better<br />
or worse than anticipated. Given these uncertainties, readers should not put undue reliance<br />
on any forward-looking statements. The information contained in this presentation is subject<br />
to change without notice and <strong>BASF</strong> does not undertake any duty to update the forwardlooking<br />
statements, and the estimates and assumptions associated with them, except to the<br />
extent required by applicable laws and regulations.<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 2
Our global strategic framework<br />
Why –<br />
Our purpose<br />
How –<br />
Our values<br />
We create chemistry for a sustainable future<br />
Creative Open Responsible Entrepreneurial<br />
What –<br />
Our strategic<br />
principles<br />
We add value<br />
as one <strong>com</strong>pany.<br />
We drive<br />
sustainable<br />
solutions.<br />
We innovate<br />
to make<br />
our customers<br />
more successful.<br />
We form<br />
the best team.<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 3
1<br />
Where we are<br />
2<br />
Trends in <strong>Asia</strong> <strong>Pacific</strong><br />
3<br />
“grow smartly” – <strong>Asia</strong> <strong>Pacific</strong> Strategy<br />
4 Strategic levers<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 4
<strong>BASF</strong> in <strong>Asia</strong> <strong>Pacific</strong><br />
Mongolia<br />
China<br />
Pakistan<br />
Bangladesh<br />
Thailand<br />
India<br />
South Korea<br />
Taiwan<br />
Hong Kong<br />
Vietnam<br />
Philippines<br />
Malaysia<br />
Sri Lanka<br />
Singapore<br />
Indonesia<br />
Japan<br />
Customers from 17 countries<br />
More than 100 production sites<br />
148 sales offices*<br />
~16,400 employees,<br />
thereof 800 R&D staff<br />
Sales in 2012: ~€12.5 billion**<br />
EBITDA in 2012: €1.2 billion***<br />
Australia<br />
Regional headquarters<br />
Verbund site<br />
Production site<br />
R&D/Technical center<br />
<strong>Asia</strong> <strong>Pacific</strong> service center<br />
New Zealand<br />
* Some sites are not shown due to scale. Site and office numbers refer<br />
to <strong>com</strong>panies of significant size where <strong>BASF</strong> holds a stake greater<br />
than 50% .<br />
** Sales by location of customer<br />
*** EBIT by location of <strong>com</strong>pany<br />
All figures for 2012 have been adjusted to changes in IFRS 10 & 11<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 5
Sales and profitability in <strong>Asia</strong> <strong>Pacific</strong><br />
Sales by location of customer<br />
€ billion<br />
20<br />
EBITDA by location of <strong>com</strong>pany<br />
€ billion<br />
2<br />
+11% p.a.<br />
1.7<br />
1.6<br />
1.4<br />
10<br />
5.3 6.5 8.1<br />
+14% p.a. 14.4 14.9<br />
12.5 12.5*<br />
9.6 9.3 8.7<br />
1<br />
0.6 0.7 0.8<br />
1.2<br />
0.8<br />
0.9<br />
1.2*<br />
0<br />
2004<br />
2005<br />
2006<br />
2007<br />
2008<br />
2009<br />
2010<br />
2011<br />
2012<br />
2012r<br />
0<br />
2004<br />
2005<br />
2006<br />
2007<br />
2008<br />
2009<br />
2010<br />
2011<br />
2012<br />
2012r<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> * 2012r figures restated according to changes in IFRS 10 & 11<br />
6
Sales <strong>Asia</strong> <strong>Pacific</strong> 2012<br />
Sales by segment<br />
Sales by sub-region<br />
Agricultural<br />
Solutions<br />
4%<br />
Performance<br />
Products<br />
27%<br />
€12.5<br />
billion<br />
Other<br />
8%<br />
Chemicals<br />
31%<br />
Functional<br />
Materials &<br />
Solutions<br />
30%<br />
South Korea<br />
8%<br />
South <strong>Asia</strong><br />
11%<br />
Japan<br />
13%<br />
ASEAN<br />
22%<br />
€12.5<br />
billion<br />
Australia,<br />
New Zealand (ANZ)<br />
4%<br />
Greater<br />
China<br />
42%<br />
South <strong>Asia</strong>: India, Pakistan, Bangladesh, Sri Lanka<br />
ASEAN: Singapore, Philippines, Vietnam,<br />
Thailand, Indonesia, Malaysia<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> Figures for 2012 adjusted to changes in IFRS and new segment structure as of January 1, <strong>2013</strong>. Sales to third parties by location of customers 7
1<br />
Where we are<br />
2<br />
Trends in <strong>Asia</strong> <strong>Pacific</strong><br />
3<br />
“grow smartly” – <strong>Asia</strong> <strong>Pacific</strong> Strategy<br />
4 Strategic levers<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 8
Emerging trends in <strong>Asia</strong> drive the need<br />
for sustainable development<br />
Demands of society<br />
& government<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 9
Capturing opportunities and addressing<br />
challenges in <strong>Asia</strong> <strong>Pacific</strong><br />
Demands of<br />
society<br />
& government<br />
Macroeconomics Competition Sustainability<br />
Macroeconomics Competition Sustainability<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 10
<strong>Asia</strong> <strong>Pacific</strong> will be the global<br />
growth engine<br />
Real GDP (World)<br />
US$ trillion<br />
2020<br />
2010<br />
14%<br />
13%<br />
CAGR<br />
27%<br />
World: 3.0%<br />
29%<br />
49.7 <strong>Asia</strong> <strong>Pacific</strong>: 4.8%<br />
25%<br />
67.1<br />
2012<br />
31%<br />
14%<br />
28%<br />
28%<br />
33%<br />
28%<br />
52.3<br />
30%<br />
Source: <strong>BASF</strong><br />
<strong>Asia</strong> <strong>Pacific</strong> North America Europe Rest of World<br />
Macroeconomics Competition Sustainability<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 11
China is in the process of be<strong>com</strong>ing the<br />
dominant <strong>Asia</strong>n economy<br />
Real GDP (<strong>Asia</strong> <strong>Pacific</strong>)<br />
US$ trillion<br />
33%<br />
7%<br />
8%<br />
7%<br />
14.9<br />
11%<br />
32%<br />
2020<br />
2010<br />
6%<br />
8%<br />
7%<br />
8%<br />
CAGR<br />
7% 34%<br />
7%<br />
<strong>Asia</strong> <strong>Pacific</strong>: 4.8%<br />
13.6 21.8<br />
11%<br />
14%<br />
2012<br />
41%<br />
24%<br />
35%<br />
Source: <strong>BASF</strong><br />
Japan Greater China South <strong>Asia</strong> South Korea ASEAN ANZ<br />
Macroeconomics Competition Sustainability<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 12
<strong>Asia</strong> <strong>Pacific</strong> is the fastest growing<br />
chemical market, outpacing GDP<br />
Real chemical production excluding pharma (World)<br />
US$ trillion<br />
2020<br />
2010<br />
10%<br />
10%<br />
CAGR<br />
40%<br />
World: 4.0%<br />
21%<br />
27%<br />
2.2 <strong>Asia</strong> <strong>Pacific</strong>: 6.2%<br />
3.2<br />
23%<br />
11%<br />
2012<br />
19%<br />
50%<br />
25%<br />
2.4<br />
42%<br />
22%<br />
Source: <strong>BASF</strong><br />
<strong>Asia</strong> <strong>Pacific</strong> North America Europe Rest of World<br />
Macroeconomics Competition Sustainability<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 13
China is the dominating chemical market<br />
in <strong>Asia</strong> <strong>Pacific</strong><br />
Real chemical production excluding pharma (<strong>Asia</strong> <strong>Pacific</strong>)<br />
US$ trillion<br />
2%<br />
8%<br />
9%<br />
8%<br />
2010<br />
2020<br />
1%<br />
8%<br />
11%<br />
7%<br />
19%<br />
CAGR<br />
<strong>Asia</strong> <strong>Pacific</strong>: 6.2%<br />
9%<br />
0.9 1.6<br />
54%<br />
2012<br />
1%<br />
8%<br />
14%<br />
10%<br />
7%<br />
1.0<br />
64%<br />
60%<br />
Source: <strong>BASF</strong>; CAGR <strong>Asia</strong> <strong>Pacific</strong> 6.2%<br />
Japan Greater China South <strong>Asia</strong> South Korea ASEAN ANZ<br />
Macroeconomics Competition Sustainability<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 14
<strong>Asia</strong>n <strong>com</strong>panies grow share in global<br />
chemical market<br />
Sales – Global Top 100 Chemical Companies<br />
US$ billion<br />
1,294<br />
953<br />
70%<br />
79%<br />
30%<br />
21%<br />
2006 2011<br />
Non-<strong>Asia</strong>n <strong>com</strong>panies <strong>Asia</strong>n <strong>com</strong>panies<br />
• Share of <strong>Asia</strong> <strong>Pacific</strong> <strong>com</strong>panies<br />
has increased by 9 ppts from<br />
2006 to 2011<br />
• 13 new <strong>Asia</strong>n <strong>com</strong>panies have<br />
joined the list of the top 100<br />
chemical producers since 2006<br />
• <strong>Asia</strong> <strong>Pacific</strong> be<strong>com</strong>es the center<br />
of global <strong>com</strong>petition<br />
• Feedstock access be<strong>com</strong>es a<br />
key <strong>com</strong>petitive advantage<br />
• Attracting local talent, land<br />
scarcity and sustainability topics<br />
are key challenges for growth in<br />
<strong>Asia</strong> <strong>Pacific</strong><br />
Source: <strong>BASF</strong><br />
Macroeconomics Competition Sustainability 15<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 15
Competitive landscape in <strong>Asia</strong> <strong>Pacific</strong><br />
be<strong>com</strong>es more challenging<br />
Chemical demand excluding pharma in <strong>Asia</strong> <strong>Pacific</strong><br />
Share of local production and imports in total market*, 2002 – 2012 (%)<br />
100%<br />
2012<br />
Production for<br />
local market<br />
66%<br />
76%<br />
24%<br />
Imports<br />
34%<br />
24%<br />
2%<br />
3%<br />
4%<br />
67%<br />
2002<br />
2012<br />
* Total market is defined as apparent consumption, i.e. production – exports + imports<br />
Source: IHS Global Insight, <strong>BASF</strong><br />
Other local producers<br />
Formosa Chemicals<br />
Imports<br />
Sinopec/PetroChina<br />
Mitsubishi Chemicals<br />
Macroeconomics Competition Sustainability 16<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 16
Chemical market in <strong>Asia</strong> <strong>Pacific</strong> is<br />
dominated by local players<br />
Top 10 chemical producers in <strong>Asia</strong> <strong>Pacific</strong><br />
Chemical Sales in <strong>Asia</strong> <strong>Pacific</strong><br />
in 2012 (€ billion)<br />
1 Sinopec 44.9 Chemical Segment only<br />
2 Mitsubishi Chemicals 29.7<br />
3 Formosa Chemicals 23.7<br />
estimated (business year<br />
April - March)<br />
Formosa Petrochemical<br />
Corp. only<br />
4 ChemChina 19.9 2011<br />
5 Sumitomo Chemicals 18.3<br />
estimated (business year<br />
April - March)<br />
6 LG Chem 16.1<br />
7 Toray 15.5<br />
8 <strong>BASF</strong> 14.9<br />
9 Mitsui Chemicals 13.0<br />
10 Reliance Chemicals 12.8<br />
adjusted to changes in IFRS:<br />
€12.5 bn<br />
estimated (business year<br />
April - March)<br />
Petrochemical segment only;<br />
business year April - March<br />
Source: <strong>BASF</strong>, Company reports<br />
Macroeconomics Competition Sustainability 17<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 17
Increasing need for sustainability driven<br />
by governments and society needs<br />
Source: UNEP Global Environment Outlook 2012<br />
Macroeconomics Competition Sustainability<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 18
<strong>Asia</strong>n <strong>com</strong>panies overtook US <strong>com</strong>panies<br />
in Dow Jones Sustainability World Index<br />
2003<br />
2012<br />
7%<br />
18%<br />
9%<br />
21%<br />
54%<br />
21%<br />
52%<br />
18%<br />
<strong>Asia</strong> <strong>Pacific</strong><br />
US<br />
Europe<br />
Other<br />
*According to Dow Jones Sustainability World Index SM<br />
The DJSI is <strong>com</strong>posed of global sustainability leaders as identified by SAM’s corporate sustainability assessment, and represents the top 10% of the largest 2,500 <strong>com</strong>panies in the Dow<br />
Jones Global Total Stock Market Index SM based on long-term economic, environmental and social criteria.<br />
Macroeconomics Competition Sustainability<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 19
Sustainability in <strong>Asia</strong> <strong>Pacific</strong> is<br />
increasingly addressed by governments<br />
China India Japan South Korea Singapore Thailand Malaysia Indonesia Australia<br />
2011 Rank * 7 (↑3) 4 (↓2) N.A. 1 (→) 6 (↓1) 2 (↑3) 3 (→) 8 (↓1) N.A.<br />
Plan<br />
12 th Five year<br />
plan<br />
National<br />
action plan<br />
on climate<br />
change<br />
National<br />
strategic<br />
projects<br />
National<br />
strategy for<br />
green growth<br />
and Five-year<br />
plan<br />
10-Year<br />
national green<br />
plan<br />
National<br />
energy policy<br />
10th Five year<br />
plan<br />
National<br />
midterm<br />
development<br />
plan<br />
Carbon plan<br />
Focus area **<br />
Energy &<br />
waste<br />
management<br />
safety<br />
Water &<br />
energy<br />
efficiency<br />
Energy &<br />
waste<br />
management<br />
GHG reduction<br />
targets<br />
Waste<br />
management<br />
clean air<br />
water supply<br />
Bio-energy<br />
Green<br />
housing<br />
waste<br />
management<br />
Energy<br />
sustainable<br />
palm oil<br />
scheme<br />
Energy &<br />
climate<br />
change<br />
R&D platform<br />
Opportunity Waste water<br />
treatment<br />
biodegradable<br />
plastics<br />
Sustainable<br />
agriculture &<br />
habitat<br />
Future city<br />
initiative<br />
Foster green<br />
technology &<br />
industries<br />
Environment<br />
& water<br />
technology<br />
innovation<br />
Biogas Promote<br />
production green<br />
e.g. agro & technology<br />
industry waste R&D<br />
Infrastructure<br />
development<br />
increased food<br />
production<br />
Green<br />
initiative<br />
funding<br />
* 2011 ranking and changes <strong>com</strong>pared to 2010 according to The <strong>Asia</strong>n Sustainability Rating (2011+2012) (excludes Japan and Australia)<br />
** Top focus areas listed. Detailed list available<br />
Source: <strong>Asia</strong>n Sustainability Ratios; published government documents; <strong>BASF</strong><br />
Macroeconomics Competition Sustainability 20<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 20
Some <strong>Asia</strong> <strong>Pacific</strong> players already have a<br />
good sustainability positioning<br />
Value creation through sustainability<br />
Global player<br />
<strong>Asia</strong> <strong>Pacific</strong> player<br />
Start to tackle critical<br />
customer issues<br />
Shape industry<br />
orientation<br />
Holistic business<br />
steering<br />
Internal to external<br />
orientation<br />
EHS & CSR<br />
focus<br />
Product<br />
oriented<br />
Solution<br />
oriented<br />
Future outlook<br />
Source: Company annual/sustainability reports, SAM Yearbook 2010 & 2011<br />
Macroeconomics Competition Sustainability 21<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong> — June 5-6, <strong>2013</strong>
1<br />
Where we are<br />
2<br />
Trends in <strong>Asia</strong> <strong>Pacific</strong><br />
3<br />
“grow smartly” – <strong>Asia</strong> <strong>Pacific</strong> Strategy<br />
4 Strategic levers<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 22
<strong>BASF</strong> grows smartly in <strong>Asia</strong> <strong>Pacific</strong><br />
We create chemistry<br />
for a sustainable future.<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 23
<strong>BASF</strong> grows smartly, balancing<br />
economy, environment and society<br />
• Achieve sales* of €25 billion in 2020<br />
• Grow profitably by at least 2 percentage<br />
points above chemical production<br />
• Innovate to drive sustainable solutions for<br />
customers<br />
Economy<br />
• Create ~9,000 valueadding<br />
employment<br />
opportunities by 2020<br />
• Achieve OMP ratio of 75% with<br />
investments of ~€10 billion**<br />
• Invest in cutting edge<br />
technologies to improve<br />
our <strong>com</strong>petitiveness<br />
Environment<br />
Balance<br />
Society<br />
• Engage with society and<br />
stakeholders to secure<br />
license to operate<br />
• Contribute to the social<br />
development of<br />
<strong>com</strong>munities in our<br />
operating neighborhood<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> * Sales target 2020 after restatement for IFRS 10 & 11 ** Total investments incl. partners, post IFRS 10 & 11, excl. intangibles<br />
24
1<br />
Where we are<br />
2<br />
Trends in <strong>Asia</strong> <strong>Pacific</strong><br />
3<br />
“grow smartly” – <strong>Asia</strong> <strong>Pacific</strong> Strategy<br />
4 Strategic levers<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 25
Our strategic levers<br />
Market<br />
Innovation<br />
Portfolio<br />
Investment<br />
People<br />
Excellence<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 26
Market<br />
Connecting with our customers and<br />
business partners to capture growth<br />
opportunities<br />
€25 billion sales by 2020<br />
• Drive industry and customer orientation<br />
• Engage with stakeholders to support<br />
sustainable development<br />
• Explore opportunities in new markets<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong><br />
27
Organic growth drives top line growth<br />
Sales contributions<br />
€ billion<br />
>€10 billion<br />
CAGR<br />
~9%<br />
>€2 billion<br />
New<br />
Sales Target:<br />
€25 billion<br />
€12.5 billion<br />
2012<br />
restated<br />
Organic<br />
Growth<br />
New Business &<br />
Acquisitions<br />
2020<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 2012 restated = adjusted to changes in IFRS 10 & 11<br />
28
Dynamic industrialization drives sales<br />
<strong>BASF</strong> will generate annual sales growth above SRM growth<br />
Sales vs. SRM growth rate by key customer industries<br />
16<br />
<strong>BASF</strong>’s annual sales growth 2010-2020 (%)<br />
8<br />
0<br />
0 8 16<br />
SRM growth 2010-2020 (%)<br />
Sales in 2010<br />
Chemicals &<br />
Plastics<br />
Consumer<br />
Goods<br />
Transportation<br />
Construction<br />
Agriculture<br />
Health &<br />
Nutrition<br />
Electronics<br />
Energy &<br />
Resources<br />
Others<br />
SRM = Strategic Relevant Market<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 29
<strong>BASF</strong> Industry Teams<br />
Focus on ten most important industries<br />
Industries<br />
Automotive<br />
Construction<br />
Packaging<br />
Paint & Coatings<br />
Pharma<br />
Targeted <strong>BASF</strong> growth rates<br />
12 % p.a.<br />
9 % p.a.<br />
10 % p.a.<br />
7 % p.a.<br />
10 % p.a.<br />
Mining<br />
Food & Agriculture<br />
Electrical & Electronics<br />
Wind Energy<br />
Textiles<br />
Sales 2010<br />
Target Sales 2020<br />
<strong>BASF</strong><br />
divisions<br />
Intermediates<br />
Monomers<br />
Petrochemicals<br />
Catalysts<br />
Coatings<br />
Construction<br />
Chemicals<br />
Performance<br />
Materials<br />
Dispersions<br />
& Pigments<br />
Nutrition<br />
& Health<br />
Paper<br />
Chemicals<br />
Performance<br />
Chemicals<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 30
<strong>BASF</strong> will generate highest sales growth<br />
in Greater China, South <strong>Asia</strong> and ASEAN<br />
Sales vs. SRM growth by sub-region<br />
16<br />
<strong>BASF</strong>’s annual sales growth 2010-2020 (%)<br />
8<br />
3 rd party net sales in 2010<br />
Greater China<br />
ASEAN<br />
Japan<br />
South <strong>Asia</strong><br />
South Korea<br />
ANZ<br />
SRM = Strategic Relevant Market<br />
0<br />
0 8 16<br />
SRM growth 2010-2020 (%)<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 31
Task forces will explore untapped<br />
markets in <strong>Asia</strong> <strong>Pacific</strong><br />
Myanmar<br />
Mongolia<br />
Laos<br />
Mongolia (GDP: US$10.2 billion)<br />
• Natural mineral & mining industry<br />
• Construction<br />
• Agriculture<br />
Laos (GDP: US$8.9 billion)<br />
• Low cost labor<br />
• Agriculture (livestock & crop)<br />
Cambodia<br />
Cambodia (GDP: US$14.4 billion)<br />
• Low cost labor<br />
• Textile industry<br />
• Agriculture<br />
GDP (nominal) in 2012<br />
Total Population<br />
2012: 72.4 million<br />
2020: 77.8 million<br />
Myanmar (GDP: US$54.0 billion)<br />
• Natural resources (e.g. gas)<br />
• Newly opening attractive market<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> Source: GDP: United Nations; Mongolia sales: WASP; Cambodia, Laos, Myanmar: ASEAN sub-region<br />
32
Tap into the potential of the<br />
“Base of Pyramid”<br />
Affluent<br />
Middle Class<br />
Emerging Middle<br />
Class<br />
Parts of Bottom of<br />
Pyramid<br />
Approach<br />
• Explore untapped market<br />
opportunities<br />
• New collaborative business models<br />
for penetrating new markets along<br />
with customers, NGOs and<br />
government agencies<br />
• Initial focus on South <strong>Asia</strong>, starting<br />
in India; potential to be extended to<br />
ASEAN / Indonesia<br />
Focus areas<br />
• Housing: Affordable mass housing,<br />
slum rehabilitation<br />
• Food: Food fortification, packaging<br />
and storage<br />
• Energy: Solar energy and wind<br />
energy<br />
• Healthcare: Water purification,<br />
personal care products<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 33
Innovation<br />
Driving innovation in <strong>Asia</strong> for <strong>Asia</strong> and<br />
the world<br />
~3,500 R&D staff by 2020<br />
• Expand the <strong>Asia</strong> <strong>Pacific</strong> presence within <strong>BASF</strong>’s<br />
global R&D network<br />
• Collaborate with customers to capture new<br />
business areas<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong><br />
34
Address specific R&D areas for <strong>BASF</strong><br />
in <strong>Asia</strong> <strong>Pacific</strong><br />
Electronics<br />
Agro<br />
Catalysts<br />
Polymers & Materials<br />
Mining<br />
Water<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 35
Expand research capabilities in<br />
<strong>Asia</strong> <strong>Pacific</strong> with new R&D centers<br />
R&D Center Korea (<strong>2013</strong>)<br />
Focus: electronics<br />
R&D Center Japan (<strong>2013</strong>)<br />
Focus: battery materials<br />
Innovation Campus <strong>Asia</strong> <strong>Pacific</strong>,<br />
Shanghai (2012)<br />
Focus: polymers & materials<br />
R&D Center Singapore (2007)<br />
Focus: water, membrane, oilfield<br />
R&D Center Australia (2012)<br />
Focus: mining<br />
Innovation Campus <strong>Asia</strong> <strong>Pacific</strong>,<br />
India (in planning)<br />
Focus: life science, agro<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 36
Portfolio<br />
Enhancing our portfolio<br />
>€2 billion sales from new business and<br />
acquisitions by 2020<br />
• Develop new businesses and growth fields<br />
• Identify attractive acquisition opportunities<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong><br />
37
Opportunities in identified growth fields<br />
Customer<br />
industries<br />
Transportation<br />
Construction<br />
Consumer<br />
Goods<br />
Health &<br />
Nutrition<br />
Electronics<br />
Agriculture<br />
Energy &<br />
Resources<br />
Batteries for<br />
mobility<br />
Heat<br />
management<br />
Enzymes<br />
Medical<br />
Organic<br />
electronics<br />
Plant<br />
biotechnology<br />
E-Power<br />
management<br />
Growth<br />
Fields<br />
Lightweight<br />
<strong>com</strong>posites<br />
Functional<br />
crop care<br />
Wind energy<br />
Water<br />
solutions<br />
Ongoing inflow of new growth fields<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 38
Battery materials will play a key role in<br />
advancing electromobility of the future<br />
Focus<br />
Advanced cathodes and electrolytes development for lithium-ion batteries,<br />
as well as next-generation battery systems<br />
Business potential 2020<br />
• Overall market size: >€20 billion globally (~€16 billion in <strong>Asia</strong> <strong>Pacific</strong>)<br />
• SRM size: >€5 billion globally (~€4 billion in <strong>Asia</strong> <strong>Pacific</strong>)<br />
• <strong>BASF</strong> sales potential: >€500 million globally (~€350 million in <strong>Asia</strong> Pacif.)<br />
Activities<br />
• Acquisition of Novolyte Technologies (April 2012), including production<br />
facility, Application Technology Center in Suzhou, China<br />
• New electrolytes R&D laboratory and Application Technology Center for<br />
Battery Materials starting up in Amagasaki, Japan, <strong>2013</strong><br />
• Ongoing collaboration with leading universities, institutes and industry<br />
partners, as well as battery producers and OEMs<br />
Target<br />
• Position <strong>BASF</strong> as a leading global solution provider for battery and cell<br />
manufacturers<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 39
Portfolio development <strong>Asia</strong> <strong>Pacific</strong><br />
Towards more market driven and innovative businesses<br />
Selected transactions with relevant impact in <strong>Asia</strong> <strong>Pacific</strong>*<br />
Acquisitions<br />
• Plastic additives, Pigments<br />
(Ciba)<br />
• Mining Safety Solutions<br />
(Hock)<br />
• Catalysts (Engelhard)<br />
• Care Chemicals (Cognis)<br />
• Construction Chemicals<br />
(Degussa)<br />
• Electronic Chemicals<br />
(Merck, Novolyte)<br />
• Health & Nutrition<br />
(Takeda, Pronova)<br />
• Crop Protection<br />
(Becker Underwood)<br />
~€3 billion sales<br />
in <strong>Asia</strong> <strong>Pacific</strong><br />
<strong>BASF</strong><br />
Core Business<br />
Selected Transactions<br />
2001 − Today*<br />
Strong Partnerships<br />
• Petronas<br />
• Sinopec<br />
• Shell<br />
• Hua Yi<br />
• Heesung<br />
• Sumitomo Metal Mining<br />
• Huntsman<br />
Divestitures<br />
• Pharma (Knoll)<br />
• Printing systems<br />
• Polyamide fibers<br />
(Honeywell)<br />
• Animal nutrition premix<br />
business<br />
• Styrenics (transferred into<br />
Styrolution JV on Oct 1, 2011)<br />
~€0.5 billion sales**<br />
in <strong>Asia</strong> <strong>Pacific</strong><br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> * only closed deals have been considered ** without Styrenics<br />
40
Investment<br />
Expanding our local production network<br />
75% own manufactured products<br />
(OMP ratio) by 2020<br />
• Implement ambitious investment plan efficiently<br />
• Form production clusters to address target<br />
industry needs<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong><br />
41
Ambitious investment plan to realize an<br />
OMP ratio of 75% by 2020<br />
OMP ratio<br />
(%)<br />
100<br />
75<br />
75<br />
61<br />
54<br />
50<br />
25<br />
0<br />
2012<br />
2012<br />
restated<br />
2020<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 42
Continuous investments underline our<br />
long-term <strong>com</strong>mitment to <strong>Asia</strong><br />
Investments in <strong>Asia</strong> <strong>Pacific</strong><br />
(€ billion)<br />
10<br />
actual*<br />
plan**<br />
~10<br />
7<br />
5<br />
5<br />
<strong>BASF</strong> share:<br />
~75%<br />
<strong>BASF</strong> share:<br />
~80%<br />
0<br />
1993-2002 2003-2012 <strong>2013</strong>-2020<br />
∅ capex p.a 0.5 0.7 1.25<br />
Milestones<br />
Kuantan Nanjing Chongqing / Maoming (China)<br />
(Malaysia) (China) Kuantan (Malaysia)<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> * Investments 1993-2012 incl. partners and incl. intangibles ** Investments <strong>2013</strong>-2020 incl. partners, post IFRS 10 & 11, excl. intangibles 43
Investment focus on<br />
China, ASEAN, and India<br />
Investment of €10 billion until 2020*<br />
Greater<br />
China<br />
South<br />
Korea<br />
Japan<br />
South<br />
<strong>Asia</strong><br />
ASEAN<br />
ANZ<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> * Investments incl. partners, post IFRS 10 & 11, excl. intangibles<br />
44
Major investment projects <strong>Asia</strong> <strong>Pacific</strong><br />
MDI plant<br />
• Location: Chongqing, China<br />
• Planned start-up: 2014<br />
• Investment: ~€860 million<br />
Expansion of Verbund site<br />
• Location: Nanjing, China<br />
• Feasibility studies ongoing<br />
• Investment: up to US$1 billion (100%)<br />
Isononanol (INA) plant<br />
• Location: Maoming, China<br />
• Planned start-up: 2015<br />
Aroma ingredients <strong>com</strong>plex<br />
• Location: Kuantan, Malaysia<br />
• Planned start-up: 2016<br />
• Investment: US$500 million (100%)<br />
Polyurethanes, Surfactants &<br />
Dispersions<br />
• Location: Dahej, India<br />
• Planned start-up: 2014<br />
• Investment: €150 million<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 45
People<br />
Attracting and developing talent<br />
~9,000 new jobs by 2020<br />
• Develop a differentiated recruitment approach<br />
• Establish a “Learning Campus”<br />
• Redesign our motivational <strong>com</strong>pensation and<br />
rewards system<br />
• Engage our people in sustainability<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong><br />
46
Strong focus on development and<br />
retention to strengthen employee pipeline<br />
Strategic<br />
Priorities<br />
Excellent<br />
people<br />
Excellent<br />
leaders<br />
Excellent<br />
place to work<br />
Key Measures<br />
Differentiated recruitment and<br />
employer branding<br />
Learning Campus<br />
Competencies<br />
Performance Management<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 47
Striving for long-term employee<br />
<strong>com</strong>mitment<br />
Employee <strong>com</strong>mitment<br />
Higher than peer average*<br />
Attrition rate<br />
Lower than peer average*<br />
57%<br />
74%<br />
6.8%<br />
8.9%<br />
Peers<br />
vs.<br />
<strong>BASF</strong><br />
<strong>Asia</strong><br />
<strong>BASF</strong><br />
vs.<br />
Average<br />
peers in <strong>Asia</strong><br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> * Source: tivian GmbH and HR Business Solutions<br />
48
Learning Campus enhances employees’<br />
development opportunities<br />
Learning Programs<br />
Target areas<br />
Kick-off activities<br />
1<br />
Reinforce strategy<br />
2<br />
Foster one<br />
c <strong>com</strong>pany<br />
3<br />
4<br />
Senior executives<br />
& top talents<br />
Leaders<br />
Employees<br />
Customize business<br />
learning<br />
Management<br />
innovation<br />
• Sustainability learning<br />
• Regional talent program<br />
• Executive MBA<br />
• New leader curriculum<br />
• New employee learning<br />
• Learning Campus<br />
• Academy platform<br />
• Learning, consulting &<br />
coaching<br />
• Cooperation with top<br />
institutions<br />
Learning Campus<br />
The <strong>BASF</strong> place to evolve<br />
• A landmark that reflects <strong>BASF</strong> values<br />
and people excellence<br />
• Provides a unique environment for<br />
inspiring learning<br />
• Designed for talent development<br />
activities and regional learning<br />
programs<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 49
Excellence<br />
Improving operational efficiency and<br />
organizational effectiveness<br />
€1 billion cost savings by 2020<br />
• Drive marketing and sales excellence<br />
• Enhance operational excellence<br />
• Optimize business enabling structures<br />
• Increase collaboration efficiency<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong><br />
50
Regional excellence initiative will drive<br />
<strong>Asia</strong> <strong>Pacific</strong>’s profitable growth<br />
Functional Excellence<br />
Structural Excellence<br />
Investment Process<br />
Excellence<br />
Operational<br />
Excellence<br />
• Shared services<br />
(Finance, IS/IT, etc.)<br />
• Procurement<br />
• Supply chain<br />
• Functional efficiency<br />
initiatives<br />
• BU efficiency targets<br />
(e.g. sales efficiency)<br />
• Structural Excellence<br />
Program<br />
• Savings in investment<br />
costs and depreciation<br />
• Raw material savings<br />
through yield<br />
increases<br />
• Energy and utilities<br />
• Production efficiency<br />
gains<br />
€1 billion cost savings by 2020<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 51
Substantial cost savings to be achieved<br />
through investment process excellence<br />
Engineering measures<br />
-30%*<br />
-10m**<br />
• Early transfer to <strong>Asia</strong>n engineering resources<br />
• Enabling more localized plant concepts<br />
-50%*<br />
Procurement measures<br />
• Higher share of technical procurement in <strong>Asia</strong><br />
• Adapt <strong>BASF</strong> specification to local supplier<br />
conditions as far as possible<br />
Engineering<br />
service cost<br />
Past projects<br />
in <strong>Asia</strong><br />
Imported<br />
equipment<br />
Project A<br />
Project<br />
duration<br />
Project B<br />
Schedule measures<br />
• Locally adjusted workflow and cooperation with<br />
regional engineering partners allows faster<br />
project execution<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> * On average ** Month on average<br />
52
Increased efficiency improves productivity<br />
per employee<br />
Sales and Personnel costs<br />
€ billion<br />
30<br />
25<br />
20<br />
15<br />
10<br />
12.5<br />
+100%<br />
~25<br />
• While sales are expected to<br />
double from 2012 to 2020<br />
personnel costs will rise by<br />
80%<br />
• Planned personnel increase<br />
of 9,000 employees to achieve<br />
75% OMP ratio<br />
• Personnel costs include salary<br />
cost, inflation and headcount<br />
related overhead costs<br />
5<br />
0<br />
+80%<br />
2012 2020<br />
Sales Personnel costs<br />
• Despite personnel increase,<br />
personnel costs as a<br />
percentage of sales will<br />
decline from 2012 to 2020<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 53
We create chemistry in <strong>Asia</strong> <strong>Pacific</strong>:<br />
2020 targets<br />
Market<br />
€25 billion sales<br />
Innovation<br />
~3,500 R&D staff<br />
Portfolio<br />
>€2 billion sales from<br />
new biz and acquisitions<br />
Investment<br />
75% OMP ratio<br />
People<br />
~9,000 new jobs<br />
Excellence<br />
€1 billion cost savings<br />
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 54
<strong>BASF</strong> <strong>Investor</strong> <strong>Day</strong> <strong>Asia</strong> <strong>Pacific</strong>, June 5-6, <strong>2013</strong> 55
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