impact of new segment structure, ifrs 10/11 and ias 19 (revised) on basf · pdf...

Impact of new segment structure, IFRS 10/11 and IAS 19 (revised) on BASF Group's reporting

Hans-Ulrich Engel, Chief Financial Officer Manfredo Rübens, President Finance Conference call March 22, 2013 Ludwigshafen, Germany

BASF Presentation_March 22, 2013 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 forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations.


1

2

3

Topics

New segment structure of BASF as of January 1, 2013

Definition and requirements of IFRS 10/11 & IAS 19 (revised)

Impact of new structure, IFRS 10/11 & IAS 19 (revised) on BASF reporting

4 “We create chemistry” strategy – IFRS impact on financial targets


Janu

ary

2013

Petrochemicals

e.g. Amines

e.g. TDI

e.g. Monomers

e.g. Epoxy Systems

e.g. PU Systems

e.g. Ultramid®

Monomers

Intermediates

Unt

il 20

12

Petrochemicals

Classical Chemicals Functionalized Materials & Solutions

Performance Materials

Polyurethanes

Performance Polymers

Inorganics

New organization of divisional activities

Intermediates


Competencies for successful management of a diverse portfolio

Classical Chemicals

Performance Products

Functionalized Materials & Solutions

Operational and technology excellence

Scale, Verbund integration and raw material conditions

Reliable, low cost logistics

Complexity reduction

Deep understanding of customer value chain and multi-disciplinary know-how enables constant innovation

Customized services and solutions developed together with industry and application experts

Tailored offerings for markets and industries

Customer proximity and application know-how

Customized Products

Industry focus Product focus


Petrochemicals

Dispersions &

Pigments

Crop

Protection

Catalysts

New segment structure as of January 1, 2013

Monomers Care Chemicals

Construction Chemicals

Intermediates

Nutrition & Health

Coatings

Paper Chemicals

Performance

Materials

Performance Chemicals

Oil & Gas

Oil & Gas Agricultural Solutions

Functional Materials & Solutions

Performance Products Chemicals


Petrochemicals

Strengthening C3 value chain Realizing technological synergies

Basic Petrochemicals Cracker products Alkylene oxides &

glycols Industrial gases

Industrial Petrochemicals Acrylic acid Alcohols & solvents Plasticizers

Propylene oxide [from Polyurethanes]

https://www.petrochemicals.basf.net/portal/streamer?fid=470090


Monomers

Strengthening production Verbund Minimizing cross-divisional interfaces

Monomers [from Polyurethanes] MDI TDI

Inorganic Chemicals [from Inorganics] Basic chemicals Technical salts Additives Standard

alcoholates Hydrosulfites

Glues & Resins and Specialties [from Inorganics] Ammonia, melamine Glues Impregnating resins Electronic materials Metal systems

Monomers/Basic Polymers [from Performance Polymers] Caprolactam,

adipic acid HMD, PA polymers

for extrusion, PA fibers, compounds


Intermediates

Classical intermediates Amines Diols Polyalcohols Organic acids &

specialties

Inorganic life science products [from Inorganics]

PBT base resin [from Performance Polymers]

Strengthening C1 value chain Extending BDO value chain

C1 based products [from Inorganics] (w/o Ammonia) Methanol


Materials Business [from Intermediates] Epoxy systems

Performance Materials

Materials Business [from Polyurethanes] PU Systems TPU Cellasto®

Polyols

Materials Business [from Performance Polymers] Biopolymers Engineering plastics Functional foams

Styrene and Foams [from Performance Polymers] Styropor ® Neopor ® Styrodur ® (Poly-)Styrene

Strengthening our "one face to the customer" approach Intensifying key industry focus


1

2

3

Topics






Full consolidation method – 100% inclusion of all financial figures – Elimination of intercompany relations between fully or pro-rata consolidated companies

Pro-rata consolidation method – Inclusion of financial figures according to participating interest – Only partial elimination of intercompany relations to match participating interest

Equity method – Proportional share of the company's net income increases financial assets – Net loss and a proportional payment of dividends decrease financial assets

Methods to include companies in consolidated financial statements


IFRS 10/11 Consolidation methods for subsidiaries and joint arrangements

Type of influence

Joint control

Joint Operation

Pro-rata consolidation

IFRS 11

Joint Venture

Equity method

Control

IFRS 10

Full consolidation


* Number of legal entities (as of December 31, 2012)

Impact of new requirements on BASF Group

Associated Company Joint Venture Joint Operation Subsidiary

BASF

Bef

ore

IFR

S 10

/11

Afte

r IF

RS

10/1

1

Equity method 14*

Pro-rata consolidation 22*

Associated Company Joint Venture Joint Operation Subsidiary

BASF

Equity method 14

Equity method 18

Full consolidation 304

4

14

Full consolidation 308*

Pro-rata consolidation: 8


IFRS 10/11 Impact on BASF Group reporting

Statement of income – Reduced sales, EBIT and financial result but no impact on net income – Equity results as separate income statement line item in EBIT – Reclassification of the equity results of associated companies from financial result into EBIT

Balance sheet

– Decrease in all asset line items, except financial assets – Higher financial assets due to increased investments accounted for using the equity method – Decrease of liabilities line items and reduction of equity as a result of lower minority interests

Statement of cash flows – Cash flow provided by operating activities slightly lower as only the dividend payments out of joint

ventures are recognized – Cash used in investing activities and financing activities decreases slightly as a result of the

elimination of investing and financing outflows of so far fully or pro-rata consolidated companies


IAS 19 (revised): Employee benefits Impact on BASF Group

First time adoption of the revised IAS 19 on January 1, 2013 Reduction in 2012 of around €80 million in BASF’s financial result leading to

a decrease of €60 million in net income with an EPS effect of minus €0.06 due to IAS 19 (revised)

Reduction of around €100 million in financial result expected in 2013

Reclassification of actuarial gains and losses from retained earnings to other comprehensive income (OCI)


1

2

3

Topics






BASF Group reporting Key financials

Million € 2012 restated 2012 ∆

million € ∆ %

Sales to third parties 72,129 78,729 -6,600 -8.4

EBITDA 10,009 12,516 -2,507 -20.0

EBIT before special items 6,647 8,881 -2,234 -25.2

EBIT 6,742 8,976 -2,234 -24.9

− thereof equity income 361 361

Financial result -765 -540 -225 -41.7 Income before taxes and minority interests

5,977 8,436 -2,459 -29.1

Income taxes 910 3,214 -2,304 -71.7

− thereof Libyan oil taxes 2,243 -2,243

Income before minority interests 5,067 5,222 -155 -3.0

Net Income 4,819 4,879 -60 -1.2

EBIT after cost of capital 1,164 1,534 -370 -24.1 EPS in € 5.25 5.31 -0.06 -1.13

Financial result Reduction due to reclassi-

fication of associated com-panies and IAS 19 (rev.)

EBITDA Reduction mainly due to

Wintershall AG

EBIT IFRS 10/11 reclassification

leads to reduction in EBIT Partially offsetting effect

due to inclusion of equity income of associated companies in EBIT

Sales Decrease mainly due to

Wintershall AG: -€2,748 million and BASF-YPC: -€1,337 million


Million € 2012 restated 2012 ∆

million € ∆ %

Long-term assets 35,259 35,538 -279 -0.8

− thereof property, plant and equipment 16,610 18,177 -1,567 -8.6

− thereof financial assets 4,331 2,925 1,406 48.1

Short-term assets 27,467 28,789 -1,322 -4.6

Equity 25,621 25,804 -183 -0.7

Liabilities 37,105 38,523 -1,418 -3.7

− thereof financial indebtedness

12,798 13,355 -557 -4.2

Total 62,726 64,327 -1,601 -2.5

BASF Group reporting Balance sheet*

Short-term assets Decrease mainly due to

reduction of trade receivables and inventories

Property, plant and equipment Decrease mainly due to

BASF-YPC, Wintershall AG

Financial assets Increase of investments

accounted for using the equity method

Liabilities Decrease mainly due to

BASF-YPC, Wintershall AG

Financial indebtedness Decrease mainly due to

BASF-YPC

* As of December 31, 2012


BASF Group reporting Statement of cash flows

Million € 2012 restated 2012

Cash provided by operating activities 6,602 6,733 - thereof Changes in net working capital -844 -955

Cash used in investing activities -3,977 -4,088 - thereof Payments related to tangible / intangible assets -4,015 -4,149

Acquisitions / divestitures -319 -319

Cash used in financing activities -2,904 -2,928 - thereof Changes in financial liabilities

Dividends

-343

-2,560

-286

-2,641

Free cash flow 2,587 2,584

Payments related to intangible assets and property, plant and equipment reduced by €134 million Free cash flow remains unchanged Net debt of €11.2 billion (previously €11.6 billion)

Restated figures



Sales 17,887 13,824

Petrochemicals 8,260

Monomers 6,772

Intermediates 2,855

EBITDA 3,021 2,409

EBIT before special items 2,171 1,717

EBIT 2,173* 1,718

EBIT after cost of capital** 1,040 911

** Cost of capital rate 2012 and 2013: 11%

* Thereof equity income: €29 million

Chemicals Key figures



Sales 17,049 11,460

Catalysts 5,568 6,184

Construction Chemicals 2,315 2,315

Coatings 2,961 2,961

Performance Materials 6,205

EBITDA 1,363 894

EBIT before special items 932 561

EBIT 806* 435

EBIT after cost of capital** -548 -657



Functional Materials & Solutions Key figures



Sales 12,740 16,700

Exploration & Production 2,584 5,330

Natural Gas Trading 10,156 11,370

EBITDA 2,445 4,721

EBIT before special items 1,876 4,104

EBIT 1,676* 3,904

Net Income 1,201 1,201

EBIT after cost of capital** 530 884



Oil & Gas Key figures


Impact on regional sales

2012

North America

Europe

2012 restated

Sales by location of company Billion €

Asia Pacific

South America, Africa, Middle East

45.7

14.6

13.9

4.5

78.7

41.5

14.4

11.7

4.5 72.1

58.0%

18.5%

17.7%

5.8%

57.5%

20.0%

16.2%

6.3% -2.2

-0.2

-4.2


Impact on investments

2012


Chemicals

2012 restated

Capex Million €

Functional Materials & Solutions

Agricultural Solutions

Oil & Gas

8% 5%

28%

5%

18%

12%

5%

5%

28%

Other


Chemicals

Functional Solutions Agricultural Solutions

Oil & Gas

Other

Plastics

4,215 4,081

14%

22%

18%

32%


Currency impact on BASF Group Annual impact of US$ change ($ exchange rate: -$0.01 per €)

Million € IFRS old IFRS new Sales to third parties +200 +140

EBIT +50 +40

Oil price impact on segment Oil & Gas Annual impact of oil price change (1US$/bbl rise in annual average Brent oil price) Million € IFRS old IFRS new Sales to third parties +60 +40

EBIT +30 +10

Impact on factors influencing sales and earnings


Outlook BASF Group 2013

Excluding the effects of acquisitions and divestitures, we strive to increase our sales volumes in 2013.

We aim to exceed the 2012 restated levels in sales and EBIT before special items.

The expected increase in demand, together with our measures to improve operational excellence and raise efficiency, will contribute to this.

We aim to earn a high premium on cost of capital once again in 2013.


1

2

3

Topics






“We create chemistry” strategy Adjusted key financial targets for 2015 and 2020

Sales Billion €

64

2010 2012

~79 ∆ -7

2012 restated

~72 ~85

2015*

∆ -5 ~80

2015 adjusted

~115

2020*

∆ -5

2020 adjusted

~110

* Communicated on November 29, 2011

∆ = IFRS 10/11 impact


“We create chemistry” strategy Adjusted key financial targets for 2015 and 2020

EBITDA Billion €


11.1

2010

~12.5 ∆ -2.5

2012 2012 restated

~10 ~14

2015 adjusted

~22

2020 adjusted

~15

2015*

∆ -1

~23

2020*

∆ -1

∆ = IFRS 10/11 impact


“We create chemistry” strategy Earnings per share target for 2015

Earnings per share €

Business growth 1.30

4.96

2002 2010

0.5

0.9

0.8

1.5 Margin

Tax rate

Share buy-back

Target 2015*

~7.5

„STEP“

Share buy-back

Growth



“We create chemistry” strategy Overview: Adjusted key financial targets for 2015 and 2020

Grow at least 2 percentage points above chemical production

Earn a premium on cost of capital of at least €2.0 billion on average p.a.

Profitability targets Growth targets

2015

2020

Sales ~€80 billion

Sales ~€110 billion

EBITDA ~€14 billion

EBITDA ~€22 billion

EPS ~€7.50

BASF Presentation_March 22, 2013 33 33

impact of new segment structure, ifrs 10/11 and ias 19 (revised) on basf · pdf...

Documents