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Plastics Toward new levels of performanceJohn Feldmann

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Agriculture & Nutrition

Performance Products

19%Plastics• Styrenics• Performance Polymers• Polyurethanes

24%

Chemicals

Oil & Gas20%

10%22%

*including other activities: 2.5 billion Euro (5%)

2006 Group sales*: 52.6 billion Euro

BASF’s Plastics segment

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Styrenics

• Styrene

• Polystyrene and copolymers

• Foams

• Specialties

Performance Polymers

• Polyamide intermediates

• Polyamides

• Engineering Plastics

Polyurethanes

• Basic products

• Systems

• Special elastomers

BASF PlasticsA good mix of commodities and specialties

AutomotiveElectric & Electronic PackagingConstruction Footwear

Electric & Electronic

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Plastics The material of choice for the 21st century

Easy and efficient to convert

Shaping functionality and design

Driving energy and resource efficiency

5

Global consumption of plastics

24 41 53

Western Europe

1990 2006 2015

NAFTA

1990 2006 2015

Global Growth1990-2006: +5.5 % p.a. 2006-2015: +5.0 % p.a.

25 47 66

Asia

1990 2006 2015

75 136

Japan

Asia excl. Japan

1410

11

14

+2.9 % +6.3 % +4.2 %

Global Consumption1990: 86 million to2006: 208 million to 2015: 328 million to

in million to; annual growth rates

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50 90 108

40 104 136

Western Europe

1980 2006 2015

Japan

1980 2006 2015

2 3421

Asia excl. Japan

1980 2006 2015

46 107 140

NAFTA

1980 2006 2015

+2.0 %

+5.5 %

+3.0 %+3.0 %

Per capita consumption of plastics

in kg; annual growth rates

1 | Plastics – our track record of profitable growth

2 | A strong portfolio based on performance

3 | Toward new levels of performance

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8

Plastics On track to profitable growth

0

2000

4000

6000

8000

10000

12000

2001 2002 2003 2004 2005 20060

200

400

600

800

1000

1200

• Third consecutive year of increased profitability

Main drivers• Portfolio optimization

with focus on products and solutions that offer differentiation potential in their markets

• Reduction of complexity in commodity businesses

• Implementation of dedicated customer interaction models

Sales in million Euro

EBIT before special items in million Euro

PolyurethanesStyrenics Performance Polymers

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Strong profitability growth

0

100

200

300

400

500

600

700

2001 2002 2003 2004 2005 2006

Index

Fixed costs indexed (including depreciation and amortization)

• EBIT grew significantly stronger than sales

• Cost reduction through operational excellence and relentless restructuring

• Drivers for improvement:– Significant higher

sales prices and margins

– High capacity utilization

– Portfolio optimization toward higher margin products

EBIT before special items indexed

Sales indexed

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Selected milestones in Plastics since 2001

Major investments

• Global network of Engineering Plastics compounding plants

• PU basic products (TDI, MDI, PO)

• Global network of PU system houses

• Acquisitions in Engineering Plastics (Honeywell, LATI NAFTA, Leuna-Miramid, Ticona PA 6.6)

Major divestitures / closures

BASF Plastics

Optimized portfolio toward specialty business

• Polyolefins (Basell)• Fibers (Honeywell)• Polystyrene NAFTA

(INEOS)• Closure of selected

styrenics plants (PS, Spain; EPS, NAFTA; ABS, Netherlands)

Powerful partnerships

• Dow (PU)• Shell (SM/PO)• Regional partners

(e.g. Huntsman, Toray, Alfa)

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1 | Plastic – our track record of profitable growth

2 | A strong portfolio based on performance

3 | Toward new levels of performance

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Balanced portfolio of chemical building blocs and higher value-added products

75%

Chemicals & basic materials Customized solutions

64%

36%

Formulated materials

Estimate 2007 (in % of sales)

19%

50%

31%

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Major plastic segments

PS

EPSABS

PA*

PCPBT

POM

PPO

PMMA

PET(bulk)

PUR

PA**

2

3

4

5

6

7

8

0 5 10 15 20 25

Share of global plastic consumption 2006 in %

Growth p.a. in %2006 – 2015

PPPVC

HDPE

LDPE &LLDPE

Global markets 2006

• Total plastics market: 208 million to

• BASF relevant market: 45 million to

Market growth 2006-2015

• Annual consumption and production growth rate worldwide: 5%

• Growth by major regions– Asia (excl. Japan): 6%– NAFTA: 3%– Europe: 3.5%

BASF products, circle size = consumption 2006

* Engineering Plastics & Extrusion** Spin polyamides, accessible market

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PS

EPS ABS

PA*

PC

PBT

POM

PPO

PMMA

PET(bulk)

PUR basic product

ASA

PUR specialties

PA**

0

5

10

0 5 10

PEPVC

PP

Main pricing elements or pricing criteria

Perf

orm

ance

diff

eren

tiatio

n

high

low

Raw material costs

Performance

Segmentation of global plastics market

BASF products, circle size = consumption 2006

* Engineering Plastics & Extrusion** Spin polyamides, accessible market

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Basic and formulated materials

Main businesses• Spin polyamides, polyamide intermediates• Styrene, polystyrene, ABS, styrenic foams• Polyurethane basic products

BASF relevant markets*• Market size in 2006: 31 million to• Market growth 2006-2015: ~4% p.a.

Research and Development• > 20 R&D projects

* w/o Polyamide intermediates, Styrene

How we succeed:• Standard products at

appropriate quality and supply reliability

• Lowest cost provider with minimum complexity

• Investments in best-in- class world-scale plants

• Transactional pricing• Supply/demand

balance

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60

65

70

75

80

85

90

95

100

0

1000

2000

3000

4000

5000

6000

7000

8000

Profitable growth in PU basic products Supply / demand balance remains favorable

Global capacity in kto

Global capacity utilization in %

MDI BASF MDI others TDI BASF TDI others

MDI utilizationTDI utilization

• Rates above 90% indicate favorable market conditions

• Market growth 2001-2005: ~7% p.a. 2006-2015: ~5% p.a.

• BASF volume growth 2001-2005: ~13% p.a. 2006-2015: above market

• Additional BASF capacities

+ 400 kto MDI in China 2010 onwards (JV with partners)

+ 300 kto TDI in Europe 2011 onwards (JV with DOW)

2000 2006 FC 2010

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Formulated materials and customized solutions

Main businesses• Polyurethane systems and specialties• Styrenic specialties• Engineering Plastics

BASF relevant markets• Market size in 2006: 14 million to• Market growth 2006-2015: ~5% p.a.

Research and Development• >50 R&D projects

How we succeed:• Constant flow of

innovations for customers’ products and processes

• Customized offerings with superior performance

• Very active sales force with high technical expertise

• Value pricing• Opening up new horizons

for plastics applications• Close and fruitful

cooperation with customers

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Nanotechnology enables product innovation in Engineering Plastics

Ultradur® High Speed – Increased flowability ofpolymer melt by 100% through nanoparticles• High level of material properties is retained• Reduction of cycle time in production (by 30%)

and defect rate (to 0%)• Potential reduction of global CO2 emissions by

220,000 to p.a. (assuming re-placement of all PBT plastics worldwide by Ultradur® High Speed)

• Lower production costs for customers

Expected sales in 2010: 25 million Euro

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Ultradur® High Speed: completely filled mold

Standard polymer: only partially filled mold

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Elastocool® – Best insulation solutions for growingmarket of appliances

• Global product platform with regional production• Dedicated marketing team focuses on customers

with global requirements and high volumes• High performance products at very competitive

costs• Global availability and logistical reliability

• Global partnership with local service contact

Expected sales in 2010: 400 million Euro

Profitable growth through innovative marketing approach in polyurethanes

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Styrenics specialty providing breakthrough solution for body panels

Permaskin® from Luran® S – UV-resistant polymerbased on acrylic rubber, formed and adhesivelybonded to exterior body panels

• Cost effective use for weather resistant applications without the need for painting and/or coating

• Excellent surface quality, maintenance free• Enhanced surface protection for materials

like wood, PUR, metal, etc.• Joint customer development with Permacoat

Expected sales for body panels in 2010: 50 million Euro

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0

20

40

60

80

100

120

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

upper bandwidth

average value = 89standard deviation = 18

lower bandwidth

0

20

40

60

80

100

120

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

upper bandwidth

average value = 103standard deviation = 8

lower bandwidth

Indexed margin comparison in polyamide value chain

Basic material:Caprolactam

Higher value-added product:Engineering Plastics

Mar

gin,

inde

xed

Mar

gin,

inde

xed

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Shift to higher value-added products as key to success

020406080

100120140

2000 2005 FC 2010

Share of global sales volumes indexed (year 2000 = 100)

Intermediates (e.g. Caprolactam), spin polymers, fibers (only 2000)

Engineering Plastics

• Shift from basic materials to higher value-added products

• Acquisition of selected Engineering Plastics businesses since 2003

• Establishment of global network of specific compounding facilities

• Intensifying partnerships with customers at early stages of product / application development

• Strengthening application development capabilities

• Focusing on innovative concepts and customer solutions

41%

59%

70%

30%

60%

40%

CAGR of Engineering

Plastics 9%

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High share of PU specialties and systems ensure robustness and profitability

Share of annual sales

• BASF with highest share of PU specialties and systems among top 3 players

• Forward integration into additional margin business

• Global network of >30 system houses

• More resilient to raw materials and basic products volatility

BASF Competitor 1 Competitor 2 Industry Average

Comparison of top 3 players by sales volumes

Special elastomers PU Systems Basic materials

100%

40%

60%

80%

20%

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1 | Plastics – our track record of profitable growth

2 | A strong portfolio based on performance

3 | Toward new levels of performance

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2525

Ecovio® Foam Bio-degradable packaging foam

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Elastocoast® Flexible Polyurethane protection for dikes along seashores

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Active portfoliooptimization

• Rigorous improvement of product portfolio to better serve future market needs

• Focus on activities which offer differentiation in the market and profitable growth opportunities for BASF

• Divestiture of businesses with low differentiation potential

Excellentinnovation platform

• Process innovation with leapfrog technologies

• Products and applications developed with customers

• R&D spending average 2007-2011: 150 million Euro p.a.

Good position ingrowth markets

• Intensified exploitation of growth opportunities in markets and applications that have no or only limited plastics experience

• Investments in new capacities closely tied to market needs

• Close cooperation with customers

• Capex budget 2007- 2011: 2.4 billion Euro

Our strategy for profitable growth

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Targets Plastics 2010

2006 201019% of sales as customized solutions > 30% of sales as customized

solutions

EBIT after cost of capital of 514 million Euro

Earning a premium on cost ofcapital

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BASF Plastics Our unique strengths

• Well balanced customer portfolio in all regions

• Innovative product portfolio with tendency to higher value-added products

• Well positioned in commodity type businesses through lean business models, partial backward integration and operational excellence

• Market leadership in specialties and systems through a customer oriented and innovation driven growth strategy

• Global network of state of the art production facilities, modern compounding plants and superior system houses in all major markets close to our customers

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Disclaimer

This presentation contains forward-looking statements under the US Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections of BASF management and currently available information. They are not guarantees of future performance, involve certain risks and uncertainties that are difficult to predict and are based upon assumptions as to future events that may not prove to be accurate.

Many factors could cause the actual results, performance or achievements of BASF to be materially different from those that may be expressed or implied by such statements. Such factors include those discussed in BASF’s Form 20-F filed with the Securities and Exchange Commission. We do not assume any obligation to update the forward-looking statements contained in this presentation.

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Glossary

• ABS acrylonitrile-butadiene-styrene copolymer (BASF brand Terluran®) offers superior surface quality, mechanical properties and chemical resistance; applications include electrical and electronic equipment and automotive components.

• ASA acrylonitrile-styrene-acylate copolymer (Luran® S); resistant to weathering, aging and chemicals; primary applications include exterior automotive components, electrical and electronic equipment.

• EPS expandable polystyrene (Styropor® and Neopor®); advantages include heat insulation, low weight and moisture resistance; primary applications include building insulation and packaging.

• MDI diphenylmethane diisocyanate is a versatile isocyanate that can be used to make flexible foams as well as semi-rigid and rigid polyurethane plastics; applications include furniture interiors, automotive components and shoe soles.

• PA polyamide (nylon) 6 and 6.6 (Ultramid®) offers toughness and strength as well as heat and chemical resistance; applications include automotive engine intake manifolds and flame retardant plastics for electrical components such as switches.

• PBT polybutylene terephthalate (Ultradur®); engineering plastic with high stiffness, strength, dimensional stability and heat and aging resistance; applications include electrical connectors and automotive components.

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Glossary (continued)

• PO propylene oxide, raw material for polyols which are combined with isocyanates to make polyurethanes.

• POM polyoxymethylene (Ultraform®); engineering plastic with high stiffness, strength, resilience and low wear; applications include clips and fasteners as well as mechanical and precision engineering devices such as shafts and gears.

• PS polystyrene; mainly used in packaging and household appliances.

• PU, PUR polyurethanes offer a wide variety of applications, e.g. seats, steering wheels, fenders, and dashboards in automotive.

• SM styrene monomer

• TDI toluene diisocyanate is an isocyanate used primarily in the manufacture of flexible foams; applications include foam cushions for furniture and automotive components.

• to metric ton