stefano pigozzi basf monomers division excellence in ... · annual sales growth of €35 million/a...

BASF Investor Day Chemicals segment – Monomers, May 22, 2014 1

BASF Monomers Division Excellence in Commodities

Stefano Pigozzi President Monomers Division Investor Day Chemicals segment May 22, 2014


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.


Functional Materials & Solutions 23%

Performance Products 21%

Agricultural Solutions 7%

Oil & Gas 20%

€74 billion

Monomers represent almost 1/10th of BASF Group’s third-party sales

Other 6%

Monomers 9%

BASF Group third party sales 2013

Chemicals 23%


You experience our products every day!

… sleeping on your comfortable foam mattress

… opening your perfectly

insulated fridge

… grabbing your packaged cheese

… enjoying the surface of your laminated

tabletop


BASF Monomers – Excellence in Commodities

Excellent business with strong underlying growth opportunities

Clear strategy based on cost and commercial excellence

Growth targets focused on emerging markets and downstream segments

Committed to generating above average returns and performance

BASF Investor Day Chemicals segment – Monomers, May 22, 2014


Most of the segments we serve will grow above GDP

* Market growth, CAGR 2015 – 2020. Renewable energy: 2011-2020, “World Energy Outlook 2013" report of the International Energy Agency (IEA), "New Policies Scenario"

Automotive

Isocyanates Polyamides

Textile

Polyamides Isocyanates

Furniture

Isocyanates Glues & Resins

Renewable Energy

Inorganic Chemicals

Electrical & Electronics

Electronic Materials


Automotive 11%

Construction 10%

Furniture 27%

Textile 14%

Other 19%

Chemicals 13%

Electrical & Electronics 6%

€6.4 billion

A balanced portfolio between the different industry segments

3rd party sales by industry (2013) in billion €


Market leader position* in key product lines

Main Competitors

* (#): Market position in 2012 ** Percent of 3rd party sales 2013 *** Incl. Ammonia/Urea/Melamine

Isocyanates

TDI (Toluene-diisocyanate): #1 globally

MDI (Methylene-diphenyldiisocyanate): #1 globally

50% captive

Polyamides & Intermediates

Polyamides for packaging films: #1 globally

71% captive

Glues & Resins***

Glues: #1 in Europe

32% captive

Inorganic Chemicals

Sodium Methylate: #2 globally

Hydrosulfite: #2 globally

50% captive

Electronic Materials

Hydrogenperoxide & Sulfuric acid: #1 in Asia & Europe

NMP (N-Methyl-pyrrolidone): #1 globally

1% captive

Huntsman

Mitsui Chemicals

Solvay

Dow

Wanhua

KPX Chemicals

Evonik Ube

Bayer Material Sciences

Borealis

DSM

Grupa Azoty


Rest of world 7%

North America 21%

Asia Pacific 32%

Europe 40%

* OMP = Own Manufactured Products

3rd party sales by region (2013) in billion €

A globally balanced business with high OMP* shares in all regions

€6.4 billion


Global asset footprint enables fast response in all markets

.

Antwerp**

Caojing*

Schwarzheide

Singapore

Yeosu

Geismar

Freeport

Guaratinguetá

Anchieta

Shanghai

Taoyuan

Ludwigshafen

* SLIC with Huntsman / SBPC with Shanghai Hua Yi and Sinopec ** Solvin with Solvay

Production site worldwide Verbund site


Further expansion of Monomers footprint in all regions

.

Production site worldwide Verbund site

Ongoing or planned investments

Caojing

Singapore

Yeosu

Guaratinguetá

Anchieta

Shanghai

Taoyuan

Chongqing

*Ammonia investment with Yara

Geismar

Freeport*

Schwarzheide

Ludwigshafen

Antwerp


Increased real capacity by incremental process improvements

Cost excellence: Process improvements in MDI

Annual EBIT improvement: ~ €50 million/a

2015 2012

Process improvement program MDI/Antwerp Target: Increase production

output by continuous process improvement via incremental steps

Expected benefits: – Increased sales – Production cost* reduction

€50 million EBIT

* Production cost = Personnel, maintenance and energy cost (inflation adjusted)


Process improvement program 2000-2013 MDI/Antwerp Target: Increase production

output by continuous process improvement via incremental steps

Achieved benefits: – Increased sales – Production cost* reduction

Cost excellence: Process improvements in MDI

1992 – 2001 2009 – 2013 2002 – 2008

Annual EBIT improvement 2000-2013: ~ €220 million/a

Strong increase of production output in the last decade

* Production cost = Personnel, maintenance and energy cost (inflation adjusted)


€7 million savings

Cyclohexane input reduction

Annual savings: ~ €7 million/a

Cost excellence: Process improvements in caprolactam

Yield improvement project caprolactam/Freeport Target: Improvement of

yields by higher product selectivity

Expected benefit: Lower raw material input

2015 2013


Effects of process automation

Cost excellence: Process improvement via advanced automation

Annual savings: ~ €45 million/a

Energy consumption

Production rate

Headcount

Process automation program for continuous processes Target: Automation in order to

increase speed of process adaptions to changing conditions

Expected benefits: – Higher production rate and

lower energy consumption – Headcount reduction


Benefit from low feedstock costs in the US

Cost excellence: Backward-integration to strengthen our Verbund

New ammonia plant Freeport/US Target:

– Take advantage of shale gas opportunities

– JV investment approach with Yara reduces capex, allows for world scale economics without increasing BASF‘s merchant market exposure

Expected benefit: Backward integration into a key Verbund chemical used for caprolactam, amines, isocyanates etc.


Commercial excellence: Complexity reduction due to extended value chains

Organizational set-up until Dec 31, 2012

Annual EBIT improvement in nitric acid: ~ €2 million/a

Isocyanates TDI/MDI

Chlorine HCl

Caprolactam / Polyamides

Sulfuric acid

Nitric acid Ammonia

Hydroxylamine

Inorganics Polyurethanes Performance Polymers

Extended value chains nitric acid/Ludwigshafen Targets:

– Reduction of interfaces in production and marketing

Achieved benefits: – Improved planning

performance led to – Less storage

capacities – Additional volumes of

nitric acid available for merchant market


Commercial excellence: Complexity reduction due to extended value chains

Annual EBIT improvement in nitric acid: ~ €2 million/a

Monomers

Organizational set-up from Jan 1, 2013

Isocyanates TDI/MDI

Chlorine HCl

Nitric acid

Hydroxylamine Caprolactam / Polyamides

Sulfuric acid

Extended value chains nitric acid/Ludwigshafen Targets:

– Reduction of interfaces in production and marketing

Achieved benefits: – Improved planning

performance led to – Less storage

capacities – Additional volumes of

nitric acid available for merchant market

Ammonia


Commercial excellence: Product portfolio optimization in polyamides

Annual EBIT improvement: ~ €4 million/a

Shift to high-margin products polyamides/Ludwigshafen Target: Retrofit production

lines to produce high-margin Ultramid® C (Co-polyamide 6/6.6) used in film applications for food packaging

Achieved benefit: Higher profitability of the Polyamide business


Commercial excellence: Product and application development in isocyanates

Annual sales growth of €35 million/a from 2014-2018

New foam components based on MDI Target: Comfort improvement of

conventional TDI-mattresses with a MDI-based viscoelastic gel foam layer

Achieved benefit:

– 2010-2013: Annual sales growth of 17% p.a.


Growth: MDI investment in Chongqing, South-Western China

Local supply of fast growing market in South-western China

World-scale plant; 400,000 mt/a located in Chongqing area, representing a market of 270 million people

Nearly double-digit growth rates in China driven by construction and build-up of cold chain for food

Startup delayed to Q2 2015 as regulatory changes on natural gas prices affect integration concept of raw materials

MDI plant Chongqing


TDI plant Ludwigshafen

Growth: TDI investment in Ludwigshafen, Germany

New TDI-plant with best cost position in Europe

Largest single-train TDI plant globally; 300,000 mt/a

Superior cost structure due to economies of scale and highly efficient Verbund integration

Growth story expected to continue in Eastern Europe and Africa

In Europe rebalancing of market expected by further strengthening competitive environment


Polyamide plant Caojing

Growth: Polymerization plant in Caojing, China

Further reduction of the merchant market exposure in caprolactam

BASF´s first specialty polyamide plant in the Asia Pacific region; 100,000 mt/a

Serving the strong growth markets for specialty products particularly in the engineering plastics and packaging film industries in China


Growth: Expanding downstream integration in Caprolactam

Caprolactam

Verbund Caprolactam outlet 2020

Energy Benzene Ammonia …

Merchant Market Downstream Businesses

82% 18%

Polyamide for

packaging films

Polyamide for

engineering plastics

BASF caprolactam positioning

Increasing share of captive use with start–up of new 100 kt/a polymerization plant in Caojing

– Growth with higher

value-added segments in downstream business

– Reduction of merchant-market exposure


Sales to 3rd parties in billion €

A strong commodity business with good perspectives

CAGR 2013-2020 4-5%

Business perspectives

0

2

4

6

8

2013 2015E 2020E

Mid- and long term growth above GDP targeted for the steadily growing internal and external demand

Excellence program results in additional earnings of ~€200 million/a by 2020

EBITDA margin in line with BASF Group average

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