BASF : 2Q 2020 Presentation

Analyst Conference Call Q2 2020

Ludwigshafen, July 29, 2020

Cautionary note regarding forward-looking statements

This presentation contains forward-looking statements. These statements are based on current estimates and projections of the Board of Executive Directors and currently available information. Forward-looking statements are not guarantees of the future developments and results outlined therein. These are dependent on a number of factors; they involve various risks and uncertainties; and they are based on assumptions that may not prove to be accurate. Such risk factors include those discussed in Opportunities and Risks on pages 139 to 147 of the BASF Report 2019. BASF does not assume any obligation to update the forward-looking statements contained in this presentation above and beyond the legal requirements.

2	July 29, 2020 | BASF Analyst Conference Call Q2 2020

Chemical production in China with a V-shaped recovery, recovery in North America and Europe still a question mark

Chemical production compared to prior-year quarter

%

8

6

4

2

0

Q1

Q2

Q3

Q4

Q1

(2)

(4)

(6)

(8)

(10)

(12)

1.0	2.0		3.0	4.0	5.0
			2019					2020

China

Q2

Asia

Global

North America

Europe

6.0

Macroeconomic development Q2 2020 vs. Q2 2019

%

Global GDP	(10)
Global industrial production	(10)
Global chemical production	(4)
Global automotive

production	(45)

3	July 29, 2020 | BASF Analyst Conference Call Q2 2020	Source: BASF, data: IHS, Feri, NBS China, FED, Eurostat, LMC. Asia: China, India, Japan, South Korea, Taiwan, Thailand.
Data partly estimated.

BASF Group Q2 2020: Sales volumes in Greater China significantly above prior-year months

Sales volumes development by region1

April/May/June 2020 vs. April/May/June 2019

%

	BASF Group		Europe		North America		Greater China
										13	28
		1						2	9
				(7)
(12)			(19)		(12)
(21)
		(27)			(27)
April	May	June	April	May	June	April	May	June	April	May	June
						2020

4

July 29, 2020 | BASF Analyst Conference Call Q2 2020

1 Location of customer

The pandemic is impacting key customer industries differently

Sales volumes development of key customer industries1
Q1/Q2 2020 vs. Q1/Q2 2019
%
Automotive	Energy and	Consumer	Construction	Electronics	Health and
		resources	goods			2		Nutrition
						(4)			0	0
		(2)	(7)	(7)	(8)	(8)		(6)
(22)								of which:		2
	(45)
Q1	Q2	Q1	Q2	Q1	Q2	Q1	Q2	Q1	Q2	Q1	Q2
						2020

5

July 29, 2020 | BASF Analyst Conference Call Q2 2020

1 Source: IHS, LMC; 2 Source: Semiconductor Industry Association (nominal sales growth, April and May 2020)

(11)

(27)

(16)

The gap in BASF's average daily order entry is slowly closing, but visibility remains low

Gap between average daily order entry April/May/June/July1 2020 vs. April/May/June/July1 2019

%			June
April	May
0	2020	2020	2020

July1 2020

(9)

(10)

(20)

(30)

6

July 29, 2020 | BASF Analyst Conference Call Q2 2020

1 Until July 26, 2020

BASF Group Q2 2020: COVID-19 leads to lower volumes, mainly due to lower demand from the automotive industry

Sales volumes development by segment

Q2 2020 vs. Q2 2019

absolute (million €) terms

	Main customer industry: automotive
Chemicals	Materials
155	(680)
	Industrial	Surface
	Solutions
	(234)	Technologies
		(804)

Nutrition	Agricultural	Other
& Care	Solutions
96	45	(216)

 7%



(23%)



(11%)

 (26%)

 7%

 2%



(29%)

relative (%) terms

Overall change (1,638)

 (11%)

7	July 29, 2020 | BASF Analyst Conference Call Q2 2020

BASF Group Q2 2020: Sales and earnings decline on account of lower demand from key customer industries

Sales bridge Q2 2020 vs. Q2 2019

million €

20,000

14,478 (1,638)

(130) 114

10,000

0
Q2 2019		Volumes		Prices		Portfolio
Sales development
Q2 2020 vs. Q2 2019			(11%)			(1%)		 1%

1. 12,680

Currencies Q2 2020

	(1%)

EBIT before special items by segment Q2 2020 vs. Q2 2019

million €

1,200 995

800

226

400

Agricultural Solutions (1)



Nutrition & Care 36



0

Industrial Solutions (80)



Surface Technologies (280)



Materials (414)



Chemicals (121)



(400)

Other 91



Q2 2020

Q2 2019

8	July 29, 2020 | BASF Analyst Conference Call Q2 2020

Excellence Program 2019 - 2021: On track to achieve the targeted annual EBITDA contribution

Annual EBITDA contribution1

One-time costs2

Category

Operational excellence

Leaner structures

Innovation

Simplification

2019 actual		2020		2021
€0.6 billion		€1.3 - €1.5 billion		€2.0 billion
€0.5 billion		€0.3 - €0.4 billion		€0.05 - €0.15 billion

Measures focused on production, logistics and planning

Personnel cost savings; reduction of 6,000 positions targeted globally by end of 2020

R&D cost reduction via focusing budgets

Increased process efficiency, e.g., in procurement

9

July 29, 2020 | BASF Analyst Conference Call Q2 2020

1 Run rate; 2 One-time costs in the respective year

Portfolio measures expected to be closed in 2020

Lone Star Funds to acquire BASF's construction chemicals business

• Sales 2019: ~€2.6 billion
• BASF and Lone Star Funds signed agreement for the acquisition of BASF's construction chemicals business in December 2019
• Purchase price of €3.17 billion1
• Closing is expected in Q3 20202

DIC to acquire BASF's pigments business

• Sales 2018: ~€1 billion
• BASF and DIC reached an agreement on the acquisition of BASF's pigments business in August 2019
• Purchase price of €1.15 billion1
• Closing is expected in Q4 20202

10

July 29, 2020 | BASF Analyst Conference Call Q2 2020

1 On a cash and debt-free basis; 2 Subject to the approval of the relevant competition authorities

BASF Group Q2 2020: Key financial figures

		Q2 2020		Q2 2019
		€		€
Sales	12,680 million		14,478 million
EBITDA before special items		1,229 million		1,885 million
EBITDA	1,070 million		1,546 million
EBIT before special items		226 million		995 million
EBIT		59 million		507 million
Net income		(878) million		5,954 million
Reported EPS	(0.95)	6.48
Adjusted EPS		0.25		0.83
Cash flows from operating activities		2,242 million		1,946 million

Sales development		Volumes		Prices		Portfolio
Q2 2020 vs. Q2 2019		 (11%)		 (1%)		 1%

Change

%

(12)

(35)

(31)

(77)

(88)

.

.

(70)

15

Currencies



(1%)

11	July 29, 2020 | BASF Analyst Conference Call Q2 2020

Strong balance sheet

Balance sheet June 30, 2020 vs. December 31, 2019

billion €

90.4	90.4
87.0	87.0

								38.4	42.4	Equity
Noncurrent	55.2
56.0
assets
								26.1			Financial
								18.4	debt
Inventories	10.8
11.2			1.2	1.0	Liabilities of
Accounts	9.4			disposal groups1
receivable	9.1
Other assets	4.7			24.7	25.2	Other
3.8
Disposal groups1	4.7							liabilities
Liquid funds			5.6	4.0
		2.9
			June 30, 2020		Dec. 31, 2019		June 30, 2020		Dec. 31, 2019

• Total assets increased by €3.4 billion to €90.4 billion
• Current assets up by €4.2 billion, mainly due to higher cash and cash equivalents and other receivables
• Net debt increased by €5.0 billion to €20.5 billion, mainly due to the dividend payment in Q2 2020 and the acquisition of Solvay's polyamide business in Q1 2020
• Equity ratio on June 30, 2020: 42.5%

12

July 29, 2020 | BASF Analyst Conference Call Q2 2020

1 BASF's pigments business and construction chemicals business

Qualitative statements on further business development in 2020 provided in the Half-Year Financial Report 2020

• Given the continued high level of uncertainty surrounding economic developments due to the effects of the pandemic and the low visibility, it is still not possible to make any concrete statements on the development of sales and earnings for the full-year 2020.
• For the second half of 2020, we anticipate a high level of uncertainty due to the ongoing corona pandemic.
• For the third quarter of 2020, we currently do not expect EBIT before special items to improve significantly compared with the second quarter of 2020, in part due to the generally lower demand in August and the seasonality of the Agricultural Solutions business.

13	July 29, 2020 | BASF Analyst Conference Call Q2 2020

Product Carbon Footprints create transparency for customers

- digital solution to calculate greenhouse gas emissions for all BASF products

Scope 3	Scope 1
Extraction and raw materials	BASF

Scope 2 Energy purchase

Cradle-to-gate

• Digital solution calculates cradle-to-gate Product Carbon Footprints
• Based on the total of direct process CO2 emissions, energy demand and scope 3 upstream CO2 emissions
• Carbon footprints for 45,000 BASF products in the global portfolio available in the course of 2021

14	July 29, 2020 | BASF Analyst Conference Call Q2 2020

Chemicals

Sales Q2 2020 vs. Q2 2019

EBIT before special items

million €

Intermediates

Petrochemicals 1,173 (20%)

million €

251

250

174

618€1,791

150	119
115

(14%)

(18%)

50

Sales development		Volumes
Q2 2020 vs. Q2 2019		 7%

(50)												(2)
	Q2			Q3	Q4
					Q1			Q2
				2019					2020
	Prices				Portfolio			Currencies
	(25%)				0%			0%

16	July 29, 2020 | BASF Analyst Conference Call Q2 2020

Materials

Sales Q2 2020 vs. Q2 2019

million €

Monomers 1,072

(23%)€2,143

(28%)

Sales development

Q2 2020 vs. Q2 2019

Performance

Materials

1,071

(31%)

Volumes

 (23%)

EBIT before special items

million €

500

334

300					266
																		209
100											80
(100)
																								(80)
			Q2					Q3				Q4					Q1	Q2
					2019							2020
Prices
						Portfolio						Currencies
	(8%)									 4%										(1%)

17	July 29, 2020 | BASF Analyst Conference Call Q2 2020

Industrial Solutions

Sales Q2 2020 vs. Q2 2019 million €

	Dispersions & Pigments
Performance	1,173
(12%)

Chemicals	€1,819
646
(20%)	(15%)

Sales development		Volumes
Q2 2020 vs. Q2 2019		 (11%)

EBIT before special items million €

300
														273
	243
200				205
																			163
100									108
0
	Q2				Q3			Q4				Q1					Q2
			2019									2020
Prices
					Portfolio					Currencies
	(4%)						0%					0%

18	July 29, 2020 | BASF Analyst Conference Call Q2 2020

Surface Technologies

Sales Q2 2020 vs. Q2 2019

million €

Catalysts 2,549 +15%

Coatings	€3,099
550	(2%)
(41%)

Sales development		Volumes
Q2 2020 vs. Q2 2019		 (26%)

EBIT before special items

million €

300
											236
														220
200								206
			129
100
0

(100)
(200)											(151)
	Q2		Q3	Q4
			Q1				Q2
			2019				2020
	Prices
			Portfolio			Currencies
	 24%			0%			0%

19	July 29, 2020 | BASF Analyst Conference Call Q2 2020

Nutrition & Care

Sales Q2 2020 vs. Q2 2019	EBIT before special items
million €	million €

Nutrition & Health	Care Chemicals
548	1,007
+12%	0%

€1,555

+4%

300

254 256

220 225

200

126

100

0

Q2	Q3	Q4	Q1		Q2
	2019			2020

Sales development

Q2 2020 vs. Q2 2019

Volumes

• 7%

Prices

 (1%)

Portfolio

0%

Currencies

	(2%)

20	July 29, 2020 | BASF Analyst Conference Call Q2 2020

Agricultural Solutions

Sales H1 2020 vs. H1 2019

million €

Seeds & Traits 1,017 (2%)

€4,585

Herbicides+3% 1,636 +7%

Fungicides 1,274 +3%

Seed Treatment 249 (3%)

Insecticides 409 +7%

EBIT before special items Q2 2020 vs. Q2 2019 and H1 2020 vs. H1 2019

million €

1,000		929
		861
800

600

400

200
			120				121
0
		Q2 2020		Q2 2019		H1 2020		H1 2019

Sales development		Volumes		Prices		Portfolio
Q2 2020 vs. Q2 2019			2%		 1%		0%
H1 2020 vs. H1 2019			5%	0%	0%

Currencies

	(5%)
	(2%)

21	July 29, 2020 | BASF Analyst Conference Call Q2 2020

Review of "Other"

Financial figures		Q2 2020		Q2 2019
		million €		million €
Sales	507	744
EBIT before special items	(80)	(171)

Thereof	Costs of corporate research
	Costs of corporate headquarters
	Foreign currency results, hedging and other
	measurement effects
	Other businesses

Special items

(81)	(99)
(57)	(66)
(49)	(12)
24	48
(48)	(193)

EBIT	(128)	(364)

22	July 29, 2020 | BASF Analyst Conference Call Q2 2020