BASF : UBS European Virtual Conference

BASF : UBS European Virtual Conference

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Sector Diversified Chemicals

November 11, 2020 at 03:39 am EST

BASF Capital Market Story

Dr. Martin Brudermüller, Chairman of the

Board of Executive Directors and CTO

UBS European Virtual Conference

November 11-12, 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 November 2020 | BASF Capital Market Story

Agenda

1	2	3
At a glance	Strategy implementation	Unique position to capture
	in full swing	growth in Asia

4	5	6
Battery materials driving	Pushing the transition to a	Reporting
electromobility and future	sustainable economy
growth

3 November 2020 | BASF Capital Market Story

What is driving BASF's future growth?

Global trends provide tremendous opportunities for growth in the chemical industry

Demographic change:

Share of population aged 60 and over worldwide

Population growth:

Driven by the emerging markets

China the largest market:

Share of global chemical production

+100%

2020 to 2050

+25%

2020 to 2050

~50%

by 2030

Digitalization:

Rapid growth in volume of data

Climate change:

Required reduction of greenhouse gas emissions to achieve the 2°C goal

Electromobility:

Growing demand for battery materials until 2030

456

zettabytes in 2030

-70%

by 2050

+25%

CAGR

4	November 2020 \| BASF Capital Market Story Sources: UN, IEA, UBS Foresight, BASF

Unique position to deliver long-term value

Unique Verbund concept

6 Verbund sites globally
361 additional production sites worldwide
6.4 million metric tons of CO2 prevented globally in 2019

Industry-leading innovation platform

€2.2 billion R&D expenditures in 2019
~11,000 employees in R&D
Sales of ~€10 billion in 2019 with products launched during last 5 years

Strong and expanding local presence in fast growing Asian market

2 Verbund sites already
>100 production sites
~€14.2 billion1 sales in 2019
Strong volume and earnings development of BASF in Greater China

Creating value to society and contributing to a sustainable development

Target CO2-neutral growth until 2030
Carbon management bundles measures to reduce greenhouse gas emissions
Achieve €22 billion in Accelerator sales by 2025 (2019: €15.0 billion)

Progressive dividend policy

Aim to increase the dividend per share every year
Dividend of €3.30 per share for 2019

5	November 2020 \| BASF Capital Market Story 1 Sales by location of customer. Only includes sales from BASF entities fully consolidated according to IFRS 10/11

Our ambitious corporate targets - financial and nonfinancial targets

Grow sales volumes faster than global chemical production every year	Achieve a return on capital employed (ROCE)1	considerably above the
	cost of capital percentage every year

Increase EBITDA before special items by 3% to 5% per year		Increase the dividend per share every year
		based on a strong free cash flow

Grow CO2-neutrally until 2030 (compared with baseline 2018)		Achieve €22 billion in Accelerator sales2 by 2025

	1	Return on capital employed (ROCE) is a measure of the profitability of our operations.
6	November 2020 \| BASF Capital Market Story 2	We calculate this indicator as the EBIT generated by the segments as a percentage of the average cost of capital basis
Accelerator products are products that make a substantial sustainability contribution in the value chain.

Further nonfinancial targets

Reduce worldwide process safety incidents per 200,000 working hours to ≤ 0.1 by 2025

Introduce sustainable water management at all production sites in water stress areas and at all Verbund sites by 2030

Increase the proportion of women in leadership positions with disciplinary responsibility to 30% by 2030

Reduce the worldwide lost-time injury rate per 200,000 working hours to ≤ 0.1 by 2025

More than 80% of our employees feel that at BASF, they can thrive and perform at their best

Cover 90% of our relevant spend1 with sustainability evaluations by 2025 Have 80% of our suppliers improve their sustainability performance upon re-evaluation

7	November 2020 \| BASF Capital Market Story 1 We understand relevant spend as procurement volumes with relevant suppliers.

BASF's diversified portfolio with market-oriented segment structure provides resilience and supports customer orientation

Surface

Technologies

Industrial	Catalysts, Coatings	Nutrition
Solutions		& Care
Dispersions & Pigments,		Care Chemicals,
Performance Chemicals		Nutrition & Health

Materials

Performance

Materials, Monomers

Chemicals

Petrochemicals,

Intermediates

Agricultural

Solutions

Agricultural Solutions

Other

Verbund

Regions and countries

Service units (e.g., business services, procurement, engineering)

Corporate center (governance units)

8 November 2020 | BASF Capital Market Story

Each segment has a clear and compelling path forward

Chemicals

Materials

Industrial Solutions

Surface Technologies

Nutrition & Care

Agricultural Solutions

of sales 20191 EBIT bsi 20191

Core theme

Innovation focus

Capex relevance

M&A relevance

Sustainability

16%

€0.8 billion

Verbund

Improved or new processes

ChemCyclingTM

20%

€1.0 billion

Advanced materials

Applications, biomaterials

Bio-based materials

14%

€0.8 billion

Additives platform

Formulations

Category

Operational excellence

Leaner structures

Innovation

Simplification

2019 actual	2020	2021
€0.6 billion	~€1.4 billion	€2.0 billion

€0.5 billion	~€0.3 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; around 10% of this reduction will likely be delayed into 2021, mainly due to the pandemic

R&D cost reduction via focusing budgets

Increased process efficiency, e.g., in procurement

21 November 2020 | BASF Capital Market Story 1 Run rate; 2 One-time costs in the respective year

Realignment of BASF's Global Business Services unit

- expected annual cost savings of >€200 million from 2023 onwards

	 In January 2020, the unit was formed as part of the implementation of the corporate strategy.
	 Around 8,400 employees transferred to the unit to become a global, flexible and demand-driven
	service division that strengthens the competitiveness of the operating divisions and provides
About BASF's Global	services in areas such as finance, HR, environmental protection, health and safety, intellectual
property, communications, supply chain and consulting.
Business Services unit	 Following the bundling of services and the implementation of a wide-ranging digitalization
	strategy, the number of employees in this unit will decline by up to 2,000 by the end of 2022.
	 Annual cost savings of over €200 million expected from 2023 onwards.
	 In Q3 2020, provisions for one-time costs of ~€300 million were recognized in Other.
	 In 2023, the unit will be a fully dedicated service division with the sole purpose of providing
Target picture	solutions for BASF Group with the best possible cost-to-serve offer:
- Simpler end-to-end processes offering more flexibility
2023
- More automation in process steps

	- Bundling of tasks in central hubs

22 November 2020 | BASF Capital Market Story

We have consistently refocused our portfolio towards innovative growth businesses1

Acquisitions

Functional crop care
Personal care and food ingredients
Omega-3fatty acids
Enzymes
Battery materials
Specialty plastics
Refinish coatings
Surface treatment
Seeds and crop protection
Polyamide business

BASF

core business

Selected transactions

2010−today

Divestitures

Styrenics
Fertilizers
Natural gas trading and storage
Custom synthesis business
Textile chemicals
Polyolefin catalysts
Industrial coatings
Leather chemicals
Water and paper chemicals
Oil & gas
Construction chemicals

~€8.8 billion sales in emerging and innovation-driven businesses

~€28.7 billion sales in businesses with decreased differentiation potential

23 November 2020 | BASF Capital Market Story 1 Selected, closed transactions 2010-today

Major portfolio measures in 2020 and 2021

Lone Star Funds acquired BASF's construction chemicals business

Sales 2019: ~€2.6 billion
BASF and Lone Star Funds signed agreement in December 2019
Purchase price of €3.17 billion1
Transaction closed on September 30, 2020

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 Q1 20212

Initial public offering (IPO) of Wintershall Dea

Sales 2018: ~€4.1 billion
Merger took place on May 1, 2019
Realization of synergies on track
Integration expected to be completed in January 2021
IPO planned for 2021, subject to market conditions

24 November 2020 | BASF Capital Market Story 1 On a cash and debt-free basis; 2 Subject to the approval of the relevant competition authorities

Clear acquisition criteria

Strategic acquisition criteria

We want to acquire businesses which …

create more value as part of BASF's Verbund
help achieve relevant market positions
drive innovation or technological differentiation
enable new and sustainable business models

Financial acquisition criteria

We want to acquire businesses which …

provide a return on capital employed above the WACC after full integration into BASF Group
are EPS accretive by year three at the latest
contribute to growth of EBITDA before special items

25 November 2020 | BASF Capital Market Story

Agenda

1	2	3
At a glance	Strategy implementation	Unique position to capture
	in full swing	growth in Asia

4	5	6
Battery materials driving	Pushing the transition to a	Reporting
electromobility and future	sustainable economy
growth

26 November 2020 | BASF Capital Market Story

Asia Pacific is the growth region for global chemical production with China as the major driver

Real chemical production excluding pharmaceuticals

billion US$

CAGR1 +2.8%

Middle East, Africa

Global GDP CAGR +2.6%

Middle East, Africa

(CAGR +3%)

Europe

15%

(CAGR +1%)

Europe

South America

Greater

17%

South America

(CAGR +2%)

China

2030: ~5,500

2019: ~4,000

Greater China

43%

North America

~50% (CAGR +4%)

North America

16%

14%

(CAGR +2%)

Rest of Asia Pacific

15%

16%

(CAGR +2%)

27 November 2020 | BASF Capital Market Story Source: BASF 1 Real chemical production excluding pharmaceuticals; as of April 2020.

BASF is active in Asia Pacific since 1885 and has a unique position to capture growth in the region

Nanjing

Hong Kong

Zhanjiang1

Kuantan

Kuala Lumpur

Regional center

Verbund sites

Selected sites

R&D/Technical centers

Shared Services Center

BASF Group in Asia Pacific (2019)

BASF is present in 19 markets
>100 production sites1
~125 sales offices2
18,634 employees3
~€14.2 billion sales4
~€1.1 billion EBIT

BASF investigates establishment of a second Verbund site in China
Only selected sites and offices are depicted on this chart. Site and office numbers refer to companies of significant size where BASF holds a stake greater than 50%
As of December 31, 2019
Sales by location of customer. Only includes sales from BASF entities fully consolidated according to IFRS 10/11

28 November 2020 | BASF Capital Market Story

BASF in Asia Pacific - a balanced portfolio

Sales1 by segment in 2019: €14.2 billion

Sales1 by sub-region in 2019: €14.2 billion

100%

75%

50%

25%

5%	Other	100%

5%	Agricultural Solutions
11%	Nutrition & Care
			75%
25%	Surface Technologies
17%	Industrial Solutions	50%


25%	Materials	25%

12%	Chemicals	0%

2019

2% Australia, New Zealand

9% South Korea

11% South Asia

13% Japan

13% ASEAN

52% Greater China

2019

ASEAN: Singapore, Philippines, Vietnam, Thailand, Indonesia, Malaysia, Myanmar, Cambodia, Laos

South Asia: India, Pakistan, Bangladesh, Sri Lanka, Nepal

South Korea: Includes Mongolia

29 November 2020 | BASF Capital Market Story 1 Sales to third parties by location of customer; figures do not include sales of joint ventures consolidated at equity such as BASF-YPC Ltd., Nanjing, China

Strong earnings development of BASF in Greater China over the past years

BASF's sales volumes outgrew Greater China's chemical production during the last five years

Real chemical production growth1 (CAGR 2015-2019)

%
8
6
4
2
0
Global chemical	Chemical	Sales volumes of
production	production Greater	BASF in Greater
	China	China

Strong earnings development of BASF in Greater China

EBITDA before special items			EBITDA margin
million €			before special items
					%
2,000					20
1,500					15
1,000					10
500					5
0						0

2015	2016	2017	2018	2019

30 November 2020 | BASF Capital Market Story 1 Source: BASF, real chemical production excluding pharmaceuticals (base year 2015)

Guangdong is home of key customers from fast-growing industries

Strongly growing industrial base1 billion US$ (base year 2015)

800	~6.2%
600
CAGR

400661

200

2019

Large chemical production2

billion US$ (base year 2015)

200	~3.9%
150
CAGR

100161

2019

Market characteristics

 Around 115 million residents in
	Guangdong province (2019)
	GDP Guangdong (2019):
	~US$1,560 billion (to reach
	GDP of South Korea soon)
 GDP growth until 2035: 5-6% p.a.
	Key customer industries:

Largest automotive production, China

of motor vehicles built in Guangdong (1,000) (base year 2015)

4,000	~6.8%
3,000	CAGR

2,000	3,120
1,000

0
2019

Steady increase of private consumption3

billion US$ (base year 2015)

600		~5.4%
450		CAGR

300	560	Guangdong
150		Hong Kong

2019

transportation, consumer goods,

home and personal care,

electronics

 Chemical products are generally

undersupplied from local production

	1 Real value added, manufacturing Guangdong
31	2	Real chemical production Guangdong; inferred by gross output/value added ratio for China
November 2020 \| BASF Capital Market Story 3	Real private consumption Guangdong; 2018 and 2019 IHS forecast

BASF intends to build a world-class Verbund site in South China to serve fast-growing customer industries in the region

Key facts

 Wholly owned and operated by BASF

 Project is currently in the feasibility phase

 First plants expected to be operational in 2022

 US$10 billion capital expenditures

to be implemented in phases until 2030

 Most advanced Verbund site with smart manufacturing concepts

32 November 2020 | BASF Capital Market Story

Agenda

1	2	3
At a glance	Strategy implementation	Unique position to capture
	in full swing	growth in Asia

4	5	6
Battery materials driving	Pushing the transition to a	Reporting
electromobility and future	sustainable economy
growth

33 November 2020 | BASF Capital Market Story

Rise of e-mobility is net positive for chemicals demand per car

Internal Combustion

Engine (ICE)

Emissions control and power generation

Catalysts

Engineering plastics

Coolants

Engine

Coatings

Higher demand:

Growth in battery materials more than compensates some catalyst replacement

Higher demand:

Growth drivers: Flame retardant plastics, battery housings and cable sheathing

Comparable demand:

Growth areas: E-coolants and specialty fluids for e-mobility and autonomous driving

Comparable demand:

Growth areas: Coatings for battery housings and passive vehicle-temperature management

Battery Electric

Vehicle (BEV)

Cathode Active

Material (CAM)

Battery

34 November 2020 | BASF Capital Market Story

BASF addresses the needs of the fast-growinge-mobility market

Heat management

Effective heat management can increase the range of electric cars, as it reduces the energy drawn from the battery to heat and cool the vehicle.

Charging infrastructure

Safe and easy-to-use charging devices are vital if electromobility is to become widespread.

Components		BASF materials
Chassis coatings		Chromacool®

Components

Charging stations

Charging cables

Charging plugs

Charging inlet

BASF materials

Ultramid®, Ultradur®

Elastollan®

Ultramid®

Electric powertrain

The electric motor and power electronics are core components of an electric vehicle. BASF materials help customers to reduce weight, increase design flexibility and enable components and functions to be integrated safely.

	Components	BASF materials
	Electric motor	Cellasto®

	Power electronics	Ultramid®, Ultradur®

35 November 2020	\| BASF Capital Market Story 1 CAM = Cathode Active Materials

Battery

The battery pack is the heart of an electric car. To support next-generation battery technology, BASF is continuously improving its portfolio with new solutions.

Components		BASF materials
Battery cells		CAM1 (HED™ product family),
		N-methylpyrrolidone (NMP), Ethylene carbonate

Battery housing		Oxsilan®, CathoGuard®, Ultramid®
Battery bearings		Cellasto®

Battery cooling		Glysantin®, Ultramid®
High-voltage plugs		Ultradur® HR, Ultramid®

BEVs and hybrids create superior growth opportunities in battery materials

Global vehicle production by engine type

million units

120		20%	2.0%
	29%	CAGR
100	CAGR
CAGR

Market projections for 2030:

~25 million electric vehicles built per year
1,500-2,500kt of CAM in electromobility
€45-60billion CAM market size

~25% CAGR

Electromobility drives battery materials growth

2020	2025	2030
BEV: Battery Electric Vehicles		Hybrids: ICE + Battery	ICE only

2020 2030

36 November 2020 | BASF Capital Market Story

BASF is well-positioned in the value chain with strategic partnerships to secure high-purity raw materials

Mining	Metal refinery	BASF Battery Materials	Systems and applications
Metal ore	Metal salt		Cells

CAM and precursors	OEMs
mining and upgrading	solution and cast	batteries

Recycling

The chemistry of cathode active materials is key to addressing electromobility challenges.

37 November 2020 | BASF Capital Market Story

BASF is a leading supplier for high energy density cathode active materials to the automotive industry

CAM drive battery performance

HED™ Nickel Cobalt Manganese Oxide (NCM) & Nickel Cobalt Aluminum Oxide (NCA)
Own precursor and cathode active materials manufacturing
Global footprint, R&D, technology centers and production sites
Comprehensive IP portfolio and close relationship with automotive industry

BASF's targets and approach

Double the range of a midsize car to 600 km
Double the battery lifetime
Halve the size of the battery
Reduce the charging time to 15 minutes
Balance chemical composition
Optimize production process

38 November 2020 | BASF Capital Market Story

BASF combines battery-materials production and recycling with the goal of closing the loop in the circular economy

Battery materials circular economy

Metal mining		Cathode active	Battery
& refining		material	cell

Metal	Lithium-ion
extraction	battery

Collection & dismantling	Electric
end-of-life battery packs	car

Key facts

Regulation drives demand for recycling
OEMs will need recycling partners to establish closed loop approaches
Recycling provides sustainable and cost-efficient access to metals
BASF has proprietary and differentiating technology along with expertise in recycling

39 November 2020 | BASF Capital Market Story

BASF is a leading battery materials supplier with global production

2012

First CAM production facility in Elyria, Ohio

2018

Second CAM production facility in Battle Creek, Michigan; merged with Elyria, Ohio into BASF TODA America (BTA)

2022

CAM precursor

production planned

in Harjavalta,

Finland

Targeted

position In

China

2022

CAM production

planned in

Schwarzheide,

Germany

2015

Foundation of BASF

TODA Battery Materials

(BTBM), Japan

2017

Tripled capacity at

BTBM in Onoda,

Japan

- 40 November 2020 | BASF Capital Market Story

BASF is active and investing in battery materials

October 2018

February 2020

March 2020

BASF and Nornickel join forces to supply the battery materials market

BASF's announced precursor plant will be constructed in Harjavalta, Finland enabling secure supply of locally-sourced nickel and cobalt
The new plant will utilize locally generated renewable energy sources, including hydro, wind and biomass
Start-upplanned for 2022

BASF further invests in Europe to strengthen position in battery materials for electric vehicles

Schwarzheide, Germany as location for CAM production in Europe enabling the supply of ~400,000 electric vehicles per year
Production plant to use industry-leading energy mix lowering CO2 footprint
Part of BASF's plans to establish a global presence with battery materials supply
Start-upplanned for 2022

Fortum, BASF, and Nornickel sign cooperation agreement on battery recycling

BASF intends to use recycled materials from processes developed by the cooperating companies in its planned Harjavalta, Finland facility
The parties will foster production and use of responsibly produced recycled raw materials in the battery market

41 November 2020 | BASF Capital Market Story

BASF Battery Materials in pole position

Broadest high energy density CAM portfolio

Tailored solutions to strong customer base

Established manufacturing know-how

Strong innovation and growth pipeline

Global presence and secure supply chain

Long-standing strategic partnerships

Leading raw material and sustainability position

42 November 2020 | BASF Capital Market Story

Agenda

1	2	3
At a glance	Strategy implementation	Unique position to capture
	in full swing	growth in Asia

4	5	6
Battery materials driving	Pushing the transition to a	Reporting
electromobility and future	sustainable economy
growth

43 November 2020 | BASF Capital Market Story

Resource efficiency - BASF's Verbund is ideal for

CO2 emission reduction

Combined heat and power plants and integrated energy Verbund prevented 6.4 million metric tons of CO2e emissions in 2019
Synergies in logistics and infrastructure, minimization of waste
BASF uses fossil raw materials responsibly: 75% of carbon converted to products, 25% consumed for process energy and converted to CO2 equivalents1
European emissions trading benchmarks show that BASF's chemical plants operate at above-average energy efficiency

44 November 2020 | BASF Capital Market Story 1 BASF carbon mass balance calculation (2019, non-audited, without oil and gas business)

BASF has a strong track record of CO2 emission reduction

- our goal: CO2-neutral growth until 2030

Absolute greenhouse gas (GHG) emissions

Indexed (1990 = 100)
160							Paris climate agreement
140	Global GHG emissions
120
100							BASF business
80
						growth
60	BASF GHG emissions

40							2030 target
20							No increase of
						GHG emissions
0

1990	1995	2000	2005	2010	2015	2020	2025	2030

Since 1990, we have doubled our production volumes

and cut our GHG emissions in halves; the emission intensity thus decreased by 75%, from 2.2 tons of CO2e per ton of product to 0.6 tons of CO2e

20 million tons of CO2e emissions by BASF Group in 2019
Low-hangingfruits have been harvested; fundamentally new technologies are needed to reduce emissions on a large scale
We will grow our production volumes without adding further CO2e emissions1 until 2030 (intensity to be reduced by 30%)
BASF is committed to the Paris agreement for climate protection

45	1	BASF operations excluding the discontinued oil and gas business; includes other greenhouse gases according to
November 2020 \| BASF Capital Market Story	the Greenhouse Gas Protocol, which are converted into CO2 equivalents

BASF's Carbon Management - our focus to reduce emissions

Potential CO2 reduction

 We have established a carbon management that involves

Develop breakthrough

technologies

Shift power supply

towards renewable energies

Further improve process and energy efficiency

Costs and risks

- a research program to develop CO2-reduced breakthrough technologies
- shifting our energy mix towards renewable energies
- continued operational excellence measures
BASF co-founded the World Economic Forum's initiative on Collaborative Innovation for Low-Carbon Emitting Technologies in the Chemical Industry
BASF further enhances transparency: We support the recommendations of the Task Force for Climate-related Financial Disclosure and participated in the "TCFD Preparer Forum for Chemicals" in 2019

46 November 2020 | BASF Capital Market Story

BASF's CO2 reduction efforts are focused on main emitters

Example: Verbund site Ludwigshafen

Annual CO2e emissions in million tons1

Upstream	~3.3	Downstream

Verbund		Verbund
steam cracker		~190 plants

ammonia
hydrogen	incineration,
+14 other plants
sewage plant

Power / Steam

~0.3

~0.5

~3.9

Carbon management research and development program:
- breakthrough technologies for production of the basic chemicals with highest CO2 emissions (accounting for approximately 70% of the CO2 emissions of the chemical industry in Europe)
- key role of electrification and fundamentally new synthesis pathways
- moving towards low-carbon chemical value chains

47 November 2020 | BASF Capital Market Story 1 Schematic breakdown of 2019 emissions, rounded

Hydrogen - a key element for CO2-free chemistry

Methods of H2 production:
efficiency
	Methane

		pyrolysis
GHG		(CO2-free, ~10 MWh)


		Steam
		reforming
		(10 metric tons CO2,
		~6 MWh1)

	1 for the chemical reaction	Energy efficiency

One key challenge in cutting major emission sources in the BASF production Verbund is access to low cost, energy-efficientCO2-free hydrogen.
Steam reforming requires only ~6 MWh for the chemical reaction but emits approximately 10 metric tons of CO2 per metric ton of hydrogen.
Water electrolysis is CO2-free but requires ~55 MWh of green electricity per ton of hydrogen produced for the entire process.
Methane pyrolysis combines low emissions and low energy demand; it could yield CO2-free hydrogen while only consuming ~10 MWh of green electricity for the entire process.

48 November 2020 | BASF Capital Market Story

Methane pyrolysis - producing CO2-free hydrogen with less electricity

We are continuously optimizing processes, gradually replacing fossil fuels with renewable energy and developing new low-emission technologies to further reduce our overall CO2 footprint.
Methane pyrolysis is a low-emission technology. Electricity is used to heat methane and split it into its components: hydrogen gas and solid carbon.
Methane pyrolysis requires ~20% of the electricity needed for the very energy-intensive water electrolysis process.
If renewable energy sources are used, the process yields hydrogen and very pure solid carbon without any CO2 emissions.

49 November 2020 | BASF Capital Market Story

CO2-free hydrogen can reduce the overall Product Carbon Footprint of chemicals in different use cases

		H2
	Energy carrier	Raw material


"Hydrogen the energy vector"	"Hydrogen the chemical building block"

50 November 2020 | BASF Capital Market Story

Increasing importance of renewable energy

In 2019, internally generated power in the BASF Group had a carbon footprint of around 0.26 tons of CO2 per MWh of electricity and was below the national grid factor at most BASF Group locations (purchased electricity: around 0.46 tons of CO2 per MWh)
In 2019, 23 BASF sites were partially or fully powered by emission-free electricity
Demand for electricity from renewable sources will increase sharply with new, low-carbonelectricity-based production processes
At the Ludwigshafen site in Germany, we would need to roughly triple or quadruple our current electricity use (2019: 6.2 TWh) to fully implement the new production processes
Availability and price of renewable power as critical success factors
BASF is investigating different options for renewable power supply

51 November 2020 | BASF Capital Market Story

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

52 November 2020 | BASF Capital Market Story

From a linear to a more circular economy

- BASF contribution: ChemCyclingTM

Close the loop

ChemCyclingTM

can handle mixed plastic waste
produces virgin grade raw materials
replaces virgin fossil resources
CO2 emissions prevented1

Investments into Quantafuel (pyrolysis of mixed plastic waste) and Pyrum (pyrolysis of end-of-life tires) and uptake supply agreements with both companies
Agreement with New Energy for uptake of pyrolysis oil derived from end-of-life tires and for a joint feasibility study for adaption of technology to other plastic waste streams
Plastic waste and end-of-life tires are converted into liquid feedstock and fed into BASF's value chains

Linear economy

Mechanical	Landfill Incineration Littering

recycling

53 November 2020 | BASF Capital Market Story 1 Compared to conventional plastic production and incineration of plastic waste

Alliance to End Plastic Waste (AEPW)

take action, develop solutions and catalyze investment
- Founded in 2019, BASF is a founding member of the AEPW
- 46 members from entire plastics value chain
- Commitment to spend US$1.5 billion over five years for infrastructure development, innovation, education, engagement and clean-up
- Example: collaboration with non-profit initiative RenewOceans in Varanasi, India (Ganges river)
- - ReFence technology to collect plastic from waterways
  - Waste management strategy for university campus
  - Strategy for scaling and franchising of the existing model

54 November 2020 | BASF Capital Market Story

Around 30% of BASF Group sales from sustainable solutions

- leveraging our innovation power

Percentage of sales 2019

	Substantial sustainability
28.9%	contribution in the value chain

Sustainable	Meets basic sustainability
standards on the market

 Portfolio segmentation: >50,000 specific product

applications analyzed by 2019 (€51.9 billion in sales,

96.3% of relevant portfolio1)

 >12,000 Accelerators across all business segments

 Accelerator margins on average ~6 percentage

points above the rest of assessed portfolio

Solution

61.9% Steering

Specific sustainability issues, actively addressed

	Goal: €22 billion of sales with Accelerator products
	by 2025 (2019: €15.0 billion)
	Stronger integration in R&D pipeline, business
	strategies and M&A projects

Significant sustainability concern identified and action plan developed

9.1% 0.1%

 We will stop selling Challenged products within

maximum five years after classification

55 November 2020 | BASF Capital Market Story 1 The product portfolio acquired from Bayer has been partially assessed

Accelerator examples

- innovations for a sustainable future

SLENTEX® - high-performance	Formic acid - ecoefficient runway
flexible insulation material	and road deicing

Acronal® MB - from biomass to dispersions

ecovio® - compostable cling film	Inscalis® - insecticide with	Synative® ES TMP - biodegradable
for fresh-food packaging	unique mode of action	marine lubricants

56 November 2020 | BASF Capital Market Story

Value balancing alliance - consistent assessment in monetary terms of the impact of business activities on the well-being of people

Member companies

Pro-bono consultants

Policy advisor		Funding

Founded in June 2019, BASF is a founding member of the value balancing alliance
Standardizing accounting methodologies to assess value to society and value to business along entire value chain
From traditional reporting of input and output
(e.g., raw materials, CO2 emissions) to impact valuation (e.g., social cost of carbon)
Increase transparency by
- standardizing calculations for comparable results
- piloting in management accounting
- making outcomes publicly available
Ambition: Transform business from maximizing profits to optimizing value creation

57 November 2020 | BASF Capital Market Story

BASF in sustainability ratings and rankings

CDP

In 2019, BASF achieved a score of A- in the climate category, thus attaining leadership status again; BASF was included in the "Water A list" of leading companies for sustainable water management

MSCI ESG Research

In 2020, BASF was again rated AA and ranks third in "Diversified Chemicals"

Sustainalytics

BASF is "Outperformer" in the overall ESG rating 2020 with strong ratings in social and governance categories

FTSE4Good Global Index

BASF was included again in the FTSE4Good Global Index 2020, with a rank in the top ten of the chemical industry

2020 CSR Award of the German federal government

BASF was recognized for an outstanding and long-term CSR commitment and a holistic CSR strategy which addresses all areas of the company

58 November 2020 | BASF Capital Market Story

Agenda

1	2	3
At a glance	Strategy implementation	Unique position to capture
	in full swing	growth in Asia

4	5	6
Battery materials driving	Pushing the transition to a	Reporting
electromobility and future	sustainable economy
growth

59 November 2020 | BASF Capital Market Story

BASF Group Q3 2020: Sales volumes in Greater China significantly above prior-year months

Sales volumes development by region1

July/August/September 2020 vs. July/August/September 2019

	BASF Group		Europe	North America		Greater China
					17	18	15

(4)	4			4
(8)	(8)	(7)	(6)	(6)
				(20)

Jul

Aug

Sep

Jul

Aug

Sep

Jul

Aug

Sep

Jul

Aug

Sep

2020

60 November 2020 | BASF Capital Market Story 1 Location of customer

BASF Group Q3 2020: Volumes declined slightly, to a large extent due to lower demand as a result of the pandemic

Sales volumes development by segment

Q3 2020 vs. Q3 2019

absolute (million €) terms

	Chemicals	Materials	Industrial	Surface	Nutrition	Agricultural	Other
BASF
Group	(259)	(125)	Solutions	Technologies	& Care	Solutions	(128)
(347)			(104)	95	(5)	179

 (2%)

relative (%) terms



(11%)



(4%)



(5%)

 3%	0%		 11%



(19%)

61 November 2020 | BASF Capital Market Story

BASF Group Q3 2020: Sales and EBIT before special items improved compared with Q2 2020, but are still below prior-year quarter

Sales bridge Q3 2020 vs. Q3 2019

million €

20,000

15,000	14,556	(347)	274	201

10,000

5,000

0
Q3 2019	Volumes		Prices		Portfolio
Sales development
Q3 2020 vs. Q3 2019		(2%)		 2%		 1%

13,811

Currencies Q3 2020

	(6%)

EBIT before special items by segment Q3 2020 vs. Q3 2019

million €

1,200	1,056

900										581

		Agricultural Solutions	(47)			


				Nutrition & Care	(82)			
600


		Surface Technologies (6)				





300				Industrial Solutions	(19)			




					Materials	(49)			



					Chemicals (205)
0							


						Other (67)			

(300)

Q3 2019

Q3 2020

62 November 2020 | BASF Capital Market Story

Details on the impairments in the third quarter of 2020

Slower growth in the automotive and aviation	 Segments: mainly Surface Technologies
industries due to the consequences of the
 Impairment: ~€1 billion
corona pandemic

Oversupply of basic chemicals	 Segments: mainly Chemicals and Materials
putting ongoing pressure on margins	 Impairment: ~€1.3 billion

Measures to streamline glufosinate-ammonium	 Segment: Agricultural Solutions
production: site in Michigan and one production plant
 Impairment: ~€300 million
in Germany to be closed by 2022

63 November 2020 | BASF Capital Market Story

BASF Group Q3 2020: Key financial figures

		Q3 2020		Q3 2019
		€		€
Sales		13,811 million		14,556 million
EBITDA before special items	1,542 million		1,980 million
EBITDA		1,044 million		2,259 million
EBIT before special items		581 million		1,056 million
EBIT		(2,638) million		1,336 million
Net income	(2,122) million		911 million
Reported EPS		(2.31)		1.00
Adjusted EPS	0.60	0.89
Cash flows from operating activities		2,100 million		1,998 million
Free cash flow		1,364 million		1,072 million

Sales development		Volumes		Prices		Portfolio
Q3 2020 vs. Q3 2019		 (2%)		 2%		 1%

Change

(5)

(22)

(54)

(45)

(33)

Currencies

 (6%)

64 November 2020 | BASF Capital Market Story

Cash flow development Q1 - Q3 2020

Cash flows from operating activities

Thereof	Changes in net working capital

	Miscellaneous items

Cash flows from investing activities

	Payments made for property, plant and equipment

Q1 - Q3 2020

million €

3,312

(1,043)

739

(674)

Q1 - Q3 2019

million €

4,317

(177)

(6,849)

Thereof	and intangible assets

	Acquisitions / divestitures
Cash flows from financing activities
Thereof	Changes in financial and similar liabilities
	Dividends

Free cash flow

(2,031)(2,648)

1,4522,254

778(4,745)

3,913(1,730)

(3,139)(3,016)

1,2811,669

65 November 2020 | BASF Capital Market Story

Strong balance sheet

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

billion €

87.0

								34.6	42.4	Equity
Noncurrent	51.9
56.0
assets

								21.6			Financial
										debt
										18.4
Inventories	10.5					1.3
11.2			1.0	Liabilities of
Accounts	9.3					disposal groups1
receivable	9.1			29.5

Other assets	5.1			25.2	Other
3.8
Disposal groups1	4.3							liabilities
Liquid funds			5.9	4.0
		2.9
			Sept. 30, 2020		Dec. 31, 2019		Sept. 30, 2020		Dec. 31, 2019

Total assets stable at €87.0 billion
Noncurrent assets decreased by €4.0 billion, mainly due to the non- cash-effective impairments and currency (translation) effects
Current assets increased by
€4.1 billion, mainly due to higher cash and cash equivalents and higher other receivables
Equity ratio on September 30, 2020: 39.8%

66 November 2020 | BASF Capital Market Story 1 BASF's pigments business and construction chemicals business

Chemicals

Sales Q3 2020 vs. Q3 2019

million €

Intermediates

614€1,783

Petrochemicals 1,169 (32%)

EBIT before special items

million €

250	251



		174
150
	115

(12%)

(27%)

50
(50)	Q3		Q4	Q1




		2019

(2)

Q2 Q3

2020

Sales development

Q3 2020 vs. Q3 2019

Volumes

 (11%)

Prices		Portfolio
 (13%)		0%

Currencies

 (3%)

67 November 2020 | BASF Capital Market Story

Materials

Sales Q3 2020 vs. Q3 2019

million €

Monomers 1,247

(10%)€2,657

(8%)

Sales development

Q3 2020 vs. Q3 2019

Performance

Materials

1,410

(6%)

Volumes



(4%)

EBIT before special items

million €

500

300	266
				209

100			80

(100)


Q3			Q4	Q1


		2019
Prices
			Portfolio
	(7%)			 7%

217

(80)

Q2 Q3

2020

Currencies



(4%)

68 November 2020 | BASF Capital Market Story

Industrial Solutions

Sales Q3 2020 vs. Q3 2019 million €

	Dispersions & Pigments
Performance	1,200
(10%)

Chemicals	€1,844
644
(19%)	(13%)

EBIT before special items million €

300273

200	205


100		108

163

186

Sales development		Volumes
Q3 2020 vs. Q3 2019		 (5%)

Q2 Q3

2020

Currencies



(3%)

69 November 2020 | BASF Capital Market Story

Surface Technologies

Sales Q3 2020 vs. Q3 2019

million €

Catalysts 3,310 +38%

Coatings	€4,142
832	25%
(11%)

EBIT before special items

million €

300
				236
					220
200		206



100
0


(100)
(200)
	Q3			Q4	Q1


			2019

200

(151)

Q2 Q3

2020

Sales development	Volumes	Prices		Portfolio
Q3 2020 vs. Q3 2019	 3%	 29%	0%

Currencies

 (7%)

70 November 2020 | BASF Capital Market Story

Nutrition & Care

Sales Q3 2020 vs. Q3 2019		EBIT before special items
million €		million €
		300
Nutrition & Health	Care Chemicals	225					254

489	938
200
(2%)	(8%)

€1,427					126
	100
(6%)

		0	Q3			Q4		Q1



				2019

Sales development		Volumes		Prices	Portfolio
Q3 2020 vs. Q3 2019	0%		 (1%)	0%

256

143

Q2	Q3
2020

	Currencies
		(5%)

71 November 2020 | BASF Capital Market Story

Agricultural Solutions

Sales Q3 2020 vs. Q3 2019				EBIT before special items
million €				million €
3,000						100


							73
2,000

	1,561
		(6%)	1,474		50	(64%)
1,000


0						0

Q3 2019		Q3 2020	Q3 2019

Sales development		Volumes		Prices		Portfolio
Q3 2020 vs. Q3 2019		 11%		 2%		0%

Q3 2020

Currencies

 (19%)

72 November 2020 | BASF Capital Market Story

Review of "Other"

Financial figures		Q3 2020	Q3 2019

		million €	million €
Sales	484	698

EBIT before special items	(237)	(170)

Thereof	Costs of corporate research

	Costs of corporate headquarters

	Foreign currency results, hedging and other
	measurement effects
	Other businesses

Special items

(95)	(91)

(53)	(57)

(15)	(15)

21	53

(408)	330

EBIT	(645)	160

73 November 2020 | BASF Capital Market Story

Attachments

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Disclaimer

BASF SE published this content on 11 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 November 2020 08:38:05 UTC

Real-time Estimate Tradegate Other stock markets 10:41:47 2024-04-24 am EDT			5-day change	1st Jan Change
51.26 ^EUR	+0.36%		+0.43%	+4.94%

04:35pm	Wintershall Dea management board to step down after Harbour Energy deal closed	RE
Apr. 22	German Shares Advance as Eurozone Consumer Confidence Edges Up	MT

Markets		Create customer relevance
	through size and broad portfolio

North America		Europe
Sales (million €)	15,948	Sales (million €)	23,827
EBIT (million €)	692	EBIT (million €)	2,125
Employees	19,355	Employees	72,153

Sales (million €)			5,338
EBIT (million €)			302
Employees			7,486

Substitution of

Energy storage

Hydrogenated

natural gas

Technologies	 Leverage technological advantages
	and innovation across all segments

BASF sales by industry 2019
Direct	> 20%		Chemicals and plastics
customers
10-20%1	Agriculture \| Consumer goods \| Transportation
		< 10%1		Construction \| Electronics \| Energy and resources \| Health and nutrition

	Sales 2019 by location of customer; EBIT 2019 by location of company. The 2019 EBIT figures have been restated to reflect the
11	reclassification of income from non-integral companies accounted for using the equity method to net income from shareholdings.
November 2020 \| BASF Capital Market Story 1 In each case

Organic	Progressive	Portfolio	Share
growth	dividend	upgrading	buybacks

 Strengthen portfolio by	 Share buybacks are
selective M&A opportunities	part of our toolbox but
while maintaining price	are currently not being
discipline	considered
 Focus the portfolio through
continued pruning
measures

		5%	Other1

		1%	South America, Africa

22%	Other (Infrastructure, R&D)		Middle East
5%	Agricultural Solutions	19%	North America


9%	Nutrition & Care
12%	Surface Technologies	41%	Asia Pacific
5%	Industrial Solutions
13%	Materials


Corporate research				Chemicals
19%				5%
				Materials
				9%
Agricultural	€2,158 million	Industrial Solutions
9%
Solutions
			Surface Technologies
41%
				10%
				Nutrition & Care
				7%

0
	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019


Yield1	3.7%	4.6%	3.7%	3.5%	4.0%	4.1%	3.4%	3.4%	5.3%	4.9%

Adapting to an uncertain environment		Measures
	Early and decisive management actions to ensure		 The customer is at the center of all our activities; we closely interact, even more
	continuity of operations worldwide		so during the pandemic
			 We adapt our utilization rates according to market demand using our proprietary
			Verbund simulator

	Clear focus on cost control		 We are on track to achieve €2.0 billion annual EBITDA contribution from the
			Excellence Program by the end of 2021
			 We realign BASF's Global Business Services unit and expect annual cost savings
			of >€200 million from 2023 onwards

	High capital expenditure discipline		 We reduce planned capital expenditures from €3.4 billion to €2.8 billion in 2020

	Strong liquidity based on a robust balance sheet		 We increased our liquidity to €5.9 billion on Sept. 30, 2020;
			with 39.8%, the equity ratio remains strong

	Focus on cash generation		 We increased free cash flow by 27% to €1.4 billion in Q3 2020

Wintershall Dea management board to step down after Harbour Energy deal closed	10:35am	RE
German Shares Advance as Eurozone Consumer Confidence Edges Up	Apr. 22	MT
BASF: buys 49% of Nordlicht wind farms from Vattenfall	Apr. 22	CF
BASF to Buy Stake in German Offshore Wind Farms From Vattenfall -- Update	Apr. 22	DJ
BASF to Buy Stake in German Offshore Wind Farms From Vattenfall	Apr. 22	DJ
BASF to Buy 49% Stake in Vattenfall’s Nordlicht 1, 2 Wind Farms in Germany	Apr. 22	MT
BASF SE : Warburg Research remains Neutral	Apr. 22	ZD
Russia's Nornickel to move copper plant to China, CEO tells Interfax	Apr. 22	RE
Dpa-AFX Overview: COMPANIES - The most important news from the weekend	Apr. 21	DP
BASF: No problem with artificial intelligence in application documents	Apr. 21	DP
BASF CEO: slump in demand bottoming out but no turnaround yet	Apr. 19	RE
BASF, Partners Start Up Electrically Heated Steam Cracking Furnace in Germany	Apr. 18	MT
Study: US companies outpace Europe and Asia in research spending	Apr. 18	DP
BASF: steam cracker in Ludwigshafen goes into operation	Apr. 17	CF
BASF Begins Operations of Prototype Metal Refinery for Battery Recycling	Apr. 17	MT
BASF: opens battery recycling plant	Apr. 16	CF
Climate-neutral natural gas?: Experts doubt the effectiveness of offsetting	Apr. 16	DP
BASF to present new recycling methods	Apr. 15	CF
Middle East escalation overshadows Scholz's visit to China	Apr. 14	DP
Scholz arrives in China for three-day visit	Apr. 14	DP
Companies open to applications with the help of AI	Apr. 12	DP
German Shares Downcast as ECB Hold Rates Steady	Apr. 11	MT
BASF Initiates Change Negotiations With Harjavalta, Finland, Workers Amid Permit Issues	Apr. 11	MT
BASF: plans redundancies at Harjavalta	Apr. 11	CF
Lack of permits: BASF jobs in Finland at risk	Apr. 11	DP

34% Chemicals		34% Europe

								3.20	3.30
							3.10
						3.00
3	2.50	2.60	2.70	2.80	2.90






	2.20
2

	1st Jan change	Capi.
BASF SE	+4.94%	48.78B
SHIN-ETSU CHEMICAL CO., LTD.	+9.55%	80.03B
DUPONT DE NEMOURS, INC.	-4.46%	30.85B
PIDILITE INDUSTRIES LIMITED	+8.67%	17.8B
BRENNTAG SE	-8.70%	11.66B
EASTMAN CHEMICAL COMPANY	+7.29%	11.38B
ASAHI KASEI CORPORATION	+3.37%	9.84B
SYENSQO SA/NV	-7.95%	9.83B
SRF LIMITED	+5.46%	9.31B
MITSUBISHI CHEMICAL GROUP CORPORATION	+5.28%	8.35B