BASF : Virtual UBS Swiss/German Field Trip

BASF Capital Market Story

Dr. Hans-Ulrich Engel, Chief Financial Officer

Virtual UBS Swiss/German Field Trip

November 27, 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		Progressive
and contributing to a
	dividend policy
sustainable development

• Target CO2-neutral growth ▪ Aim to increase the dividend

until 2030	per share every year
▪ Carbon management	▪ Dividend of €3.30 per
bundles measures to	share for 2019
reduce greenhouse
gas emissions

• Achieve €22 billion in Accelerator sales by 2025
  (2019: €15.0 billion)

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 CO -neutrally until 2030 (compared with baseline 2018)		Achieve €22 billion in Accelerator sales2 by 2025
2

	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
Industrial	Technologies
Catalysts, Coatings
Solutions
Dispersions & Pigments,
Performance Chemicals
Materials
Performance
Materials, Monomers

Chemicals

Petrochemicals,

Intermediates

Nutrition

& Care

Care Chemicals,

Nutrition & Health

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	Surface	Nutrition	Agricultural
Solutions	Technologies	& Care	Solutions

% of sales 20191

EBIT bsi 20191

Core theme

Innovation focus

Capex relevance

M&A relevance

16%

€0.8 billion

Verbund

Improved or new processes

20%

€1.0 billion

Advanced materials

Applications, biomaterials

14%	22%	10%	13%
€0.8 billion		€0.7 billion		€0.8 billion		€1.1 billion
						Integrated offering
Additives		Surface modification		Consumer		of crop protection,
platform		platform		ingredients		seeds & traits,
						digital
		Battery materials,		Biotechnology,		Crop protection,
Formulations				seeds & traits,
	surface effects		formulations
				digital farming

Sustainability ChemCyclingTM

Bio-based materials

More		Low-emission		Bio-based and		Better
from less		mobility		natural, traceability		with less

9	November 2020 | BASF Capital Market Story 1 Other (sales 2019: €2.9 billion, EBIT bsi 2019: €(581) million) not depicted on this slide

Our unique Verbund concept is one of BASF's greatest assets with multiple benefits strengthening the portfolio

• 6 integrated Verbund sites worldwide
• 6.4 million metric tons of CO2 emissions prevented globally in 2019

Production

Value Chains

• Ensure competitive supply of key raw materials and products to all segments

Technologies ▪ Leverage technological advantages and innovation across all segments

Verbund

		Digitalization
		▪ Harvest the advantages offered
		by digitalization across BASF
▪	Create customer relevance
Markets	through size and broad portfolio

10 November 2020 | BASF Capital Market Story

We operate close to our customers in all regions worldwide

North America				Europe				Asia Pacific
Sales (million €)	15,948		Sales (million €)	23,827		Sales (million €)	14,203
EBIT (million €)	692		EBIT (million €)	2,125		EBIT (million €)	1,082
Employees	19,355		Employees	72,153		Employees	18,634

South America, Africa, Middle East	Regional centers
			Selected sites
Sales (million €)	5,338
			Verbund sites
EBIT (million €)	302
			Planned Verbund site
Employees	7,486
			Selected research and
			development sites

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

Guidance on the use of cash - clear priorities

Organic	Progressive	Portfolio	Share
growth	dividend	upgrading	buybacks

• ~€23.6 billion capex budget 2020-2024
• Around €2.1 billion R&D expenditures annually

• Aim to increase dividend per share every year
• Strong balance sheet supports dividend policy in times of slower free cash flow generation driven by weak macro environment

▪ 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

12 November 2020 | BASF Capital Market Story

Investments in organic growth

• planned capex for 2020 reduced from €3.4 billion to €2.8 billion

Capex budget 2020-2024: €23.6 billion

100%		22%	Other (Infrastructure, R&D)
75%		5%	Agricultural Solutions
		9%	Nutrition & Care
		12%	Surface Technologies
50%		5%	Industrial Solutions
		13%	Materials
25%
		34%	Chemicals
0%

5% Other1

1% South America, Africa

Middle East

19% North America

41% Asia Pacific

34% Europe

35% Growth projects in Asia Pacific2 and battery materials

65% Investments

in ongoing business

By segment

By region

By type of investment

1 Alternative sites currently being investigated

13 November 2020 | BASF Capital Market Story 2 Mainly Verbund site Guangdong, China

Industry-leading innovation platform

R&D expenditures 2019

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

Key facts

• €2.2 billion R&D expenditures in 2019
• R&D expense to sales ratio ~4%
• ~11,000 employees in R&D
• ~1,000 new patents filed in 2019
• Research Verbund: Our 8 Academic Research Alliances are complemented by cooperations with ~300 universities and research institutes
• 2019: Sales of ~€10 billion with products launched during last 5 years
• Achieve €22 billion in Accelerator sales1 by 2025
• Peak sales potential of BASF's Agricultural Solutions innovation pipeline of >€7.5 billion between 2019 and 2029

14 November 2020 | BASF Capital Market Story 1 Accelerator products are products that make a substantial sustainability contribution in the value chain.

BASF with increased dividend for 2019

Dividend per share

€

										3.20	3.30
									3.10
							3.00
3	2.50	2.60	2.70	2.80	2.90
	2.20
2

1

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%

Dividend policy

• Aim to increase the dividend per share every year

Key facts 2019

• Dividend of €3.30 per share, an increase of
  10 euro cents compared to 2018
• Total dividend payment of €3.0 billion fully covered by free cash flow of €3.7 billion
• Dividend yield of 4.9% based on the share price at year end

15 November 2020 | BASF Capital Market Story 1 Dividend yield based on share price at year end

Outlook 2020 for BASF Group

Outlook 2020

Sales

EBIT before special items

Return on capital employed (ROCE)

€57 billion - €58 billion

€3.0 billion - €3.3 billion

0.0% - 1.0%

Underlying assumptions

• GDP growth: -5.0%
• Growth in industrial production: -5.0%
• Growth in chemical production: -2.5%
• Average exchange rate: US$1.15 per euro
• Average oil price (Brent crude): US$40 per barrel

16 November 2020 | BASF Capital Market Story

Measures to navigate BASF through the pandemic

• well positioned to benefit from market recovery

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

17 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

18 November 2020 | BASF Capital Market Story

We create chemistry for a sustainable future

and aspire to be the leading chemical company for our customers

Innovation - with impact

Sustainability - live our purpose

Operations - be the leader

Digitalization - leverage across the company Portfolio - businesses with customer relevance People - drive high performance

Our customers will experience a new BASF

19 November 2020 | BASF Capital Market Story

Transforming into an agile and customer-focused organization

Action fields

Embedding to bring services closer to customers

Streamlined headquarters and services

Regions with sharpened roles to increase customer focus

Simplification of process landscape

People working in an entrepreneurial performance culture

Progress report

On October 1, 2019, we completed the embedding of around 20,000 employees

Since January 1, 2020, the lean corporate center with ~1,000 employees is operating. In addition, the Global Business Services unit was established

Regions with strengthened customer focus,

supporting and enabling the businesses locally

Simplification measures on track: currently ~200 projects ongoing, thereof >140 implemented

Empowering and incentivizing employees to take ownership in their area of expertise

20 November 2020 | BASF Capital Market Story

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		~€1.4 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

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

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

~€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$

			Middle East, Africa
			4%
				Europe
Greater			17%
			South America
China
2019: ~4,000	3%
43%

North America 16%

Rest of Asia Pacific 15%

CAGR1 +2.8%	Middle East, Africa
Global GDP CAGR +2.6%
4% (CAGR +3%)

Europe 15% (CAGR +1%)

South America 2% (CAGR +2%)

Greater China	2030: ~5,500
~50% (CAGR +4%)

North America 14% (CAGR +2%)

Rest of Asia Pacific 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

1. BASF investigates establishment of a second Verbund site in China
2. 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%
3. As of December 31, 2019
4. 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

100%			5%	Other
			5%	Agricultural Solutions
			11%	Nutrition & Care
75%
			25%	Surface Technologies
50%			17%	Industrial Solutions
25%			25%	Materials
			12%	Chemicals
0%
	2019

Sales1 by sub-region in 2019: €14.2 billion

100%		2%	Australia, New Zealand
		9%	South Korea
		11%	South Asia
75%		13%	Japan
		13%	ASEAN
50%

25%	52% Greater China

0%

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	Large chemical production2
billion US$ (base year 2015)	billion US$ (base year 2015)
800	~6.2%		200		~3.9%
600		150
CAGR		CAGR
400	661		100		161
200		50
0			0
2019			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

Steady increase of private consumption3 billion US$ (base year 2015)

600	~5.4%
450	CAGR

transportation, consumer goods,

home and personal care,

electronics

▪ Chemical products are generally

2,000

1,000

3,120

300	560	Guangdong
150		Hong Kong

undersupplied from local production

0

2019

0

2019

	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®

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
80
60
40
20
0
2020	2025		2030
	BEV: Battery Electric Vehicles		Hybrids: ICE + Battery			ICE only

Market projections for 2030:

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

Electromobility drives

battery materials growth

~25% CAGR

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		2015
CAM precursor		Foundation of BASF
production planned
	TODA Battery Materials
in Harjavalta,
	(BTBM), Japan
Finland

	Targeted
	position In
	China
2022	2017
CAM production
planned in
Schwarzheide,	Tripled capacity at
Germany	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
80							BASF business
						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

1	BASF operations excluding the discontinued oil and gas business; includes other greenhouse gases according to
45 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

Develop breakthrough technologies

Shift power supply

towards renewable energies

Further improve process and energy efficiency

• We have established a carbon management that involves
• • 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

Costs and risks

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"

Substitution of		Energy storage		Ammonia		Hydrogenated
natural gas				products

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 recycling

Landfill Incineration Littering

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

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

▪ 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

▪ We will stop selling Challenged products within maximum five years after classification

Portfolio segmentation: >50,000 specific product

▪

Around 30% of BASF Group sales from sustainable solutions

• leveraging our innovation power

Percentage of sales 2019

28.9%

Sustainable

Solution

61.9% Steering

9.1% 0.1%

Substantial sustainability contribution in the value chain

Meets basic sustainability standards on the market

Specific sustainability issues, actively addressed

Significant sustainability concern identified and action plan developed

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	Acronal® MB - from biomass
flexible insulation material	and road deicing	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

BASF	Chemicals	Materials	Industrial	Surface	Nutrition	Agricultural	Other
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%

1. 13,811

Currencies Q3 2020

	(6%)

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

million €

1,056

1,200
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)

5

27

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

Q1 - Q3 2020

million €

3,312

(1,043)

739

(674)

Q1 - Q3 2019

million €

4,317

(177)

(6,849)

47

Thereof	Payments made for property, plant and equipment
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

87.0

87.0

87.0

					34.6	42.4	Equity
Noncurrent	51.9	56.0
assets
					21.6		Financial
						debt
						18.4
Inventories	10.5	11.2		1.3	1.0	Liabilities of
Accounts				disposal groups1
9.3
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

(12%)

(27%)

Sales development

Q3 2020 vs. Q3 2019

Petrochemicals 1,169 (32%)

Volumes



(11%)

EBIT before special items

million €

250	251
									174
150
					115
50
(50)		Q3				Q4		Q1
			2019

	Prices	Portfolio
	(13%)	0%

46

(2)

Q2Q3

2020

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)

Q2Q3

2020

Currencies

	(4%)

68 November 2020 | BASF Capital Market Story

Industrial Solutions

Sales Q3 2020 vs. Q3 2019 million €

Dispersions & Pigments

1,200

EBIT before special items

million €

300		273

Performance

(10%)

Chemicals	€1,844
644
(19%)	(13%)

200

100

205

108

186

163

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

0

Q3

Q4

Q1

2019

Prices		Portfolio
 (5%)	0%

Q2Q3

2020

Currencies

	(3%)

69 November 2020 | BASF Capital Market Story

Surface Technologies

Sales Q3 2020 vs. Q3 2019

million €

EBIT before special items

million €

Catalysts

300

206236220

200

3,310

+38%

Coatings€4,142

832	25%
(11%)

200

100

0

(100)

(200)
Q3		Q4	Q1
		2019

(151)

Q2Q3

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									254
225
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

Q2Q3

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%

26

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