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
44 5 6 BatteryBattery materialsmaterials drivingdriving Pushing the transition to a Reporting electromobilityelectromobility andand futurefuture sustainable economy growthgrowth
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: Digitalization: Share of population aged 60 +100% Rapid growth in 456 and over worldwide 2020 to 2050 volume of data zettabytes in 2030
Population growth: Climate change: Driven by the emerging +25% Required reduction of greenhouse gas –70% markets 2020 to 2050 emissions to achieve the 2°C goal by 2050
China the largest market: Electromobility: Share of global ~50% Growing demand for battery +25% chemical production by 2030 materials until 2030 CAGR
4 November 2020 | BASF Capital Market Story Sources: UN, IEA, UBS Foresight, BASF Unique position to deliver long-term value
Unique Verbund Industry-leading Strong and expanding Creating value to society Progressive concept innovation platform local presence in fast and contributing to a dividend policy growing Asian market sustainable development
. 6 Verbund sites . €2.2 billion R&D . 2 Verbund sites . Target CO2-neutral growth . Aim to increase the dividend globally expenditures in 2019 already until 2030 per share every year
. 361 additional production . ~11,000 employees . >100 production . Carbon management . Dividend of €3.30 per sites worldwide in R&D sites bundles measures to share for 2019 reduce greenhouse . 6.4 million metric tons . Sales of ~€10 billion . ~€14.2 billion1 sales gas emissions of CO2 prevented in 2019 with products in 2019 globally in 2019 launched during last . Achieve €22 billion in 5 years . Strong volume and Accelerator sales by 2025 earnings development (2019: €15.0 billion) of BASF in Greater China
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
2 Grow CO2-neutrally until 2030 (compared with baseline 2018) Achieve €22 billion in Accelerator sales by 2025
1 Return on capital employed (ROCE) is a measure of the profitability of our operations. We calculate this indicator as the EBIT generated by the segments as a percentage of the average cost of capital basis 6 November 2020 | BASF Capital Market Story 2 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 Reduce the worldwide lost-time injury rate per 200,000 working hours to ≤ 0.1 by 2025 working hours to ≤ 0.1 by 2025
Introduce sustainable water management at all production More than 80% of our employees feel that at BASF, sites in water stress areas and at all Verbund sites by 2030 they can thrive and perform at their best
Increase the proportion of women in leadership positions with disciplinary Cover 90% of our relevant spend1 with sustainability evaluations by 2025 responsibility to 30% by 2030 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 Agricultural Performance Solutions Materials, Monomers Agricultural Solutions
Chemicals Petrochemicals, Intermediates 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 16% 20% 14% 22% 10% 13%
EBIT bsi 20191 €0.8 billion €1.0 billion €0.8 billion €0.7 billion €0.8 billion €1.1 billion Integrated offering Advanced Additives Surface modification Consumer of crop protection, Verbund Core theme materials platform platform ingredients seeds & traits, digital Crop protection, Improved or Applications, Battery materials, Biotechnology, Formulations seeds & traits, Innovation focus new processes biomaterials surface effects formulations digital farming
Capex relevance
M&A relevance
Bio-based More Low-emission Bio-based and Better ChemCyclingTM Sustainability materials 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
Technologies . Leverage technological advantages and innovation across all segments . 6 integrated Verbund sites worldwide
. 6.4 million metric tons of CO2 emissions prevented globally Verbund in 2019 Production Digitalization . Harvest the advantages offered Value Chains by digitalization across BASF . Ensure competitive supply of key raw materials and products to all segments
. 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
Sablona
South America, Africa, Middle East Regional centers Sales (million €) 5,338 Selected sites EBIT (million €) 302 Verbund sites Employees 7,486 Planned Verbund site 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 reclassification of income from non-integral companies accounted for using the equity method to net income from shareholdings. 11 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 . Aim to increase dividend . Strengthen portfolio by . Share buybacks are budget 2020-2024 per share every year selective M&A opportunities part of our toolbox but . Around €2.1 billion R&D . Strong balance sheet while maintaining price are currently not being expenditures annually supports dividend policy in discipline considered times of slower free cash . Focus the portfolio through flow generation driven by continued pruning weak macro environment 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% 5% Other1 35% Growth projects in 1% South America, Africa Asia Pacific2 and 22% Other (Infrastructure, R&D) Middle East battery materials 19% North America 75% 5% Agricultural Solutions 9% Nutrition & Care 12% Surface Technologies 41% Asia Pacific 50% 5% Industrial Solutions
13% Materials
25% 65% Investments 34% Chemicals 34% Europe in ongoing business
0% 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 Key facts . €2.2 billion R&D expenditures in 2019 Corporate research Chemicals . R&D expense to sales ratio ~4% 19% 5% . ~11,000 employees in R&D Materials . ~1,000 new patents filed in 2019 9% . Research Verbund: Our 8 Academic Research Industrial Solutions Agricultural Alliances are complemented by cooperations with €2,158 million 9% Solutions ~300 universities and research institutes 41% Surface Technologies . 2019: Sales of ~€10 billion with products launched 10% during last 5 years Nutrition & Care . Achieve €22 billion in Accelerator sales1 by 2025 7% . 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 € Dividend policy . Aim to increase the dividend per share 3.20 3.30 3.10 3.00 every year 2.90 3 2.80 2.70 2.60 2.50 Key facts 2019 2.20 . Dividend of €3.30 per share, an increase of 2 10 euro cents compared to 2018 . Total dividend payment of €3.0 billion fully covered by free cash flow of €3.7 billion 1 . Dividend yield of 4.9% based on the share price at year end 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%
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 €57 billion – €58 billion EBIT before special items €3.0 billion – €3.3 billion Return on capital employed (ROCE) 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
44 5 6 BatteryBattery materialsmaterials drivingdriving Pushing the transition to a Reporting electromobilityelectromobility andand futurefuture sustainable economy growthgrowth
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 Our customers will experience Digitalization – leverage across the company a new BASF
Portfolio – businesses with customer relevance
People – drive high performance
19 November 2020 | BASF Capital Market Story Transforming into an agile and customer-focused organization
Action fields Progress report
On October 1, 2019, we completed the Embedding to bring services closer to customers embedding of around 20,000 employees
Since January 1, 2020, the lean corporate center with ~1,000 Streamlined headquarters and services employees is operating. In addition, the Global Business Services unit was established
Regions with sharpened roles to increase Regions with strengthened customer focus, customer focus supporting and enabling the businesses locally
Simplification measures on track: currently Simplification of process landscape ~200 projects ongoing, thereof >140 implemented
People working in an entrepreneurial Empowering and incentivizing employees to take performance culture 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
2019 actual 2020 2021 Annual EBITDA €0.6 billion ~€1.4 billion €2.0 billion contribution1
One-time costs2 €0.5 billion ~€0.3 billion €0.05 – €0.15 billion
Category Operational Measures focused on production, logistics and planning excellence Personnel cost savings: reduction of 6,000 positions targeted globally by end of 2020; Leaner structures around 10% of this reduction will likely be delayed into 2021, mainly due to the pandemic Innovation R&D cost reduction via focusing budgets
Simplification 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 services in areas such as finance, HR, environmental protection, health and safety, intellectual About BASF’s Global 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 solutions for BASF Group with the best possible cost-to-serve offer: Target picture - 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
BASF Acquisitions core business Divestitures . Functional crop care Selected transactions . Styrenics . Personal care and food ingredients 2010−today . Fertilizers . Omega-3 fatty acids . Natural gas trading and storage . Enzymes . Custom synthesis business . Battery materials . Textile chemicals . Specialty plastics . Polyolefin catalysts . Refinish coatings . Industrial coatings . Surface treatment . Leather chemicals . Seeds and crop protection . Water and paper chemicals . Polyamide business . Oil & gas . Construction chemicals
~€8.8 billion sales in emerging ~€28.7 billion sales in businesses with and innovation-driven businesses 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 DIC to acquire BASF’s Initial public offering (IPO) construction chemicals business pigments business of Wintershall Dea
. Sales 2019: ~€2.6 billion . Sales 2018: ~€1 billion . Sales 2018: ~€4.1 billion . BASF and Lone Star Funds signed . BASF and DIC reached an agreement . Merger took place on May 1, 2019 agreement in December 2019 on the acquisition of BASF’s pigments . Realization of synergies on track . 1 business in August 2019 Purchase price of €3.17 billion . Integration expected to be completed . 1 . Transaction closed on September 30, Purchase price of €1.15 billion in January 2021 . 2 2020 Closing is expected in Q1 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 Financial acquisition criteria
We want to acquire businesses which … We want to acquire businesses which …
. create more value as part of BASF’s Verbund . provide a return on capital employed above the . help achieve relevant market positions WACC after full integration into BASF Group . . drive innovation or technological differentiation are EPS accretive by year three at the latest . . enable new and sustainable business models 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
44 5 6 BatteryBattery materialsmaterials drivingdriving Pushing the transition to a Reporting electromobilityelectromobility andand futurefuture sustainable economy growthgrowth
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$ 1 CAGR +2.8% Middle East, Africa Global GDP CAGR +2.6% 4% (CAGR +3%) Middle East, Africa Europe 4% 15% (CAGR +1%) Europe South America Greater 17% 2% (CAGR +2%) China South America 43% 2019: ~4,000 3% Greater China 2030: ~5,500 ~50% (CAGR +4%) North America North America 16% 14% (CAGR +2%)
Rest of Asia Pacific 15% 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
BASF Group in Asia Pacific (2019) . BASF is present in 19 markets . >100 production sites1 Nanjing . ~125 sales offices2 Hong Kong . 18,634 employees3
1 Zhanjiang . ~€14.2 billion sales4 Kuantan . ~€1.1 billion EBIT Kuala Lumpur
1 BASF investigates establishment of a second Verbund site in China Regional center 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% Verbund sites 3 As of December 31, 2019 Selected sites 4 Sales by location of customer. Only includes sales from BASF entities fully consolidated according to IFRS 10/11 R&D/Technical centers Shared Services Center
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% 5% Other 100% 2% Australia, New Zealand 5% Agricultural Solutions 9% South Korea 11% Nutrition & Care 11% South Asia 75% 75% 13% Japan 25% Surface Technologies 13% ASEAN 50% 50% 17% Industrial Solutions
25% 25% Materials 25% 52% Greater China
12% Chemicals 0% 0% 2019 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 Strong earnings development of BASF chemical production during the last five years in Greater China
Real chemical production growth1 (CAGR 2015-2019) EBITDA before special items EBITDA margin % million € before special items %
8 2,000 20
6 1,500 15
4 1,000 10
2 500 5
0 0 0 Global chemical Chemical Sales volumes of 2015 2016 2017 2018 2019 production production Greater BASF in Greater China China
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 Market characteristics billion US$ (base year 2015) billion US$ (base year 2015) . Around 115 million residents in 800 200 Guangdong province (2019) ~6.2% ~3.9% 600 CAGR 150 CAGR . GDP Guangdong (2019): 400 100 661 161 ~US$1,560 billion (to reach 200 50 GDP of South Korea soon) 0 0 . GDP growth until 2035: 5-6% p.a. 2019 2019 . Key customer industries: Largest automotive production, China Steady increase of private consumption3 # of motor vehicles built in Guangdong (1,000) billion US$ (base year 2015) transportation, consumer goods, (base year 2015) home and personal care, electronics 4,000 ~6.8% 600 ~5.4% CAGR 3,000 CAGR 450 . Chemical products are generally
2,000 300 560 Guangdong undersupplied from local production 3,120 1,000 150 Hong Kong 0 0 2019 2019 1 Real value added, manufacturing Guangdong 2 Real chemical production Guangdong; inferred by gross output/value added ratio for China 31 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
44 5 6 BatteryBattery materialsmaterials drivingdriving Pushing the transition to a Reporting electromobilityelectromobility andand futurefuture sustainable economy growthgrowth
33 November 2020 | BASF Capital Market Story Rise of e-mobility is net positive for chemicals demand per car
Internal Combustion Battery Electric Engine (ICE) Vehicle (BEV)
Emissions control Higher demand: Growth in battery materials more than and power generation + compensates some catalyst replacement Cathode Active Catalysts Material (CAM)
Higher demand: Engineering plastics Growth drivers: Flame retardant plastics, + battery housings and cable sheathing
Comparable demand: Coolants Growth areas: E-coolants and specialty fluids = Engine for e-mobility and autonomous driving Battery
Comparable demand: Coatings Growth areas: Coatings for battery housings and passive vehicle-temperature management =
34 November 2020 | BASF Capital Market Story BASF addresses the needs of the fast-growing e-mobility market
Heat management Charging infrastructure
Effective heat management can increase the range Safe and easy-to-use charging devices are vital of electric cars, as it reduces the energy drawn if electromobility is to become widespread. from the battery to heat and cool the vehicle. Components BASF materials Components BASF materials Charging stations Ultramid®, Ultradur® Chassis coatings Chromacool® Charging cables Elastollan®
Charging plugs Ultramid®
Charging inlet Ultramid®
Electric powertrain Battery
The electric motor and power electronics The battery pack is the heart of an electric car. To support are core components of an electric vehicle. next-generation battery technology, BASF is continuously BASF materials help customers to reduce improving its portfolio with new solutions. weight, increase design flexibility and enable Components BASF materials components and functions to be integrated safely. Battery cells CAM1 (HED™ product family), Components BASF materials N-methylpyrrolidone (NMP), Ethylene carbonate Electric motor Cellasto® Battery housing Oxsilan®, CathoGuard®, Ultramid® Power electronics Ultramid®, Ultradur® Battery bearings Cellasto® Battery cooling Glysantin®, Ultramid® High-voltage plugs Ultradur® HR, Ultramid® 35 November 2020 | BASF Capital Market Story 1 CAM = Cathode Active Materials BEVs and hybrids create superior growth opportunities in battery materials
Global vehicle production by engine type Market projections for 2030: million units . ~25 million electric vehicles built per year . 1,500-2,500 kt of CAM in electromobility 120 2.0% 20% 29% CAGR . €45-60 billion CAM market size CAGR 100 CAGR
80 Electromobility drives
60 battery materials growth ~25% CAGR 40
20
0 2020 2025 2030 2020 2030 BEV: Battery Electric Vehicles Hybrids: ICE + Battery ICE only
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
Cells Metal ore Metal salt 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 BASF’s targets and approach . HED™ Nickel Cobalt Manganese . Double the range of a midsize car Oxide (NCM) & Nickel Cobalt to 600 km Aluminum Oxide (NCA) . Double the battery lifetime . Own precursor and cathode active . Halve the size of the battery materials manufacturing . Reduce the charging time . Global footprint, R&D, technology to 15 minutes centers and production sites . Comprehensive IP portfolio and . Balance chemical composition close relationship with automotive industry . 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 Key facts
Metal mining Cathode active Battery . Regulation drives demand for recycling & refining material cell . OEMs will need recycling partners to establish closed loop approaches . Recycling provides sustainable and cost-efficient access to metals Metal Lithium-ion . BASF has proprietary and extraction battery differentiating technology along with expertise in recycling
Collection & dismantling Electric end-of-life battery packs car
39 November 2020 | BASF Capital Market Story BASF is a leading battery materials supplier with global production
2012 2022 2015 CAM precursor First CAM production production planned Foundation of BASF facility in Elyria, Ohio in Harjavalta, TODA Battery Materials Finland (BTBM), Japan
Targeted 2018 position In Second CAM production China facility in Battle Creek, Michigan; merged with 2022 Elyria, Ohio into BASF CAM production 2017 TODA America (BTA) 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 BASF further invests in Europe to Fortum, BASF, and Nornickel sign supply the battery materials market strengthen position in battery cooperation agreement on battery materials for electric vehicles recycling . BASF’s announced precursor plant will be . Schwarzheide, Germany as location for CAM . BASF intends to use recycled materials constructed in Harjavalta, Finland enabling production in Europe enabling the supply of from processes developed by the secure supply of locally-sourced nickel and ~400,000 electric vehicles per year cooperating companies in its planned cobalt . Production plant to use industry-leading Harjavalta, Finland facility . The new plant will utilize locally generated energy mix lowering CO2 footprint . The parties will foster production and use renewable energy sources, including hydro, . Part of BASF’s plans to establish a global of responsibly produced recycled raw wind and biomass presence with battery materials supply materials in the battery market . Start-up planned for 2022 . Start-up planned for 2022
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
44 5 6 BatteryBattery materialsmaterials drivingdriving Pushing the transition to a Reporting electromobilityelectromobility andand futurefuture sustainable economy growthgrowth
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 1 and converted to CO2 equivalents
. 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 . Since 1990, we have doubled our production volumes Indexed (1990 = 100) and cut our GHG emissions in halves; the emission intensity thus decreased by 75%, from 2.2 tons of CO2e per ton of Paris climate agreement 160 product to 0.6 tons of CO2e 140 Global GHG emissions
120 . 20 million tons of CO2e emissions by BASF Group in 2019 100 . 80 BASF business Low-hanging fruits have been harvested; fundamentally new growth technologies are needed to reduce emissions on a large scale 60 BASF GHG emissions 40 2030 target . We will grow our production volumes without adding further No increase of 20 1 GHG emissions CO2e emissions until 2030 (intensity to be reduced by 30%) 0 1990 1995 2000 2005 2010 2015 2020 2025 2030 . 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 . 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
Develop . BASF co-founded the World Economic Forum’s initiative breakthrough on Collaborative Innovation for Low-Carbon Emitting technologies Technologies in the Chemical Industry Shift power supply towards renewable energies . BASF further enhances transparency: We support the Further improve process recommendations of the Task Force for Climate-related and energy efficiency 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 1 Annual CO2e emissions in million tons
~3.3 ~0.3 . Carbon management research and Upstream Downstream development program: Verbund Verbund – breakthrough technologies for production of the steam cracker ~190 plants basic chemicals with highest CO2 emissions ammonia (accounting for approximately 70% of the CO2 hydrogen emissions of the chemical industry in Europe) incineration, ~0.5 +14 other plants – key role of electrification and fundamentally new sewage plant synthesis pathways – moving towards low-carbon chemical value ~3.9 chains Power / Steam
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: . One key challenge in cutting major emission sources in the BASF production Verbund is access to low cost,
energy-efficient CO2-free hydrogen. Water Methane . electrolysis pyrolysis Steam reforming requires only ~6 MWh for the chemical (CO2-free, 55 MWh) (CO2-free, ~10 MWh) reaction but emits approximately 10 metric tons of CO2 per metric ton of hydrogen. GHG efficiency GHG
. Water electrolysis is CO2-free but requires ~55 MWh of green electricity per ton of hydrogen produced for the Steam reforming entire process. (10 metric tons CO2, ~6 MWh1) . 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 1 for the chemical reaction Energy efficiency 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
Energy carrier Raw material H2 “Hydrogen the energy vector” “Hydrogen the chemical building block”
Substitution of Hydrogenated Energy storage Ammonia 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-carbon electricity-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
Digital solution calculates cradle-to-gate Scope 3 Scope 1 Product Carbon Footprints Extraction and raw materials BASF
Based on the total of direct process CO2 emissions, energy demand and scope 3
Scope 2 upstream CO2 emissions Energy purchase Carbon footprints for 45,000 BASF products in the global portfolio available in the course of 2021 Cradle-to-gate
52 November 2020 | BASF Capital Market Story From a linear to a more circular economy – BASF contribution: ChemCyclingTM
. Investments into Quantafuel (pyrolysis of mixed plastic Close the loop waste) and Pyrum (pyrolysis of end-of-life tires) and uptake supply agreements with both companies ChemCyclingTM . Agreement with New Energy for uptake of pyrolysis oil derived from end-of-life tires and for a joint feasibility study + can handle mixed plastic waste for adaption of technology to other plastic waste streams + produces virgin grade raw materials Plastic waste and end-of-life tires + replaces virgin are converted into liquid fossil resources feedstock and fed into BASF’s
+ CO2 emissions value chains prevented1 Linear economy
Landfill Incineration Littering Mechanical 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 . Portfolio segmentation: >50,000 specific product applications analyzed by 2019 (€51.9 billion in sales, Substantial sustainability 96.3% of relevant portfolio1) contribution in the value chain 28.9% . >12,000 Accelerators across all business segments
Meets basic sustainability . Accelerator margins on average ~6 percentage Sustainable standards on the market points above the rest of assessed portfolio Solution 61.9% . Goal: €22 billion of sales with Accelerator products Steering by 2025 (2019: €15.0 billion) Specific sustainability issues, actively addressed . Stronger integration in R&D pipeline, business strategies and M&A projects
Significant sustainability concern . We will stop selling Challenged products within identified and action plan developed maximum five years after classification 9.1% 0.1%
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 . 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 Pro-bono consultants − piloting in management accounting − making outcomes publicly available
Policy advisor Funding . 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
44 5 6 BatteryBattery materialsmaterials drivingdriving Pushing the transition to a Reporting electromobilityelectromobility andand futurefuture sustainable economy growthgrowth
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 20.0 16.0 12.0 18 8.0 17 15 4.0 4 4 0.0 (4) -4.0 (8) (8) (7) (6) (6) -8.0 -12.0 (20) -16.0 -20.0 -24.0 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%) (11%) (4%) (5%) 3% 0% 11% (19%)
relative (%) terms
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 EBIT before special items by segment Q3 2020 vs. Q3 2019 million € million € 1,056
20,000 1,200 900 14,556 274 201 581 15,000 (347) (873) 13,811 Agricultural Solutions (47)
Nutrition & Care (82) 600
Surface Technologies (6) 10,000 Industrial Solutions (19) 300
Materials (49)
5,000 Chemicals (205) 0
Other (67)
0 (300) Q3 2019 Volumes Prices Portfolio Currencies Q3 2020 Q3 2019 Q3 2020
Sales development
Q3 2020 vs. Q3 2019 (2%) 2% 1% (6%)
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 . corona pandemic Impairment: ~€1 billion
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 . in Germany to be closed by 2022 Impairment: ~€300 million
63 November 2020 | BASF Capital Market Story BASF Group Q3 2020: Key financial figures
Q3 2020 Q3 2019 Change € € % Sales 13,811 million 14,556 million (5) EBITDA before special items 1,542 million 1,980 million (22) EBITDA 1,044 million 2,259 million (54) EBIT before special items 581 million 1,056 million (45) 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 (33) Cash flows from operating activities 2,100 million 1,998 million 5 Free cash flow 1,364 million 1,072 million 27
Sales development Volumes Prices Portfolio Currencies
Q3 2020 vs. Q3 2019 (2%) 2% 1% (6%)
64 November 2020 | BASF Capital Market Story Cash flow development Q1 – Q3 2020
Q1 – Q3 2020 Q1 – Q3 2019 million € million € Cash flows from operating activities 3,312 4,317 Thereof Changes in net working capital (1,043) (177) Miscellaneous items 739 (6,849) Cash flows from investing activities (674) 47 Payments made for property, plant and equipment Thereof (2,031) (2,648) and intangible assets Acquisitions / divestitures 1,452 2,254 Cash flows from financing activities 778 (4,745) Thereof Changes in financial and similar liabilities 3,913 (1,730) Dividends (3,139) (3,016) Free cash flow 1,281 1,669
65 November 2020 | BASF Capital Market Story Strong balance sheet
Balance sheet September 30, 2020 vs. December 31, 2019 billion € . Total assets stable at €87.0 billion . Noncurrent assets decreased by 87.0 87.0 87.0 87.0 €4.0 billion, mainly due to the non- cash-effective impairments and currency (translation) effects 34.6 42.4 Equity . Current assets increased by 51.9 Noncurrent 56.0 €4.1 billion, mainly due to higher cash assets and cash equivalents and higher other receivables 21.6 Financial debt 18.4 . Equity ratio on September 30, 2020: Inventories 10.5 1.3 Liabilities of 39.8% 11.2 1.0 disposal groups1 Accounts 9.3 receivable 9.1 29.5 Other assets 5.1 25.2 Other Disposal groups1 4.3 3.8 liabilities 4.0 Liquid funds 5.9 2.9 Sept. 30, 2020 Dec. 31, 2019 Sept. 30, 2020 Dec. 31, 2019
66 November 2020 | BASF Capital Market Story 1 BASF’s pigments business and construction chemicals business Chemicals
Sales Q3 2020 vs. Q3 2019 EBIT before special items million € million €
Petrochemicals 251 1,169 250 (32%) Intermediates 174 150 614 115 (12%) €1,783 46 (27%) 50
(2) (50) Q3 Q4 Q1 Q2 Q3 2019 2020
Sales development Volumes Prices Portfolio Currencies
Q3 2020 vs. Q3 2019 (11%) (13%) 0% (3%)
67 November 2020 | BASF Capital Market Story Materials
Sales Q3 2020 vs. Q3 2019 EBIT before special items million € Performance million € Materials 500 1,410 (6%) Monomers 300 266 1,247 209 217 (10%) €2,657 80 (8%) 100
(100) (80) Q3 Q4 Q1 Q2 Q3 2019 2020
Sales development Volumes Prices Portfolio Currencies
Q3 2020 vs. Q3 2019 (4%) (7%) 7% (4%)
68 November 2020 | BASF Capital Market Story Industrial Solutions
Sales Q3 2020 vs. Q3 2019 EBIT before special items million € million € 300 Dispersions & Pigments 273 1,200 Performance (10%) 205 200 186 Chemicals 163 644 €1,844 (19%) 108 (13%) 100
0 Q3 Q4 Q1 Q2 Q3
2019 2020
Sales development Volumes Prices Portfolio Currencies
Q3 2020 vs. Q3 2019 (5%) (5%) 0% (3%)
69 November 2020 | BASF Capital Market Story Surface Technologies
Sales Q3 2020 vs. Q3 2019 EBIT before special items million € million € 300 Catalysts 236 220 206 200 3,310 200 +38% 100 Coatings €4,142 832 0 (11%) 25% (100) (151) (200) Q3 Q4 Q1 Q2 Q3
2019 2020
Sales development Volumes Prices Portfolio Currencies
Q3 2020 vs. Q3 2019 3% 29% 0% (7%)
70 November 2020 | BASF Capital Market Story Nutrition & Care
Sales Q3 2020 vs. Q3 2019 EBIT before special items million € million € 300 254 256 Nutrition & Health Care Chemicals 225 489 938 (2%) (8%) 200 143 €1,427 126 100 (6%)
0 Q3 Q4 Q1 Q2 Q3 2019 2020
Sales development Volumes Prices Portfolio Currencies
Q3 2020 vs. Q3 2019 0% (1%) 0% (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 1,474 (64%) (6%) 50
1,000 26
0 0 Q3 2019 Q3 2020 Q3 2019 Q3 2020
Sales development Volumes Prices Portfolio Currencies
Q3 2020 vs. Q3 2019 11% 2% 0% (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 (95) (91)
Costs of corporate headquarters (53) (57) Foreign currency results, hedging and other measurement effects (15) (15) Other businesses 21 53
Special items (408) 330
EBIT (645) 160
73 November 2020 | BASF Capital Market Story