We create chemistry for a sustainable future Stephan Kothrade President, Greater China and Functions Asia Pacific Shanghai, March 8, 2018
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 the Opportunities and Risks Report from pages 111 to 118 of the BASF Report 2017. BASF does not assume any obligation to update the forward-looking statements contained in this presentation above and beyond the legal requirements. 2 March 2018 Deutsche Bank Field Trip, Shanghai
Agenda 1 2 At a glance: BASF in Asia Pacific and China Innovating to fuel growth in Asia Pacific 3 March 2018 Deutsche Bank Field Trip, Shanghai
BASF is growing in and with Asia Pacific 1890 First business contact in India 1966 First production in China 1989 Business started in Malaysia 2005 Inauguration of Nanjing Verbund site 2012 Inauguration of Shanghai Innovation Campus 2015 Inauguration of Chongqing MDI plant 1850s 1950s 1970s 1990s 2010s 1885 First delegate in China 1954 First business contact in South Korea 1982 Ulsan site started in South Korea 1988 First production in Japan 2001 Inauguration of Kuantan Verbund site 2014 Inauguration of Dahej site 2017 Inauguration of Mumbai Innovation Campus 4 March 2018 Deutsche Bank Field Trip, Shanghai
BASF in Asia Pacific 2017 BASF is present in 18 markets ~100 production sites * Nanjing Hong Kong ~125 sales offices * 18,256 employees ** Kuantan ~ 14.3 billion sales *** Kuala Lumpur Regional center Verbund sites Selected sites R&D/Technical centers Shared Services Center ~ 2.2 billion EBIT * Only selected sites and offices are depicted on this chart. Site and office numbers refer to companies of significant size where BASF holds a stake greater than 50%. ** As of December 31, 2017. *** Sales by location of customer. 5 March 2018 Deutsche Bank Field Trip, Shanghai
BASF s performance in Asia Pacific Sales* (billion ) 15 10 5 0 2.0 12.5 12.4 12.3 12.3 2012 2013 2014 2015 2016 2017 EBIT (billion ) 14.3 12.2 Developments in 2017 2.2 Considerable sales growth across all sub-regions and business segments, driven by higher prices and volumes Significant increase in earnings, led by the Chemicals segment Strong underlying demand across most sectors and markets 1.0 0.9 0.8 0.7 0.4 1.1 0.0 2012 2013 2014 2015 2016 2017 * By location of customer 6 March 2018 Deutsche Bank Field Trip, Shanghai
BASF in Asia Pacific: Balanced portfolio Sales* by segment in 2017 (billion ) Sales* by sub-region in 2017 (billion ) Agricultural Solutions 4% Other 3% South Korea 8% Australia, New Zealand 3% 14.3 billion Chemicals 28% South Asia 11% 14.3 billion Japan 12% Functional Materials & Solutions 36% Performance Products 29% ASEAN 15% Greater China 51% *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 7 March 2018 Deutsche Bank Field Trip, Shanghai South Asia: ASEAN: India, Pakistan, Bangladesh, Sri Lanka Singapore, Philippines, Vietnam, Thailand, Indonesia, Malaysia, Myanmar
We participate in innovative and growing markets Estimated CAGR 2015 2020 for selected industries, Asia Pacific 6.7% 4.9% 4.4% Electronics Consumer Products Construction 3.1% 2.9% Agriculture Transportation 8 March 2018 Deutsche Bank Field Trip, Shanghai Source: BASF
China is the third largest market for BASF globally China nominal GDP growth 2017: 6.9% Heilongjiang China chemical production 2020: US$1.7 trillion; around 70% of Asian real chemical production Xinjiang Tibet GDP growth rate 2017: 9% 6.9% <9% < 6.9% Qinghai Sichuan Yunnan Inner Mongolia Beijing Tianjin Hebei Ningxia Shanxi Shandong Gansu Shaanxi Henan Hainan Liaoning Jiangsu Hubei Anhui Shanghai Chongqing Zhejiang Jiangxi Hunan Guizhou Fujian Guangxi Guangdong Jilin Initiatives such as One Belt One Road and Made in China 2025 expected to boost growth and innovation More stringent enforcement of laws related to protection of the environment Chemistry will enable innovations in downstream industries Source: National Bureau of Statistics and provincial bureaus of statistics, P.R. China 9 March 2018 Deutsche Bank Field Trip, Shanghai
Greater China BASF s extensive network guarantees access to major local markets Mainland China, Hong Kong, Taiwan 25 major wholly-owned subsidiaries Jilin 7 joint ventures Xinjiang Beijing Tianjin Liaoning 25 production sites Shandong Jiangsu 24 sales offices Legend *** Asia Pacific headquarters Greater China headquarters R&D and Technical Centers Verbund site Production site Sales office Shanghai Sichuan Anhui Chongqing Zhejiang Fujian Taiwan Guangdong Guangxi Hong Kong 8,982 employees * ~ 7.3 billion sales ** in 2017 (excl. BASF-YPC, Nanjing) * As of December 31, 2017 ** By location of customer *** Some sites are not shown due to scale. 10 March 2018 Deutsche Bank Field Trip, Shanghai
Sustainability in China: dialogue and partnerships with stakeholders BASF sets standards for occupational and process safety distribution safety environmental protection and promotion of sustainability along the value chain BASF actively engages via industry associations regular stakeholder dialogues, including NGOs community advisory panels publication of integrated annual reports encompassing economy, society and environment, since 2009 11 March 2018 Deutsche Bank Field Trip, Shanghai
Agenda 1 2 At a glance: BASF in Asia Pacific and China Innovating to fuel growth in Asia Pacific 12 March 2018 Deutsche Bank Field Trip, Shanghai
R&D in chemistry lays the foundation for future innovation Synthetic dyes Fertilizers Plastics / foams Health care & nutrition, crop protection Systems 1930 1993 1900 1950 2000 Polystyrene 1934 Magnetic tape 1949 U46 herbicide Opus fungicide 1996 Strobilurine fungicide 2008 HPPO 2015 Slentite 2016 Maglis 1869 Alizarin 1897 Indigo 1901 Indanthrene blue 1913 Ammonia 1923 Methanol 1936 Buna 1937 Polyethylene 1951 Styropor 1963 Vitamin A 1974 Basagran herbicide 1980 Citral 1990 2006 Vitamin Ecovio B2 1998 Neopor 2013 Infinergy DroughtGard FWC TM Four-Way- Conversion Catalyst 2011 Xemium fungicide 13 March 2018 Deutsche Bank Field Trip, Shanghai
Need for quick adaption to the fast changing R&D environment Academic research broadens Globalization of R&D Chinese competitors leverage R&D Start-ups drive technology Technological progress accelerates Battle for talent intensifies Digitalization in R&D Open innovation 14 March 2018 Deutsche Bank Field Trip, Shanghai
Globalization of R&D Asia Pacific: home to headquarters of BASF Advanced Materials & Systems Research Europe Ludwigshafen Process Research & Chemical Engineering Asia Shanghai Americas Research Triangle Park Asia 2016 10,000 FTE Europe Advanced Materials & Systems Research Asia Bioscience Research future Europe Effective January 2016, BASF established regional research hubs across the globe. 15 March 2018 Deutsche Bank Field Trip, Shanghai
Globalization of R&D Effective and efficient R&D for innovation in growth markets R&D Center Suwon Focus: Electronics R&D Center Amagasaki Focus: Electronics, Battery Materials Innovation Campus Shanghai Focus: Advanced Materials, Process Engineering, Environmental Catalysts Innovation Campuses Innovation Campus Mumbai Focus: Crop Protection, Specialty Chemicals Major R&D sites R&D locations 16 March 2018 Deutsche Bank Field Trip, Shanghai
Globalization of R&D A unique concept: Innovation Campus R&D employees Business community Media Shanghai 2012 145 million investment 600+ R&D employees from 15 nationalities Headquarters of Advanced Materials & Systems Research Government NGO Innovation Campus Customers Science & academia Investors Mumbai 2017 50 million investment 100+ R&D professionals Space for over 300 R&D professionals in the future Focus areas: crop protection, specialty chemicals 17 March 2018 Deutsche Bank Field Trip, Shanghai
Addressing specific market needs Success factors: identifying market trends, close interaction with customers and enhanced capabilities Reduced sound for chassis Better indoor air quality Super concentrated laundry detergent Waterborne coating system for minivans BASF solution: LASD * emulsions applied to chassis BASF solution: Low VOC acrylic dispersions for paints BASF solution: New polymer Sokalan HP 20 BASF solution: Coating system with differentiated performance Key contributions: Long lasting sound reduction * LASD: liquid applied sound damping Key contributions: Meets stricter regulations and growing consumer demand; added functionalities such as stain resistance Key contributions: First superconcentrated liquid detergent with enhanced whiteness properties Key contributions: Lean portfolio combining mono-coat and integrated paint systems 18 March 2018 Deutsche Bank Field Trip, Shanghai
Digitalization in R&D Digitalization in R&D: enabling new digital solutions for our businesses Data science Knowledge systems Scientific modeling By integrating digital technologies into BASF s everyday R&D operations we will boost effectiveness of research, increase efficiency and open up new innovation opportunities. Supercomputer QURIOSITY Effective performance of ~1.75 Petaflop Dramatically reducing simulation and modeling time from months to days 65 th place in the TOP500 list, the fastest computer in the chemical industry 19 March 2018 Deutsche Bank Field Trip, Shanghai
Digitalization in R&D Stain-resistant coating: faster market entry by digital engineering New stain-resistant coating for the furniture industry developed based on systematic data analysis Number of experiments reduced by factor 10 Challenge No suitable water-based white furniture coating with improved resistance against colored stains found via classical experiments Research Data analysis led to dedicated experiments Solution Newly developed formulation enabled accelerated market entry 20 March 2018 Deutsche Bank Field Trip, Shanghai
Open innovation Innovate with our partners: network for Asian Open Research (NAO) * Tsinghua University * Changchun Institute of Applied Chemistry * Beijing University of Chemical Technology * Kyoto University * Sichuan University * Seoul National University * The Chinese University of Hong Kong * Fudan University Zhejiang University * Universities with long time collaboration or at least 2 collaboration projects 21 March 2018 Deutsche Bank Field Trip, Shanghai
We innovate to fuel growth in Asia Pacific Globalization of R&D Digitalization in R&D Open innovation 22 March 2018 Deutsche Bank Field Trip, Shanghai