Moving BASF to the next level – The importance of innovation Dr. Herbert Fisch Vice President BASF Hungária Kft. & Southeast Europe Budapest, 18th May 2012. BASF – The Chemical Company We create chemistry for a sustainable future Our chemicals are used in almost all industries We combine economic success, social responsibility and environmental protection. Sales 2011: €73,497 million EBIT 2011: €8,586 million Employees (as of December 31, 2011): 111,141 In 2011, BASF filed for around 1,050 new patents worldwide 6 Verbund sites and around 370 production sites Platzhalter für Bild 2 Structure of BASF’s segments Chemicals Inorganics Petrochemicals Intermediates Plastics Performance Products Performance Polymers Dispersions & Pigments Polyurethanes Care Chemicals Nutrition & Health Functional Solutions Catalysts Construction Chemicals Coatings Agricultural Solutions Crop Protection Oil & Gas Exploration & Production Natural Gas Trading Paper Chemicals Performance Chemicals 3 Demographic challenges set the stage for the future of the chemical industry Nine billion people in 2050 but only one earth Resources, Environment & Climate Food & Nutrition Quality of life Chemistry as enabler 4 BASF’s Strategy 2025 „We create chemistry for a sustainable Future” Ambitious targets for the future Growth Profitability Grow at least 2 percentage points above chemical production Sales of €115 billion in 2020 Earn a premium on cost of capital of at least €2.5 billion per year on average Thereof sales of €30 billion with innovations launched within last 10 years Double EBITDA compared with 2010 to €23 billion in 2020 Targets for environment, health & safety as well as best team complement financial targets 5 Stronger integration of sustainability into our business decisions Enable our customers to develop more sustainable solutions Creating value Connect – in our team and with society Deliver excellence in our operations Reducing risk 6 Our solutions for a sustainable future Megatrends drive growth & technology fields Resources, Environment & Climate Food & Nutrition Quality of life Growth fields* Customer industries Chemistry as enabler Transportation Construction Consumer Goods Health & Nutrition Electronics Agriculture Energy & Resources Batteries Heat management Enzymes Medical Organic Electronics Plant biotechnology Functional crop care Energy management Rare earth metals recycling Leightweight composites Heat management Wind energy Technology fields Water solutions Raw material change Materials, systems & nanotechnology White biotechnology *including growth fields still under evaluation 7 From Chemicals to Chemistry Shift of Innovation Focus 1960 1970 1980 1990 2000 2010 2020 Chemistry as key enabler for functionalized materials & solutions New molecules Improved applications Functionalized materials & solutions Deep understanding of customer value chains required Batteries, membranes ... From chemicals to chemistry 8 Innovation Meeting challenges, developing new business areas Research for the future: with our innovative products and processes, we provide sustainable solutions for global challenges. Expenditures for R&D circa €1.61 billion world leader in chemical industry Corporate Research Since 2005 increase of R&D expenditures by 50% Plastics Around 2,800 projects Strongest innovation power in the chemical industry (No.1 in the Patent Asset IndexTM) Sales target 2020: circa €30 billion from product innovations Chemicals 9% 8% Performance Products 21% Functional Solutions Agricultural Solutions circa €1.61 billion 23% 1% 12% 26% Oil & Gas 9 Growth and Technology Fields Growth fields Technology fields Water Solutions Raw Material Change Help our customers to implement solutions for water recycling and reuse, water savings and drinking water treatment Synthesis of formic acid and acrylates Batteries for Mobility Innovative insulation materials for buildings and Work on concepts for next generations of batteries (lithium-sulfur, lithium-air) Organic Electronics Material systems for OLEDs (focus on blue phosphorescent emitting materials) Materials, Systems & Nanotechnology cars to reduce energy consumption White Biotechnology Vitamin B2: Highly efficient biocatalytical production 1% 10 BASF Interdisciplinary Know-How Verbund Examples from our cooperation network 11 Connect – in our team and with society CHEMGENERATION: BASF Hungária launched an educational website celebrating the International Year of Chemistry jointly with the Hungarian Chemical Society (MKE) and MOL, Richter, sanofiaventis/Chinoin, TEVA Gyógyszergyár, TVK Update of CHEMGENERATION: FUTURE CITY game launched focusing on environmentally conscious thinking BASF will initiate a TEENS’ LAB roadshow with eight science universities and colleges in 2012 BASF opened its KIDS’ LAB in cooperation with the Museum of Transports 12 13 Our Values: CSR BASF Hungária Kft. CSR BASF acts responsibly in environment protection drastically reducing CO2 emission and investing heavily in green technologies BASF is active in Corporate Responsibility and charity In 2007 & 2008 BASF transferred 14 million HUF supporting the National Ambulance Service and the Association of Hungarian Diabetic Patients www.chemgeneration.com: BASF Hungária Kft. launched an educational website celebrating the International Year of Chemistry with the Hungarian Chemists’ Assotiation BASF opened its Kids’Lab in cooperation with the Museum of Transports Three pillars of our new innovation set-up to make R&D more effective and efficient 15 BASF business units in Hungary BASF Hungária Kft. BASF Poliuretán Hungária Kft. Agro Division Polyurethane Production Industry Division Construction Chemicals Division BASF’s „We create chemistry”Strategy puts focus on sustainable innovations Growth drivers: sustainability, innovation and investments Expansion of Functionalized Materials & Solutions Additional value from industry groups and cross-disciplinary innovation Technology and operational excellence in all businesses and regions Internationalization of organization according to market needs 17 Our purpose We create chemistry for a sustainable future Platzhalter für Bild 18 Our strategic principles We add value as one company We innovate to make our customers more successful Platzhalter für Bild We drive sustainable solutions We form the best team 19 Our Values: Brand BASF Hungária Kft. BASF’s brand value BASF Hungária does not sell simple products: it’s core value is supporting its customers & partners by systemintegrated solutions, BASF Hungária offers a problem-solution focused attitude Our core value is our unrivalled knowhow of our colleagues 2011 sales* and EBIT in the regions million € (Change to previous year in %) Europe 56% Sales 41,036 EBIT 5,668 +17% +9% North America +11% Sales 14,727 +19% EBIT 1,314 South America, Africa, Middle East +15% Sales 4,418 +166% EBIT 471 Sales BASF Group 73,497 20% 6% 18% Asia Pacific Sales 13,316 EBIT 1,133 +14% -11% *by location of company 21 Organization of the BASF Group Six business segments contain 15 divisions which bear the operational responsibility and manage 70 global and regional business units These in turn develop strategies for 76 strategic business units Regional divisions contribute to the local development of BASF’s business, help to exploit market potential and are responsible for optimizing the infrastructure for our businesses Three central divisions, five corporate departments and ten Competence Centers provide Group-wide services such as finance, investor relations, communications, human resources, research, engineering and site management 22 BASF’s segment – Oil & Gas As the largest German producer of oil and gas, we focus our exploration and production on oil- and gas-rich regions in Europe, North Africa, South America, Russia and the Caspian Sea region. Together with our Russian partner Gazprom, we are active in the transport, storage and trading of natural gas in Europe. Oil & Gas Exploration & Production Natural Gas Trading 23 BASF’s segment – Chemicals Chemicals Inorganics Petrochemicals Intermediates In the Chemicals segment, we supply products to customers in the hemical, electronics, construction, textile, automotive, pharmaceutical and agricultural industries as well as any others. We also ensure that other BASF segments are supplied with chemicals for producing downstream products. Our portfolio ranges from basic chemicals, glues and electronic chemicals for the semiconductor and solar cell industries, to solvents and plasticizers, as well as starting materials for detergents, plastics, textile fibers, paints and coatings, and pharmaceuticals. 24 BASF’s segment – Agricultural Solutions Agricultural Solutions Crop Protection Our crop protection products guard against fungal diseases, insects and weeds and they increase quality and secure crop yields. Our research in plant biotechnology concentrates on plants for greater efficiency in agriculture, healthier nutrition and for use as renewable raw materials. Research and development expenses, sales, earnings and all other data of BASF Plant Science are not included in the Agricultural Solutions segment; they are reported in Other. 25 BASF’s segment – Functional Solutions Functional Solutions Catalysts In the Functional Solutions segment, we bundle system solutions and innovative products for specific sectors and customers, in particular for the automotive, chemical and construction industries. Our portfolio comprises automotive and industrial catalysts, automotive and industrial coatings and concrete admixtures as well as construction systems such as tile adhesives and architectural coatings. Construction Chemicals Coatings 26 BASF’s segment – Performance Products Performance Products Dispersions & Pigments Care Chemicals Performance Products lend stability and color to countless everyday items and help to improve their application profile. Our product portfolio includes vitamins and food additives as well as ingredients for pharmaceuticals and for hygiene, home and personal care items. Other Performance Products improve processes in the paper industry, oil and gas production, mining and water treatment. They can also enhance the efficiency of fuels and lubricants, the effectiveness of adhesives and coatings, and the stability of plastics. Nutrition & Health Paper Chemicals Performance Chemicals 27 BASF’s segment – Plastics Plastics Performance Polymers Polyurethanes The Plastics segment includes a broad range of products, system solutions and services. We offer a number of engineering plastics for the automotive and electrical industries as well as for use in household appliances and sports and leisure products. Our styrenic foams are used as insulating materials in the construction industry and in packaging. Our polyurethanes are extremely versatile: As soft foams, for example, they improve car seats and mattresses, and as rigid foams they increase the energy efficiency of refrigerators. 28 Innovation Global Know-how Verbund Thanks to our close cooperation with numerous partners from science and business worldwide, we have created an international and interdisciplinary Know-how Verbund. Science Relations and Innovation Management Approx. 10,100 employees in research and development worldwide Science Relations and Innovation Management Universities Research institutions Research Verbund with about 1,950 cooperations Process Research & Chem. Engineering Biological & Effect Systems Research High-tech joint ventures BASF Research Verbund Advanced Materials & Systems Research Plant Science Partners in industry BASF Future Business 29 Our solutions for a sustainable future Innovation process to identify growth fields 30 BASF has the strongest patent portfolio in the chemical industry 31