Chemicals – Performance

through chemical intelligence

BASF Segment Day

Chemicals
July 2008, London
1
 Disclaimer

This presentation may contain forward-looking statements. These

statements are based on current expectations, estimates and
projections of BASF management and currently available information.
They are not guarantees of future performance, involve certain risks and
uncertainties that are difficult to predict and are based upon
assumptions as to future events that may not prove to be accurate.

Many factors could cause the actual results, performance or

achievements of BASF to be materially different from those that may be
expressed or implied by such statements. Such factors include those
discussed in BASF’s Report 2007 on pages 106ff. We do not assume
any obligation to update the forward-looking statements contained in this
presentation.
1 | Chemicals

2 | Petrochemicals

3 | Inorganics

4 | Intermediates
 Chemicals – strong contribution to
BASF’s profitability

Sales EBIT
to third parties before special items*

Agricultural Agricultural
Solutions Oil & Gas Solutions
Oil & Gas
8%
Chemicals 6% 18% Chemicals
27%
16% Functional 30%
16% Solutions
9% Functional
17% 15% Solutions
11%
20%
Plastics
Performance Performance
Products Plastics Products

2007: €58 billion 2007: €6.3 billion*

(Incl. other: €6.6 billion (12%)) (Incl. other: €(361) million)

*excluding nondeductible oil taxes

 Positioned at the heart
of BASF’s Verbund

Supply the Verbund highly efficiently with competitive

and reliable raw materials

Utilize plants with additional third party business

Grow value-added products to reduce cyclicality

5
 Verbund is intelligence in chemistry

Ludwigshafen Propionic aldehyde Propanole

Propionic acid Raw
Vinylethers
Air Oxygen
Polystyrene
Ethanol amine Ethylenimin materials
styropor Diethanol amine Polymin
Natural gas Acetylene Styrene
Ethyl benzene C13-C15-alcohols Chemicals
Naphtha Ethylene
Segment
Ethylene oxide Glycole ethers Glyoxal
Propylene
C4-cut Oxo alcohols Lutensol-brands
SB-copolymer Plasticizers
Ammonia Polyisobutene Keropur
Phosphate Nitric acid Plurafac-brands
Potassium Fertilizers Butyrolactone Pyrrolidone
chloride
Nitrogen oxide N-Methylpyrrolidone
Tetrahydrofuran Poly tetrahydrofuran
Methanol
Formaldehyde POM
Methyl acrylate Ethylenediamine
Butanediol Trilon-brands
Methyl amines DMT
Vacuum residue Hydrogen Ultradur-brands
Neopentylglykol
Hydroxylamine Hexanediol
Hydrogen cyanide Ethylhexanol
Acrylic acid Acrylic acid ester Dispersions
Carbon oxide Oxo C4 Butyraldehydes Butylacetate
Formic acid Butanoles
Acetic acid
Carbon dioxide Carbon dioxide liqu. Carbon dioxide solid
Urea Urea-formaldehyde-
Melamine condensation products
Salt Chlorine Vinylchloride* Polyvinylchloride* PVC*
Propylene oxid Propyleneglycoles Separoles
Caustic soda
Na-nitrite, -nitrate Rongalites
Na-sulfites Rongales
Sulfur Na-salts of Na-bisulfites
Sulfur dioxide Sulfuric acid Blankites
Hydrosulfites Lutinol E * Ludwigshafen only,
Benzene Sulfuric acid
Textil chemicals AH-salts within JV
Cyclohexane Adipic acid Polyamides
Caprolactam
O-xylene PSA
Strong positions across
chemical spectrum

Petrochemicals Inorganics Intermediates

• Cracker products • Inorganic • Amines

• Industrial gases chemicals • Butanediol
• Alkylene oxides • Inorganic and derivates
and glycols specialties • Polyalcohols and
• Plasticizers • Electronic specialties
materials • Acids and special
• Solvents
• Glues and resins intermediates
 Balanced portfolio of internal and
third party customers

Supply driven Market driven

• Cracker products Intersegmental • Plasticizers

sales
• Industrial gases • Solvents
• Alkylene oxides • Amines
and glycols • Butanediol
• Inorganic 34% 66% and derivates
chemicals, • Polyalcohols
Ammonia and and specialties
Methanol
Sales to • Acids and special
3rd parties intermediates
• Inorganic
specialties
2007 Chemicals consolidated • Electronic
sales: €14.1 billion materials
• Glues and resins
 Balanced regional and industry
portfolio

by region by industry

South America, Africa, Middle East

Chemical
3% Others Industry
Asia
27% 22%
20%
Europe
45%
13% Plastics
5% & Rubber
Automotive
32% 5%
Textiles 7% 11%
10%
Wood Petroleum
North America & Coal
products Computer &
Electronics

2007 Chemicals sales to third parties: €9.4 billion

 Relentless focus on operational
excellence drives profitability

Index BASF’s “asset right”

strategy:
300 300 • High capacity utilization
• Integration into Verbund
• Rationalization of older
200 200
plants
• Investments into state-
of-the-art technologies
100 100
• Consequent economy-
of-scale investments
0 0 • Increasing share of
2001 2002 2003 2004 2005 2006 2007 specialties
• Competitive raw
Fixed costs indexed Sales indexed EBITDA material sourcing
(including depreciation indexed
and amortization)
 A challenging environment
in cracker products

Ethylene 2008-12 • Global demand

growth requires
Americas Europe Asia incl. ME and Afr. +6 million t/a ethylene
2007 40.5 M t 36.0 M t 30.3 M t 27.8 M t 53.9 M t 50.2 M t
• New capacities
2012 40.4 M t 36.1 M t 31.2 M t 28.6 M t 87.3 M t 79.1 M t
announced of
7 million t/a ethylene
(>50% in ME/Afr.),
• Global growth of
prosperity and of
energy markets will
quickly absorb
additional capacities
Capacity Demand Capacity Demand Capacity Demand starting 2012

Capacity 2007 Demand 2007

Additional capacity 2008-2012 Additional demand 2008-2012
 Possible impact of cracker margin
decline on BASF is limited
CMAI cracker margin outlook
in $/t • Forseeable margin
700 squeeze 2008-2011 for
cracker products
600
• Margin at risk for BASF
500 is limited
- Net effect: €400
400
million for BASF
300
Group without
Oil&Gas (~5% of
200 BASF EBIT)
100 • Smart product spectrum
reduces impact of
0
margin decline on BASF
-100
performance
2008

2009

2011

2013

2016
2010

2012

2014

2015

2017
2001

2004

2006
2000

2002

2003

2005

2007

Europe South East Asia North America

Source: CMAI; lines March 2008, dots June 2008

 Growth of Chemicals mainly based
on volume increases

In billion € Changes since 2001:

• New Verbund sites in

12
+ 48 % - 32 % Nanjing, Port Arthur,
+ 108 %
Kuantan
10
+13 % • PolyTHF in Caojing
+79 %
8
• Numerous
debottleneckings
6
• Acquisitions in
4
electronic chemicals,
plasticizers etc.
2 • Sale of Ethane cracker
in North America
0
• Consistant restructuring
Sales 2001 Volumes Portfolio Prices Currencies Sales 2007
in butanediol, alcohols,
solvents and plasticizers
 Driving future growth

Strengthen position Active portfolio Accelerate

in growth markets optimization innovation
• Maintain profitability • Acquisitions in leading • Innovation pipeline
with strong value technologies and filled with 200
chains and technology growth markets promising projects
leadership (50% product
• Closure and / or
innovation, 50%
• Extend into new divestiture of process innovation)
products: Electronic underperforming
• R&D spending
materials, specialties businesses
average 2008-2012:
• Extend into growth • Strengthen and expand €140 million p.a..
market Asia partnership portfolio
• Optimize supply (e.g. Sinopec/Nanjing,
to Verbund IBM/electronic
materials)
• Capex budget
2008–2012:
€2.1 billion
 Balancing supply with demand
through innovation

Global position 2007

high Benzene
Expanding the feedstock basis
to take advantage of market fluctuations
Benzene e.g. Benzene from natural gas
BASF captive demand

Propylene
Propylene Ethylene
Balancing production for captive supply
Ethylene and broadening of feedstock base
e.g. Fischer-Tropsch to Olefins

Toluene Raffinate
low
Raffinate II Feeding our value chains with
alternative raffinate supply
low high e.g. n-butenes from butane
BASF own production
 Broadening our feedstock base

Today: Cracker technology

Fixed
Crude oil Naphtha composition BASF Verbund
of olefins

Tomorrow: direct Fischer-Tropsch technology

Crude oil

Natural gas Flexible

Syngas composition BASF Verbund
of olefins
Coal

Renewables
 Changing energy markets create
new demand

Life cycle of technologies • Increase of global

primary energy demand
for energy supply from 84 billion to
128 billion boe in 2030*
BASF R&D focus Hydro
Gas
Other markets
Oil • Target: Develop
Coal resource efficient
Nuclear materials to enable
Batteries systems that meet
Wind demand for portable
and sustainable
Photovoltaic energy supply
Biomass
Biofuels
Geothermal
Fuel cells
Thermoelectric
Marine

Embryonic Growth Mature

* Source IEA 2006

 New chemicals for high growth
energy markets

Time to market Application Development

In development In launch partner

Customers in Residential,
Fuel Cells
portable, back-up, automotive

Thermoelectrics Automotive Fraunhofer Institute

Organic Photovoltaik Residential Bosch, Heliatek

Lithium Ion Batteries Automotive Bosch, VW

OLED Technology Lighting Philips, Osram

System market value by 2020: €50 billion

 Driving future growth

2007 2015
• Sales to 3rd parties of • Best in class in
€9.4 billion operational excellence
• EBIT after cost of capital • Solidly balanced portfolio
of €1,358 million in major global markets
• Broadened feedstock
technology
• Innovative chemicals for
global megatrends
• Profitable growth above
the respective market
growth
• Earning a premium on
cost of capital

19
1 | Chemicals

2 | Petrochemicals

3 | Inorganics

4 | Intermediates
 Petrochemicals –
part of BASF’s balanced portfolio

Agricultural Oil & Gas

Solutions

18%
6%
Chemicals 16%

9.8% Functional
16%
Solutions
Petrochemicals
€5.7 billion

17%
15%
Plastics
Performance
Products

2007 Sales to third parties: €58 billion

(incl. other: €6.6 billion (12%))
 Petrochemicals –
the start of BASF’s value chains

Supply driven Market driven

Cracker Products
• Ethylene Alkylene oxides
Glycols
• Propylene • Ethylene oxide
• Ethylene glycol
• Butadiene • …
• Raffinate • … Value
• Benzene chains
• … of the
Alcohols & BASF
Solvents Verbund
• Butanols
• 2-Ethylhexanol
Industrial gases
• Isononanol
• …
• 2-Propylheptanol Plasticizers
• ... • DEHP
• DINP, DINCH
• DPHP
• ...
 Petrochemicals is the global integrator
at all BASF Verbund sites

Capacities of Verbund
sites 2008 in kt/a

Antwerp
Antwerp Ludwigshafen Ludwigshafen
• Cracker products: 2400 • Cracker products: 1500
Port Nanjing
• Oxo-Alcohols: - • Oxo-alcohols: 700
• Plasticizers: - Arthur/ • Plasticizers: 200
Freeport/ Kuantan
• EO/MEG: 500 Geismar/ • EO/MEG: 300
• Industrial gases: 100 Pasadena • Industrial gases: 4200

Port Arthur*/Freeport/
Geismar/Pasadena Kuantan* Nanjing*
• Cracker products*: 2400 • Cracker products: - • Cracker products: 1200
• Oxo-alcohols: 500 • Oxo-alcohols: 300 • Oxo-alcohols: 300
• Plasticizers: 200 • Plasticizers: 100 • Plasticizers: -
• EO/MEG: 200 • EO/MEG: - • EO/MEG: 300
• Industrial gases: 600 • Industrial gases: 200 • Industrial gases: 200

* Availability of volumes ex JV’s for BASF depending on contractual situation

 Petrochemicals grew faster
than the market

In billion € Internal Sales

CAGR 2001 - 2007:
Sales to third
parties • GDP growth: 3.2%

9.8 • Chemical production

10.0 9.6
growth*: 3.8%
8.2
• Petrochemicals BASF:
8.0
6.9 16.4%

6.0 5.4
4.9 * without pharma

4.0
4.0

2.0

0.0
2001 2002 2003 2004 2005 2006 2007
 Wird noch grafisch
optimiert

Sales by product group

Sales to third parties

Alcohols 2007:
& Solvents
• Commodities 99%
15%

15% Plasticizers
Cracker
Products
59% 1%
Industrial Gases
11%

Alkylene Oxides
& Glycols

2007 Sales to third parties

€5.7 billion
 Sales by region and industry

by region by industry

Rest of0%
World
Others Chemicals
2%
21% 21%
Europe
38% Agriculture
45% 4%
North Food & 5% 16%
Beverage Petroleum
America
7% & Coal
15% Motor Vehicles 11% 15%
& Parts
0%
Construction Plastics
Asia & Rubber

2007 Sales to third parties

€5.7 billion
 Operational excellence
drives profitability

Petrochemicals Petrochemicals “asset

right” strategy:
Index (2001=100)

600 600
• Integration into Verbund
• High capacity utilization
500 500
• Consistent fixed cost
400 400 management
• Continuous
300 300
improvement of state-
200 200
of-the-art technologies

100 100

0 0
2001 2002 2003 2004 2005 2006 2007

Fixed costs indexed Sales to third EBITDA

(including depreciation parties indexed indexed
and amortization)
 Temporarily global ethylene/propylene
overcapacities result in margin reduction

ME + Africa Asia America + Europe Global demand

Ethylene capacity (in kt/a) Propylene capacity (in kt/a)

180 180
160 160
140 140
120 120
100 100
80 80
60 60
40 40
20 20
0 0
2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012

• Global demand growth requires +6 million t/a ethylene and +4 million t/a propylene
• New capacities announced of 7 million t/a ethylene (>50% in ME/Afr.), 4.5 million t/a propylene (>50% in Asia)
• Global growth of prosperity and of energy markets will quickly absorb additional capacities after 2012
• Dramatically increased investment cost and limited engineering resources limit capacity growth globally

Source: CMAI
 BASF’s captive olefins demand split is
different to ME downstream products
Middle East demand split BASF net balance

Styrene Others Ethylene

Others PE
4% 3% PVC
3% Ethylene 8% 10%
MEG 2%
23% 2007
Styrene 32%*
64% 28%
7% EO
PVC PE
17%

MEG

Acrylic acid Alcohols

PO
1%
Acrylonitrile 8% Propylene
4% 21%
2007
Alcohols 38%
11%** Acrylonitrile
88%
PP 30%
Acrylic acid

Source: CMAI, BASF * planned divestiture will reduce to less than half ** planned divestiture will reduce to zero
 Naphtha-based cracker provides
full slate of cracker products

to/to Ethylene Typical cracker output BASF Naphtha cracker matches

demand BASF’s broad demand
for cracker products much
better than an ethane-
Feedstock Ethane Naphtha 2007 based cracker
(1.3) (3.0)

Ethylene 1.0 1.0 1.0

Propylene 0.02 0.55 1.09

Butenes <0.01 0.10 0.13

Benzene 0.01 0.25 1.74

 Active portfolio management to improve
cracker products balance

BASF supply / demand balance 2007 Measures to improve

in kt
the cracker products
balance:

Technology
• Conversion of ethylene
Ethylene
to propylene in world-
Propylene scale metathesis units
(e.g. Pt. Arthur)
Butenes Portfolio optimization by
divestiture
Benzene
• Ethane cracker share in
Geismar
• Acrylonitrile business in
-3000 -2500 -2000 -1500 -1000 -500 0 500
Seal Sands (in progress)
• Styrenics business (in
changes due to divestitures in progress
progress)
 Industry leading production know-how
Example: Ethylene oxide

Results of last Townsend benchmarking BASF Antwerp • Cost leadership through

BASF Nanjing consequent process
BASF Geismar innovation (incl. catalyst)
Average world • Enhanced technology:
100
Best quartile Increased selectivity by
world optimized feed gas
75
• Best in class in specific
EO yield
50 • Significant ethylene
savings
• New catalysts with
25
superior performance in
pilot phase
0
Total manufacturing Unplanned production
costs losses

excluding Antwerp site power outage effect

 Integration of cracker products is
essential for BASF’s profitability

Mission
„Make“ to cover optimum of captive use, and
„Trade“ to balance surplus and deficit volumes

Strengths Measures to mitigate challenges

• Verbund synergies • Strive for operational excellence

• World scale assets with excellent to • Enhance feedstock flexibility
best in class benchmark position • Maintain high reliability
• Strong partnerships
(Asia, North America)
 Petrochemicals strongly positioned
in market driven activities

Alcohols & Solvents Plasticizers

• Butanols • DEHP
• 2-Ethylhexanol • DINP
• Isononanol • DINCH
• 2-Propylheptanol (2-PH) • DPHP
• ... • ...

• #1 worldwide in alcohols • #2 worldwide

• Sole producer of 2-PH
• Market leader oxygenated
solvents in Europe
• Proprietary technologies
• New proprietary catalysts in
the pipeline
• Sole producer of Hexamoll DINCH
• Well backward integrated
• Proprietary technologies for PA,
Phthalic esters and Hexamoll DINCH
• New proprietary catalysts in
the pipeline
 Alcohols & Solvents and Plasticizers:
The right levers to success

Consolidation • Closures in Europe

• Acquisition in North America

Portfolio management • Exit 2-EH, DEHP (Europe)

and rationalization • Focus on innovative Plasticizers DINCH, DPHP

Investments • Pasadena, Nanjing

Expansions • Ludwigshafen, Freeport, Kuantan

Innovation • 2-Propylheptanol
• DINCH, DPHP

Operational excellence • Reliability improvements in Kuantan

• Restructuring of plasticizers in Europe, North America
 Growth drivers for Petrochemicals

Expected market
Increased Increased demand
Megatrends growth rate
demand for for petrochemicals
2008 – 2013 p.a.

Energy Agrochemicals Cracker products 4-5 %

consumption
Plastics Alkylene oxides & 5%
Urbanization glycols
Nutrition
Aging population Solvents 3%
Construction chem.
Growing Plasticizers 3%
Chemicals
population
Alcohols 4%
Pharmaceuticals
Globalization
...
 Strategy for Petrochemicals

Strengthen position Active portfolio Accelerate

in growth markets optimization innovation
• Develop strong C4- • Strongly grow business • New technologies
value chain in Asia with innovative based on alternative
products (Oxo-C5 raw materials
• Continuously improve
operational excellence alcohols and DINCH) • New dedicated
technologies to match
for a sustainable and • Divestiture of non-
captive demand
competitive supply strategic businesses
• Improvement of core
• Grow cracker • Restructure outdated technologies through
profitability by increased facilities in core new catalysts and
feedstock flexibility businesses processes
and improved logistics • New applications for
(pipelines) alcohols and
plasticizers
 Essentials Petrochemicals
At the heart of the Verbund
Agility, flexibility and deep knowledge of markets
Continuously develop new processes and optimize
existing ones
Positioned to manage upcoming capacity increases
Relentless focus on operational excellence
Dedicated, creative and global team

38
 1 | Chemicals

2 | Petrochemicals

3 | Inorganics

4 | Intermediates

39
 Inorganics –
Part of BASF’s balanced portfolio

Agricultural Oil & Gas

Solutions

18%
6%
Chemicals
16%

Functional
16%
Solutions
Inorganics 2.1%
€1.2 billion

17%
15%
Plastics
Performance
Products

2007 Sales to third parties: €58 billion

(incl. other: €6.6 billion (12%))
 Inorganics at a glance

• Total sales of €2.3 billion; highly profitable

• Good business mix of commodities and

specialties
• Commodities:
- Strong know-how base in chemical Verbund
- Mainly for captive use in Verbund
• Specialties:
- Strong market expertise and innovation focus
- Characterized by unique products with
high market shares, e.g. hydroxylamine
free base, boranes
 Inorganics at BASF

Electronic Inorganic Inorganic Glues & Impreg-

Fertilizers
Materials Specialties Chemicals nating Resins

• Electronic • Alcoholates • Chlorine/ • Ammonia/ • Reported

grade • Boranes caustic soda urea under „Other“
chemicals • Nitric acid • Methanol/ • Organizatio-
• Hydroxyl-
• Formulations amine free • Sulfuric acid formaldehyde nally part of
and materials base • Melamine Inorganics
• Inorganic Division
• Carbonyl iron salts • Glues and
powder impregnating • Contract
resins manufacturing
• Metal injection for K+S
molding
 Inorganics grew faster than the market

In billion € Internal Sales

Total Sales
Sales to third CAGR 2001 - 2007:
parties
• GDP growth: 3.2%
2.5 2.3 • Chemical production
2.2
growth*: 3.8%
2.0 1.9 • Inorganics growth: 8.1%
1.7
1.5
1.4 1.4
1.5 * without pharma

1.0

0.5

0.0
2001 2002 2003 2004 2005 2006 2007
 Sales by product group

Split of sales to third

parties 2007:
Electronic
Glues & Materials • Commodities 58%
Impregnating • Specialties 42%
Resins 25%
33%

18%

24% Inorganic
Specialties
Inorganic
chemicals

2007 Sales to third parties:

€1.2 billion
 Sales by region and industry

by region by industry

North Rest
0%of World
America
3% Computer &
7% Others Electronics
27%
Asia 35%
22% Europe

68%
17%
0% 8% 13% Chemicals
Plastics &
Rubber
Construction

2007 Sales to third parties:

€1.2 billion
 Contributing consistently high margins

Inorganics BASF’s “asset right”

strategy:
Index (2001=100), excluding catalysts
• Competitive raw
200 200 material sourcing
• Integration into Verbund
150 150 • High capacity utilization
• Rationalization in older
100 100 plants
• Profitable growth in
50 50
specialties

0 0
2001 2002 2003 2004 2005 2006 2007

Fixed costs indexed Sales to third EBITDA

(including depreciation parties indexed indexed
and amortization)
 Strong European platform in commodities
and global focus on specialties

Commodities (58%) Specialties (42%)

Rest of World Rest of World

Asia
NAFTA
4% 5% 1%
2%
Europe
37%
47%
Asia
89%
15%

Europe
NAFTA

2007 Sales to third parties:

€1.2 billion
Clearly differentiated strategies
for commodities and specialties

Commodities Specialties
“Keep cost leadership“ “Grow profitably“

• Competitive raw material • Market and product

sourcing driven innovation
• Verbund integration • Strong customer
orientation/interaction
• World scale plants
• Technical service
• Process innovation
including catalysts • Selective globalization
through acquisitions
• Operational excellence
 Inorganics is one of the basic pillars
of the Verbund

Ammonia • Many products are

Fertilizers building blocks for the
Nitric acid Verbund
Polyurethanes,
polyamides,
Natural gas amines • Inorganics is a
Nitrogen based salts significant steam
Urea Melamine
producer
Glues and resins
• Inorganics provides
Methanol Formaldehyde economic opportunities
for the utilization of
waste streams and by-
Aluminum, iron,
Chlorine hydrogen chloride products

Rock salt Sodium/potassium Alcoholates

Caustic soda Superabsorbents,

surfactants

Sulfur based salts Building blocks

Sulfur Sulfur oxides
Sulfuric acid Other Inorganics products
Other BASF products
 Ammonia and caustic soda are
main drivers of profitability
Ammonia
• Mainly captive use (>95%)
• Top 3 internal customers
(90% of demand):
- nitric acid (for fertilizers,
polyurethanes and polyamide)
- urea (for melamine, glues and
resins)
- amines
• Stable demand due to fertilizers for
agriculture
Caustic Soda
• Mainly captive use (>95%)
• Top 3 internal customers
(50% of demand):
- sulfur based salts
- surfactants (for detergents)
- crop protection chemicals
• Anti-cyclical profit pattern due to
couple-production chlorine/caustic
soda
 Organic and external growth as main
imperatives for specialties

Innovation Acquisitions

• New products • Established portfolio areas

• New applications • New portfolio areas
• New business models

• Example: Recently developed • Example: Acquisition of Merck

applications of Carbonyl iron Electronic Chemicals (MEC) in
powder (CIP) 2005
 Expansion into new applications
for carbonyl iron powder

Inductive Metal Injection Magnetorheological Electro Magnetic

Components Molding Fluids (MRF) Interference Shielding

Diamond Diamond Radar Miscellaneous

Synthesis Tools Absorption Applications

Expected additional sales in 2015: €500 – 750 million

 Significant size and growth in
electronic chemicals value chain

Formulations / Consumer
Chemicals Components
materials devices

Market size USD 5 bn USD 85 bn USD 515 bn USD 1500 bn

2007
CAGR
15% 9% 8% 9%
2003 - 2007

BASF business

BASF after MEC acquisition

 Expanded positioning in electronic
materials through MEC acquisition

Stronger footprint in Expansion into

established areas new areas
Products Products
• Chemicals • Formulations and materials
Applications Applications
• Semiconductors • Displays
• Photovoltaics
Regions/countries Regions/countries
• Germany • Taiwan
• Japan • China
• South Korea • Malaysia
• USA • Singapore
 Strategy for Inorganics

Strengthen position Active portfolio Accelerate

in growth markets optimization innovation
Investigating competitive Acquiring activities in R&D spendings 3% of
raw material sources (esp. inorganic specialties and sales to third parties p.a.
for natural gas) electronic materials (both
in established and new
portfolio areas) Innovation focus on
Investing in additional inorganic specialties and
production capacities for Forward integration for electronic materials
carbonyl iron powder carbonyl iron powder into
new applications and
business models New chemicals and
Investing in sodium formulations for the next
methylate plant for Focussing in commodities generation of microchips
biodiesel in Brazil on Europe to further (e.g. “flash memories“)
reduce complexity
 Growth drivers for Inorganics

Expected market
Increased Increased demand
Megatrends growth rate
demand for for inorganics
2008 – 2013 p.a.

Energy Electronics Electronic materials 8%

consumption
Energy Inorganic specialties 8%
Urbanization
Pharmaceuticals Fertilizers 3%
Aging population
Food Inorganic chemicals 2%
Growing
Housing Glues and 2%
population
impregnating resins
Automotive
Globalization
Chemicals
...
 Our path to profitable growth
Strongly positioned and highly profitable both
in commodities and specialties

Successfully managing a complex portfolio

Utilizing competitive advantages in commodities

based on the Verbund

Exploiting significant growth potential with

specialties

Continued sales growth and high margins

expected
57
 1 | Chemicals

2 | Petrochemicals

3 | Inorganics

4 | Intermediates

58
 Intermediates –
Part of BASF’s balanced portfolio

Agricultural Oil & Gas

Solutions

18%
6%
Chemicals
16%

Functional
16%
Solutions
Intermediates 4.3%
€2.5 billion

17%
15%
Plastics
Performance
Products

2007 Sales to third parties: €58 billion

(incl. other: €6.6 billion (12%))
 Intermediates at BASF

Butanediol & Polyalcohols & Acids &

Amines
Derivatives Specialties Specialties
> 200 different Entire butanediol Broad range of Commodity and
amines value chain coatings building specialty in one
blocks product
Key products: Key products: Key products: Key products:
Ethanolamines Butanediol Hexanediol Formic Acid
Methylamines THF/PolyTHF Neopentylglycol Propionic Acid
Alkylethanolamines Maleic Anhydride Vinylmonomers Glyoxal

Versatile chemical building blocks/performance enhancers

 Rooted in BASF’s Verbund –
Facing the market

Right setup:
BASF Verbund
• Benefit from
the Verbund
70%
25% • Add value to
the Verbund
BASF Intermediates • Add value to
our customers

75%

Market

€2.5 billion sales to third parties 2007

3.000 customers globally
 Intermediates grew faster
than the market

In billion € Internal Sales

CAGR 2001 - 2007:
Sales to third
parties • GDP growth: 3.2%

• Chemical production
4.0 growth*: 3.8%
3.3
3.0 • Intermediates: 5.8%
3.0 2.7 2.7
2.4 * without pharma
2.3 2.3

2.0

1.0

0.0
2001 2002 2003 2004 2005 2006 2007
 Wird noch grafisch
optimiert

Intermediates is a market-driven business

Acids &
Sales to third parties
Specialties 2007:

• Commodities 40%
15% • Specialties 60%
Amines
Polyalcohols 37% • Market leader in 70 %
& Specialties of product lines
14%

34%

Butanediol & Derivatives

2007 Sales to third parties

€2.5 billion
 Focusing on growth markets
Growing above GDP in major industries

Sales 2007 Industries Annual growth

by industry BASF Intermediates
2003 – 2007
Chemical Chemical Industry 8%
Others
Industry
Automotive 19%
Plastics & Rubber 6%
23% 21%
Agriculture 22%
Construction 27%
Pharma 5% Textile & Leather 1%
14%
Pharma 5%
7%
Textile Automotive
& Leather 9% 11%
10%
Construction Plastics
& Rubber
Agriculture
 Focusing on growth markets
Growing above GDP in all regions

Sales 2007 Region Annual growth

by region BASF Intermediates
Rest of World0% 2003 – 2007
Europe 7%
North 5% Asia 17 %
America
15%
North America 6%
ROW 15 %

51%

29%
Europe

Asia

0%
 Intermediates business re-energized

Intermediates Key changes since 2001:

Index (2001=100) • Business revamped in

past 5 years
250 250
• Radical shift in
200 200 commodity strategy
• Restructuring of assets
150 150
• Significant increase in
margin and profitability
100 100

50 50

0 0
2001 2002 2003 2004 2005 2006 2007

Fixed costs indexed Sales to third EBITDA

(including depreciation parties indexed indexed
and amortization)
Strongly positioned to grow above GDP

Right tools Strong levers

• Unique portfolio of • Integral part of

Intermediates BASF Verbund
• Appropriate set-up • Leading market positions
in commodities and
• Active in strongly growing
specialties
markets
• Focus on value and growth
• Established innovation
process and pipeline

BASF Intermediates has grown and

will grow profitably above GDP
 Innovations are key for
commodities and specialties

Innovation drivers Innovation tools Examples

Cost and technology

New / improved N2O technology (CDon)
leadership in
processes incl. catalysts Capacity increases
commodities

Taking advantage of New products Ionic liquids

key market trends

New business models Gas treatment / windmills

Taking advantage of Formic acid for various

our unique portfolio New applications
applications

3% of sales to third parties spent for R&D

 Excellence in commodities
and specialties

Ethanolamines Alkylethanolamines One value chain –

two different businesses
• Commodity • Specialty • Maximizing value by
• 4 product types • 17 product types portfolio extension

• 1,800 kt/a market • 200 kt/a market • Leading market

demand
• Main industries:
Agro, detergents,
gas treatment
demand positions in both
segments
• Main industries:
Gas treatment, water • Ethanolamines and
treatment, coatings Alkylethanolamines
representing > 10%
of sales to third parties

Ethylene oxide

Ethylene
 From product to systems provider

Epoxy systems for

Intermediates Solution Systems
windmills:
producer provider provider
• Installed capacity for
wind energy will grow
Single amine Amine blend 2 component system by more than 500 %
amine blend until 2015
plus epoxy resin
• Amines are key
chemicals for production
of windmill blades
• 1.5 tons of amines for
each MW of new wind
energy capacity

BASF 1997 2005 today

 Growth drivers for Intermediates

Expected market
Increased Increased demand
Megatrends growth rate
demand for for intermediates
2008 – 2013 p.a.

Energy Agrochemicals Amines 4%

consumption
Pharmaceuticals Butanediol & 5%
Urbanization Derivatives
Personal care
Aging population Polyalcohols & 4%
Plastics
Specialties
Growing population
Textiles
Acids & Specialties 3%
Globalization
Construction chem.
Chemicals
...
 Strategy for Intermediates

Strengthen position Active portfolio Accelerate

in growth markets optimization innovation

• Investment focus in • Enhance develop- • Advance leading

growth region Asia ment of system technology positions
• Business focus on solutions and new by
high growth market business models Æimproving existing
segments in growth • Permanently reflect processes
industries portfolio and market Æradical new
trends processes for key
products
• Acquisitions to close
strategic gaps • Open up new
applications in close
customer cooperation
 Our path to profitable growth
Increasing demand for more and new Intermediates
will fuel our growth

We are well positioned to make best use of that

• in Commodities by our world-class processes,
our Verbund-integration, our leading market
positions and our know-how
• in Specialties by our unique portfolio,
our innovative solutions and
our strong customer co-operations

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