BASF investigates establishment of second Verbund site in China Dr. - - PowerPoint PPT Presentation

July 2018 1 | Memorandum of Understanding on Verbund site in Guangdong

BASF investigates establishment

• f second Verbund site in China
• Dr. Martin Brudermüller, Chairman of the Board of

Executive Directors and Chief Technology Officer July 10, 2018

July 2018 2 | Memorandum of Understanding on Verbund site in Guangdong

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 page 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.

July 2018 3 | Memorandum of Understanding on Verbund site in Guangdong 57% 19% 17% 7%

2015

7% 74% 5% 6% 7% 1%

Asia and China continue to dominate global chemical production

Real chemical production (excl. pharma) (trillion US$, base year 2015)

2015 CAGR

3.4%

2025

World

CAGR

4.4%

2.0 3.1

Asia Pacific

2025

Source: BASF

3.6 5.0

Greater China South Korea Japan South Asia ANZ South East Asia Asia Pacific Others Europe North America

62% 16% 15% 7% 5% 78% 5% 5% 6% 1%

July 2018 4 | Memorandum of Understanding on Verbund site in Guangdong

BASF is a well-established and highly-recognized company in China

* As of Dec. 31, 2017 ** By location of customer *** Some sites are not shown due to scale.

Mainland China, Hong Kong, Taiwan

• 25 major wholly-owned subsidiaries
• 7 joint ventures
• 25 production sites
• 24 sales offices
• 8,982 employees*
• €7.3 billion sales** in 2017

(~€8.7 billion including 50%

• f BASF-YPC, Nanjing)

Asia Pacific headquarters Verbund site Production site Sales office Greater China headquarters R&D and Technical Centers

Legend***

Jiangsu Taiwan Liaoning Jilin Shandong Guangdong Beijing Zhejiang Chongqing Guangxi Tianjin Hong Kong Shanghai Sichuan Anhui Fujian Xinjiang Nanjing

July 2018 5 | Memorandum of Understanding on Verbund site in Guangdong

BASF is growing in and with China

1966

First production in China

2005

Inauguration

• f Nanjing

Verbund site

2014

Expansion of acrylic acid production at Nanjing Verbund site

1885

First delegate in China

2015

Inauguration of Chongqing MDI complex Inauguration

• f Maoming site

1850s 2020s 1960s 2000s 2010s 2009

Establishment of Nanjing Specialty Chemicals

2010

Expansion

• f Nanjing

Verbund site

2012

Inauguration of Innovation Campus Shanghai

End of 2018

Expansion of Innovation Campus Shanghai: Automotive Application Center Intended establishment

• f Verbund site

in Guangdong

July 2018 6 | Memorandum of Understanding on Verbund site in Guangdong

BASF’s existing Verbund site in Nanjing** has been consistently profitable with reliable dividend payments

* Year of scheduled turnaround; ** BASF-YPC Company Ltd. Nanjing, 50:50 JV with Sinopec

Sales (in billion €) EBITDA (indexed)

1.72 1.36 1.93 2.76 2.83 2.84 2.71 2.21 2.36 2.76

100 200 300 400 500 0.5 1 1.5 2 2.5 3 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 * *

July 2018 7 | Memorandum of Understanding on Verbund site in Guangdong

Guangdong province is ideally located to serve the fast-growing, undersupplied market in South China

Tibet Qinghai Sichuan Yunnan Hainan Hebei Heilongjiang Liaoning Shanxi Beijing Tianjin Shandong Henan Jiangsu Zhejiang Shanghai Anhui Jiangxi Guizhou Chongqing Fujian Hubei Hunan Guangdong Guangxi Inner Mongolia Gansu Ningxia Shaanxi Xinjiang Jilin Nanjing Hong Kong

Market characteristics

• More than 110 million residents in

Guangdong province

• GDP Guangdong (2017):

~US$1,330 billion (to reach GDP of South Korea soon)

• Current GDP growth: ~7% p.a.;

GDP growth until 2035: ~6% p.a.

• Key customer industries:

transportation, consumer goods, home and personal care, electronics

• Chemical products are generally

undersupplied by local production

July 2018 8 | Memorandum of Understanding on Verbund site in Guangdong

Guangdong is home of key customers from fast-growing industries

Greater China

200 400 600 2012 2013 2014 2015 2016 2017

Strongly growing industrial base

(Real value added, manufacturing in Guangdong; base year 2015)

50 100 150 2012 2013 2014 2015 2016 2017 1,000 1,500 2,000 2,500 3,000 3,500 2012 2013 2014 2015 2016 2017

Largest automotive production in China

(number of cars built in Guangdong [in 1,000])

Largest electronics production in China

(Real value added, electronic equipment in Guangdong; base year 2015)

200 400 600 2012 2013 2014 2015 2016 2017

Increasing growth of private consumption

(Real household consumption in Guangdong; base year 2015) billion US$ billion US$ billion US$

July 2018 9 | Memorandum of Understanding on Verbund site in Guangdong

BASF intends to build a world-class Verbund site in South China to serve fast-growing customer industries in the region

Intended scope of new Verbund site (preliminary) Parameters

• 100% BASF-owned and operated
• Potential investment of up to

US$10 billion until around 2030

• Investment to evolve in phases
• Startup of first plants in 2026

at the latest

• Most advanced Verbund site with

smart manufacturing concept

• Environment, health and safety

concept according to BASF’s global standards and local laws and regulations

• Next step: Pre-feasibility study

Steam cracker

(planned capacity ~1 million tons p.a.

• f ethylene)

Ethylene

• xide

Acrylic acid Oxo-C4 HPPO Raffinate Butadiene

Ethylene Propylene Crude-C4

Ethylene glycol Surfactants Amines SAP Acrylates Dispersions Polyols Intermediates Performance polymers

July 2018 10 | Memorandum of Understanding on Verbund site in Guangdong

The new Verbund site – an important contribution to BASF’s profitable growth in China and also globally

• Asia and China continue to dominate global chemical production

– Already today, China has a world market share of around 40%

• BASF is a well-established and highly-recognized company in China

– Strong production footprint with 25 production sites – Sales offices across China – Innovation Campus in Shanghai

• Guangdong province is ideally located to serve the fast-growing,

undersupplied market in South China – Customers from key industries like transportation or consumer goods as well as further fast-growing industries are located in Guangdong

• BASF intends to build a world-class Verbund site in South China

to serve fast-growing customer industries in the region