BASF Coatings Division: Focusing on growth and value

BASF’s Coatings Division:
Focusing on growth and value

Markus Kamieth
President
Coatings Division

September 05, 2012

BASF Investor Day Automotive September 5, 2012 Coatings 1

Coatings – focusing on growth and value
BASF Group sales 2011

Functional Solutions Performance Products
15% 21%
Coatings
4% Other
9%
Agricultural Solutions
6% €73.5
Oil & Gas
billion 16%

Plastics Chemicals
15% 18%


1 | BASF – a leading player in Coatings
2 | Strategic focus on automotive

BASF Investor Day Automotive September 5, 2012 Coatings Coatings 3

Coatings – smart combination of different
functional layers
Example: Automotive OEM Coating

Clearcoat
Transparent protection
Basecoat
Color, metallic effect
Primer
Finish quality, stone chip resistance
E-coat
Corrosion protection

Pre-treatment
Body
Steel, aluminum


Focused on key industries

E-coat, primer,
OEM coatings
basecoat and clearcoat

Sealer, primer,
Refinish coatings
basecoat and clearcoat

Industrial coatings: Coil coatings for steel and aluminum,
Coil and wind energy coatings for wind turbine rotor blades

For interior and exterior use
Decorative paints
in buildings


Focused on attractive market segments
Coatings demand (in € billion)

R
CAG .
.a
5% p ~20.4

~17.0 R
6% CAG
8.7 OEM coatings

6.9
4% CAGR

7.7 Refinish coatings
6.6

4% CAGR
2.2 2.5 Industrial coatings*
1.3 4% CAGR 1.5 Decorative paints**

BASF Coatings strategic relevant market
* BASF is active in coil and wind segment of the industrial coatings market
** Brazil
Data source: BASF internal data

Balanced sales with a focus on growing
markets and segments
By industry 2011 By region 2011

Industrial OEM
coatings coatings Asia Europe
8% 47% 17% 42%

€2.8 €2.8
billion billion
South
Decorative Refinish America, North
Paints coatings Africa & M.E. America
23% 22% 28% 13%

~ 45% of sales in emerging markets


Global presence brings
customer proximity
Regional automotive production development by 2015
(in mio. units)
Europe, Africa,
Middle East

North America 23 26
8
3 17
13 3
1 2011 2015
2011 2015 Asia Pacific
53

South America 37

3 3
4 6
1 4
2011 2015
BASF manufacturing sites in 2011
BASF R&D centers in 2011


Global player in automotive OEM and
refinish coatings markets
OEM coatings market in 2011 Refinish coatings market in 2011
BASF BASF
19% 10%

PPG DuPont*
Others €6.9 Others €6.6
billion billion
DuPont*

Nippon Paint Kansai Paint PPG

BASF in OEM coatings BASF in refinish coatings
Globally # 2 Globally # 3
China # 1 Focus on profitable premium segment
Leader in topcoats and process solutions Pioneer in waterborne technology
Supplier to all major OEMs Qualified by all major OEMs

Source: BASF internal *DuPont announced divestment of its Performance Coatings business to Carlyle group on August 30, 2012

Coatings – a consistent cash generator
for BASF Group
Sales* (in € billion) EBITDA (indexed)


Clear levers for profitable growth

Consistently outperforming coatings market growth

Strengthen leading
positions and
Leverage operational Enhance and broaden
expand in selected
excellence innovation platform
regions and
segments


Significant investments in emerging
markets
2012: New Laboratory India 2014: New Basecoat plant China

2012: New Technical Center Thailand 2012: New Laboratory Mexico

>50% of investments until 2017 will be in Asia Pacific

2 | Strategic focus on automotive
2a | OEM coatings


What makes BASF successful in
Automotive OEM coatings?
Automotive OEMs Key success factors
Process innovator –
BASF is the global leader
in integrated processes
Product innovator –
Competence in all layers:
BASF is the global leader in topcoats
Globally #2
(basecoat and clearcoat)
Automotive suppliers
Partnership with customers –
From design to assembly

Globally #2


Process innovator
Our invention of the “Integrated process” is an industry trend

Conventional coating-process Key facts
Pioneer with Daimler (1997)
Flash-
Oven Oven Oven
off BASF is the leader in integrated
processes
E-coat Primer Basecoat Clearcoat
BASF targets >30% market
share by 2015
2011: JV with Henkel to develop
“Integrated process” leap-frog technology, combining
pre-treatment and e-coat
Flash- Customer benefits
Oven Oven
off
Reduction of capital investment
E-coat Innovative Clearcoat Energy savings
Basecoat


BASF Coatings – driving sustainability
Process and product innovations

Significant energy savings VOC* in kg/car (average)

-17%
100% -66%
-25
% 83%
Thereof
paint shop
Total energy
consumption of
car production
8.4 2.8

Conventional Integrated Conventional Waterbased
coatings process process coatings process coatings process

Integrated processes save up to 17% of the Waterbased coatings process
total energy required for car production reduces VOC by 66%

* VOC = Volatile Organic Compounds


Product innovator
We are No.1 in topcoats

Topcoats (basecoat and clearcoat) are the most valuable layers on a car body

iGloss
Avg. usage per car Benchmark in protection
(by value)

Clearcoat 20%

XColors
Innovative color trends

Basecoat 43%

Cathoguard 800/900
Primer 14% Environmentally friendly

E-coat 23%


Partnership with key OEM customers
Close relationship from concept to market

IAA Frankfurt 2011: smart forvision 2010: Start-up partner for Hyundai Russia

2012: Tech Day SAIC R&D Center 2012: Zhengzhou Nissan R&D Award


Growth opportunities
We are well-positioned in BRIC, particularly in China

BRIC production forecast (Light vehicles in million) Key facts
Market leader in China and BRIC
50
R Pioneer in China: since 1997; new
C AG p.a.
%
41 OEM coatings production planned in
40 12 2014
0% China growth fueled by investment in
+1 %
30 1
26 +1 integrated processes – until 2015, >16
1%
+1 new OEM plants will require this
20 technology
29% of BASF OEM coatings sales
10 came from BRIC countries in 2011
+14%
Objective: grow our sales share from
0 BRIC countries to >35% until 2015
2011 2015
India China Russia Brazil

Data source: LMCA


2 | Strategic focus on profitable growth
2b | Refinish coatings


Premium A segment makes up 60% of
automotive refinish market
Market share of segments in A Car age < 5 years, OEM and insurer driven
refinish coatings 2011 (in %)

B Car age < 5-10 years, insurer and owner driven

C Car age > 10 years, owner driven

A segment B segment C segment


What makes BASF successful in
Refinish coatings?
Automotive refinish coatings Key success factors
Process innovation –
leader in the integrated process
Product innovation –
leader in waterborne technology
Premium brands and distribution network

Globally #3


Process innovator
Integrated process in refinish

Key facts
Market launch of direct-to-metal (DTM)
sealer in 2011
Clearcoat
Market potential for refinish integrated
system until 2020 is €100 million
Basecoat Clearcoat

Customer benefit
Sealer Basecoat Process time saving of up to 50%
Up to 15% material consumption
Primer DTM sealer savings

Substrate Substrate

Current process New BASF
process


Product innovator
Leader in waterborne technology

Key facts
BASF Refinish Coatings is pioneer in
waterborne technology
Current roll-out of waterborne basecoat in
North America
Foster introduction in BRIC Countries
In 2011 waterborne products accounted for
Rising share of BASF Refinish Coatings ~30% of BASF Refinish Coatings total sales
waterborne sales
In 2015 we expect to achieve >35% of BASF
Refinish Coatings sales from waterborne
products
Increasing regulations worldwide push
demand for waterborne technologies

BASF Refinish Coatings BASF Refinish Coatings
total sales waterborne products sales


Premium brands
One premium brand by country

In the market since 1898 In the market since 1919

Premium brand primarily sold in: Premium brand primarily sold in:
Australia, BRIC, Europe, South Africa North America, Europe, Japan


Growth opportunities
Targeting new markets with value-for-money brands

B brand sold in Mexico Key facts
Value-for-money brand
– Provides access to new markets for
BASF Refinish Coatings
– Strengthens our dealers’ market
position and dealer network
– Facilitates additional sales of BASF
Refinish Coatings premium brands
B brand sold in Australia, China, Market potential in selected countries is
South Africa, Turkey ~€800 million
Target: Value-for-money brands will
account for >10% of BASF Refinish
Coatings sales in 2015


BASF’s Coatings Division targets 2015

Operational targets

OEM:
– Remain No. 1 in topcoats and integrated process
– Grow sales share in BRIC countries by 20 percent

Refinish:
– Expand leading position in waterborne technologies
– Grow in B-segment, with focus on Asia


BASF’s Coatings Division targets 2015

Financial targets

Grow sales to more than 3.6 billion euros by 2015

Steadily increase operating profitability

Continue to generate a premium on cost of capital


BASF Investor Day Automotive September 5, 2012 Coatings
29 29

BASF Coatings Division: Focusing on growth and value

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