BASF Agricultural Solutions

Transcription

1 BASF Agricultural Solutions Titelmasterformat durch Klicken bearbeiten Markus Heldt President Crop Protection Division Morgan Stanley Investor Visit Ludwigshafen June 24, 2014 BASF Agricultural Solutions Capital Market Story

2 1 Positioning & strategy 2 Financial results & targets Sales of > 500 million in Global Growth R&D levers: network 3.1 Portfolio development 2014:New Biostacked launches and global expansion 3.2 Growth in 2014 markets 3.3 Innovation & investments Broad product innovation on horizon 4 Summary & outlook BASF Agricultural Solutions Capital Market Story

3 Population growth drives crop demand, triggering innovation in agriculture World population in billion bn* 9bn* Plant Biotechnology Crop Protection Fertilizers & Breeding 3 Mechanisation 2 Land & Irrigation E Demand for agricultural products projected to grow further (food, feed, fuel). Innovations needed! BASF Agricultural Solutions Capital Market Story 2014 * Source: FAO 3

4 Positioning & strategy Ι Financial results & targets Ι Growth levers Ι Summary and outlook Farmer Expenses Crop Protection represents only small share of overall costs Farmer expenses 2013* in % Other 25% Crop Protection 15% Fertilizer 25% Farmer expenses in the U.S. U.S. Ag market has highest degree of technology adaption Seeds, fertilizers: Significant share of farmer expenses. Fertilizers very price volatile Crop protection cost portion is comparatively small Crop protection demand impacted by weather Energy 16% Seed 20% Crop Protection: small share of farmer expenses BASF Agricultural Solutions Capital Market Story 2014 * Source: based on USDA data for US market 2013, includes total operating costs 4

5 Accelerated crop protection market growth Growth* in % World GDP Growth Agriculture industry Crop protection industry CAGR % Crop protection Crop protection market has clearly outgrown Agriculture and GDP * GDP: Annual percentage change of a country's GDP in constant prices. Agriculture industry: BASF analysis of FAO, IHS Global Insight BASF Agricultural Solutions Capital Market Story 2014 and national statistics (e.g. Eurostat). Crop Protection: Phillips McDougall data 5

6 Crop protection: A consolidated industry BASF has outgrown peers BASF Shell Cyanamid Ciba Sandoz Merck AHP Novartis FY sales 2013** 5,227m $ 10,923m ICI ISK Biosciences Bayer Rhone-Poulenc Hoechst Schering DuPont Dow Rohm & Haas Monsanto Zeneca Aventis Aventis 7,194m $ 3,541m $ 5,546m $ 4,521m BASF Agricultural Solutions Capital Market Story 2014 * Crop protection sales, CAGR **Source: corporate reports and BASF estimations 6

7 Positioning & strategy Evolution of crop protection innovators offering Crop protection has become a solutions business Market demand Broad use of modern crop protection Further increase of technology adoption Farmer as steward of the land today IT Services future BASF Agricultural Solutions Capital Market Story

8 Positioning & strategy Strategic positioning, product examples Disease control F500 Urban pest control Termidor Crop protection Weed control Kixor Insect control fipronil Biologicals Plant health Soil management Financial services IT Services Innovation beyond crop protection BASF offering Traits & seed partnerships Seed treatment Standak Top Herbicide tolerant systems Clearfield dicamba HT* BASF Agricultural Solutions Capital Market Story 2014 * incl. Engenia TM: technologically-advanced dicamba formulation for use in dicamba/glyphosate tolerant cropping systems 8

9 1 Positioning & strategy 2 Financial results & targets Sales of > 500 million in 2020 Global R&D network 3 Growth levers 2014:New Biostacked launches and global expansion in 2014 Broad product innovation on horizon 3.1 Portfolio Development 3.2 Growth Markets 3.3 Innovation & Investments 4 Summary & outlook BASF Agricultural Solutions Capital Market Story

10 Financial results Record sales and earnings, EBITDA margin target surpassed million FY 2013 FY 2012 % Q % Sales* 5,227 4, % 1,653 +6% EBITDA before special items 1,389 1, % % EBITDA margin 26.6% 25.5% % - EBIT before special items 1,222 1, % % EBIT margin 23.2% 22.0% % - Assets (as of Dec 31st) 6,777 6,527 +4% 7,841 +2% Capex % 63 +7% Research and development expenses % % 2013 another record year. EBITDA margin exceeds 25% target and long-term average BASF Agricultural Solutions Capital Market Story 2014 * Sales drivers FY 2013: volumes +10%; prices +3%; currencies -5%; structure +4%; Q1 2014: volumes +9%; prices +3%; currencies -6% 10

11 Financial results A regionally balanced market presence 3 rd Party sales FY 2013 by region* in million North America 1,497 (+35%) Asia Pacific 513 (-2%) 5,227 (+12%) Europe 1,946 (+7%) South America, Africa, Middle East 1,271 (+4%) Multi-year view Northern hemisphere: 8% CAGR , with strongest growth in N. America Southern hemisphere: 10% CAGR Reduced earnings seasonality through significant contribution from Southern hemisphere Q Positive business performance due to strong demand in Europe and North America Currency headwinds in several key markets Challenges in South America due to adverse weather BASF Agricultural Solutions Capital Market Story 2014 * In brackets: growth at constant exchange rates in % vs. prior year 11

12 Financial results A balanced portfolio, with new segment Functional Crop Care 3 rd Party sales FY 2013 by indication* in million Fungicides 2,269 (+9%) Functional Crop Care 288 (new) 5,227 (+12%) Herbicides 1,790 (+12%) Insecticides/Other 880 (+0%) Multi-year view Sustained leadership in fungicides. Herbicides sales thrived (9% CAGR ) Insecticides growth opportunity New: Functional Crop Care Q Fungicides: Significant volume growth in Europe, driven by cereal fungicides Herbicides: Sales increase, volume and prices up in North America and Europe Insecticides: Continued innovation strategy in Fipronil Functional Crop Care: Continued growth momentum BASF Agricultural Solutions Capital Market Story 2014 * In brackets: growth at constant exchange rates in % vs. prior year 12

13 Financial results & targets Keeping the momentum towards 8 billion sales target in 2020 Financial targets & sales drivers in million CAGR 6% ~8,000 4,679 5,227 ~6,000 Functional Crop Care Insecticides Fungicides Herbicides E 2020E BASF Agricultural Solutions Capital Market Story 2014 * Growth markets (GM s) : Latin America, Eastern Europe, South Africa, Asia (w/o Japan, Australia, New Zealand) 13

14 Financial results & targets Further profitable growth targeted with ~25% EBITDA (average) Sales to 3 rd parties in million EBITDA margin* in % % % % % % % % EBITDA margin 3-year average BASF Agricultural Solutions Capital Market Story 2014 * Before Special Items onwards according to IFRS onwards excl. corporate cost 14

15 Our growth levers High profitability 26.6% EBITDA* margin in 2013 Additional upstream earnings BASF Agricultural Solutions Capital Market Story 2014 * Before Special Items 15

16 1 Positioning & strategy 2 Financial results & targets Sales of > 500 million in 2020 Global R&D network 3 Growth levers: 2014:New Biostacked launches and global expansion in 2014 Broad product innovation on horizon 3.1 Portfolio development 3.2 Growth markets 3.3 Innovation & investments 4 Summary & outlook BASF Agricultural Solutions Capital Market Story

17 Portfolio development Blockbuster fungicide F500 Market launch of F500, first mixtures (incl. Epoxiconazol) Nominated for the German "Zukunftspreis" Launch of global brand AgCelence, (Brazil, soy) 3 rd plant expansion comes on stream Production start-up Launch of mixture with Boscalid Launch of Plant Health products in the US Collaboration with Monsanto on F500 & Xemium-based seed treatments Revolving innovation towards > 1 billion peak sales potential for F500 franchise BASF Agricultural Solutions Capital Market Story

18 Portfolio development New blockbuster fungicide Xemium continues to thrive. Xemium New carboxamide fungicide; one a.i. covers all market segments Registration proceeds swiftly: Status: > 70 crops, >40 countries Target: >100 crops, >70 countries In launch since Q4 2011, outstanding market reception Registration in Brazil and China in September 2013 Peak sales potential has tripled since launch, now > 600 million Xemium registered Next upcoming registrations BASF Agricultural Solutions Capital Market Story

19 Portfolio development Revolving innovation in Fipronil: E.g., Termidor systems Termidor success story Differentiating product innovations based on Fipronil Termidor has been the leading termite control product over a decade Termidor HE: System which enhances dispersal of Fipronil in treatment zone 1/3 viewer drills 50% lower water use 1/3 less labor Termidor launches : BASF Agricultural Solutions Capital Market Story

20 Portfolio development Herbicide renaissance BASF herbicide launches U.S. market Integrity Treevix OpTill Sharpen Kixor Herbicide a.i. Optill PRO Powered by Kixor Herbicide Armezon Herbicide Facet L Herbicide 2012 Wheat Rice Zidua Herbicide Zidua Herbicide Clearfield Plus Production System Sharpen Powered by Kixor Herbicide Outlook Herbicide Cotton Varisto Herbicide Alfalfa and Harvest Aid in Rice & Wheat Soybean, Cotton Outlook Herbicide Plus Sharpen Powered by Kixor Herbicide Engenia Herbicide Optill PRO Powered by Kixor Herbicide Improved Residual Armezon Herbicide Engenia Herbicide Outlook Herbicide Zidua Herbicide New Herbicide a.i. New Rice Herbicide Herbicide renaissance Increasing weed resistance requires rethinking of weed control BASF with continued flow of new herbicide launches, esp. in the Americas CAGR +9% for BASF s multi-level approach Strong herbicide pipeline Successful expansion of Kixor Herbicide-tolerant production systems: Clearfield grows globally Cultivance and Engenia (Dicamba) upcoming BASF Agricultural Solutions Capital Market Story

21 Portfolio development Clearfield system for weed management Sunflower >5M ha Russia, Ukraine, Bulgaria, Hungary, Argentina Rice >2M ha US, Brazil, Central America, Malaysia High-yielding varieties with broad spectrum >10M herbicides ha Oilseed Rape / Canola >2.5M ha Central & Eastern Europe, Canada, Australia BASF sells imidazolinone herbicides to farmers and licenses own herbicide tolerance trait technology to >100 seed partners BASF Agricultural Solutions Capital Market Story

22 Portfolio development Offering is moving towards integrated solutions Fallow / Burndown Seed Solutions Pre/Post Emergence Crop Care Soil Management BASF Agricultural Solutions Capital Market Story

23 Portfolio development AgMusa TM : Game changer in sugarcane planting Integrated, tailored solutions addressing the needs of each crop Sourcing Production and treatment Delivery excellence Nurseries Multiplication Treatment Planting AgMusa TM system for sugarcane Market launch in Brazil in 2013 Maximizing sugarcane yield by caring for its foundation: healthy seedling Disease free, pre-treated seedlings from nursery formation Biofabric operation in São Paulo Enhanced value creation for the farmer, significantly higher price level BASF Agricultural Solutions Capital Market Story

24 Portfolio development Functional Crop Care Seed Solutions Seed treatment to enhance seed performance Crop Care Products to manage abiotic stress factors (heat, cold, nutrient deficiency) and thus enhance plant health Soil Management Products to enhance water and nutrient management in the soil BASF Agricultural Solutions Capital Market Story

25 Portfolio development Functional Crop Care: Targets Sales of > 500 million in 2020 Functional Crop Care is a key growth field with significant investment (incl. acquisition of Becker Underwood in 2012) Global R&D and commercial organization established New Biostacked launches and global expansion in 2014 Wave of product launches ahead (2 nd half of decade) BASF Agricultural Solutions Capital Market Story

26 1 Positioning & strategy 2 Financial results & targets Sales of > 500 million in 2020 Global R&D network 3 Growth levers: 2014:New Biostacked launches and global expansion in 2014 Broad product innovation on horizon 3.1 Portfolio development 3.2 Growth markets 3.3 Innovation & investments 4 Summary & outlook BASF Agricultural Solutions Capital Market Story

27 Increasing importance of growth markets Brazil now the largest crop protection market Crop protection markets in million Brazil USA Japan China France Germany Canada Argentina Australia Italy India Spain , , , , , , , , , , ,956 BASF Agricultural Solutions Capital Market Story 2014 Source: Phillips McDougall, 2012 data 27

28 Increasing importance of growth markets Third-party sales in growth markets in billion 1.3 CAGR 11% ~ E Success in growth markets Over-proportional sales increase in growth markets CAGR +11% for : 42% of sales from growth markets (2008: 37%) Tailored business models as basis for further expansion Ongoing increase of resources and R&D investments Profitable business expansion in growth markets, consolidated margins globally on comparable level ~ 1 bn in EBIT bsi expected Latin America Other growth markets* BASF Agricultural Solutions Capital Market Story 2014 * Eastern Europe, Africa, Asia (w/o Japan, Australia, New Zealand) 28

29 Increasing importance of growth markets Growth-market sales indexed % % Eastern Europe CAGR E 2020E > 4.5 bn E 2020E CAGR % Asia 16% % in Latin America CAGR CAGR % Africa 12% Individual measures Latin America: Additional resources and assets added, new financial tools introduced Eastern Europe: Continued organizational build-up Asia: Strengthened asset and organizational footprint Africa: Organizational footprint strengthened, ongoing portfolio expansion E 2020E E 2020E BASF Agricultural Solutions Capital Market Story 2014 * CAGR

30 Increasing importance of growth markets Local grower business models: Samruddhi Rs per hectare* Net profit 30,988 42,103 Samruddhi Non Samruddhi Samruddhi in India Trained agronomists safeguard successful use of technology Total cost of cultivation 20,033 17,993 Quantified, tangible benefit for the farmer (audited by PWC) >220,000 farmers participating* Focus crops: soybean, potato, onion, groundnut Roll-out in other growth markets ongoing (e.g. Indonesia) BASF Agricultural Solutions Capital Market Story 2014 * Source: BASF, Samruddhi project data for 2012, audit for 2013 ongoing 30

31 1 Positioning & strategy 2 Financial results & targets Sales of > 500 million in 2020 Global R&D network 3 Growth levers: 2014:New Biostacked launches and global expansion in 2014 Broad product innovation on horizon 3.1 Portfolio development 3.2 Growth markets 3.3 Innovation & investments 4 Summary & outlook BASF Agricultural Solutions Capital Market Story

32 Innovation & investments Innovation involves internal and external partners Global R&D platform Innovation network Core of our business model: Innovative solution provider R&D involves BASF Research Verbund and external partners Commitment to high R&D intensity (~9% of sales): : ~ 2.0 billion : ~ 2.9 billion BASF Agricultural Solutions Capital Market Story

33 Innovation & investments Commitment to R&D is rewarded by strong pipeline growth Total R&D expenditures in million Pipeline peak sales potential* in million R&D commitment is rewarded Consistent growth and output of our R&D pipeline: Peak Sales Potential 2.1 billion Xemium PSP now > 600m Kixor PSP raised to > 300m Functional Crop Care shaping up (e.g. soil management) ,700 2, ,200 BASF Agricultural Solutions Capital Market Story 2014 * Pipeline: market launches in timeframe 33

34 Innovation & investments R&D commitment drives earnings growth R&D expenses in million EBITDA bsi in million Continued commitment to R&D (~9% of sales annually). Earnings have outgrown R&D expenses by factor 2. EBITDA target of ~ 2 billion in BASF Agricultural Solutions Capital Market Story

35 Innovation & investments A differentiator: High share of raws from Verbund sources Raw materials* sourcing (Top-100 by value), 2013 in million from 3 rd parties 66% > 700 million from Verbund 34% Raw materials: Make or buy Make: Raws from the Verbund Security & flexibility of supply Market-based transfer pricing Typically 35-40% of the Top- 100 raws come from Verbund Buy: Sourcing synergies Economy of scale via joint BASF procurement BASF Agricultural Solutions Capital Market Story 2014 * Without AI tolling, 3rd party AI, formulants, packaging 35

36 Innovation & investments Commitment to capex Capex development in million 2,000 ~1,800 Capex F500 : 3 rd plant expansion Kixor and Xemium : new production plants Xemium : backward integration Formulation: new plants and expansions 1,000 0,000 ~ Planned capex Further capacity expansions (F500, Xemium, Dicamba) New formulation plants (e.g. Rudong, China) R&D site expansion (IND, USA) Investments expected to double (5-year period) BASF Agricultural Solutions Capital Market Story

37 Services AgIT: Farmers need to manage multiple decision parameters Financials Wheat prices Fertilizer prices Task management Fleet management Weather Documentation Field stress Certification BASF Agricultural Solutions Capital Market Story

38 Services AgIT: Today s IT situation does not meet farmers needs BASF Agricultural Solutions Capital Market Story

39 Services AgIT: Providing decision support for precision farming Solution provider approach Grower needs Agronomic How to increase yields sustainably Commercial How to run farm enterprise successfully Emotional How growers see themselves, want to spend their time Strategic pillars Grow Smarter Market Smarter Live Smarter Connect crop protection portfolio with services and the farmer community Leverage BASF data science capabilities, tools and existing infrastructure Partnership opportunities with leading market players (e.g. John Deere) Market launch in 2015 BASF Agricultural Solutions Capital Market Story

40 Financial services for farmers Farmers risk exposure BASF offers financial services Financial programs with price guarantees Weather, FX & crop price volatility Farmer income Grain exchange programs Brazil: 84% of business with lower payment risk terms in 2013 vs. 62% in 2006 Financial services are key to mitigate BASF/farmers business risks Farmers challenges go beyond the farm gate BASF Agricultural Solutions Capital Market Story

41 Working with farmers & food value chain partners Food value chain partnerships Sustainability goes beyond regulatory requirements Increasing consumer concern about food safety - globally BASF s solutions address changing requirements Partnerships with farmers as well as retailers to the benefit of the consumer Differentiator in competition EU, North America Asia Pacific South America BASF Agricultural Solutions Capital Market Story

42 Clear commitment to sustainable agriculture Increasing resource efficiency e.g., water efficiency Improving smallholders lives e.g., Better Rice Initiative (BRIA) Sustainability Society Economy Safe-guarding human health and environment e.g., Mata Viva BASF Agricultural Solutions Capital Market Story

43 Managing sustainable farming with AgBalance assessment BASF contributes to sustainable farming Manage resources more efficiently Develop sustainable market approaches across the value chain Identify potential improvements and future trends Differentiate from the competition Management tool supports sustainable farming BASF Agricultural Solutions Capital Market Story

44 1 Positioning & strategy 2 Financial results & targets Sales of > 500 million in 2020 Global R&D network 3 Growth levers: 2014:New Biostacked launches and global expansion in 2014 Broad product innovation on horizon 3.1 Portfolio development 3.2 Growth markets 3.3 Innovation & investments 4 Summary & outlook BASF Agricultural Solutions Capital Market Story

45 Well positioned for continued profitable growth & to address global farmers needs BASF Agricultural Solutions Capital Market Story

46 Outlook Positive market fundamentals expected to continue, despite increased crop price volatility Continued sales momentum of recent market launches Accelerated technology adaption in growth markets will create additional demand for BASF s innovative solutions Continued profitable growth expected, supported by high demand for innovative solutions and our strong pipeline 25% average annual EBITDA* margin target (2013: 26.6%) Targeted sales of ~ 8 billion in 2020 (~ 6 billion in 2015) BASF Agricultural Solutions Capital Market Story 2014 * EBITDA before special items 46

47 BASF Agricultural Solutions Capital Market Story