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

BASF investigates establishment of second Verbund site in China Dr. Martin Brudermüller, Chairman of the Board of Executive Directors and Chief Technology Officer July 10, 2018 1 July 2018 | 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. 2 July 2018 | Memorandum of Understanding on Verbund site in Guangdong

Asia and China continue to dominate global chemical production Real chemical production (excl. pharma) (trillion US$, base year 2015) World Asia Pacific 1% 7% 5% 15% 7% 1% 6% 7% 78% 5% 74% 17% 7% CAGR CAGR 2025 62% 2025 2015 2015 5% 6% 3.4% 4.4% 3.1 5.0 3.6 2.0 57% 5% 16% 19% Asia Pacific North America Greater China South Asia South East Asia Europe Others Japan South Korea ANZ 3 July 2018 | Memorandum of Understanding on Verbund site in Guangdong Source: BASF

BASF is a well-established and highly-recognized company in China Mainland China, Hong Kong, Taiwan  25 major wholly-owned subsidiaries  7 joint ventures Jilin Xinjiang Beijing  25 production sites Liaoning Tianjin  24 sales offices Shandong Jiangsu  8,982 employees * Nanjing Shanghai Sichuan Anhui Legend*** Chongqing  €7.3 billion sales ** in 2017 Zhejiang Asia Pacific headquarters Fujian (~€8.7 billion including 50% Greater China headquarters Taiwan R&D and Technical Centers of BASF-YPC, Nanjing) Guangdong Guangxi Verbund site Hong Kong Production site Sales office 4 July 2018 | Memorandum of Understanding on Verbund site in Guangdong * As of Dec. 31, 2017 ** By location of customer *** Some sites are not shown due to scale.

BASF is growing in and with China 2005 2010 2014 2015 1966 Inauguration of Intended First Inauguration Expansion Expansion of acrylic establishment production of Nanjing of Nanjing Chongqing MDI acid production at in China Verbund site Verbund site complex of Verbund site Nanjing Verbund site in Guangdong Inauguration of Maoming site 1850s 1960s 2000s 2010s 2020s End of 2018 2009 2012 1885 First Establishment of Inauguration of Expansion of Innovation delegate Nanjing Specialty Innovation Campus Shanghai: in China Chemicals Campus Shanghai Automotive Application Center 5 July 2018 | Memorandum of Understanding on Verbund site in Guangdong

BASF’s existing Verbund site in Nanjing ** has been consistently profitable with reliable dividend payments Sales EBITDA (in billion €) (indexed) 3 500 2.84 2.83 2.76 2.76 2.71 2.5 2.36 400 * 2.21 * 1.93 2 1.72 300 1.5 1.36 200 1 100 0.5 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 6 July 2018 | Memorandum of Understanding on Verbund site in Guangdong * Year of scheduled turnaround; ** BASF-YPC Company Ltd. Nanjing, 50:50 JV with Sinopec

Guangdong province is ideally located to serve the fast-growing, undersupplied market in South China Market characteristics  More than 110 million residents in Heilongjiang Guangdong province Jilin  GDP Guangdong (2017): ~US$1,330 billion (to reach Xinjiang Liaoning GDP of South Korea soon) Inner Mongolia Beijing Tianjin  Current GDP growth: ~7% p.a.; Hebei Shanxi Ningxia Shandong GDP growth until 2035: ~6% p.a. Qinghai Gansu Jiangsu Shaanxi  Key customer industries: Henan Nanjing Tibet Shanghai transportation, consumer goods, Anhui Hubei Sichuan home and personal care, electronics Chongqing Zhejiang Jiangxi Hunan  Chemical products are generally Guizhou Fujian Yunnan undersupplied by local production Guangdong Guangxi Hong Kong Hainan 7 July 2018 | Memorandum of Understanding on Verbund site in Guangdong

Greater China Guangdong is home of key customers from fast-growing industries Largest electronics production in China Strongly growing industrial base (Real value added, electronic equipment in Guangdong; base year 2015) (Real value added, manufacturing in Guangdong; base year 2015) billion US$ billion US$ 600 150 400 100 200 50 0 0 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 Largest automotive production in China Increasing growth of private consumption (number of cars built in Guangdong [in 1,000]) (Real household consumption in Guangdong; base year 2015) billion US$ 3,500 600 3,000 400 2,500 2,000 200 1,500 1,000 0 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 8 July 2018 | 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 Ethylene glycol  Potential investment of up to Ethylene Ethylene US$10 billion until around 2030 Surfactants oxide  Investment to evolve in phases Amines Steam  Startup of first plants in 2026 cracker SAP at the latest Acrylic acid (planned Acrylates Propylene  Most advanced Verbund site with capacity Oxo-C4 Dispersions smart manufacturing concept ~1 million HPPO tons p.a. Polyols  Environment, health and safety of ethylene) concept according to BASF’s global Intermediates standards and local laws and Raffinate Crude-C4 Performance regulations Butadiene polymers  Next step: Pre-feasibility study 9 July 2018 | 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 10 July 2018 | Memorandum of Understanding on Verbund site in Guangdong