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BASF Agricultural Solutions Titelmasterformat durch Klicken bearbeiten Markus Heldt President Crop Protection Division Credit Suisse Global Ag & Chemicals Conference London May 14, 2014 BASF Agricultural Solutions Capital Market Story 2014 1

1 Positioning & strategy 2 Financial results & targets Sales of > 500 million in 2020 3 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 2014 2

Population growth drives crop demand, triggering innovation in agriculture World population in billion 9 8 7 6 5 4 7.1bn* 9bn* Plant Biotechnology Crop Protection Fertilizers & Breeding 3 Mechanisation 2 Land & Irrigation 1 1850 1890 1930 1970 2010 2013 2050E Demand for agricultural products projected to grow further (food, feed, fuel). Innovations needed! BASF Agricultural Solutions Capital Market Story 2014 * Source: FAO 3

Farmer expenses Crop protection represents only small share of overall costs BASF Agricultural Solutions Capital Market Story 2014 * Source: based on USDA data for US market 2013, includes total operating costs 4

Accelerated crop protection market growth Growth* in % World GDP Growth Agriculture industry Crop protection industry 500 400 CAGR 1980-2013 4% Crop protection 300 200 100 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 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

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 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2013 BASF Agricultural Solutions Capital Market Story 2014 * Crop protection sales, CAGR 2008-2013 **Source: corporate reports and BASF estimations 6

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 1970 1990 today IT Services future BASF Agricultural Solutions Capital Market Story 2014 7

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

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 2014 9

Financial results Record sales and earnings, EBITDA margin target surpassed million FY 2013 FY 2012 % Q1 2014 % Sales* 5,227 4,679 +12% 1,653 +6% EBITDA before special items 1,389 1,193 +16% 552 +3% EBITDA margin 26.6% 25.5% - 33.4% - EBIT before special items 1,222 1,037 +18% 510 +2% EBIT margin 23.2% 22.0% - 30.7% - Assets (as of Dec 31st) 6,777 6,527 +4% 7,841 +2% Capex 310 167 +85% 63 +7% Research and development expenses 469 430 +9% 112 +12% 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

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 2008-2013, with strongest growth in N. America Southern hemisphere: 10% CAGR 2008-2013 Reduced earnings seasonality through significant contribution from Southern hemisphere Q1 2014 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

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 2008-2013) Insecticides growth opportunity New: Functional Crop Care Q1 2014 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

Financial results & targets Keeping the momentum towards 8 billion sales target in 2020 Financial targets & sales drivers in million CAGR 6% 2013-2020 ~8,000 4,679 5,227 ~6,000 Functional Crop Care Insecticides Fungicides Herbicides 2012 2013 2015E 2020E BASF Agricultural Solutions Capital Market Story 2014 * Growth markets (GMs) : Latin America, Eastern Europe, Africa, Asia (w/o Japan, Australia, New Zealand) 13

Financial results & targets Further profitable growth targeted with ~25% EBITDA (average) Sales to 3 rd parties in million EBITDA margin* in % 6.000 30% 5.000 25% 4.000 20% 3.000 15% 2.000 10% 1.000 5% 2001 2003 2005 2007 2009 2011 2013 0% EBITDA margin 3-year average BASF Agricultural Solutions Capital Market Story 2014 * Before Special Items. 2004 onwards according to IFRS. 2006 onwards excl. corporate cost 14

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

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 2014 16

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 2001 2002 2003 2004 2005 2006 2007 2011 2012 2013 2014 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 2014 17

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 2014 18

Portfolio development Fipronil-based innovation: Termidor HE system Termidor Differentiating product innovations based on Fipronil Termidor : The leading termite control product over a decade Termidor HE: System which enhances dispersal of Fipronil in the treatment zone Benefits: 1/3 fewer drills 50% lower water use 1/3 less labor BASF Agricultural Solutions Capital Market Story 2014 19

Portfolio development Herbicide renaissance BASF herbicide launches U.S. market Integrity Treevix OpTill Sharpen 2010 2011 Kixor Herbicide a.i. Optill PRO Powered by Kixor Herbicide Armezon Herbicide Facet L Herbicide 2012 Wheat Rice 2013 2014 2015 2016 2017-2020 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 2008-2013 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 2014 20

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 2014 21

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 2014 22

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 2014 23

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 2014 24

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 2014 25

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 1.928 1,928 1.623 1,623 1.450 1,450 1.350 1,350 1.213 1,213 1.129 1,129 838 2.717 2,717 2.651 2,651 4.067 4,067 7.035 7,035. 7.956 7,956 BASF Agricultural Solutions Capital Market Story 2014 Source: Phillips McDougall, 2012 data 27

Increasing importance of growth markets Third-party sales in growth markets in billion 1.3 CAGR 11% 2008-2020 1.8 2.2 ~4.5 2008 2011 2013 2020E Success in growth markets Over-proportional sales increase in growth markets CAGR +11% for 2008-2013 2013: 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

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 29

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): 2009-2013: ~ 2.0 billion 2014-2018: ~ 2.9 billion BASF Agricultural Solutions Capital Market Story 2014 31

Innovation & investments Commitment to R&D is rewarded by strong pipeline growth Total R&D expenditures in million 2013 2012 2011 2010 2009 Pipeline peak sales potential* in million 469 430 412 393 355 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) 2013 2012 1,700 2,100 2011 1,200 BASF Agricultural Solutions Capital Market Story 2014 * Pipeline: market launches in 2010-2020 timeframe 32

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 33

Innovation & investments Commitment to capex Capex development in million 2,000 ~1,800 Capex 2009-2013 F500 : 3 rd plant expansion Kixor and Xemium : new production plants Xemium : backward integration Formulation: new plants and expansions 1,000 0,000 ~ 900 2009-2013 2014-2018 Planned capex 2014-2018 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 2014 34

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 2014 35

Services AgIT: Today s IT situation does not meet farmers needs BASF Agricultural Solutions Capital Market Story 2014 36

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 Q4 2014 BASF Agricultural Solutions Capital Market Story 2014 37

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 2014 38

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 2014 39

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 2014 40

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 2014 41

Well positioned for continued profitable growth and to address global farmers needs BASF Agricultural Solutions Capital Market Story 2014 43

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 44

BASF Agricultural Solutions Capital Market Story 2014 45