3rd Quarter 2021 Results

Analyst Conference Call Q3 2021

Speech

October 27, 2021

Martin Brudermüller

Chairman of the Board of Executive Directors

Hans-Ulrich Engel

Chief Financial Officer

The spoken word applies.

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BASF Analyst Conference Call Q3 2021

October 27, 2021

Martin Brudermüller

Good morning ladies and gentlemen,

Thank you for joining us today.

[Slide 3: BASF with continued strong performance in Q3 2021]

I would like to begin with the highlights of the third quarter of 2021.

Demand remained solid over the summer, enabling us to continue to grow profitably. Compared with the third quarter of 2020, we increased prices by 36 percent and volumes by 6 percent. Increases were realized especially in the Chemicals, Materials and Industrial Solutions segments.

EBIT before special items rose by around 1.3 billion euros compared with the weak third quarter of 2020 to reach 1.9 billion euros. This is also considerably above the pre-pandemic level of 1.1 billion euros in Q3 2019.

With strong earnings contributions from the Chemicals and Materials segments, the earnings mix in the third quarter of 2021 was comparable with the second quarter of 2021. Overall, margins in the upstream businesses remained at a high level but softened slightly compared with Q2 2021.

Our downstream businesses are still confronted with further rising raw material, energy and freight costs. Price increases in most downstream businesses could only partially offset these higher costs. In addition, higher fixed costs weighed on earnings.

The semiconductor shortage severely hampered the global automotive industry in the third quarter. Temporary shutdowns and lower run rates in production have negatively impacted our

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BASF Analyst Conference Call Q3 2021	October 27, 2021

automotive-related businesses, particularly in the Surface Technologies segment.

At the beginning of the year, LMCA projected global light vehicle production would reach 87.6 million in 2021. In the meantime, LMCA has revised its forecast to 76.7 million units. We do not rule out the production of only 75 million units in 2021. We expect the semiconductor shortage to persist, at least in the first half of 2022. It is interesting to note that the production cuts are predominantly related to vehicles with internal combustion engines and not battery electric vehicles.

[Slide 4: Q3 2021: Global chemical production negatively impacted by various shortages]

Let's now turn to the macroeconomic data.

According to the currently available estimates, global chemical production increased by around 4 percent in Q3 2021 compared with the prior-year quarter. All regions recorded growth; it was most pronounced in Europe and in Asia excluding China. However, several temporary factors - such as the global semiconductor shortage, hurricanes Ida and Nicholas in the U.S. as well as power cuts in some provinces of China - led to overall lower growth rates compared with Q2 2021. The slowdown was particularly evident at the end of the quarter.

With an increase in sales volumes of 6 percent, BASF Group again grew faster than global chemical production in Q3 2021.

[Slide 5: BASF Group Q3 2021: Volume growth in all major regions except for China, where the recovery was already in full swing in Q3 2020]

This slide shows our volume growth by region. Sales volumes are compared with volumes in the respective prior-year quarters.

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BASF Analyst Conference Call Q3 2021

October 27, 2021

In Q3 2021, volumes grew considerably in North America and in Europe. The prior-year quarter in these regions was still heavily impacted by pandemic-related restrictions.

In Greater China, we recorded a slight volume decline compared with the very strong prior-year quarter, when we had achieved growth of 17 percent. The volume decline was almost entirely due to lower volumes in our mobile emissions catalysts business in Greater China associated with the decrease in automotive production. In Q3 2020, the introduction of China 6 emission standards for light-duty vehicles had supported volume growth.

[Slide 6: BASF Group Q3 2021: Volume growth across most segments; Surface Technologies impacted by semiconductor shortage]

Let's move on to the volume development by segment.

In the third quarter of 2021, we increased volumes in all our segments, except for Surface Technologies. The automotive industry, which is currently strongly affected by the semiconductor shortage, is the dominating customer sector for this segment.

The volume growth was most pronounced in the Chemicals, Industrial Solutions and Materials segments. Volumes in Nutrition & Care and Agricultural Solutions grew by around 100 million euros each.

Overall, volumes increased by 6 percent or 872 million euros in absolute terms compared with the prior-year quarter.

[Slide 7: BASF Group Q3 2021: Sales increased considerably, mainly due to higher prices and volumes]

We now look at our sales development compared with the third quarter

of 2020.

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BASF Analyst Conference Call Q3 2021

October 27, 2021

Sales of BASF Group increased by 5.9 billion euros to 19.7 billion euros. Considerably higher prices and volumes were the main drivers for this. In total, organic sales growth amounted to 42 percent compared with the prior-year quarter, which was weak due to the pandemic.

Currency effects of plus 1 percent were mainly related to Asian currencies. Portfolio effects influenced sales by minus 1 percent; they mainly resulted from the sale of the pigments business.

[Slide 8: BASF Group Q3 2021: Strong earnings in upstream business, while price increases in downstream business were not yet sufficient]

This slide shows the growth in EBIT before special items by segment.

As already mentioned, we achieved considerably higher earnings in the Chemicals, Materials and Industrial Solutions segments. In the downstream businesses, price increases were not yet sufficient to compensate for the higher raw material, energy and freight costs.

Compared with Q3 2020, EBIT before special items in Other improved considerably. This was mainly due to the adjustments of bonus provisions, as they were allocated to the divisions.

[Slide 9: Surface Technologies, Nutrition & Care and Agricultural

Solutions: Main drivers for earnings development in Q3 2021]

I will now provide you with further details regarding the unsatisfying earnings development in some of our downstream businesses.

• In the Surface Technologies segment, we were confronted with unexpectedly low demand from the automotive industry. According to LMCA, global light vehicle production declined by 16 percent compared with the prior-year quarter. Despite lower automotive volumes, sales in Surface Technologies increased on account of higher prices. These price increases were mainly related to the