BASF Se

Magdalena Moll - SVP Investor Relations Kurt Bock - Chief Executive Officer Hans-Ulrich Engel - Chief Financial Officer

James Knight - Exane Tim Jones - Deutsche Bank Markus Mayer - Kepler Capital Markets Oliver Schwarz - Warburg Norbert Barth - Baader Bank Andreas Heine - Barclays Ronald Köhler - MainFirst Peter Spengler - DZ Bank Patrick Lambert - Nomura Thomas Gilbert - UBS Rakesh Patel - Goldman Sachs Martin Rödiger - Kepler Cheuvreux Lutz Grueten - Commerzbank Mutlu Gundugan - ABN AMRO Christian Faitz - Kepler Capital Markets Laurent Favre - Bank of America Peter Clark - Société Générale Ronald Köhler - MainFirst

Good afternoon, ladies and gentlemen and welcome to BASF 2014 Analyst and Investor Conference here at our headquarters in Ludwigshafen. I also welcome all of those of you who are joining us by webcast or by telephone.

In 2014 the global economic environment remained challenging and volatile and in this environment BASF delivered on its promise to increase EBIT before special items. And also as announced this morning, we proposed to again raise our dividend to full year’s AD per share.

As a result of the cancellation of the asset swap with custom it was necessary to restate our quarterly and full year 2013 figures as well as the first three quarters of 2014. And for this purpose we have put on the table for you a special brochure containing the restated figures and this brochure will also be available on our website.

So with this I come to today’s agenda with me are Kurt Bock, our Chairman of the Board of Executive Directors and Hans-Ulrich Engel, our Chief Financial Officer. Kurt will highlight BASF performance in the fourth quarter and the full year 2014 and then Hans will take over and he will discuss to Q4 2014 segment results in much more detail and to view key aspects of the financial statements.

Kurt will then conclude with the outlook for 2015. Afterwards, both gentlemen will be happy to take your questions.

For your information, we have posted all the necessary documents the speech and supplementary documents on our website under www.basf.com/share. The Ludwigshafen participants into the [indiscernible] aspect this afternoon and can also use to provide few quote which gets to direct access to all information for today conference.

Before we start with you gentlemen, I would like to ask you again to please switch off your mobiles and smartphones because they could interfere with our microphone system and furthermore, I would like to ask you to take a quick look at our disclosure language which is currently showing behind me on the screen. So with this we are ready to start and I would like to hand it over to Kurt.

Thank you Maggie and welcome also from my side, please to having you here in Friday afternoon. Maggie already provide you with a clip, the snapshot of our results, we achieved what we try to achieve in 2014 improving earnings and we also paying a higher dividend, but I would like to go into a little bit more detail right now.

In 2014, BASF delivered on its promise to improve EBIT before special items. This was achieved against the backdrop of an overall very challenging and unpredictable economic and geopolitical environment.

In particular Q4 showed a strong finish despite considerably lower earnings in our Oil & Gas business. We will again raise our dividend.

In the fourth quarter, the global economic environment remained challenging and volatile, with ongoing geopolitical tensions and an elevated level of uncertainty. Demand in Europe only slightly improved.

North America showed the strongest growth of the developed economies. Emerging Asia still grew with solid rates.

Growth in China amounted to 7.3% compared to 7.5% in the fourth quarter of 2013. The economic development in South America disappointed.

In particular, Brazil remained technically in a recession. The average price for Brent crude oil dropped sharply from US$109 per barrel in Q4 2013 to US$77 per barrel last quarter.

On a euro basis, the average price for crude Brent was 29% lower than in the fourth quarter of 2013. In the fourth quarter, the euro lost around 8% of its value against the U.S.

dollar. In addition, we experienced strong devaluation of other important currencies such as the Russian ruble and the Norwegian krone.

Before I comment on our results, please be reminded that we restated BASF’s quarterly as well as full year 2013 figures and the first three quarters of 2014. As we did not complete the asset swap with Gazprom at the end of last year, it was necessary to dissolve the disposal group and book the depreciation and the equity results, which had been suspended since the end of 2012.

Now the numbers, sales in Q4 were almost stable at €18 billion. Slightly higher volumes and positive currency effects could not fully compensate for lower prices, especially in Oil & Gas as a consequence obviously of the lower oil price.

EBITDA went up considerably by 11% to €2.9 billion. EBIT before special items increased slightly to €1.5 billion supported by considerably higher earnings in Chemicals and Agricultural Solutions.

Furthermore, results in other improved significantly due to positive currency effects and the partial dissolution of the provision for our long-term incentive program. EBIT rose by 7% to €1.7 billion.

In Q4, special items in EBIT amounted to plus €271 million mainly attributable to the divestment of our 50% share in Styrolution and ELLBA Eastern. Impairment charges particularly in our Oil & Gas segment partly offset these gains.

In the fourth quarter 2014, the tax rate amounted to 16.5% compared to 19% in the prior year quarter. The decrease was driven by the largely tax-free disposal gains from the sale of our stakes in Styrolution, ELLBA Eastern and VNG for Verbundnetz Gas.

At €1.4 billion, net income came in 26% higher than in the prior-year quarter. Adjusted earnings per share increased to €1.04 compared to €1 a year ago.

Operating cash flow reached €2 billion, an increase of 4% versus a year ago. Let me now come to the full year 2014.

The year was characterized by low momentum in the overall economic development and a high level of uncertainty and volatility. Growth in industrial and chemical production was lower than expected.

BASF performed well in this environment. Sales amounted to €74.3 billion.

Volumes were up 4%, primarily driven by Functional Materials & Solutions and Oil & Gas. Prices declined mainly attributable to lower oil and gas prices.

Adverse currency effects also had an overall negative impact on sales. In our chemicals business, sales increased by 1%.

Higher volumes could not compensate for slightly lower prices and overall still negative currency effects. Sales in North America were 6%, up driven by higher volumes in Petrochemicals.

In Europe and Asia sales were almost stable, while they decreased in South America due to negative currency effects. EBITDA improved by more than €600 million and amounted to €11 billion.

With an EBIT before special items of €7.4 billion, up 4%, we achieved again our earnings guidance in this challenging environment. This was primarily driven by the performance of our Chemicals, Performance Products and Functional Materials & Solutions segments as well as Others.

Special items in EBIT amounted to plus €269 million compared to plus €83 million a year ago. The increase was caused especially by the divestiture of various companies I mentioned before.

This was partly offset by impairment charges mainly in our Oil & Gas segment. EBIT amounted to €7.6 billion.

We achieved an increase of more than €460 million compared with 2013 despite the fact that we recognized an overall negative currency impact on EBIT of around €230 million for the full year 2014. Income tax grew by €224 million to €1.7 billion.

The tax rate increased slightly from 22.5% to 23.8% as the share of higher-taxed earnings from Oil & Gas in Norway increased. Net income was up by 8% and came in at €5.2 billion.

Adjusted EPS rose to €5.44 compared to €5.31 a year ago. Operating cash flow reached €7 billion, down €1.1 billion versus 2013 caused by a swing in net working capital.

At €1.7 billion, free cash flow generation was reduced due to the lower operating cash flow and higher capital expenditures. Ladies and Gentlemen, we stand by our dividend policy to increase our dividend each year, or at least maintain it at the previous year’s level.

We will propose as you have seen, to pay out a dividend per share of €2.8, an increase of €0.010 or approximately 4%. Over the past 10 years, we have raised our dividend by an average of almost 12% per year.

Based on the share price at the end of roughly €70, we again offering an attractive dividend yield of about 4%. And with that, I will now hand over to Hans, who will give you some more details regarding the Q4 business development of our segments.

Thank you, Kurt. And good afternoon also from my side.

I will start to take you through our segments and we’ll begin with the Chemicals segment. In Chemicals, sales declined slightly due to lower prices and volumes.

Currencies provided some tailwind. EBIT before special items rose by 14% to €580 million, primarily due to significantly higher earnings in Petrochemicals.

We incurred positive special items of €65 million, mainly related to the divestiture of our 50% stake in ELLBA Eastern. I get to Petrochemicals sales in Petrochemicals came in significantly lower.

Prices decreased due to lower feedstock costs. Volumes declined as additional business from new plants could not compensate for missing volumes in propylene oxide.

This was caused by shutdowns of both ELLBA joint operations. In cracker products, we continued to perform well in North America and we were able to improve margins in Europe.

While acrylics showed an improvement in Europe and North America, we experienced margin pressure in Asia Pacific. EBIT before special items increased strongly, primarily driven by higher cracker margins.

Sales in Monomers rose considerably due to higher prices and positive currency effects. Volumes were flat as higher MDI volumes were offset by lower caprolactam volumes due to a planned turnaround.

Margins improved driven by higher prices in ammonia and lower raw material costs in MDI. Caprolactam margins remained stable at a low level.

EBIT before special items declined slightly due to increased fixed costs. Sales in Intermediates were slightly down due to lower volumes and prices.

Currencies had a positive impact on sales. While our business with specialty amines developed well, we experienced price pressure in butanediol, particularly in China.

Towards the end of the year, we observed destocking across various product lines. However, our business with specialty products developed well and margins improved due to lower raw material cost.

Consequently, EBIT before special items rose slightly. Now I’ll get to the Performance Product segment, sales in Performance Products were slightly up driven by positive currency effects.

EBIT before special items came in at prior year level as higher margins were offset by increased fixed costs primarily due to currency effects. The ongoing restructuring efforts led to special items of minus €34 million versus minus 149 million a year ago.

In Dispersions & Pigments, sales rose slightly. We saw good volume growth in Asia Pacific but experienced softer demand in Europe and North America.

Improved resin volumes could not fully offset lower volumes in pigments and dispersions. We noticed some destocking by our customers.

EBIT before special items decreased significantly on lower volumes and higher fixed costs. Care Chemicals’ sales grew slightly.

Volumes were slightly down, primarily in hygiene. Demand in home care was lower, while we saw higher volumes in personal care.

Fixed costs increased due to unfavorable exchange rates and year-end effects. Hence, EBIT before special items came in slightly lower.

In Nutrition & Health, sales decreased slightly. While we experienced good demand in animal nutrition and aroma chemicals, volumes declined in pharma as well as human nutrition.

A further price decline in Vitamin E was almost offset by price increases in other product areas such as aroma chemicals and pharma. EBIT before special items was considerably up, primarily due to lower fixed costs.

In Paper Chemicals, sales were almost stable as positive currency effects could compensate for lower volumes. While we experienced a further reduction in demand for graphical paper, we were able to grow volumes in paper packaging.

EBIT before special items almost matched the prior year level. Performance Chemicals’ sales rose slightly, driven by higher volumes in all regions.

Fuel and lubricant solutions as well as plastic additives showed good volume growth. Our business with water, oilfield and mining chemicals experienced lower demand.

EBIT before special items increased considerably due to improved margins. With that to Functional Materials & Solutions, in Functional Materials & Solutions, sales were considerably up, supported by continued robust demand from the automotive industry.

Volumes were up, prices remained stable and we realized positive currency effects. EBIT before special items declined slightly mainly due to lower contributions from Performance Materials and Construction Chemicals.

Special items of minus 43 million were primarily related to an asset impairment in Construction Chemicals. Sales in Catalysts increased significantly on higher volumes in mobile emissions, chemical and refinery catalysts.

Sales from precious and base metals trading grew to €605 million versus 488 million a year ago. Fixed costs were higher due to the start-up of two new mobile emissions catalyst plants one in Poland and the other one China as well as a zeolite manufacturing plant in Ludwigshafen.

EBIT before special items increased considerably driven by higher volumes. In Construction Chemicals, sales came in slightly higher thanks to improved construction activity in North America and the Middle East.

Sales in Europe decreased, mainly as a result of the divestiture of BASF Wall Systems. One-time effects led to higher fixed costs and thus EBIT before special items declined.

Sales of our Coatings division were slightly up due to higher volumes, prices and currency effects. In OEM coatings, we continued to experience strong demand in Europe and North America.

Automotive refinish saw lower market demand in all markets except China. Industrial coatings developed positively.

In our Brazilian decorative paints business, we increased sales, primarily in the premium segment. EBIT before special items was slightly lower due to higher fixed costs.

Sales in Performance Materials were slightly up. Sales volumes of specialty and engineering plastics as well as our specialty Cellasto increased strongly due to high demand from the transportation industry.

Styrenic foams for construction applications saw lower demand. Plant start-ups and turnarounds led to an increase in fixed costs.

EBIT before special items decreased as a result of that. On to Agricultural Solutions, sale in Agricultural Solutions increased by 25% due to higher volumes in all regions, mainly in South America as well as North America.

We were able to raise prices in all regions except South America, where we experienced product mix effects. EBIT before special items jumped to more than €120 million.

South America, there sales rose substantially, as the delayed start into the season led to a shift of demand from Q3 to Q4 2014. Our business in Brazil also benefitted from the good performance of our blockbuster fungicide Xemium in its first full year on the market.

The successful launch of three new insecticide formulations contributed to sales growth. North American sales were up strongly on higher volumes, prices and currency effects.

Especially our herbicide business showed an excellent performance, driven by high demand for Kixor and Dicamba. Sales in Europe came in higher, as we were able to increase volumes and prices.

Fungicide demand benefitted from the mild weather. We also saw good demand for the upcoming season both in Western and Eastern Europe.

In Asia Pacific, we experienced strong business growth, especially in China and Australia. From a full-year perspective, 2014 was our second-best year ever in Agricultural Solutions.

Sales rose by 4% to €5.4 billion, corresponding to a growth of 7% currency adjusted. Despite a tougher market environment and currency headwinds, full-year EBIT before special items amounted to €1.1 billion.

At 24%, the EBITDA margin came in slightly below our 25% target. Now to Oil & Gas, in Oil & Gas, sales decreased slightly as a result of the sharp drop in the oil price.

Higher volumes both in E&P and Natural Gas Trading partly offset this decline. EBIT before special items declined from €502 million to €347 million.

Special items were minus €189 million attributable to write-offs for exploration projects and producing assets. In the prior-year quarter, we reported positive special items of €383 million mainly due to the deconsolidation of GASCADE.

As a consequence, EBIT came in at €158 million versus €885 million a year ago. Net income, however, declined by only €191 million to €446 million.

This is due to positive special items of €220 million in the financial result from the sale of our stake in VNG as well as positive currency results. Now, to the Exploration & Production, sales in Exploration & Production decreased significantly due to the sharp drop in oil price.

The average price for Brent was US$77 per barrel compared to US$109 a year ago. EBIT before special items decreased substantially due to lower oil and gas prices.

Higher production volumes in Norway could only partly compensate for the strong decline in oil price. Sales in Natural Gas Trading were stable as higher volumes offset lower prices.

EBIT before special items came in considerably lower. The prior-year quarter benefitted from price revisions.

Adjusted by this one-time effect, EBIT before special items was on a similar level as in Q4 2013. With that to Other, sales in Other decreased to €700 million, as we experienced shutdowns at our ELLBA joint operations.

EBIT before special items improved by €86 million to minus €28 million, this was mainly driven by positive currency results and the partial dissolution of the provision for our long-term incentive program. Special items in Other amounted to plus €473 million, primarily related to the disposal gain from the divestiture of our 50% stake in Styrolution.

Now to the cash flow, cash provided by operating activities decreased by €1.1 billion to €7 billion. This was mainly attributable to a swing in net working capital.

In Q4, however, operating cash flow was up 4% versus prior-year quarter and came in at €2 billion. In 2014, we experienced an increase in net working capital of €700 million.

Inventories were up mainly due to higher natural gas storage levels caused by the mild winter as well as in preparation of planned start-ups and maintenance shut-downs. Cash used for investing activities totalled €4.5 billion.

We saw the peak of our CapEx spend last year and investments related to property, plant, equipment and intangible assets were up by 9% to €5.3 billion particularly due to our large projects in Europe and Asia. Net cash from acquisitions and divestments positively contributed roughly €370 million.

At €1.7 billion, free cash flow generation was significantly down due to a lower operating cash flow and higher capital expenditures. We generated €1.2 billion of free cash flow in the second half of 2014.

Cash used in financing activities amounted to minus €2.5 billion in 2014, increasing cash outflow by roughly €600 million compared with the previous year. We paid €2.5 billion in dividends to our shareholders and around €290 million to minority shareholders in Group companies in 2014.

Now let’s take a short look the balance sheet. Total assets rose by €7.2 billion to €71.4 billion, especially due to four reasons: higher CapEx, acquisitions, currency impacts, and higher deferred taxes due to the increase of the pension provisions resulting from lower discount rates.

Long-term assets were up by €5.7 billion. Intangible assets were roughly €640 million higher because of an increase in goodwill, in particular attributable to the acquisition of E&P assets from Statoil.

The value of tangible fixed assets increased by €4.3 billion to €23.5 billion and was driven by our investment projects as well as acquisitions equity investments decreased by approximately €930 million, mainly due to the divestment of our 50% share in Styrolution. Short-term assets increased by roughly €1.5 billion.

Inventories were up by 1.1 billion as already mentioned. On the liability side, provisions for pension obligations increased by €3.6 billion because of lower discount rates.

Financial debt rose by approximately €1 billion to €15.4 billion as we issued several bonds to further optimize our maturity profile and to benefit from the low interest rate environment. Net debt amounted to €13.7 billion, an increase of roughly €1.1 billion.

The net debt-to-EBITDA ratio is 1.2. At the end of 2014, our equity ratio remained at a healthy level of 40%.

And with that, back to you Kurt.

Thank you, Hans and so much about 2014. I’ll now talk about our expectations for 2015 – the underlying assumptions and our outlook for sales and EBIT before special items.

I will also discuss our strategic drivers. This should give you a better understanding of how we implement our, we create chemistry strategy.

Let me start with the macroeconomic assumptions for 2015. In general, as we disclaim obviously we expect the volatile and challenging macroeconomic environment to persist.

At 2.8%, we foresee the global economy to grow somewhat faster than last year. Major growth drivers will be North America and Asia Pacific.

Although we expect more moderate growth rates in Asia, absolute growth will remain high. At 4.2%, we anticipate a slightly faster growth of the chemical production than in 2014.

We assume an average oil price in the range of US$60 to US$70 per barrel of Brent and an average exchange rate of US$1.20 per €1. Obviously, the lower oil price will negatively affect our Oil and Gas business.

On the other hand, the appreciating U.S. dollar will provide us with some relief essentially in our downstream businesses.

Please keep in mind that other currencies, which are important for us, like the Russian ruble, the Brazilian real and the Japanese yen, will have a negative impact, thus resulting overall in only a minor positive currency effect. Overall, we will continue to grow volume and sales in 2015.

Sales are likely to be slightly higher than in 2014, mainly driven by higher sales in the Functional Materials & Solutions and in the Performance Products segments. We expect EBIT before special items to be on the level of 2014.

Higher earnings in our chemicals business and in Agricultural Solutions segment are anticipated to compensate for considerably lower earnings in Oil & Gas. We aim to earn again a substantial premium on our cost of capital, but at a lower level than in 2014, when we had a number of special effects from divestitures.

In order to help you better understand our segmental guidance, I would like to explain the oil price effects on our Oil & Gas and chemicals business in a little bit more detail. On a molecular basis BASF is almost perfectly hedged.

Our oil and gas production equals the volume of our oil and gas based feedstock for the chemical production. However, the negative effect of the lower oil price on the profitability of the Oil & Gas segment is immediate and direct.

In upstream chemicals, we expect to benefit temporarily from higher margins as product prices follow lower basic raw material prices with a certain delay. Our downstream businesses should experience slightly higher margins but also with a time lag depending on the length of the respective value chain.

We have to keep our margin some of those business we have inventory of more than one-year due to very long production change. Therefore, the total impact for BASF group under ceteris paribus conditions no volume growth, no currency effects will be negative in 2015.

In our Oil & Gas segment, we updated our oil price sensitivity: US$1 change in the average annual Brent oil price impacts the EBIT of our Oil & Gas business by €20 million. In 2014, the respective EBIT impact was €15 million.

Therefore, an oil price decrease of $30 to $40 per Barrel translates into an EBIT reduction of €600 million to €800 million. This decline in earnings will be partially compensated by higher production volumes, which we foresee for 2015.

The earnings of Wintershall are not as severely affected as those of many other oil and gas companies, because Wintershall’s gas-to-oil ratio is 3 to 1. The pricing of natural gas consumed in our main production regions Russia and Argentina is regulated.

Gas prices in Europe have largely decoupled from the oil price in recent years and are predominantly market driven. Of course, we evaluate measures on how to mitigate the lower profits in the Oil & Gas.

In the day-to-day exploration and production operations we focus on operational excellence and scrutinize cost. Furthermore, we continuously review our investment projects.

Through our portfolio management we are confident to further optimize our capex commitment in the future. Against this background we provide the following guidance for our five business segments.

In Chemicals, EBIT before special items is expected to be slightly below the 2014 level due to start-up costs for new plants of around €150 million to €200 million in 2015. We anticipate EBIT before special items in Performance Products to be considerably higher than in 2014, as a result of higher sales volumes, our restructuring efforts and continued cost discipline.

In 2015, we expect a stronger demand for our innovative systems and solutions, especially from the automotive and construction industries. Therefore, we aim also to considerably increase earnings in Functional Materials & Solutions.

In Agricultural Solutions, we expect a considerable increase in EBIT before special items driven by our innovative products and solutions. More favorable exchange rates should provide some tailwind in a volatile market environment.

In Oil & Gas, we will not be able to offset the oil price related lower earnings with higher production volumes in Norway and Russia as well as higher expected earnings in the gas trading business. Therefore, EBIT will come in considerably lower.

In Other, we expect a slight decrease in EBIT before special items due to the divestiture of our participations in Styrolution and ELLBA Eastern. Our planning and guidance for 2015 are obviously based on various assumptions beyond our control.

However, there are tools and levers which we use to achieve the best possible result under any given circumstances. We continue to focus on operational excellence.

In 2014 our excellence program STEP delivered an incremental annual earnings contribution of €400 million as promised. With a run rate of €1 billion by the end of 2014, we are fully on track to achieve our increased 2015 target of about €1.3 billion.

The same holds true for our restructuring efforts in Performance Products, where we want to achieve an earnings contribution of €500 million by 2017. In 2015, we are planning with a run rate of €250 million.

Furthermore, cash conversion is on top of our agenda. Working capital went up in 2014 due to plant shutdowns and the start-up schedule, something which we plan to reverse this year.

Free cash flow will be supported by lower spending for investment projects. This year we will again conclude a number of major projects.

As a consequence, we plan to reduce our CapEx spending from €5.1 billion in 2014 to €4 billion in 2015. This represents a major reduction after four years of growing CapEx.

Going forward, we anticipate this order of magnitude also for the period until 2019, which would correspond with the respective depreciation levels. From 2015 to 2019, we plan a total spend of €19.5 billion of which downstream chemicals receive 40%, upstream chemicals 40% and Oil & Gas 20%.

Upstream chemicals will continue to require a high share of CapEx due to its asset intensity. From 2010 to 2014 we have increased our annual R&D spending by €400 million to €1.9 billion.

For 2015, we plan a slight further increase reflecting the growing share of our more R&D-intensive downstream businesses and the ongoing globalization of our activities. I know that for some of you our R&D efforts are a kind of a black box.

To make this a little bit more tangible, we would like to show you a real-world example of an innovation which we are currently introducing into the market. BASF will launch a new generation of highly innovative superabsorbent polymers under the trademark SAVIVA.

BASF researchers have worked intensively for more than a decade to develop a new breakthrough technology and optimize the corresponding production processes. Based on its round-shaped particles with micro-pores, SAVIVA has an innovative liquid distribution mechanism, making it a highly efficient superabsorbent polymer in a diaper core.

The launch is scheduled sequentially in the different regions, starting end of 2016. And with this I would like to demonstrate this in a little experiment and there bear with me it should work.

So this is a stabilized approach, this is just blue water to make it more visible. Step up one, this is the new product.

This is the old product, they look the same obviously. So this is SAVIVA I put this in here.

It worked very nicely this morning at the press conference, so this is my second try here. This is the old stuff, which is to say what you can get in the market.

But I am really know this cylinder has an open button so water can flow into it. I will now put both of these cylinders into the blue water.

And then it’s up to you just to watch what is happening here. And this is essentially [multiple speakers].

This is not like watching paint drive I mean this is very different. So this stuff on the right hand side is what you get today when you buy a baby diaper and it supposed to be effective.

However, the migration of the fluid over water is much less than what you get with the new product. So I think you can keep watching, but I will continue to talk, just one page and then we are finished here.

With innovations like SAVIVATM, we are well on-track to achieve our 2015 target to have sales of €10 billion from innovations launched within the last 5 years. Finally, we will continue to carefully prune our business portfolio.

Examples from 2014 are the sale of our PolyAd Services and our share in Styrolution and we announced the divestiture of our textile chemicals business. We will also further optimize our Oil & Gas E&P portfolio, but we neither see a need nor an opportunity to divest our gas trading business in 2015.

Overall, we strongly believe, that we have laid the foundation for further profitable growth: Participating in the emerging growth regions of our industry, using opportunities to strengthen our core value chains in established markets for instance shale gas in North America and driving innovations in our downstream businesses. All of this will help to grow our earnings and to make them even more resilient.

And with that we are happy to take your questions.

Thank you very much Kurt and Hans. And with this ladies and gentlemen we are now moving to the Q&A session.

(Operator Instructions). I would also propose that you please limit your questions to two at a time if I may.

I know it’s not happy with me but two at a time. And I promise that you are always welcome to rejoin the queue and we will take certainly follow-up question.

So with this I have already a list of questions and we start with James Knight from Exane.

In terms of the CapEx plans, I think what you have outlined is a cut to your plans before. Could you give us a bit of a clue either which plants have been cut or where investments have been slowed down?

And secondly Kurt, I think on the newswire this morning you were quoted that in M&A it’s a seller’s market at the moment. Should we therefore not expect any mid-size deals or significant deals in the next year?

: Thanks for your question. What is happening now is a pretty natural process.

We are simply concluded or are simply concluding a number of major projects. And for that simple reasons the CapEx budget will decline, going back to a level which is, let’s say, more normal compared to our depreciation levels.

We haven’t really slowed down any investments. We haven’t really decided against any investments which we deem to be profitable and strategically relevant.

What we do, however, is in Oil & Gas is that we certainly take a second look at the speed of investment in certain fields, keeping in mind that the oil price has come down. But actually, I am not aware that we have put any major projects on the shelf for the time being.

It’s quite a natural development going into 2015 from our point of view. M&A, you are aware that we have done only relatively small deals over the last couple of years.

We have really very much focused on organic growth and therefore also higher CapEx, because we do see opportunities to grow in certain markets and with certain products. We always scan the market.

We always try to understand: Is there an opportunity, something which is a good strategic fit and also financially attractive? And financially attractive means, if BASF becomes the owner, we can create more value than the current owner for instance by generating additional synergies or bringing additional wisdom on how to run the business.

That is something we will always observe. And for that reason, we will stay very, very disciplined, given the current level of valuations as well as multiples we have seen.

Now to Tim Jones Deutsche Bank.

Tim Jones Deutsche. Two questions, first if can follow-on an M&A.

Do you take into account the structurally lower financing cost or what has happened in the market from a fixed income perspective? When you think about asset valuations, would you still look at the same kind of multiples and IRRs as you have done for the past five or six years?

And then secondly, it is quite rare to come to a BASF analysts meeting and see such optimism for a couple of segments on the EBIT side. Don’t get me wrong.

I think it is a good thing. But I am kind of wondered when you talk about a considerable increase to EBIT in Functional Materials Performance Products, can you give us an idea why you are so optimistic on the growth prospects this year?

And really what I am looking for is for you to break it down between raw material benefits, FX, self help, product innovation, things like that, to give us a better understanding of why you are so confident about growth for those two important segments.

Thank you, Tim. I don’t think that cheap financing is a good reason to buy a company, to make it very, very clear.

We have a cost of capital concept which we apply almost religiously within our company across all types of decisions we have to take, including M&A. The costs of capital haven‘t really come down recently if you look at this more precisely.

They have stayed persistently, you might say, high, despite very, very low debt costs. I know that there are many companies out there who basically say, okay, buying a company and making it accretive at EPS level is a great decision.

That is for us just one way of looking at an acquisition. For us it is really about: Do we earn the cost of capital over time?

This then goes back to what I said earlier on about valuations and multiples which are currently expected in the market. The Functional Materials & Solutions business, we are cautiously optimistic.

We are never really bullish. We are always cautiously optimistic.

We do think that we can grow earnings in that business, for a couple of reasons. One is, we have a very good franchise now in Asia.

We have a couple of major investments under way. You see this also on the one slide which we presented here today.

This holds true for Coatings, this holds true for Performance Materials, but also for Catalysts. We just opened up – to name another example – a new catalysts plant, the largest one in Europe, which went into operation in Poland last year.

We continue to be very, very cost-conscious. There is always kind of restructuring going on within these businesses because they are under tremendous competitive pressure, also from our customer industries, which is very often the automotive industry.

Yet we do think we can grow earnings in 2015 also based on volume growth. FX might help a little bit in that respect as well.

Raw materials, you have to be very specific here. Some of these businesses have almost zero oil-linked raw materials, like Catalysts.

In Coatings, it is a little bit different, but even there we estimate that probably 15% of the raw material base in Coatings is really directly linked to the oil price. At this point in time, our task is actually to fight off expectations from our customers who also look at the oil price and now turn around and say, okay, how about lower prices for our automotive supply products, and to explain to them what the real impact of lower oil prices and lower raw material costs on these businesses is.

Then there is a time lag; I mentioned this before. In some of the businesses, more in Performance Products, we have very long value chains, inventories sitting on the shelf, prefabricated products for instance.

So it just takes quite some time to see really the effects of lower raw material prices creeping into the production costs of these down-stream businesses. So I don’t think this will be the most important factor for driving earnings in 2015.

First of all, you mentioned China and the slowdown you saw at the end of last year and at the beginning of this year. Can you give me a kind of flavor in what kind of end markets you saw the slowdown?

And second can you give us guidance on your financial result for 2015? What do you expect here?

On your financial cost.

China from our point of view is actually almost a split market. We are doing very, very well in the downstream businesses and I already mentioned the investments which are under way where we can differentiate with technology, with customer service, customer proximity.

This is a nice growth area currently for us in China. On the other hand, we have a couple of upstream businesses where we have margin pressure.

The most publicized is obviously caprolactam which, by the way, we only produce outside of Asia and then export into China. There has been tremendous margin pressure for this product.

In other major product lines, like acrylics, we also see a little bit of that, or in isocyanates. So the big question for us in China is really, will the investments continue in chemicals or will this margin pressure which we have seen recently lead to a situation where some of the industry players will think twice about establishing additional capacity?

We feel relatively comfortable in an overall uncomfortable situation because, when you look at industry cost curves and our technologies we do think that we have good operations in place. But that is pretty much what we are seeing in China.

We mentioned that we see a little bit of slowing down of overall growth in China. But for example the automotive industry will continue to show good growth going into 2015.

On the financial results and the guidance there we usually don’t guide on the financial result. But I think I understand where you are coming from with your question.

So if you look at the financial result for the year 2014, you see essentially two special effects in there. One is the effect of the sale of our stake of 15 point some percent in VNG to the tune of 220 million on the positive side.

And you see a swing in the order of magnitude of minus 160 million negative which was related to the mark-to-market that we had to do for the Styrolution options, which was positive year-end 2013 and then turn slightly negative at the point in time end of Q2 when we moved the assets into the disposal group. So if you take these two effects out, that gives you a pretty good picture on the clean financial result.

That actually should be a pretty good guidance.

Just two quick questions related to the China, Asia question, your adjusted EBIT in Asia was significantly down in Q4 I believe, 2% or 3% level, minus 50% percent or something like that. Is that mainly driven by the caprolactam issues, the pricing issues you mentioned etc.?

So, what’s behind that? On the Agricultural Solutions side you saw significant volume gains in the fourth quarter I believe 22% or so while prices were down.

It looks like there was a certain sales incentive to go for volume, at least if you look at the prior quarters Q1, Q2, Q3 which were not that great, neither on the volume nor on the pricing side. Can you give us some background to that?

Was it just Xemium and I believe the lower Fipronil prices or a mix? Thank you.

China, we experienced start-up costs for a couple of plants coming into operation plus negative currency effects. This also plays a role if you look at the overall results.

So again, in China we saw start-up costs, which impacted earnings, and negative currency effects. Does it mean that we are happy with the earnings development in Asia?

Clearly no and there are a couple of measures we put into place to revert that development. Agricultural solutions, yes, we had good volume growth in Q4.

I think we always cautioned you not to become too much obsessed with individual quarters if you look at the agricultural business. This actually had happened in Q3.

There are a couple of factors, some of the sales in the southern hemisphere were a little bit late; they came from Q3 into Q4. This all then averaged kind of out.

So, we think we had a positive, good volume development. If your question is, did we buy market-share, clearly no.

Actually, when you look at our overall numbers, we have increased pretty steadily our prices in crop protection over the last couple of years. This also holds true in 2014 when we had something like a 2% price increase in agricultural product.

South America is kind of an interesting case. It's very difficult.

It's very, very technical because in South America you have a triangle, Brazilian real, U.S. dollar and our accounting currency, which is euro.

If you really try to account for all these effects, it becomes extremely difficult to really find out what is the real true underlying price effect is. If you just look at local prices which are essentially dollarized, we did not reduce our prices in South America, with very, very few exceptions where we had generic competition and had essentially reformulated our products and had then different price points.

So, the policy is continuously to have a good pipeline, innovative pipeline, new products, new innovations and good pricing. That hasn‘t changed at all.

Mr. Engel, I think you said that the higher working capital partly came from a higher level of gas inventories due to the warm winter.

If gas prices would follow the move of oil prices, would we see write-downs on that inventories? And secondly, I am a bit puzzled about chemicals recording sales to ELLBA because ELLBA was consolidated in the others segment.

So, I thought those sales would have been recorded as internal sales, not external sales. However, if that is only the 50% of ELLBA -- of sales to ELLBA not belonging to BASF, would we see higher sales and earnings with the ELLBA franchise, now that you own 0% of that?

The second one I can quickly answer, the situation has changed in ELLBA for a couple of reasons. One is, we divested our share in what we call ELLBA Eastern.

So we are not a 50% shareholder in that any more. We purchase now propylene oxide.

The styrene monomer we actually don’t need any more because we divested our 50 percent share in Styrolution. That is the strategic reasoning behind the divestiture of ELLBA Eastern.

The other joint venture which we run together with Shell at this point in time, as you know, is not in operation. It is being rebuilt, reconstructed.

This is going on and this will only actually result in sales later in 2016. So at this point in time it is kind of an almost hypothetical question you have been asking.

On your first question the clear answer is no, definitely not at current price levels. Natural gas at this point in time in Western Europe is in U.S dollars at 7 to 7.50 per million BTU, no risk of write-offs there.

Two more strategic questions first on the Oil & Gas business. What we see last year with the failure of the Gazprom deal and clearly above that is the overall political situation about Russia and Europe.

How will this impact your Oil & Gas strategy? Can you elaborate a little bit more in detail?

Does that e.g. also mean that you perhaps think about the Russian assets or even talk with Russia?

On the other side, there is your gas trading business where you said last year that it is no longer of strategic importance for you. Are you looking for a new buyer or how will you continue with that?

My second question is from a strategic point about the Asian market. You already elaborated a little bit on that.

But if you see the results in the last year, the overall performance there clearly must be somewhat of a disappointment also for you. Does that also impact somewhat the Asian strategy, example to go more to other markets like India?

Is that something you think about? Or will that also impact other regions in the Asia markets?

Thank you, Norbert. I think we made it pretty clear that we didn’t really welcome the result of not having the asset swap late 2014 because we thought this was a good transaction for both parties and there was a lot of good economic and strategic reason for doing this kind of swap – which included, by the way, in case you have forgotten, that we would have increased our exposure in Russia by adding additional licenses and therefore also additional commitments to develop these fields, which means from our point of view we do feel comfortable operating in Russia.

We have been doing this now for quite some time; we have a very, very good collaboration, co-operation on the ground. The conflict has had no impact on operations.

There is a joint understanding with our partner Gazprom how to run these operations. If you look at our Annual Report, you can also see that these operations are profitable.

They are profitable and they pay a dividend to BASF. We do believe – and this is not a political statement – that economic ties are still essential to bridge conflicts between countries or within a region.

So we do feel comfortable, we don’t see any reason to go back to the drawing board to find out whether it makes sense to have assets in Russia. Yes, it does make sense to have assets in Russia.

We also made clear, by the way, at the same time that we would like to balance our portfolio overall a little bit more. For that reason, we have made these acquisitions in Norway now twice, acquiring producing fields, but also developing fields from Statoil.

With regard to the gas trading business – I think I said it in my little speech at this point in time, we see no reason nor any need to think about further strategic consequences. It is a good business, by the way.

It is not a suffering business, not at all. We know how to run the business jointly with Gazprom.

We feel comfortable with our partner there. We will continue running it and then we see where we are.

At some point in time we might reflect what needs to be done. But at this point in time, it doesn’t add any value to do some soul-searching here with regard to gas trading.

Growth rates in Asia have come down. The business has become a little bit more complicated.

We said this earlier on the good times in China where whatever you built would be sold are probably history and they will not come back very quickly. However, Asia is larger than just China.

We also made that clear we have quite some big investments under way example in Malaysia. We have started up a new production site in India, Dahej, which is in the state of Gujarat.

This works so far very nicely we have a clear commitment to continue to grow in Asia. If you look at our investment budget, which you also find in your Annual Report here, I think at page 124, you can see the regional distribution.

We continue to heavily invest in China. I would say that focus of those investments will shift more now from what we might call upstream to downstream, which also clearly reflects a life-cycle type of concept.

When you enter a country, e.g. China, you normally start with upstream products building the base chemicals and then you go downstream.

We have done this in other parts of the world as well. This is exactly what is happening in China as we speak.

I mentioned the resins plant, the coatings plants, the catalysts plant, the performance materials plants which we are building right now.

Two questions from my side. The first as you mentioned in your speech sometimes higher fixed cost being the reason for lower earnings.

My understanding is that especially the STEP programs and all your efforts in efficiency are to offset inflation in fixed cost to hold this flat. Is that now over, so that the growth you have with CapEx makes it not possible any more to hold this flat?

That’s the first question and then the second on the oil price sensitivity. I understand that this oil price sensitivity includes also the gas part which is in any way also linked to the oil price.

Could you elaborate a little bit more how I have to understand this oil price sensitivity, given that oil is just 25% of the total production and gas the other? So what of the gas part is dependent on what?

We want to understand what we have to model there.

On your first question with respect to fixed cost Andreas, fixed cost is, was and will always be a focus point of our attention. Where I alluded to fixed cost increases, these fixed cost increases are in almost in all cases driven either by a currency impact in Q4 or and even more so by start-up cost that we have for plants that we started up in Q3 and in Q4, such as the catalyst plants that we started up in Poland, a new coatings plant that we started up in the Coatings.

There is a dispersion plant in the Dispersions segment in Freeport that we started up in the fourth quarter, and there is the SAP plant in Nanjing. And so when go through the list where I said there are increases in fixed cost and you compare that to where we started up plants, you will see the correlation there.

So predominantly driven by start-up cost for new plants that we have. In my world or in my head I differentiate between good fixed cost and bad fixed cost.

Good fixed costs are those that will generate future profits for us. So, as a result they come into your P&L from new plants.

Bad fixed costs are those that you alluded to, for example driven by inflation. That’s exactly where our operational excellence programs are focused on.

With respect to the oil price, in fact we increased the sensitivity from $1 dollar change in oil price equating to plus or minus €15 million in EBIT for the Oil & Gas segment only, to 20 million on an annual basis. Now, by what is that driven by?

That is, in the end, driven by more production that we will have in 2015. The target is to move production from 136 million barrels of oil equivalent to 160 million barrels of oil equivalent and when we look at the sensitivity, we look at oil primarily.

But if we also look at the part of the gas business the split between oil and gas is 25% oil to 75% natural gas in 2014 where there is still a link to oil, that is then what the guidance relates to.

My first question is on agro chemicals. You are also have a positive outlook considerably increase of earnings 2015, despite obviously that soft commodity prices are a bit a dragging point for the farmers.

Could you elaborate a little bit on what makes you so confident? I know this business is quite FX sensitive, I guess.

So from that perspective that might be a significant driver, but besides that, how do you feel you will do in a potentially more competitive environment in agro in 2015? Second question to cost savings in performance product.

You mentioned you have a run rate of 250 million in 2015 and an overall target of 500 million. Run rate is a little bit imprecise for an analyst, I have to say.

What was the level of savings you already achieved in 2014 and what is still left, so-to-say, in achieving additional cost savings in this segment?

Ronald, agriculture production products, we are cautiously optimistic again for 2015. We do think we can continue to grow our business.

Yes, you are right: FX will provide provide a little bit of a tail-wind. But essentially, we are betting on our product pipeline and the products which are already in the market or will be introduced in 2015.

I don’t think, frankly, that the – because you alluded to it – competitive pressure has increased in the sense that we today face different market circumstances than what we have seen in the past. It is all about bringing new active ingredients to the market and fighting for more innovative products.

This has served us very well and this will continue to work in 2015 as well. So we have a couple of products like Xemium which are developing very, very nicely.

We have to – we mentioned that already at Q3 – sometimes a little bit fight off, let’s say, generic competition, which is also not unheard of in our industry. I think we also find ways to deal with that situation in the most value-generating or preserving way.

On your restructuring question with respect to Performance Products, if I understand you correctly, you were asking with respect to the P&L impact that we had in 2014 from restructuring. Is that correct?

Yes. What have you already achieved from the €500 million and how much is left?

The order of magnitude of the 2014 P&L impact is roughly €100 million.

300 million so which means you have another 200 million to go for the 500.

100 million then we say, 250 million Euros P&L impact in 2015 and full impact of 500 million Euros in 2017, which is, if you compare it to other restructuring programs, the ramp-up there, pretty much in line.

Thank you for taking my questions. I have two questions first on the Oil & Gas business I think, given the sharp decline of the crude oil price, the operating result was quite decent.

Did you cut operating costs like exploration costs? If so, how long could you maintain such a margin if everything stays the same?

Or do you have to increase the cost level over time? An additional question on that, can you give us an oil price at the level of which you're Oil & Gas business would be on par with last year?

You gave an oil price for this year and you said that you expect a sharp decline in profits. And my second question is could you take advantage of the low euro in relation to other currencies by shipping more from the euro sphere to other currency spheres to have more advantage of a transaction, compared to only translation?

I will take the last one of FX and let's say exploits from Europe to another deposit of world and then Huns will take oil and gas. Obviously, the weak euro helps a little bit to boost our international competitiveness, but please keep in mind that our essential strategy always has been to produce where we do have our customers.

Still, in Asia, there is some way to go. We are not yet where we need to be.

We still export quite some product from Europe to Asia and that certainly then also will result in transactional FX gains. That is certainly also reflected in our earnings guidance when we talk about Performance Products and Functional Materials & Solutions.

In both businesses we have quite some exports. I think I mentioned that FX also plays a certain role, a limited role in driving the earnings improvement in 2015.

It’s a limited opportunity frankly. You cannot just boost product volumes unless you see the competitors in Asia really falling off the cliff, which is not the case.

On your question with respect to operational cost: When you get a healthy wake-up call as a result of your oil prices or your natural gas prices coming down significantly what you do is you go through your portfolio, you review it and you typically come up with one or the other area for fixed cost improvement. This is exactly what we started doing end of Q3, early Q4.

So we broom the portfolio. This is not only the case with respect to the fixed cost; it’s also the case with respect to CapEx and investments.

It’s a healthy wake-up call, as I call it. You get a lot of attention all of a sudden to topics that you may have taken for granted while you were sailing for three years in an environment where the average Brent oil price was in the range of 105 to 110 U.S dollars.

Your second question was at what level of oil price do we get back to last year’s result? Unfortunately, I didn’t do that calculation for you.

The easy answer that I could come up with is if we go back to an average oil price of 99, which we had last year, which we had last year, we should be pretty much back. But that would not be a fair answer.

All I am trying to say is: I haven’t done that calculation for you because there are a lot of moving pieces. There is additional production coming in from the Statoil acquisition.

There is additional production coming in from the ramp-up that we have in the Western Siberian field, in Achimov. So I can’t provide you with an answer, sorry.

Two question please. Again, Oil & Gas sensitivity, more around the gas sensitivity.

First, have you seen already some oil-linked contract impact on prices on your gas part? What is the best thing to look at in terms of sensitivity for the gas business?

Does the ruble has an impact at all on your EBIT or is it the normal spot price which would have a bigger impact on your EBIT? That's my first set of question.

Second, on [aggs] in particular I think that you said, in Q4 you raised prices everywhere, apart from LatAm. Could you comment a bit more on Eastern Europe, meaning Ukraine, CIS in particular?

Were you able to raise prices to dollarize your sales there? And also in Western Europe, could you comment a bit more on your price increases?

Are you still trying to get some U.S. dollarized-type of market in Western Europe or is it a euro-denominated market?

Thanks.

Actually, I don’t have pricing data, regional pricing data at the tip of my fingers for Eastern and Western Europe. I would guess that in Eastern Europe we have not been able to fully dollarize our prices because the local currencies both in Ukraine and in Russia have come down so quickly that you cannot adjust simultaneously.

So I would expect that there is a certain time lag – –

But the strategy is to get there?

The strategy is to be there. And you have to keep in mind that we are only now entering the season.

That is also very important. Very little has happened in Q3 and Q4 in the northern hemisphere.

We are now starting to sell stuff to the distributors, to the big farmers and then it’s ultimately sprayed. So I think we are still in the midst of assessing this situation and trying to adjust our pricing levels.

It is, in fact, a difficult question. Patrick, thanks for asking it.

And because it’s so difficult, we decided not to come up with a guidance on the gas price. Some of the issues you alluded to already, which is currencies that play a role.

And we have to look at various currencies there. The ruble is one that we have to look at.

The Norwegian krone is another one that’s relevant for our gas production. The Argentinean peso is also in that mix.

So you have a number of interesting currency factors. I would like to help you to fill your spreadsheet, but, unfortunately, I would probably more misguide you than anything else.

Please understand that we came to the conclusion not to provide guidance on natural gas.

Thank you.

Good afternoon, two questions. The first one is, what are you currently feeding into your Port Arthur cracker, ethane, propane or naphtha?

Have you played the sonata of variable feed stocks and flexible feed stocks with this volatility? That's the first question.

Second question is for Dr. Bock: In 2011, you announced that where we create chemistry strategy.

From what I understood, one of your most passionate statements was that the company has to get more market-focused and customer-focused and less molecule-focused. Can you sort of give an idea where the company is on that path, maybe specifically to specialty products that are linked into the upstream Verbund which, from what it looks like, do worse downstream compared to specialties that are not linked into the Verbund, e.g.

catalysts? Where are we with that cultural mind-shift of the company?

Thank you.

This case is the easier one I'll take that Thomas. The only feedstock that you didn’t mention, which we also feed on top of ethane, propane and naphtha, is butane, so the entire slate.

You know that we have flexibilized the cracker in Port Arthur now in a way that it can take up to 90% of light feed. Yes, we almost won on a daily basis the models.

So it works. It actually works.

Margins in 2014 were excellent. They have come down a bit in 2015, reflecting the different price levels of gas versus naphtha essentially.

Market focus versus what you call molecular focus: That’s an interesting way of looking at it. Actually, our task within BASF is to have both in the appropriate businesses.

So in upstream it’s very much about product focus and producing the right molecules, having the right technologies in place and economies of scale and I think we are pretty good at that. For me, the ultimate test about our market focus is really when you talk to our customers because they give you a pretty direct and unbiased feedback how they see BASF.

In that respect, I don’t think we have to be shy to talk about what has been achieved over the last couple of years. There is a clear recognition within our customer base that BASF is probably the best company to go to if you really look for something innovative, a new solution, customer-driven in close collaboration.

And we have many, many examples, not just in the automotive industry, but also in the for instance homecare, personal care industry, where we very-very closely collaborate with our customers with our clients. And this has developed very nicely.

This is within a business. That is something you would expect us to do.

The more interesting part, from my point of view, is actually how can you present BASF as one company to our customers especially to those customers who buy or could potentially buy a broad range of products from different businesses of BASF? We call this industry groups or customer focus groups.

And there we have seen very good results over the last couple of years because what we do here is a very simple concept obviously: to present BASF across its businesses to really have what we call Tech Days with our customers where we talk about the entire slate of technologies which we have and opportunities to do something together with our customers. And doing something together doesn’t mean that we just sell.

It very often means that we develop something together. And this has developed very nicely.

Hans e.g. in North America has steered this personally with large customers, organizing this, spearheading these efforts.

It is really paying off. Many customers actually for the first time realize how broad the range of technologies and products that BASF brings to the table really is.

Actually, this is a very different entrance ticket when you talk to large customers because they clearly understand what kind of value a company like BASF with its size and innovative power can bring to them. This works very nicely.

This is for me an added value of what has been done over the last couple of years. I think it’s self-understood that we are trying to be as customer-centric and conscious in our sales and marketing operations as possible, but really adding additional value on top by talking about BASF as one company adds value from many, many customers’ point of view.

Just a couple of questions and if I can on the Functional Materials business, and we discussed where you could give us a little bit of color that you are seeing in the chemical and refinery catalyst business given the large build-up we have had in the past, are your customers now adopting a wait and see attitude on their investments going forward? And then secondly, just in battery materials, do you think, longer term, this can be as profitable as your auto catalyst business?

And what share of electric vehicles do you think we need to see to achieve that same level of profitability? I am just trying to figure out what the path is for you to grow that business.

Thank very much.

On your first question with respect to demand in chemical catalysts: We have seen a very strong fourth quarter for chemical catalysts. I was always a little bit concerned when I looked at the forecast that I got from my catalyst folks on their chemical catalyst sales for Q4, but they had an outstanding fourth quarter and it looks at this point in time like Q1 also will deliver good results.

So, from a demand perspective, that overall seems to be very healthy. Your question on battery materials is obviously a difficult one to answer.

We are, as you are aware, we are building a business from scratch. It’s based on research, on BASF’s research.

And we did a string of smaller acquisitions. We acquired Novolyte.

We acquired the electrolyte business from Merck. We acquired Ovonic.

We invested in a cathode-active material plant in Elyria, Ohio. Yesterday we announced the joint venture with Toda in Japan where we do have a majority position now.

But this is a business really in its infancy stage. We made a conscious decision there.

We see this as a very attractive growth area for BASF. At this point in time, it is small, very small, but it should reach sizeable sales in the order of magnitude of minimum €500 million by the turn of the decade, so 2020.

It’s still some time to go. I said on a similar question as I came in the morning, it’s quite interesting to follow the analyst reports on EVs or electric vehicles.

They read a little bit like the weather report. Depending what the mood is, you see big numbers for EV or not so big numbers in the next report.

But we believe looking overall at regulations and standard -- emission standards for the automotive industry, our firm belief is they can only be reached with electro mobility, whatever the mix is between hybrid and full EV and that should form a good basis for our business. Now always keep in mind, when we talk about battery materials, this is not about BASF producing batteries.

It’s not about BASF producing cells. We focus on where we think chemicals can make a difference and chemistry can make a difference and this is electrolytes and cathodeactive material.

Also two questions from my side, first on loss making activities at BASF, when I see the 5% EBIT margin in Asia and you mentioned in this call that you have good margins in the downstream chemical activities, so Performance Products and Functional Solutions, then my conclusion would be that Petrochemicals in Asia as well as Intermediates in Asia is loss making. Can you confirm that?

And also in regard to loss making activities are your E&P activities in the North Sea also loss making at the current oil price I mean right now in Q1? The second question is on targets.

At the end of last year, you scrapped the target for 2015. At that point we have been told that we should wait for an update for the targets for the year 2020.

Now we have Q4 finished and I have not seen any update on your targets for 2020. So maybe you can do that right now?

Thanks.

Very fair point, loss-making activities, no. Our petrochemicals activities in Asia or in China are not loss making.

The same holds true for exploration and production activities in the North Sea, which doesn’t mean that we are satisfied with the profitability of our petrochemical activities in China to make this very clear. The targets for 2020, I don’t think that too many people are really interested in 2020 quantitative targets at this point in time.

We have just been talking about 2015 and we made the disclaimer that there is lots of volatility and uncertainty going forward. This holds even more true for five years and not just 12 months going forward.

We have in mind, Martin, is that we will spend much more time with you in September when we will have an Investor Day actually it will be almost two days almost where we will go through all of our business and then we will have, let’s say, an educated discussion about the long-term targets and path forward. I think this is the right point in time to do this.

It’s pretty clear, since 2015 target achievement is less certain than what we had said three or four years ago that from today’s point of view, it would not be very wise if you just now just draw a line between the, let’s say new targets for 2015 and 2020. But so far, I have seen no analyst actually doing that.

Thanks for taking questions on Europe. The European chemical association Cefic seems to make a quite bullish call on chemical production growth outside Germany, but in Europe.

Is this something you can share? Is this something you already experience in countries like France and Italy for example that there is a strong growth and a recovery already in 2015?

And then question related to that one, you mentioned that the margin in Europe in petchem was up. Is this only due to cracker margins and raw materials or is this also related to a stronger demand driven by what I have just mentioned before?

Europe, yes we have seen a little bit of a recovery in countries like Spain. What is the importance of Spain for the European chemical industry is it has certain significance, but it’s still limited.

So at the end of the day the major chemical hubs are the Netherlands, Belgium, Germany and France in a certain way. This is really where it makes a difference at the end of the day.

And I have complained a little bit about the lack of growth in 2014. We are not very optimistic about 2015 when you look at the overall macroeconomic set of figures.

So our assumption for our guidance here is that Europe continues to lag behind in terms of growth. There might be a little bit of a recovery, but it’s not really a booster and not really position today, will not really accelerate overtime.

We probably need more economic tailwind for that to happen. And petrochemical margins in you have mentioned in your speech of margin was slightly up or this seems then entirely driven by the quicker margin and raw material second demand.

Demand has been relatively sluggish or, let’s put it positively, kind of stable in Europe. So we are very much talking here about a raw material price effect.

Yes, absolutely, you are correct. Plus, keep in mind that there had been outages etc.

which also affect the pricing situation, at least temporarily.

I will take first two and then Hans you talk about nutrition and health. Start-up cost this year approximately I think I mentioned it in my little speech 150 to 200 million.

This is slightly higher than what we had expected a year ago. What is the contribution of new capacity, available capacity to projected growth in 2015?

When you talk about chemicals, excluding oil and gas, we anticipate to grow more or less in line with overall market growth. We said, market growth in chemicals is about 4.2%, 4.0% slightly above that.

About 50 percent of that growth should come from additional capacity which came on stream over the course of last year or will come on stream in 2015. Nutrition & Health, why do you expect a considerable increase in volumes?

Among other things in the aroma area, from our investment that we did in the menthol plant. That should drive some of the volume growth in Nutrition & Health in the year 2015.

Two questions, I apologize to mention FX again. Firstly, on FX, your budget for the year is 1.20, obviously, the rate is much more favorable than that at the moment.

How quickly does the improvement or the weakness of the euro feed through to your business? I guess, really what I am asking is what’s the hedging policy at BASF and how slowly do FX benefits feed through to the EBIT level?

The second question is about pensions. Obviously, your pension deficit went up materially.

Can you just remind us, is that the unfunded scheme Pensionskasse? In which case does that have any impact on your cash flow contributions over the next couple of years?

Or is it just purely an accounting issue around discount rates?

Tim, it is a pure accounting issue, I’d say at this point in time. We have made one contribution to one of the plans which is the U.S.

plan, in the order of magnitude of 200 million. But what you see is completely driven by discount rates.

On average, the discount rate came down by 150 basis points in 2014. We provide the sensitivity there for 2014 as well as for 2015.

By the way, that does not only have an impact on our pension contributions. It also has an impact on the asset side because, because as a result of the pension obligation increasing by 3.6 billion, there is also a roughly 1 billion deferred asset position that goes on the books.

Now, with respect to foreign exchange and hedging policy, we are hedged typically for all booked positions in foreign currency. That gives you an idea.

When I say booked positions, you look at our accounts receivable and the time that we have in the books there, which is on average somewhere in the order of magnitude of 60 days to 70 days. But to a certain extent and in certain currencies we also hedge the planned exposure there, in particular for the U.S.

dollar. And that can go out to somewhere in-between six to twelve months.

A couple of questions, please, on the oil side, can you comment on the current situation in Libya, what is happening there or not happening there? There was a write-down in a Qatar gas field.

Can you also elucidate what happened there? Is it the Qatari government trying to build a football stadium there or something and you had to shut that down?

And then in terms of absolute chemical margins, you seem to be of the view that you can keep absolute chemical margins in a declining oil price environment. Can you elucidate how that works?

And you also mentioned in your downstream businesses that, obviously, contracts are longer, maybe even up to a year. But, I mean, these contracts are not rolling over on December 31, 2015; they are rolling over all the time.

So what are your customers telling you at the point in time when a contract is rolling over? How tough are those pricing negotiations?

I'll take the Libya one and the margin one and then Hans will talk about what happened in Qatar. Offshore Libya is okay.

We are producing offshore and we can have what you call lifting from time to time. Onshore is very, very difficult.

We had to stop again in December. It’s extremely volatile.

Actually, it’s almost not worthwhile to comment on individual days are we starting up? Do we shut down again?

What is pretty clear from today’s point of view is that in 2015 we will not achieve our “nameplate” capacity in Libya. We always produced something like 80,000 barrels a day.

That is very, very unlikely from today’s point of view. Frankly, Christian, I cannot give you a forecast.

“Volatile” is not really the right word to describe the situation. It’s a very uncertain and very dangerous situation.

To exemplify this: At this point in time, we have no expat on the ground because we can’t ask anyone of our employees to go to Libya. In some cases, you need expats to increase production levels again because there is also some technology involved.

So the planning assumption is that Libya onshore will stay at relatively low levels. The good news here is that with the lower oil price the opportunity losses of Libya have come down.

We always try to look at the positive side of things. The margin story, yes, our target is clearly to maintain what we call absolute margins.

This is demand supply-driven. So far, demand – not looking at China, in particular a couple of products in China – is still solid or even slightly growing.

That is, I think, the precondition for being able to maintain margins. If we were heading towards a real slowdown, macroeconomic slowdown, then it would become extremely difficult.

So far, I think, Q4 has demonstrated that we were able to achieve that in the Chemicals segment, which is essentially upstream. However, the rollover time, cycle time in these businesses is relatively short, 30, 60 days and things are done.

In downstream – I think I talked about it – it’s extremely difficult to predict what’s going to happen, especially when we would really get increased volatility. If the oil price stabilizes at current levels or slightly above, I think, we can cope with that situation better than if it is going up, going down, going up, going down because then discussions with customers become kind of difficult, more difficult – put it that way.

The “soccer field” in Qatar would have to be offshore, so a floating field. We had one well there offshore where we had to come to the conclusion in Q4 that it will not be economical to actually continue.

As a result of that, we took the write-off. Unfortunately, in the world of oil and gas that happens occasionally.

It shouldn’t hap-pen too often, but occasionally it happens.

To make this very clear we discovered gas. We could produce.

The problem is we need a link into the pipeline network and that is nothing we can achieve at this point in time. Therefore, it’s not economical.

I have got a question on the MMTP project, please. When you presented this project about nine months ago, I guess you were talking about the strategic side which was about not being short in propylene in potentially a short market.

Then there was an economic side which was making a good return on a potentially huge investment. Can you talk about those two sides in light of what we have seen in the past six months in terms of energy prices?

Are we now seeing 100% of the investments in the 19.5 billion CapEx guidance? Given that this project is slowed down, are we now seeing some of that investment away from the 2015 to 2019 CapEx budget window?

The 19.5 billion for the next five years include all the ideas and projects which are under consideration at this point in time. That is the case, yes.

And with regards to the royalty fleet attractiveness of the investment gas was price of France hence we fill it in.

MMTP at current price levels still looks attractive. It’s methane to methanol to propylene.

But as we said nine months ago, as you mentioned rightfully, we will take our time to make our decision. And we will make that very diligently.

So don’t expect us to make a final investment decision prior to the middle of next year which will be the middle of 2016. At that point in time, we will have seen more of the current developments.

We will get a better feeling for what’s going to happen on oil prices, on natural gas prices. Natural gas prices, when you look at them in the first quarter of the year 2015, despite the strong winter that we have at least on the East Coast and Bill is here; he can probably tell you stories from Boston which are quite amazing.

The average natural gas price is at Q1 so far is around 2.80, which gives you a significant advantage compared to natural gas prices when you look at them in Western Europe as an example. So, at this point in time, I’d say that’s still an attractive project, but we will take our time.

We will make up our mind and will then make our decision based on that.

As a follow-up: I think the budget for North America CapEx is 5.2 billion, as a percentage of the 19.5 billion. Away from MMTP and the ammonia JV, what are the big investments in North America that you are planning?

We have a number of investments that we've on the list. There is the ammonia investment.

We just announced that we closed the transaction with Yara. So we will start and put concrete and steel on the ground relatively soon.

There are a number of other highly attractive projects that we have in the US. Please accept that I don’t reveal what we have in the plan.

We also have things in there which we will finalize in 2015, so first for example, the formic acid plant, the surfactants plant, so a number of things that we have in the portfolio.

There is one additional factor which you have to keep in mind, another moving part which is really construction cost. That’s also something we have to consider.

We have seen quite a deep increase in construction costs on the U.S. Gulf Coast and it needs to be seen whether those cost will become, let’s say, more acceptable going forward.

That’s also something we have to put into our little equation.

Peter, I’d say, yes, that’s approximately correct. Please keep in mind that also there is a fair share of oil and gas-based investments included in the European budget.

If you take that out, if you just look at pure chemicals, I think your estimation is pretty close to expected reality.

Yes, the first question on your previous 2015 guidance, the EBITDA guidance you provided in November last year when you actually stated 10 to 12 billion and rather at the upper end than at the lower end. Could you perhaps say a word on that guidance?

How does that fit with your current EBIT guidance? Do you see this still as valid?

And second point, a bit more short-term, Q1, You obviously mentioned that you expect a growth in line with the chemical markets, 4% volume growth in for 2015, if I rightly understood in Chemicals. Can you bit elaborate what happened so far, let's say January/February whatever you say chemicals volumes are similar to that?

And the second sub question on that natural gas trading, we obviously had a cold winter. Do you think we can come back to, let’s say, historical good quarters, winter quarters on the earnings or is the structural margin pressure too high for the natural gas trading not to come back to this kind of levels?

Ronald, I think our EBITDA guidance for 2015 is still correct. We said something between 10 and 12.

I leave it to you to figure out whether it’s the higher end or the lower end, but I think we provided you with at least some clues today where it could be. I think you should know us well enough to understand our aspirations and what we try to achieve here.

The trading environment in Natural gas you'll cover in the second and how did January and February develop so far? It was an okay start into 2015.

It’s rather difficult now to interpret individual daily data which we also get be-cause there are so many moving parts. You know that prices are coming down in some businesses, obviously driven by raw material costs.

Volume developments are pretty different in the various regions. So I don’t want to speculate at this point in time.

But I think what we see right now is incorporated in our guidance for the entire year.

Now, on your question with respect to natural gas trading business historic margins, structural issues, my view is, this is supply and demand at its best. With stronger demand, meaning a stronger winter, I think you will be back at higher margins and back to, as you call it, more the historical type of margins.

It’s the second winter in a row if you look at the price difference when we have at least on this side of the Atlantic, warm weather. If you look at the price development during the course of 2014, I think we have seen the low in price as low as I think roughly $5 or even below $5 per million BTU in April of last year.

From then, we have seen the price increasing. Currently, it’s somewhere in the range of $7.50 per million BTU.

There were voices out there that said, gas will not come back from this $5 price level that we have seen in the second quarter of last year. So we see that once demand is kicking back in, prices go also back up.

And that’s also my expectation to see that going forward.

But that means the strong winter we have seen here in the first quarter in Germany will be quite helpful for your business in natural gas trading?

A strong winter is always helpful, yes.

I had three like I pick one then and which do I actually pick, I pick up the ag one. This spectacular V-shaped recovery in the ag business from the third into the fourth quarter, you explained it with the way the season started last year 2013 versus 2014 in Brazil.

But is there something the organization has learned suddenly from the third into the fourth quarter? I am specifically asking about Becker Underwood because that’s the new business that you have.

And I suspect that’s the business that gave you trouble in 2014. So with your guidance in mind, is it the biologics business that you see considerably improving as you go into 2015?

Is that the reason behind the improvement?

Again, Thomas, I caution you a little bit to put too much weight on individual quarters in that particular business. Functional crop care -- that is Becker Underwood -- actually has developed very nicely and according to our plan and the projection which we had made before we made that acquisition actually.

So we are very satisfied with that development. It’s gaining traction.

It has been a very, let’s say, US-centered focused business. And the task for the team is now to globalize it.

They already had made some progress in Latin America. I think we will grow it in a very nice way.

It adds new products to our portfolio which we haven’t had before. The growth rates for the functional crop care, biological crop care should essentially be higher on average than for crop protection products.

So we are quite optimistic about it.

Just looking at some of the numbers or the guidance that you have given us this year, EBIT is flat, CapEx down, I presume working capital will be better because 2014 wasn’t great. You are not going to do any big M&A.

So I am just wondering what you are going to do with the big pots of cash that you are going to have at the end of this year. So it’s the age old question, Buybacks, extra dividends, at what point do BASF management just tip the balance and do step up the pay-out ratio or will do some special dividends or go back to buybacks that you have done historically?

Thanks.

Could we answer that question at our Investors Day in September, Tim? Will that be okay?

Between now and September there is nothing new to report actually.

Okay, we will save it for September.

Okay, thank you.