BASF The Chemical Company Our Strategy for Profitable

BASF - The Chemical Company Our Strategy for Profitable Growth Dr. Martin Brudermüller Member of the Board of Executive Directors

1 | BASF - The Chemical Company 2 | Historic success stories 3 | Our strategy for future growth 4 | Lessons learnt 2

BASF – Number 1 chemical company worldwide n The world’s leading chemical company: No. 1– 3 market position in 75% of all products and markets n Sales 2007: 58. 0 billion Euro n EBIT 2007: 7. 3 billion Euro n Business partners in over 200 countries n More than 150 production sites n More than 95, 000 employees worldwide 3

BASF’s balanced portfolio Sales by segment in 2007 Agriculture & Nutrition Chemicals 16% 6% Plastics* 17% 18% Chemical Activities Performance Products Functional Solutions 15% 16% Oil & Gas 2007 total sales*: 58 billion Euro * Styrenics are reported under ‘Other’ following the transfer of the Specialty Plastics and Foams business units to the Performance Polymers division as of January 1, 2008 4

BASF-Group: Sales by region in 2007 Sales 2007 in million EUR* (change compared with previous year in percent) Europe +9. 6% North America +3. 5% 32. 4 Asia Pacific +18. 0% 11. 9 South America +18. 5% 4. 1 9. 6 Total: 58. 0 bn EUR *Sales to third parties by location of customer 5

1 | BASF - The Chemical Company 2 | Historic success stories 3 | Our strategy for future growth 4 | Lessons learnt 6

Growth driver (I) Actively shaping the change … Since 2004 The Chemical Company 1965 – 2004 From Ludwigshafen to the world 1953 – 1965 The beginning of the plastics age 1945 – 1953 Reconstruction and new beginning 1925 – 1945 New high-pressure syntheses 1901 – 1925 The age of fertilizers 1865 – 1901 Founding of BASF – the age of dyes 7

… without loosing the own historic roots 2006 In the 80 s Oil and Gas Petrochemicals Commodity Chemicals BASF Pharma Ticona, Celanese Lanxess Hoechst New JV Formosa Sabic Plastics Invista Dow Specialty Chemicals Agrochemicals/ Biotechnology BASF Clariant Du. Pont Bayer ICI Bayer Mat. Sc. Bayer Crop Sc. Bayer Sanofi Healthcare Aventis Dow Akzo Du. Pont Syngenta Astra, Zeneca 8

Growth driver (II) Innovation 3 L House Since its foundation, BASF created a (2001) continuous stream of successful & revolutionary innovations Strobilurines (1996) Vitamine A (1963) Polystyrene (1930) Ammonia (1913) Indigo (1897) 9

Growth driver (III) The Verbund Linking partners across the Verbund network ■ Production plants ■ Research units ■ Customers ■ Site community Economic and environmental advantages ■ Extremely efficient use of raw materials and energy ■ Conserves natural resources ■ Reduces emissions and waste ■ Drives innovation for us and our customers 10

1 | BASF - The Chemical Company 2 | Historic success stories 3 | Our strategy for future growth 4 | Lessons learnt 11 11

Our four strategic guidelines for profitable growth Earn a premium on our cost of capital Help our customers to be more successful The Chemical Company Form the best team in industry Ensure sustainable development 12

Constantly improving our cost base Cost savings in million EUR Global Efficiency Improvement Program 1, 500 Antwerp Europe 1, 250 NAFTA Ludwigshafen 1, 000 Cost savings ¢ Ludwigshafen 480 m Euro by 2005 ¢ Antwerp 73 m Euro by 2006 ¢ Europe 250 m Euro by 2006 ¢ NAFTA 400 m USD by 2006 Global Efficiency Improvement Program ¢ 210 m Euro by 2007 ¢ 300 m Euro by 2008 e 13

Superior growth opportunities Good position in growth markets Active portfolio optimization • Strong presence in Asia • Enhance position in high growth businesses • Acquisitions in core business • Divestments, restructuring & reorganization • Strategic partnerships Excellent innovation platform • Market-driven innovation • Innovative business offerings Excellent platform to enable faster-than-market growth 14

Asia – The world’s largest chemical market Chemical demand (excluding pharma)* 2006 $1, 900 billion 2020 $3, 000 billion SA 5% WE 26% NAFTA 24% Asia Pacific 37% $720 billion 4. 0 - 4. 5% p. a. $1, 300 billion Asia Pacific 45% WE 21% NAFTA 20% *Real figures (base 2006) 15

Asia Pacific will become the world’s leading manufacturing hub by 2020 Industrial production (in billion USD) 2, 305 Greater China South Asia ANZ 55 100% 6, 553 10, 734 4, 657 Rest of world 633 65% 2, 155 57% 131 ASEAN 221 Korea 190 305 451 Japan Greater China South Asia 71 ANZ ASEAN 358 Korea 1, 317 Japan 1, 076 2006 35% 43% 2006 2020 Source: BASF ZZS: Real value-added, baseline 2006 Asia Pacific 2020 16

By 2010 in Asia, we want to: 1 | Contribute 20% of the BASF Group’s global sales and earnings in its chemical businesses, thereof half in China. 2 | Build a local manufacturing base to secure 70% of domestic sales. 3 | Strengthen our position as one of the top five suppliers in our strategically relevant markets. 4 | Form the best team in the industry. 17 17

Strong sales and profitability in Asia Pacific Sales* Billion Euro EBIT Million Euro 9. 6 9% ANZ South Asia South Korea 16% Japan 17% ASEAN 46% Greater China 4% 8% CAGR: + 13. 7% p. a. CAGR: + 26. 6% p. a. 2. 7 1997 2007 *Net sales to third parties by location of customer 1997 2007 18

Powerful production network in Asia Pacific ¢ 62 wholly owned subsidiaries ¢ 106 production sites China Pakistan S. Korea Japan Bangladesh Taiwan Hong Kong India Thailand Vietnam Philippines Malaysia Singapore ¢ 179 plants ¢ 10. 5 million tons installed capacity ¢ ~60 % local production ¢ Investments in Asia: - 2003 – 2007: € 2. 8 bn Indonesia - 2008 – 2012: € 2. 5 bn Australia Regional Headquarters Verbund site Production sites New Zealand 19

Building strategic partnerships with Korea‘s global champions Example: Hyundai. KIA n Global partnership since 2004 n Joint development projects n BASF supplying broad product portfolio: - Polyurethanes - Engineering plastics - Engine coolants and brake fluids - Coatings - Vehicle cataysts 20

Building strategic partnerships with Korea‘s global champions Example: Daelim Industrial Co. Ltd n Partnership since 2005 n Joint activities on ecological friendly construction projects n 3 L model house at Daelim R&D Center with BASF’s products - Neopor® (thermal insulation) - Micronal® (phase change material) 21

Excellent local team in Asia Pacific 98% local employees 55% Asian executives 50% lower attrition rate Good position in growth markets • Strong presence in Asia • Enhance position in high growth businesses High attraction of local talents all over Asia Know-how driven international executive pool High identification and loyalty of employees with BASF 22

Superior growth opportunities Good position in growth markets Active portfolio optimization • Strong presence in Asia • Enhance position in high growth businesses • Acquisitions in core business • Divestments, restructuring & reorganization • Strategic partnerships Excellent innovation platform • Market-driven innovation • Innovative business offerings Excellent platform to enable faster-than-market growth 23

Profitable growth through active portfolio management high n R&D Market Attractiveness Improve or disappear n Investments Develop n Acquisitions - Generate growth above industry average Reposition - Offer a special value proposition to customers Hold - Are innovation driven low Performance high - Reduce earnings cyclicality - Meet our financial criteria 24

Consistent portfolio management towards higher returns and reduced cyclicality … Major acquisitions • Crop protection (AHP, Fipronil, seed treatment) • Superabsorbents • Oil & Gas (NL) • Engineering Plastics • Electronic Chemicals • Custom synthesis • Catalysts/Pigments • Construction Chemicals • Water-based resins € 13 billion (Sales) Selected transactions 1997 -2007 BASF Core Businesses • • • Powerful partnerships Shell Gazprom Sinopec Petronas Toray Monsanto Major divestitures • • Pharmaceuticals Fertilizers Refineries Decorative paints Fibers Printing systems Polyolefins (Basell) Polystyrene North America • Agchem generics € 11 billion* (Sales) * Including non-consolidated sales from BASELL 25

… is reflected by BASF’s increasing share of specialty chemicals Net sales to third parties in million € * Specialties Commodities 58% 63% 55% 52% 53% 54% 46% 48% 47% 45% * Excluding Precious & Base Metal Services, Oil&Gas and ‘Other’ ** Excluding Styrenics commodity business 42% 37% 26

Superior growth opportunities Good position in growth markets Active portfolio optimization • Strong presence in Asia • Enhance position in high growth businesses • Acquisitions in core business • Divestments, restructuring & reorganization • Strategic partnerships Excellent innovation platform • Market-driven innovation • Innovative business offerings Excellent platform to enable faster-than-market growth 27

Global megatrends underpin innovation efforts Growth and aging of the world population Urbanization and metropolization Energy demand Economic globalization climate impact and emerging markets Megatrends Health & Nutrition Housing & Construction Energy & Resources Mobility & Communication 28

Growth clusters: Cross-sectional technologies feeding our businesses Megatrends Health & Nutrition Housing & Construction Energy & Resources Mobility & Communication Growth Clusters Energy Management Nanotechnology Plant Biotechnology Industrial Biotechnology Raw Material Change Chemical relevant technology base 29

Focus on five growth clusters Business model Biology Chemistry Product innovation Process innovation Plant Biotechnology White Biotechnology Energy Management Nanotechnology Physics Raw Material Change n R&D expenditures for growth clusters more than 900 million EUR from 2006 – 2008 n Approx. 25% funded by divisions, 75% corporate funded n First projects out of growth clusters came to market by 2007 Targeted annual sales from growth clusters 2010 2015 0. 5 -1 billion Euro 2 -4 billion Euro 30

Energy Management: Enabling viable energy supply strategies Life cycle of technologies for primary energy supply Oil Gas Hydro Coal Nuclear n Target: Develop innovative materials and solutions for portable and sustainable energy supply Batteries Wind Photovoltaic Biomass Biofuels Fuel cells n Approach: Fuel Cells generate electrical energy and heat from hydrogen, methanol or hydrocarbons Geothermal Marine Embryonic Growth n Challenge: Increase of global primary energy demand from 84 to 128 bn barrel OE in 2030* Mature * Source IEA 2006 31

Fuel cells Business development in value chain BASF activities Catalyst Membrane MEA* Stack System Market volume* by 2015 in million Euro Portable 800 Fuel cells benefits: n High energy density n No charging time n Low noise Innovation drivers: Stationary 200 Automobile 500 BASF sales target: 150 – 200 million Euro in 2015 * Catalyst, membrane and membrane electrode assembly n Cost reduction n Lifetime improvement n System miniaturisation Development partners: n Aisin, Honda, Sony, MTI Micro, Nissan, Plug Power, Toyota, Samsung, Tatung, Ultracell 32

Plant biotechnology: Increasing need for agricultural productivity 4 F – drivers of agricultural innovation ¢ Food Latest UN estimate on growing world population projects 9. 2 billion people for 2050 ¢ Feed Rising social standards drive global demand for more processed food, especially for meat consumption in Asia ¢ Fiber Cotton is the single most important textile fiber in the world, accounting for about 40% of all fibers produced ¢ Fuel Use of grain for fuel is growing by roughly 20% per year Market potential ¢ In 2007, the US corn harvest alone is estimated to be worth about 48 billion USD ¢ Research target: at least 10% yield increase 33

Plant Biotechnology: KOGENT Cooperation n Cooperation and licensing agreement between BASF Plant Science and Korean Crop Functional Genomics Center (CFGC) n Involving 200 top researchers from 40 renowned research institutes one of the largest agreements in the 10 -year history of BPS n Applying biotech for agricultural efficiency, healthier nutrition and renewable resources n Demonstrates innovative spirit of BASF and Korea, as well as Korea’s leading role in plant biotech R&D 34

1 | BASF - The Chemical Company 2 | Historic success stories 3 | Our strategy for future growth 4 | Lessons learnt 35

Lessons learnt: How to ensure long term profitable grow? EBITDA* / assets in % 25 Our success factors to become the leader in capital profitability BASF** 20 n Long-term strategy Rhodia PPG Solvay 15 Dow Rohm & Haas DSM Ciba 10 n Repositioning of BASF as The Chemical Company Du. Pont n Management consequence, processes and tools Bayer n Dedication to innovation Akzo 5 10 12 14 16 18 20 22 EBITDA-margin * EBITDA based on company reports 2007 (Akzo excl. pharma and ICI) ** BASF EBITDA excl. non-deductible oil taxes 36

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