UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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the Securities Exchange Act of 1934
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ENGELHARD CORPORATION |
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IRON ACQUISITION CORPORATION BASF AKTIENGELSELLSCHAFT |
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Exhibit 99(a)(21)
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Searchable text section of graphics shown above
[GRAPHIC]
Successfully
Shaping the Future
Dr. Jürgen Hambrecht, CEO
Ludwigshafen, February 22, 2006
[LOGO]
Our Goal:
Create value across the cycle. Earn a premium on our cost of capital.
In 2005, we earned a premium of 2,354 million Euro on our cost of capital
|
[LOGO] |
Financial Highlights 2005 |
Million Euro
|
|
|
FY 2005 |
|
FY 2004 |
|
|
|
|
Sales |
|
42,745 |
|
37,537 |
|
14 |
|
|
EBITDA |
|
8,233 |
|
7,685 |
|
7 |
|
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EBIT before special items |
|
6,138 |
|
5,230 |
|
17 |
|
|
EBIT |
|
5,830 |
|
5,193 |
|
12 |
|
|
Income before taxes and minorities |
|
5,926 |
|
4,347 |
|
36 |
|
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Net Income |
|
3,007 |
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2,004 |
|
50 |
|
|
EPS (in Euro) |
|
5.73 |
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3.65 |
|
57 |
|
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Operating Cash Flow |
|
5,250 |
* |
4,634 |
|
13 |
|
%
* prior to external financing of pension liabilities
3
Profitable Growth
EBIT by activity*
Million Euro
[CHART]
* Before special items as of 1999, excl. Others,
** excl. Pharma, Polyolefins,
*** based on IFRS
4
Achievements 2005
Achieve
profitable growth 
• Sales 
14%, EBIT before
special items 17%
• Successful start-up of Nanjing
• Tripled earnings in North America
Continue
portfolio optimization
• Acquisition of growth businesses (Merck Electronic Chemicals, Orgamol)
• Divestiture of 50% stake in Basell JV
Further
reduce cost base – Europe, NAFTA, Asia
• Ludwigshafen Site Project higher than expected
• NAFTA cost savings earlier than expected
• Continuous productivity gains of our production sites
Responsible
use of cash
• 1.4 bn Euro spent on share repurchases
• 904 million Euro paid in dividends in 2005
• Capital discipline
5
How will BASF generate value in the future?
Strategic Positioning of Business Units
[CHART]
• Half of the businesses are in areas with high growth rates and are subject for expansion / moderate expansion
• Cash Flow will be mainly invested in expanding business units
• Acquisitions will contribute to profitable growth
• Divestitures almost completed
7
Important Acquisitions 2003 - 2005
1.5 billion Euro in Sales
|
Segment |
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Transaction |
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Closing |
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Chemicals |
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Merck Electronic Chemicals |
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2005 |
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Callery Chemicals |
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2003 |
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Plastics |
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Leuna Miramid, Engineering Plastics of Honeywell, PA 6.6 business of Ticona |
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2003-2005 |
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Foam Enterprises |
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2004 |
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Performance Products |
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Remaining shares of NOF Coatings |
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2005 |
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PIB Business of Exxon Mobile Chemicals |
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2003-2005 |
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Agricultural Pr. & Nutrition |
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Fipronil Package of Bayer |
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2003 |
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Orgamol |
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2005 |
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Oil & Gas |
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Urengoy-Achimov field, OOO Megatron NVK |
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2003-2004 |
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Storage Saltfleetby |
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2005 |
8
Important Divestitures 2003 - 2005
5.3 billion Euro in Sales
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Segment |
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Transaction |
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Closing |
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Plastics |
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Fiber Business |
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2003 |
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Joliet (Polystyrene Business and Site) |
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2005 |
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BASELL (50%) |
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2005 |
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Performance Products |
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Printing Inks and Printing Systems |
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2004 |
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Masterbatch Business outside Europe |
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2004 |
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Furniture and Window Coatings |
|
2004 |
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DyStar (30%) |
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2004 |
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Agricultural Pr. & Nutrition |
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Soil Fumigants, Phenoxies, Phorates, Triforine, Imazamethabenz |
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2004-2005 |
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Resende Site |
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2005 |
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Cramlington Site |
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2004 |
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Oil & Gas |
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Share in two Gas Distribution Companies in the Czech Republic |
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2005 |
9
Engelhard:
A Supplement with Excellent Strategic Fit
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Environmental Technologies |
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Process Technologies |
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[GRAPHIC] |
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[GRAPHIC] |
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Appearance and Performance Technologies |
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Materials Services |
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[GRAPHIC] |
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[GRAPHIC] |
Status Report Engelhard Acquisition
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Action |
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Date |
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Announcement of intention to acquire Engelhard |
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January 3 |
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Filing of tender offer with SEC |
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January 9 |
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Nomination of two directors for election at Engelhard’s annual meeting 2006 |
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January 27 |
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Filing of preliminary proxy statement with SEC |
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February 1 |
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Receipt of US anti-trust approval |
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February 3 |
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Extension of tender offer to March 3 |
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February 6 |
11
Strong Benefits from Acquistion of Degussa’s Construction Chemicals
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Source: Degussa |
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Sports Flooring |
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Concrete Admixtures |
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[GRAPHIC] |
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[GRAPHIC] |
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Mortar Modifiers |
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Protective Coatings and Sealants |
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[GRAPHIC] |
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[GRAPHIC] |
Status Report Degussa Construction Chemicals Acquisition
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Action |
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Date |
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BASF announces interest in acquiring Degussa Construction Chemicals business |
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December 16, 2005 |
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BASF submits binding offer |
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End of January 2006 |
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Degussa announces to enter into intensive negotiations only with BASF at present |
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February 14, 2006 |
13
Constantly Improving our Cost Base
Restructuring and Reorganization
[CHART]
• Ludwigshafen
EUR 480m (June 2005)
• Antwerp
EUR 50m
(expected end of 2006)
• Europe
EUR 160m (2003)
EUR 90m
(expected end of 2006)
• NAFTA
USD 250m (June 2005)
USD 150m
(expected mid-2007)
Commercial Effectiveness Program NAFTA: USD 200m (expected end of 2007)
14
Focus on distinct Customer Interaction Models
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[GRAPHIC] |
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[GRAPHIC] |
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[GRAPHIC] |
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Trader/transaction |
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Lean/reliable basics |
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Standard package |
|
supplier |
|
supplier |
|
provider |
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[GRAPHIC] |
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[GRAPHIC] |
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[GRAPHIC] |
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Product/process |
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Customized solutions |
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Value chain |
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innovator |
|
provider |
|
integrator |
15
Leading Supplier to Appliance Industry
Value Creation with Differentiating Offer
Relative offering level
[CHART]
16
Focus on Market Driven Innovations
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BASF Innovation Strategy |
||||
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Product |
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Process |
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New Fields of |
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Innovations |
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Innovations |
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Technology |
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Tailor-made business models |
||||
• R&D expenditures 2005: 1.06 billion Euro
• 8% increase in R&D expenditure planned for 2006
• Five growth clusters defined:
• Nanotechnology
• Energy Management
• Plant Biotechnology
• White Biotechnology
• Raw Material Changes
17
Agenda 2006
• Continue profitable growth
• Further efficiency improvement and cost reductions
• Focus cash flow on investments in most promising businesses
• Acquire more customer oriented and innovation driven businesses
• Integrate acquisition targets successfully
• Innovate for growth
18
Outlook 2006
We aim to continue to grow faster than the market. We plan to follow on from the strong level of income from operations (EBIT) before special items posted in 2005.
Assumptions:
• Global economic growth of 3.2% in 2006
• Global chemical production growth of 3.0% in 2006
• Average oil price of $55/bbl (Brent)
• Average exchange rate of $1.25 per euro
Industrial production forecast* (%)
[CHART]
Chemical production forecast* (%)
[CHART]
* Real changes compared with 2005
19
Disclaimer
This presentation contains forward-looking statements under the US Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections of BASF management and currently available information. They are not guarantees of future performance, involve certain risks and uncertainties that are difficult to predict and are based upon assumptions as to future events that may not prove to be accurate.
Many factors could cause the actual results, performance or achievements of BASF to be materially different from those that may be expressed or implied by such statements. Such factors include those discussed in BASF’s Form 20-F filed with the Securities and Exchange Commission. We do not assume any obligation to update the forward-looking statements contained in this presentation.
20
[LOGO]
Searchable text section of graphics shown above
Income Statement Highlights
Q4 2005 vs. Q4 2004
Million Euro
|
|
|
Q4 2005 |
|
Q4 2004 |
|
|
|
|
Sales |
|
11,720 |
|
9,858 |
|
19 |
|
|
EBITDA |
|
2,222 |
|
2,577 |
|
(14 |
) |
|
EBIT before special items |
|
1,591 |
|
1,617 |
|
(2 |
) |
|
EBIT |
|
1,482 |
|
1,792 |
|
(17 |
) |
|
Financial result |
|
(43 |
) |
(691 |
) |
— |
|
|
Income before taxes and minority interests |
|
1,439 |
|
1,101 |
|
31 |
|
|
Net income |
|
560 |
|
404 |
|
39 |
|
|
EPS (reported) in Euro |
|
1.10 |
|
0.74 |
|
49 |
|
%
3
Income Statement Highlights I
FY 2005 vs. FY 2004
Million Euro
|
|
|
FY 2005 |
|
FY 2004 |
|
|
|
|
Sales |
|
42,745 |
|
37,537 |
|
14 |
|
|
EBITDA |
|
8,233 |
|
7,685 |
|
7 |
|
|
EBIT before special items |
|
6,138 |
|
5,230 |
|
17 |
|
|
EBIT |
|
5,830 |
|
5,193 |
|
12 |
|
5
Special Items
Million Euro
|
|
|
FY 2005 |
|
FY 2004 |
|
|
Special items included in EBIT |
|
(308 |
) |
(37 |
) |
|
thereof restructuring |
|
(295 |
) |
(277 |
) |
|
Special items included in financial result |
|
222 |
|
(618 |
) |
|
Total |
|
(86 |
) |
(655 |
) |
6
Income Statement Highlights II
FY 2005 vs. FY 2004
Million Euro
|
|
|
FY 2005 |
|
FY 2004 |
|
|
|
|
Financial result |
|
96 |
|
(846 |
) |
— |
|
|
Thereof: |
|
|
|
|
|
|
|
|
Income from financial assets |
|
348 |
|
(596 |
) |
— |
|
|
Interest result |
|
(170 |
) |
(206 |
) |
— |
|
|
Other financial results |
|
(82 |
) |
(44 |
) |
— |
|
|
Income before taxes and minority interests |
|
5,926 |
|
4,347 |
|
36 |
|
|
Net income |
|
3,007 |
|
2,004 |
|
50 |
|
|
EPS (reported) in Euro |
|
5.73 |
|
3.65 |
|
57 |
|
|
EPS (acc. to US-GAAP) in Euro |
|
5.83 |
|
3.39 |
|
72 |
|
7
Changes in Financial Reporting
IFRS used as reporting standard since January 1st, 2005
• Impairment only approach for goodwill
• Capitalization of interest cost for construction period
• Fair value approach to financial instruments
|
• Pensions: |
• Fresh start approach as of Jan. 1, 2004
• 3rd option of IAS 19 (actuarial gains and losses charged against equity) |
8
Changes in Financial Reporting
Other changes in BASF’s financial reporting
• Unaudited IFRS figures for 2004 published in Q1 2005 have been slightly adjusted. Effects taken into consideration in Q4 2004.
• Expenses related to exploration for oil and gas deposits and to dry holes eliminated from research and development expenses and included in other operating expenses. 2004 figures were adjusted.
Detailed Financial Report to be published on March 14, 2006
9
Segment Performance
Q4 2005 vs. Q4 2004
|
Million EUR |
|
Sales |
|
|
|
EBIT* |
|
|
|
|
|
Chemicals |
|
2,211 |
|
18 |
|
379 |
|
(10 |
) |
|
|
Plastics |
|
3,037 |
|
6 |
|
221 |
|
(7 |
) |
|
|
Performance Products |
|
2,155 |
|
9 |
|
177 |
|
(7 |
) |
|
|
Agricultural Products & Nutrition |
|
1,203 |
|
5 |
|
118 |
|
(37 |
) |
|
|
thereof |
Agricultural Products |
|
720 |
|
2 |
|
124 |
|
(33 |
) |
|
|
Fine Chemicals |
|
483 |
|
11 |
|
(6 |
) |
— |
|
|
Oil & Gas |
|
2,536 |
|
57 |
|
753 |
|
47 |
|
|
|
thereof |
Exploration & Production |
|
1,040 |
|
43 |
|
603 |
|
45 |
|
|
|
Gas Trading |
|
1,496 |
|
68 |
|
150 |
|
55 |
|
|
Other |
|
578 |
|
59 |
|
(57 |
) |
— |
|
|
* Before special items
10
Segment Performance
FY 2005 vs. FY 2004
|
Million EUR |
|
Sales |
|
|
|
EBIT* |
|
|
|
|
|
Chemicals |
|
8,103 |
|
15 |
|
1,488 |
|
8 |
|
|
|
Plastics |
|
11,718 |
|
11 |
|
1,031 |
|
37 |
|
|
|
Performance Products |
|
8,267 |
|
3 |
|
890 |
|
5 |
|
|
|
Agricultural Products & Nutrition |
|
5,030 |
|
(2 |
) |
693 |
|
(9 |
) |
|
|
thereof |
Agricultural Products |
|
3,298 |
|
(2 |
) |
671 |
|
1 |
|
|
|
Fine Chemicals |
|
1,732 |
|
(3 |
) |
22 |
|
(77 |
) |
|
Oil & Gas |
|
7,656 |
|
45 |
|
2,410 |
|
46 |
|
|
|
thereof |
Exploration & Production |
|
3,499 |
|
41 |
|
2,094 |
|
59 |
|
|
|
Gas Trading |
|
4,157 |
|
49 |
|
316 |
|
(7 |
) |
|
Other |
|
1,971 |
|
26 |
|
(374 |
) |
(127 |
) |
|
* Before special items
11
Statement of Cash Flows I
Million EUR
|
|
|
2005 |
|
2004 |
|
|
Cash provided by operating activities before external financing of pension obligations |
|
5,250 |
|
4,634 |
|
|
Net income |
|
3,007 |
|
2,004 |
|
|
Depreciation and amortization of intangible, tangible and financial assets |
|
2,427 |
|
3,119 |
|
|
Changes in working capital |
|
250 |
|
(193 |
) |
|
Miscellaneous items |
|
(434 |
) |
(296 |
) |
|
Cash provided by operating activities |
|
1,590 |
|
4,634 |
|
|
Transfer of liquid funds to the Contractual Trust Arrangement (CTA) |
|
(3,660 |
) |
— |
|
12
Statement of Cash Flows II
Million EUR
|
|
|
2005 |
|
2004 |
|
|
Cash used in investing activities |
|
(706 |
) |
(1,233 |
) |
|
Payments related to tangible and intangible fixed assets |
|
(1,948 |
) |
(2,057 |
) |
|
Acquisitions / divestitures |
|
995 |
|
570 |
|
|
Financial investments and other items |
|
247 |
|
254 |
|
|
Cash used in financing activities |
|
(2,108 |
) |
(1,836 |
) |
|
Capital increases / repayments |
|
(1,425 |
) |
(781 |
) |
|
Changes in financial liabilities |
|
299 |
|
(203 |
) |
|
Dividends |
|
(982 |
) |
(852 |
) |
13
Disclaimer
This presentation contains forward-looking statements under the US Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections of BASF management and currently available information. They are not guarantees of future performance, involve certain risks and uncertainties that are difficult to predict and are based upon assumptions as to future events that may not prove to be accurate.
Many factors could cause the actual results, performance or achievements of BASF to be materially different from those that may be expressed or implied by such statements. Such factors include those discussed in BASF’s Form 20-F filed with the Securities and Exchange Commission. We do not assume any obligation to update the forward-looking statements contained in this presentation.
15