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Executives

Magdalena Moll – SVP, IR

Kurt Bock – Chairman of the Board of Executive Directors

Hans-Ulrich Engel – CFO; Chairman and CEO, BASF Corporation

Analysts

Neil Tyler – JPMorgan Securities Ltd.

Jeremy Redenius – Sanford C. Bernstein Ltd.

Mutlu Gundogan – Royal Bank of Scotland NV

Rhian Tucker – Credit Suisse Securities Ltd.

Peter Clark – Société Générale

Tony Jones – Redburn Partners LLP

Richard Logan – Goldman Sachs International Ltd.

Andrew Benson – Citigroup Global Markets Ltd.

Ronald Köhler – MainFirst Bank AG

Andreas Heine – Unicredit Bank AG

Joe Dewhurst – UBS Ltd.

Jaideep Pandya – Joh. Berenberg, Gossler & Co. KG

Annett Weber – BHF-BANK AG

Laurent Favre – Merrill Lynch International Ltd.

Christian Faitz – Macquarie Capital Ltd.

Martin Rödiger – Crédit Agricole Cheuvreux SA

Jenny Barker – Nomura International Plc

BASF SE (OTCQX:BASFY) Q2 2011 Earnings Call July 28, 2011 8:00 AM ET

Operator

Good afternoon, ladies and gentlemen. This is the Chorus Call Conference operator. Welcome to the BASF Interim Report Second Quarter Results 2011. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation there will be an opportunity to ask questions. (Operator Instructions)

This presentation includes forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. This presentation contains a number of forward-looking statements including, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand.

BASF has based these forward-looking statements on its views with respect to future events and financial performance. Actual financial performance of the entities described herein could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and final performance maybe better or worse than anticipated.

Given these uncertainties, readers should not put undue reliance on any forward-looking statements. Forward-looking statements represent estimates and assumptions only as of the date that they were made. The information contained in this presentation is subject to change without notice, and BASF does not undertake any duty to update the forward-looking statements and the estimates and assumptions associated with them except to the extent required by applicable laws and regulations.

Ladies and gentlemen, at this time I would like to turn the conference over to Magdalena Moll, Head of Investor Relations. Please go ahead, madam.

Magdalena Moll

Good afternoon, ladies and gentlemen. On behalf of BASF, I would like to welcome you to our second quarter 2011 conference call. As you have all have probably seen, BASF businesses continued to develop successfully in the second quarter thanks to ongoing strong demand for our products. Higher raw material costs could largely be passed on to the market and adjusted for Libya, EBIT before special items increased by 16% to EUR2.2 billion.

With me on the call today to explain the results are Kurt Bock, our CEO and Hans-Ulrich Engel, our Chief Financial Officer. Kurt will briefly elaborate on business performance and the important milestones reached in the second quarter. He will then discuss with you the outlook for the year 2011. Subsequently, Hans, will review the segment results and cash flow in detail. Afterwards, both gentlemen will be happy to take your questions.

As always we have posted the numbers and charts, which will be discussed during this call as well as all the press documents on our website, basf.com/share. With this I would like to hand the call over to Kurt.

Kurt Bock

Yeah, thanks Maggie, and also welcome from my side, ladies and gentlemen. After a powerful start into the year, we had another good and very solid quarter. Sales grew by 14% to EUR18.5 billion compared to 2010. More importantly, we succeeded to grow volumes in our Chemical business by 5%. For the first time in 2011, the weakening of the U.S. dollar led to a negative sales effect of 6%, which however, was largely compensated by the excellent performance of the acquired former Cognis business.

In Oil and Gas, growth was purely driven due to the shutdown of our operations in Libya. The missing sales and earnings from Libya and we do not see our operations being restarted in 2011 also affected the year-over-year earnings comparison. Adjusted for Libya, EBIT before special items increased by 16% to EUR2.2 billion. Adjusted earnings per share grew by 17% to EUR1.75.

What we saw in Q2 was a continued upward trend in raw material costs. Our sales prices rose by 13% in total and 12% in the Chemicals business. However, we were able to pass on the cost increases to a very large degree.

We also had planned and unplanned plant outages which affected earnings negatively, most notably, the turnaround of a cracker as well as the disruption of our acetylene plant in Ludwigshafen which impacted our butanediol value chain.

At the end of the second quarter, we saw some inventory destocking at our customers, above all in Asia. We interpreted this as a sign that the exceptionally high growth rates of the last couple of quarters are going to normalize as expected. We therefore reiterate our guidance for full year sales and earnings.

In the second quarter, we also achieved important milestones. As you all know, BASF and INEOS plan to combine major parts of their global styrene monomer, polymer and copolymer business activities into a new joint venture called Styrolution.

In the second quarter, we took important steps towards the establishment of the joint venture Styrolution. In May, the companies signed the joint venture contract. Meanwhile, the new joint venture has already been approved by the U.S. Federal Trade Commission and the EU Commission. We are still awaiting approvals on antitrust authorities in a few countries and expect closing in the fourth quarter.

In May, we announced our plans to build the world’s largest single-train TDI plant in Europe. TDI as you all know is a key component for the polyurethanes industry. It is widely used in the automotive industry, for example, in seating cushions and interior applications as well as in the furniture industry, for example, in flexible forms for mattresses and cushions.

We expect the global TDI market to grow faster than GDP in the coming years with strong contributions from Central and Eastern Europe, Middle East and Africa. Our excellent technology and unique Verbund concept will ensure an industry-leading cost structure. We aim to start this fully integrated plant in 2014. This investment supports our growth strategy and underlines our leading position as the largest TDI producer.

We are further intensifying our efforts in the field of electromobility and will bring BASF’s innovation strength to function here. Energy efficient electric cars are becoming key to the climate friendly transformation of individual mobility.

Improved batteries as well as innovative solutions for weight reduction and heat management are major challenges that electromobility faces today. We see new chemical solutions as a major contributor to overcoming these challenges. BASF is therefore committed to leveraging its research and business platforms on the future market.

In battery materials for example, BASF will be investing a three digit million euro sum in research, development and production over the next five years. Part of the investment is being channeled into the construction of a production plant for advanced cathode materials in Elyria, Ohio. The new facility is scheduled to supply the market with innovative cathode materials for the production of high performance lithium-ion batteries from mid-2012 onwards. In addition, we are expanding our activities in the field of high quality tailored electrolytes to position ourselves as a future system supplier in this market.

Furthermore, in order to reduce the energy consumption of electric vehicles, we are working on resin-based solutions for fiber reinforced composites to reduce vehicle weight as well as heat management solutions.

Now, let’s come to the outlook for 2011. To put it in a nutshell, we confirm our strong outlook for this year. We will continue to focus our attention on protecting our margin and optimizing our fixed cost, as well as keeping working capital at a minimum level. We differ the weakening of the U.S. dollar and the high oil price volatility we see the need to adjust the assumptions for our full year outlook.

We are increasing our Brent oil price forecast from $100 per barrel to $110 per barrel, and we are expecting a dollar/euro exchange rate of 1.40 on average up from 1.35. Importantly, our assumptions for the growth of GDP, industrial and chemical production remain unchanged. We are still assuming that oil production in Libya will not resume during 2011.

For the full year, we expect to generate significantly higher sales in 2010. As already explained during our first quarter conference call, EBIT before special items excluding non-compensable oil taxes provide a much more meaningful guidance for 2011. We therefore confirm that we aim to significantly exceed the 2010 EBIT before special items excluding those non-compensable oil taxes, which amounted to EUR7.2 billion in 2010. Finally, we remain committed to our target of achieving a high premium on our cost of capital in 2011.

And with that, I will hand over to Hans.

Hans-Ulrich Engel

Thank you, Kurt and good afternoon, ladies and gentlemen. I will highlight the financial performance of each segment in more detail and focus on the respective business developments in comparison to the second quarter of 2010.

Ongoing solid demand in the Chemicals segment drove up sales significantly. We successfully increased prices in many product lines in order to offset higher raw material costs. Planned and unplanned shutdowns negatively impacted our EBIT. Nevertheless, earnings remained almost on the strong level of the previous year’s quarter.

In Petrochemicals, the strong demand for our products led to significant sales growth in all regions, but we witnessed a declining momentum in Asia, specifically in China, towards the end of the quarter. The performance in the acrylics business was excellent as a result of ongoing tight markets.

Plasticizers, on the other hand, were weaker as demand from the construction and housing industries remained subdued, especially in North America. Earnings came in at a very high level, albeit below the extremely high previous year’s quarter. This was due to the turnaround at our larger cracker in Ludwigshafen.

In Inorganics, continued strong demand, particularly for inorganic chemicals, glues and impregnating resins, led to an increase in sales. Lower margins in ammonia and methanol as well as higher costs triggered by major plant – major planned turnarounds of our ammonia and sulfuric acid plants resulted in lower earnings.

Higher sales in Intermediates were driven particularly by customers from the plastics, coatings and textile fiber industries. The strong demand for our products could not be fully met in all product lines.

The unplanned shutdown of the acetylene plant in Ludwigshafen due to a fire significantly impacted our butanediol value chain. As a consequence, we had to declare force majeure for butanediol and several downstream products in Europe. Nevertheless, earnings were up overall given higher volumes and improved margins.

In Plastics, we experienced strong demand in all product lines and we increased sales and earnings compared to the previous year’s quarter in both divisions.

In Performance Polymers, positive pricing momentum drove sales growth. Demand for polyamides and intermediates remained at a high level. The Engineering Plastics business benefited from strong demand from the automotive industry, especially in Europe and North America. Fierce competition from Asia adversely affected demand for expandable polystyrene from the construction industry in Asia and Europe.

Sales of our biodegradable plastics were temporarily impacted by limited raw material availability, but still increased substantially. EBIT before special items rose significantly as a result of higher volumes and improved margins, especially in the polyamide and intermediates businesses.

In Polyurethanes, sales were driven by higher volumes and prices in all regions, most pronounced in Europe. Demand from the automotive and construction industries increased compared with the previous year’s quarter. We were able to increase prices for MDI, polyurethane systems and polyols, while TDI prices were slightly lower. Despite several turnarounds, earnings were up mainly because of higher volumes.

Sales and EBIT before special items in the Performance Products segment increased due to the acquired Cognis business, higher volumes as well as the successful repositioning of the combined business following the Ciba integration.

In Dispersions and Pigments, we could increase sales in all product lines and regions, except for North America, where we faced negative currency effects. Margin levels could be largely maintained since successful price increases helped to offset higher raw material costs. Thanks to higher volumes and the successful repositioning of the combined businesses following the Ciba integration, we were able to improve earnings.

In Care Chemicals, sales doubled and earnings were up significantly due to Cognis. Volumes went up despite the limited availability of precursors for hygiene and cosmetics. We experienced strong demand especially for detergents and formulators. We successfully maintained our margins despite significantly higher input costs. As a result earnings were up substantially.

In Nutrition and Health, net sales grew strongly mainly due to the inclusion of Cognis. Demand was very good in all regions and in all businesses. In vitamins, we continue to face some price pressure but we see prices stabilizing at present. Earnings could not be maintained at the previous year’s level as a result of higher raw material costs, lower vitamin margins and a weaker U.S. dollar.

In an ongoing challenging business environment sales in Paper Chemicals decreased slightly. Sales were impacted by divestments and portfolio optimizations as well as our value over volume strategy. Earnings were below the previous year’s quarter as we were not able to fully pass on higher raw material costs.

In Performance Chemicals, sales increased substantially thanks to price increases and the inclusion of the Cognis businesses. Weaker order volumes form Japan could not be compensated by the overall strong demand from the automotive and refinery industries. EBIT before special items decreased slightly mainly due to lower volumes and higher raw material costs which could only partially be compensated by price increases.

Volumes in the Functional Solutions segment were significantly higher reflecting the strong global demand for mobile emissions catalysts and OEM coatings from the automotive industries. Demand from the construction industry rose slightly in Northern, Central and Eastern Europe.

EBIT before special items improved slightly thanks to strong volume growth in catalysts. Catalysts sales rose sharply. Mobile emission catalysts showed strong growth in Europe, Asia and North America. Moreover, we realized higher volumes in refinery and chemical catalysts. As a result, EBIT before special items came in far above the level of the prior year.

Sales in Construction Chemicals were at the previous year’s level reflecting a volume improvement at stable prices as well as negative currency effects. Volumes increased in all major regions expect for Southern Europe. Volumes in North America improved despite the ongoing challenging market environment. EBIT before special items did not match the previous year’s level due to higher raw material costs which we could not pass on to our customers.

In Coatings, the positive trend in demand continued for all product lines especially in automotive OEM coatings and decorative paints. However, raw material prices could not be fully passed on. As a result, EBIT before special items was below the very good level of the previous year.

In Agricultural Solutions, high global demand for agricultural products drove volume growth, especially in fungicides. This development, however, was offset by negative currency effects from the devaluation of the U.S. dollar, resulting in sales at the previous year’s level.

EBIT before special items was slightly above the prior year level despite significantly negative currency effects. In Europe, we increased sales thanks to higher demand for our products in Eastern Europe which could more than offset the impact of dry weather conditions in Western Europe.

In North America, sales declined as a result of a weaker U.S. dollar as well as weather-related acreage reductions and a compressed season, which led to a reduced number of herbicide applications.

Our Plant Health business performed strongly. We improved sales in South America, mainly based on higher demand for Clearfield, our herbicide tolerance technology. Further sales growth came from insecticides for sugarcane and seed treatment products. In Asia, sales were significantly above the previous year’s quarter driven by our herbicide business.

Despite the production stoppage in Libya, sales in Oil & Gas increased slightly, as a result of higher oil and gas prices. Consequently, EBIT before special items adjusted for non-compensable income taxes on oil increased.

In Exploration & Production, sales decreased considerably due to the discontinuation of our oil production in Libya. Nevertheless, earnings adjusted for non-compensable oil taxes increased substantially due to the higher oil and gas prices.

Sales in Natural Gas Trading were up significantly, reflecting higher gas prices. Earnings, on the other hand, decreased as a result of slightly lower volumes and negative time-lag effects.

A look at the income statement shows that net income rose by an impressive 74% to EUR257 million. This was related to significantly higher oil and gas prices as well as a substantially lower tax rate because of the production stoppage in Libya.

In Other, sales grew in styrenics, fertilizers and other businesses. EBIT before special items improved by EUR138 million to minus EUR163 million mainly due to better operating results as well as favorable currency and valuation effects. Special items in Other amounted to plus EUR27 million. They contained EUR68 million of income resulting from the repeal of the fine imposed by the EU on Ciba in 2009 in relation to heat stabilizers.

Let me now briefly conclude with our cash flow. Cash provided by operating activities at around EUR3 billion in the first half of 2011 was EUR317 million higher than in the same period of the previous year. This can primarily be attributed to increased earnings.

Working capital rose between January and June 2011 reflecting the growth in our business, higher raw material costs as well as higher natural gas injection in our storage facilities. Cash provided by investing activities amounted to EUR81 million.

In March, the sale of shares in K+S resulted in a cash inflow of EUR972 million with a net gain of EUR887 million. CapEx amounted to EUR1.3 billion including the investments in the OPAL-pipeline, the capacity expansion of Ecoflex and Ecovio and the ongoing extension of our Verbund site in Nanjing.

Financing activities led to a cash outflow of EUR2.8 billion mainly due to a EUR486 million reduction in financial liabilities and EUR2.3 billion of dividend payments to shareholders of BASF SE and minority shareholders in group companies. Since the end of 2010 we reduced net debt by EUR1.3 billion to EUR12.3 billion. With that I thank you for your attention and we are now happy to take your questions.

Magdalena Moll

Now, ladies and gentlemen, we would now like to open the call for questions and we would ask you to please limit your questions to one at a time so that we can take as many questions as possible. To ensure the best sound quality I would also kindly ask you to use your handsets. And then you are always certainly welcomed to rejoin the queue for follow-up questions. Now Jason, please would you be so kind and explain the procedure.

Question-and-Answer Session

Operator

Excuse me this is the chorus call conference operator. We will now begin the question-and-answer session. (Operator Instructions)

Magdalena Moll

So then, let’s proceed and the first question comes from Neil Tyler, JPMorgan.

Neil Tyler – JPMorgan Securities Ltd.

Good afternoon. Okay. The question is really on the volume softness that you’ve seen in or that you are referring to in a number of areas. I wonder if qualitatively you could give us your opinion on those businesses where you think this is just an inventory management issue and that – and then those businesses where you see perhaps more fundamental weaknesses, things that – the concerns that are actually increasing in your mind over the actual growth prospects, whether you consider perhaps distinguish between those two with regards to the components of volume softness that you referred to? Thank you.

Kurt Bock

I think, Neil that questions certainly go directly to the core of the issue with regard to our further development. As I said before what we saw in Q2 was a little bit of softening towards the end of the quarter, which essentially is inventory readjustments, a little bit of destocking. And when we look across our businesses, we could not see a single business where we could identify a fundamental shift of demand head on.

What we saw is really what we believe temporary adjustments, one example Asia, China, people are just simply buying a little bit less and placing less orders, because they have financing issues. And for that simple reason they adjust the inventory levels. They will come back and we already saw that happening.

So, we see this essentially as a positive development, because the last thing we need is that we – that our customers pile up inventories over the course of the quarters and then all off sudden find out that they have to adjust their orders pattern. So I think this was positive what has happened over the last couple of weeks. And it goes across all of our businesses and we cannot identify any special business where we see a fundamental shift in demand.

The one thing I would like to add however, is when you look at volume growth in Q1, we had volume growth in the Chemical business of roughly 9% to 10%. And in Q2 this is something like 5%, which includes as we are now some turnaround situations, also some unplanned shutdowns. So, we see this as a normalization of growth. And I don’t think that we ever expected that the growth rate of Q1 could be extrapolated throughout the year 2011.

Magdalena Moll

Then we move on to the next question from Jeremy Redenius from Sanford Bernstein. Good afternoon.

Jeremy Redenius – Sanford C. Bernstein Ltd.

Hi. This is Jeremy Redenius from Sanford Bernstein. Thanks for taking my question. I’m wondering if you could just give us an order of magnitude in EBIT terms of the planned and unplanned outages and then also on the FX? Thanks.

Kurt Bock

On forex, okay – got – fine. Shutdown effect EUR50 million plus and FX actually, you can do the math almost yourself because we provide you with this guideline, EUR0.01 translates into something like EUR35, EUR33 million of EBIT effect. If you take the currency difference between Q2 this year and last year that translates into something like EUR200 million bottom line effect for BASF. And that is pretty much the number we actually saw in our accounts.

Jeremy Redenius – Sanford C. Bernstein Ltd.

And just to be clear the EUR50 million was – plus was the planned and unplanned?

Kurt Bock

Yeah.

Jeremy Redenius – Sanford C. Bernstein Ltd.

And can you comment on how much persist into the third quarter?

Kurt Bock

Pardon me?

Jeremy Redenius – Sanford C. Bernstein Ltd.

How much of that would persist into the third quarter, the unplanned?

Kurt Bock

Very, very small amount. We have not yet fully back with our acetylene plant because we are waiting for one critical equipment which we have to put into the plant. We had something like 80% utilization rates currently. So it translates a little bit into Q3 but it’s not really a tangible number.

Jeremy Redenius – Sanford C. Bernstein Ltd.

Okay. Thank you very much.

Kurt Bock

You are welcome.

Magdalena Moll

Now, we’ll take our third question from Mutlu Gundogan from Royal Bank of Scotland.

Mutlu Gundogan – Royal Bank of Scotland NV

Yes. Hello, everyone. Question on your regional results, the EBIT before special items was sequentially lower in Germany and I understand that some of that is related to the maintenance shutdown. Can you explain what the rest of the drivers? Why that is so much lower than the other regions? Thank you.

Hans-Ulrich Engel

Yeah, this is Hans. What’s the explanation on that? In our results in Germany, we actually show – because the activities in Libya are held by a German subsidiary, we actually show the results of Libya in there. And if you compare their quarter-over-quarter, we had roughly EUR280 million positive results in Q2 of the year 2010 and we don’t have any results – positive results coming from Libya in the year – in the second quarter of this year. So, that explains the swing that you see and the results there in Germany. If you add the EUR280 million back in you see that there is significantly higher earnings also in Germany.

Mutlu Gundogan – Royal Bank of Scotland NV

That’s very clear. Thank you. And just as quick follow-up, Asia-Pacific also shows a sequential decline. Is there something similar related there?

Hans-Ulrich Engel

No, there, it’s the currency effect.

Mutlu Gundogan – Royal Bank of Scotland NV

Okay. Thank you very much.

Magdalena Moll

The next question now from Rhian Tucker, Credit Suisse.

Rhian Tucker – Credit Suisse Securities Ltd.

Can you hear me?

Magdalena Moll

Rhian, we can’t hear you. Can you speak up or maybe use the handset.

Rhian Tucker – Credit Suisse Securities Ltd.

Can you hear me? Hi, Maggie. I have a question on the associates line, it was down quite sharply this quarter and you say in your note that it’s due to partly the Gazprom and partly some effects in Catalysts. Can you tell us how much of that is ongoing and how much is just limited to this quarter?

Hans-Ulrich Engel

Yeah, Rhian, this is Hans. What we actually have there in our financial results, there is two effects. The first effect is the one that you were addressing which is overall, lower earnings in Severneftegazprom which is the company operating the Yuzhno-Russkoye field, which then sells on its product based on a lower cost plus price to a trading company that’s majority owned by BASF.

So, the disadvantage that we have there in our equity earnings turn into positive when you look at our gas business – Oil & Gas business there in E&P. That’s the first thing. That will continue throughout the year on the – in the financial results because that cost plus price is based on the cost of prior year, so that will continue throughout the year.

The second effect that we have is an effect of acquiring 1% in a company Yuzhno where we had a 49% participation. We upped this now to 50%. As a result of that, we’re now going from at equity to a proportional consolidation. We had to move the transitional losses which were in OCI into income and that then were the two effects that you see reflected in our financial results.

Rhian Tucker – Credit Suisse Securities Ltd.

We can say both of those are ongoing for us this year and in fact one of them is ongoing forever?

Hans-Ulrich Engel

No further effects from Yuzhno and the SNGP effect that will continue throughout the year, but as I said, our EBIT will in the end benefit from that.

Rhian Tucker – Credit Suisse Securities Ltd.

Okay. Thank you.

Hans-Ulrich Engel

You’re welcome.

Magdalena Moll

Next question now comes from Peter Clark, Société Générale. Good afternoon, Peter?

Peter Clark – Société Générale

Yes, good afternoon, quick question on the cash flow. Obviously, CapEx is going up, no surprise there. Big working capital outflow EUR800 million was inventory. Just wondering if you are expecting some pullback in the second-half and whether an element of that was seasonal? I don’t expect it was in the second quarter, you mentioned a pricing effect as well. Because obviously it meant your free cash flow of EUR65 million was more the number than we’ve seen in the recent past. Thank you.

Kurt Bock

On our cash flow, I think you mentioned all the elements that had an impact on Q2 cash flow. I think looking at cash flow on a quarter-over-quarter basis, maybe a little bit short-sighted. Let’s look at the first-half and the strong cash flow that we generated there and we expect BASF to generate a strong cash flow also in the second-half of the year.

Peter Clark – Société Générale

So, would I be right in thinking working capital has run out a little bit more and you had expect some pullback?

Kurt Bock

I mean, what you’ve seen in Q2 on working capital is a strong impact, one, from our gas trading business where we are using the months in the second quarter and then also going a little bit still into the third quarter to refill our gas storage facilities. You will not see the same impact during the third quarter, number one. And number two, our raw material prices pretty much follow the development of oil. You’ve seen a strong increase there in the oil price in the second quarter and it looks like the oil price may have found some stability at this point in time. So, we don’t expect raw material prices and oil prices to further increase significantly in the quarters to come.

Peter Clark – Société Générale

Thank you.

Magdalena Moll

Now our next question comes from Tony Jones from Redburn.

Tony Jones – Redburn Partners LLP

Good afternoon. Tony Jones from Redburn in London. I just wanted to look at your remaining fixed cost saving program. I thought there was around EUR0.5 billion of cost savings left, which became a positive saver in 2011, could you provide an update whether that’s still happening or whether it has happened already and this is already reflected in the underlying margins? Thank you.

Kurt Bock

Tony, as you know the next – what we call the next program, the goal is to achieve cost savings of about EUR1 billion until the end of 2012. And what I can tell you we are right on track to achieving that number. We are currently at EUR800 million. So we certainly will be probably a little bit early in achieving the EUR1 billion number.

And as I also said in my speech, our cost containment efforts have continued over last couple of quarters so we are quite pleased with the cost development. We are working on our margins as you saw, but fixed cost this is I think pretty well managed certainly at this point in time.

Tony Jones – Redburn Partners LLP

Okay. Thanks. Just – actually as a quick follow-up. Are you seeing any significant inflation coming first in salaries and especially in non-European regions?

Kurt Bock

I didn’t get it. Could you repeat it please, Tony?

Tony Jones – Redburn Partners LLP

Yes. Are you seeing any significant inflation in core SG&A or employee cost?

Kurt Bock

Okay. So salary, no, we don’t see this.

Tony Jones – Redburn Partners LLP

Okay. Thank you very much.

Kurt Bock

You’re welcome.

Magdalena Moll

Our next question comes from Richard Logan from Goldman Sachs.

Richard Logan – Goldman Sachs International Ltd.

Good afternoon and thanks for taking my question. I just wondered in terms of July whether you are seeing any change in order patterns or performance so far? And linking with that, do you expect a normal summer slowdown? I remember, I think last year, you said that you weren’t seeing a summer slowdown. I was assuming that was still almost like restocking effect going on, but what are your expectations for this summer?

Kurt Bock

Richard, order intake during July is kind of normal. Orders are above last year’s level, which I think is important from your point of you as well. There is obviously kind of seasonal normal summer slowdown and we see a little bit of that happening right now. Some industries are like automotive going at full speed as you know. So we will probably have some kind of seasonal summer lull, but it’s not very pronounced.

Richard Logan – Goldman Sachs International Ltd.

Okay. That’s great. Thank you.

Kurt Bock

You’re welcome.

Magdalena Moll

The next question comes from Andrew Benson from Citi. Good afternoon.

Andrew Benson – Citigroup Global Markets Ltd.

Yeah. Thanks. Andrew Benson here. Can you explain there, the Functional Solutions, obviously, the absolute profit margins look pretty good, but the development of business was quite flat relative to your peers? And can you just explain I didn’t write it down properly the question you already answered on the maintenance and the cost in the second and third quarter as well, sorry about asking you to repeat? Thanks.

Kurt Bock

It’s – Andrew, first the question on maintenance and planned, unplanned shutdowns, that was the EUR50 million plus number, which I mentioned before, the cost of those shutdowns.

Coming to our Ag business, we think the development was actually quite good. In nominal terms, we had virtually no growth sales wise, but you have to keep in mind that we have an exchange effect. If you take that out, we had growth of about 6%. We maintained our EBITDA margin, which was at about 31%. And we had good regional development as well with one exception, which is essentially North America, where you had obviously, two effects; one is currency weakness and the other one certainly is the weakness in the market.

We are all aware of the let’s say very wet weather conditions. We also had some price adjustments in North America and the smaller part of our portfolio simply to fend off competition, which was more a – let’s say local issue in Canada. Apart from that I think the regional development was actually quite healthy.

When you look at indications, our fungicide business had excellent growth in constant exchange rates above 10%, herbicides due to the situation described before in North America, slightly below last year’s number. I’m always talking about Q2 here and insecticides also in currency adjusted above last year’s number.

Again this is Q2 I think it’s worthwhile to look at the entire first half of 2011. Then we have to wait a little bit to see how the season comes to a closure in the northern hemisphere, how much infield inventory is still around and then we can basically do the final booking and explain how we did competitively but for the time being I think we are well underway to achieve our targets.

Andrew Benson – Citigroup Global Markets Ltd.

Okay. Thanks.

Kurt Bock

You’re welcome.

Magdalena Moll

Our next question now comes from Ronald Köhler, MainFirst. Ronald?

Ronald Köhler – MainFirst Bank AG

Yes. Hello.

Magdalena Moll

Oh, here you are good. Please go ahead.

Ronald Köhler – MainFirst Bank AG

Okay. Good. My question is on the guidance just to clarification here, you guide obviously at the basis of clean EBIT income from operations before special items, before non-compensable oil tax of EUR7.2 billion as a basis. If I now assume significantly double-digit, you are at something let’s say like EUR700 million, EUR800 million additionally, but then just to make clear we also have to add the EUR280 million non-compensable oil taxes you earned in the first year to that figure. Is that the right understanding?

Kurt Bock

I think your math is pretty good actually. Yeah.

Ronald Köhler – MainFirst Bank AG

Okay. Good. Perhaps if I may another one with volume growth, you are guiding for 5% to 6% volume growth a global chemical production basis and this is reiterated which means you want to surpass it by 2 percentage points always which means you still expect for the Chemicals area 7% to 8% volume growth for the full year. That’s right?

Kurt Bock

As you know we have this target of beating the market – average growth rate of the market by 2%. This is certainly not a target which we can achieve quarter-by-quarter, it’s a long-term, medium-term target. But essentially that is what we are striving for in 2011 as well and you’re right, we have, what we see growth in our industry globally of 5% to 6%. So you add another 2 percentage points, makes to 7% to 8%, we are at roughly 7% during the first half on average. So I think we are pretty well on track.

Ronald Köhler – MainFirst Bank AG

Okay. Thank you.

Kurt Bock

You’re welcome.

Magdalena Moll

Now next question is from Christian Faitz from Macquarie. Hello, Christian.

Kurt Bock

Christian is no longer in the question.

Magdalena Moll

He is no longer in the line. Okay. Then we move on. Next question then from Andreas Heine from UniCredit.

Andreas Heine – Unicredit Bank AG

Good afternoon. I would like to understand a little bit more what’s going on in Performance Product. You mentioned I think in wording worse than in the quarter before the performance in Performance Chemicals, Paper Chemicals and Health & Nutrition. Is that that the first quarter in 2011 was just good and that now the second quarter is a better basis or was it exactly the other way round that the second quarter was somewhat weak and the first quarter was a better basis?

And also to understand a little bit more what the seasonality of this business, which I would perceive is not seasonal, but looking on the last year, it was very much down in the third quarter by EUR100 million and another EUR80 million down in the first quarter. So, substantially weak in the second half than in the first half. If you could give me some more ideas how I should model this sector, that would be very helpful.

Kurt Bock

I will try my best, yet you know this is pretty much a mixed bag of activities. There is some seasonality involved there. I’ll give you one example, which is hand care products, those ship essentially during Q4 and Q1 and then the season pretty much not for the sunburns, but for our shipments come to a closure. Apart from that what we saw, if I go through the business which we have here, it’s pretty much a continuation of what we saw in Q1. We had in Dispersions & Pigments we are essentially and save 10% above Q1.

We are certainly hoping with raising our sales prices these business are all further downstream as you know. It takes a little bit of time, but we – I think overall we’re quite successful. We had some effect in Vitamin pricing which has come down a little bit in our Nutrition & Health business, but again if I compare sequentially now, Q2 to Q1 volumes were up in that Nutrition & Health business as well and prices overall also remained pretty stable or slightly up since we tried to push them up further on.

In Care Chemicals which for instance includes cosmetics but also major part of the former Cognis business, the development actually was quite strong and again we have to stress that the Cognis business has been doing very, very well. We are very satisfied with the development as well as the integration efforts and progress which we have achieved so far. Which leads us to Paper and Paper, as we all know, paper industry is an interesting one.

We had higher volumes in Q2 than in Q1 and that is essentially a positive development. We have to fight for better pricing and better margins and that is an ongoing effort in that business and I think we’re all aware when we acquired Ciba that the Paper Chemical business would be a challenging one which proved to be true, but we’re working very hard to make it a success story for BASF.

And then finally, Performance Chemicals, which in itself is a quite diverse division. We had again stable development compared Q2 to Q1. We are in that business also trying to increase prices which in major parts we have achieved so far. That business has been hit quite a bit by the disaster in Japan, which happened really stressed for BASF Group overall, but in that particular business – so also within that segment you saw some effects and we still have two plants actually in Japan down which haven’t yet restarted and are not producing.

So I hope this has a little bit to understand that segment – you asked about seasonality those business also normally see a little bit of the summer lull going into third quarter, but apart from what I said before our sun protection product, there is no real pronounced seasonality in that segment.

Andreas Heine – Unicredit Bank AG

Thanks.

Magdalena Moll

Was this okay, Andreas?

Andreas Heine – Unicredit Bank AG

A little bit to understand still what’s going on in the second half. It was in the last year substantially down. You referred only to the Sun Care Chemicals and some are lull as an impact we have to be aware of in the third quarter. Does it mean that looking forward the Q2 results should not be particularly weaker in the second half selling Q3 and Q4 or what do we have to expect here?

Kurt Bock

As you know we don’t guide individual segments and we don’t guide individual quarter, so I refrain here from giving you more specific answer. What you will see however in the second half is the inclusion of the former Cognis business and just as a side information on July 4, we fully integrated almost all of the Cognis business into our processes and systems, which means it will be kind of difficult, we also merge the companies then, makes it kind of difficult to then further differentiate between what is the legacy Cognis, what is the legacy BASF business.

We try to – when we report Q3 and Q4 we will try to give you some explanations about how we are doing this Cognis, but obviously that business will have quite some impact on the segment development. And again Cognis, you have followed this in the past doesn’t really have a very high seasonality at all.

Andreas Heine – Unicredit Bank AG

Thanks.

Magdalena Moll

Now we are moving on to Joe Dewhurst from UBS.

Joe Dewhurst – UBS Ltd.

Hi. Good afternoon. Just question on...

Magdalena Moll

Joe, you have to speak up little bit up, please use the handset, thanks.

Joe Dewhurst – UBS Ltd.

So can you hear me now?

Magdalena Moll

Yes.

Joe Dewhurst – UBS Ltd.

Just on your growth outlook seeing obviously that the pace is certainly going to be a little bit lesser than what we saw in Q1 a little bit less dynamic. Are there any particular segments that you see as may be potentially more vulnerable than others going forward or will it be similar to what you saw in the second quarter where it was across the board with some of the inventory destocking impacts? Thanks

Kurt Bock

Yeah. I think we had a similar question earlier on. We don’t see any particular – I am not aware of any particular area where we see a – let’s say a fundamental shift in market sentiment. There is again kind of a normalization of volume growth, which we had expected as we all know we were not – that naïve to believe that we can just extrapolate the Q1 growth rate. At the same time, you have to take into account, the base line effect, because obviously the third and fourth quarter of 2010, we already operated at much higher levels than during Q1 and Q2 of 2010.

Joe Dewhurst – UBS Ltd.

Yeah. Thank you.

Magdalena Moll

For now next question comes from Jaideep Pandya from Berenberg Bank.

Jaideep Pandya – Joh. Berenberg, Gossler & Co. KG

My question is really on China...

Magdalena Moll

Again, we – that’s impossible to hear.

Jaideep Pandya – Joh. Berenberg, Gossler & Co. KG

Yes. Can you hear me now?

Magdalena Moll

Yeah. Now better.

Jaideep Pandya – Joh. Berenberg, Gossler & Co. KG

Yeah, good afternoon, hello. Yeah my question is really on the China the destocking comment of yours. Do you see this in any other emerging market in particular and one of your competitors has mentioned that in polyurethanes for instance, customers are expecting lower prices because of building of huge capacities? Do you also see that building your businesses? Thank you.

Kurt Bock

I mean obviously this is a name of the game that some customers might see an opportunity to see lower prices in the future which actually we do not see based on our capacity utilization rates and our feedstock cost. We saw a little bit of easening in PU that’s correct, especially in TDI in Asia but again that is very much a local and regional effect. And what I mentioned with regard to China I think we didn’t see in other countries in Asia, no. It’s very much in China or Chinese.

Jaideep Pandya – Joh. Berenberg, Gossler & Co. KG

Neither in Brazil?

Kurt Bock

No.

Jaideep Pandya – Joh. Berenberg, Gossler & Co. KG

Okay. Thank you.

Magdalena Moll

So now we are moving on to Mr. de Vroe from ING. Mr. de Vroe? Okay. I can’t hear you, so then we moving on to Annett Weber from BHF-BANK.

Annett Weber – BHF-BANK AG

Yes. Good afternoon. I’ve got two little questions. The first one relates again to the shutdowns, the unplanned as well as the maintenance shutdowns. Given that you posted a 2% year-on-year volume growth in Q2, what would that number have been like if you had not had these maintenance shutdowns i.e. what’s the impact on the revenue line roughly? And the second question relates to the Performance Products division, again on Cognis, how much of integration cost did you book in the Q2 results that were not shown as special items? Thanks.

Kurt Bock

The second question is roughly EUR20 million which is not special item for the Cognis integration...

Annett Weber – BHF-BANK AG

Q2?

Kurt Bock

...which also affects the result of Performance Products and the first question I cannot really answer. I mean I don’t have it at the tip of my fingers. We gave you the earnings effect in terms of overall volume effect, I can’t really tell you.

Annett Weber – BHF-BANK AG

Okay. Thanks.

Kurt Bock

I am sorry.

Magdalena Moll

Our next question comes from Laurent Favre from Merrill Lynch.

Laurent Favre – Merrill Lynch International Ltd.

Yes, can you hear me?

Magdalena Moll

Hardly, Laurent. Can you take – pick up the handset?

Laurent Favre – Merrill Lynch International Ltd.

Yeah, I am on the handset.

Magdalena Moll

Okay.

Laurent Favre – Merrill Lynch International Ltd.

Good. The question...

Magdalena Moll

Then you have to speak up a little more. Okay.

Laurent Favre – Merrill Lynch International Ltd.

Okay. The question is on Performance Products, coming back to the question from Andreas, on May month, as margins in Dispersions & Pigments and Care Chemicals were more or less flat year-on-year and that’s more than 50% of the division. For the margin to be down 240 basis points year-on-year, the margins in the three remaining segments had to be down around 5%, 500 basis points.

So I think, (inaudible) mentioned some of the reasons, but could you basically tell us a bit more especially on Nutrition & Health, why you talked about vitamins pricing being under pressure, but also maybe tell us if there is some kind of issue around the time lag of raw materials versus price increases? Or – I mean, basically what happens in Nutrition and Health, Paper Chemicals and Performance Chemicals for the margin to be down 500 basis points?

Kurt Bock

I cannot talk to your math in more detail. What we saw in Nutrition & Health is that we had now compared with last year because we refer to last year, we had good volume growth actually across all our businesses. I mentioned the vitamin E price softness, so to say. We had good margins. We had higher fixed structural cost due to the integration of Cognis and that is the number I just mentioned which is a pre-exceptional. We have special items, but we also have non-special items when we talk about our – the integration of the Cognis business. So that has to be taken into account when you do your models. I hope that helps.

Laurent Favre – Merrill Lynch International Ltd.

And what about Paper Chemicals and Performance Chemicals, please?

Magdalena Moll

Could you repeat one more time, sorry?

Laurent Favre – Merrill Lynch International Ltd.

I was saying so that would explain the difference in Nutrition and Health. I was just wondering about the two other segments, Paper Chemicals and Performance Chemicals.

Kurt Bock

Okay, Paper Chemicals were below last year. I think I mentioned that. And Care Chemicals, we had – or Performance, I am sorry. Performance Chemicals I have to look for my notes here because it’s so detail what you are asking. We had good growth. We had price increases. We had negative currency effect not surprisingly. We had volumes at about last year’s level and certainly also here in that business we had quite a strong effect from the integration of Cognis.

Laurent Favre – Merrill Lynch International Ltd.

Okay, thank you.

Kurt Bock

You are welcome.

Magdalena Moll

Now there is a follow-up question from Richard Logan from Goldman Sachs.

Richard Logan – Goldman Sachs International Ltd.

Okay. Thanks for taking my follow-up question. It was just on inventory levels. You commented on some de-stocking from – of customers. And I just wanted to get a sense as to how do you see inventory levels with customers. Do you see them as significantly below normal levels or abnormal levels? I mean, how do you view that situation?

Kurt Bock

Richard, that is a question which is very difficult for us to answer. We don’t think – we don’t get full transparency with regard to the inventory levels over customers. Sometimes they don’t want to tell us. We get information which is not completely accurate. What we saw is that there was a little bit of de-stocking going on and again we see this as a positive – again positive development happening because may be people who are building up inventories are a little bit too fast simply awaiting further price increases which would obviously be a logical consequence.

So we think what we’ve seen over the last couple of weeks is a positive market development, because again underlying fundamental growth we stick to what we saw a couple of months ago. But certainly a couple of other question marks, if you look at overall economic situation and debt situation, euro etcetera. But what we see in our markets, we haven’t really changed our assumptions for our outlook and having less inventory at our customer level I think is a good and positive development. But if you ask me is this now below normal that is most probably not the case. So I don’t think they are under stocked right now.

Richard Logan – Goldman Sachs International Ltd.

Okay. All right, thanks.

Kurt Bock

You’re welcome.

Magdalena Moll

So now we are moving towards the finish line so to speak. We have four more questions. First one is Mutlu Gundogan from Royal Bank of Scotland.

Mutlu Gundogan – Royal Bank of Scotland NV

Price increases, for some time now raw material inflation has been an issue for several of your downstream businesses. Do you believe that you can restore you margins via price increases and if yes how long should that take? Thank you.

Kurt Bock

Yes, the answer is yes. We are working very hard on this. Actually, we have during Q2 almost completely succeeded in passing on higher feedstock cost. We have a couple of specials as you know, but when you look at specific margins, we are not yet completely where we want to be but we made very good progress. It all depends certainly on one underlying assumption that is that we have continuous – continuing economic demand growth which we see from today’s point of view.

If – and the other if is certainly if all of sudden our feedstock costs goes through the roof that would change the picture but we don’t really see that happening right now. And Hans already said before looking at the oil price it looks like it will now lingering – will be lingering around that level which we have achieved recently.

Mutlu Gundogan – Royal Bank of Scotland NV

So do I understand it correctly that assuming that raw material did not move significantly price increases are on the way and should restore the margins somewhat in the coming quarters?

Kurt Bock

Price increases are underway as we speak, yeah, certainly.

Mutlu Gundogan – Royal Bank of Scotland NV

Okay. Okay. Thank you very much.

Kurt Bock

You’re welcome.

Magdalena Moll

So we now we have a question from Christian Faitz, whom we didn’t get on the line before. Christian, are you’re here.

Christian Faitz – Macquarie Capital Ltd.

Yes. Can you hear me now?

Magdalena Moll

Super. Now we can hear you. Okay.

Christian Faitz – Macquarie Capital Ltd.

All right, sorry.

Magdalena Moll

Go ahead.

Christian Faitz – Macquarie Capital Ltd.

May be check with your operator, I don’t know what happened. Anyway, regarding Agro, can you give us an assessment of channel inventories in Agro chemicals post the drought in Europe and do you buy back any stock from the wholesalers by any chance? Thank you.

Kurt Bock

No, we didn’t buy back any stock during Q2 and I can’t really answer you that question, I really don’t know, what’s the inventory level is at our customer levels are right now. We have to wait a little bit. The season has come to pretty much a closure, and then as I said before we do the final book keeping and see what we are. But I am also not aware of any special situation that we have, let’s say separate inventory sitting in somewhere, houses somewhere. That’s not the case.

Christian Faitz – Macquarie Capital Ltd.

Okay, great. Thanks and maybe staying with Agro, can you give us an update on the selling process of the fertilizer businesses?

Kurt Bock

Sorry, I didn’t get – on which? The sale process, that’s underway. We are negotiating with a couple of parties and I think we will able to bring this to good conclusion within the next couple of months. Yes, we’re confident that we will able to sell it at attractive conditions to our shareholders.

Christian Faitz – Macquarie Capital Ltd.

Great. Thank you.

Kurt Bock

You’re welcome.

Magdalena Moll

So our next question and jumping around – we have so many still but, I would like to take Martin Rödiger from Cheuvreux.

Martin Rödiger – Crédit Agricole Cheuvreux SA

Yes. Question is on Agro, one of your competitors already started to raise selling prices by 5% next season and another competitor said today, they are optimistic for price increases into 2012. Do you intend to raise any prices too and how do you see the price discipline in the respect of regions for price hikes and protection?

Kurt Bock

We had prices essentially flat during Q2 for one very specific reason that was North America which I mentioned earlier on where we had price adjustment, just to fend off some competition and maintain our market position which is again a very special situation in a very specific market. Apart from that we have brought to the market a couple of excellent new active ingredients which have been received very, very well by the marketplace and apparently for new actives you do have pricing power because you create value for our customers.

Martin Rödiger – Crédit Agricole Cheuvreux SA

And for the rest of the portfolio?

Kurt Bock

You’re talking about the Ag portfolio?

Martin Rödiger – Crédit Agricole Cheuvreux SA

Yes, for the Ag portfolio, the midpoint for the new active ingredient hitting on the market?

Kurt Bock

This is a constant game and that business that you try to provide additional value for our customers by having new formulations for instance, which we are doing quite extensively. So whenever you can deliver new additional value, we will also be able to raise prices and we have achieved that quite consistently over the last couple of years and we are still doing that.

Martin Rödiger – Crédit Agricole Cheuvreux SA

Okay, thank you.

Kurt Bock

You are welcome.

Magdalena Moll

We are now moving on with the next question from Jenny Barker from Nomura.

Jenny Barker – Nomura International Plc

Thank you very much. Gas distribution volumes were down. As we look ahead to the Nord Stream system coming on, how do you see the volumes that you will consolidate? How will they evolve? Will it be a matter of gaining market share because of this new network or will you just be waiting to see the way that the general market grows?

Hans-Ulrich Engel

Yeah, Jenny, this is Hans. Volumes were slightly down in Q2. Remember how warm the beginning of Q2 was in Western Europe and in Germany compared to relatively cold conditions that we had in Q2 of the prior year. That’s actually the driver there.

With Nord Stream there will be additional quantities. They will not be there from the first day on. There will be a ramp-up of these additional quantities that we have secured for WINGAS. Whether or not that will lead to additional market share in the end will depend on the question on gas consumption in Western Europe and in Germany. And I think you are well familiar with the situation and the energy politics that we have in Germany, as a result of which there will be less nuclear power in the years to come. And from my point of view, gas will play a major role to fill that gap and we will be there with additional quantities.

Jenny Barker – Nomura International Plc

So just could you just remind me when will material additional quantities be available to you?

Hans-Ulrich Engel

It will start in October of this year when the first pipeline of Nord Stream will be commissioned and then there will a ramp-up over a roughly a two-year period of time.

Jenny Barker – Nomura International Plc

Thank you.

Magdalena Moll

Okay and then we are moving on to the next question from Ronald Köhler from MainFirst.

Ronald Köhler – MainFirst Bank AG

Yes, thank you. It’s on Oil and Gas, I struggle a little bit to understand your results. If I look Q2 results versus Q1 excluding non-compensable oil tax, it was actually down by more than 20%. Despite that oil prices flattish, I would assume gas prices are up, so I am just talking about exploration production, and talking with the comparison of Q2 versus Q1 what happened there?

Kurt Bock

I haven’t followed the math that quickly but what happened between Q1 and Q2 in E&P is obviously the shutdown of our Libyan activities.

Ronald Köhler – MainFirst Bank AG

Obviously excluding that – actually I calculated it excluding non-compensable tax percent therefore also almost excluding all earnings of Libya, I guess.

Kurt Bock

If you take the – let’s quickly look at this here. We are in the – in Q1...

Magdalena Moll

(inaudible).

Ronald Köhler – MainFirst Bank AG

So excluding Oil and Gas taxes about EUR346 million in Q1 and it was EUR269 million in Q2 meaning minus EUR77 million that I guess that cannot be all the remaining Libyan business, I guess there must be something else, plus that I would have expected some earnings contribution on the higher additional play gas prices.

Kurt Bock

Yeah. In Q1 I don’t have the – Engel, look quickly what the Q1 number is?

Ronald Köhler – MainFirst Bank AG

EUR346 million excluding non-compensable taxes, EUR346 million.

Kurt Bock

Just give me second please.

Magdalena Moll

Maybe we check this in the meantime and we move on to the next question and then come back to you, is that okay?

Ronald Köhler – MainFirst Bank AG

Yeah. Fine. Thank you.

Magdalena Moll

Okay. So then we come to Annett Weber.

Annett Weber – BHF-BANK AG

Yes. I’ve got one follow-up question, and given that you see significant price increases 13% across the Group, 12% across the Chemicals businesses. Are you seeing any demand destruction from the current price levels that have been achieved in the say July, August timeframe?

Kurt Bock

No, we don’t see that coming back again to what I said earlier, we don’t see a fundamental shift in the market development. What we saw is a little bit more cautious ordering pattern and some what we see as destocking at our customer levels. But again we stick to our full year guidance and the volume market growth which we have as assumption for that full year guidance.

Annett Weber – BHF-BANK AG

Yeah, but it’s not related to the pricing side or something that?

Kurt Bock

No.

Annett Weber – BHF-BANK AG

Okay.

Kurt Bock

What we do see – what you normally see in this case is that there is substitution going on. People try to, let’s say, move from Paper to Plastic or vice versa or they move from polypropylene into polystyrene. These kinds of substitutions you have to a certain degree frankly and that is very often – almost entirely price driven but this is kind of, say, a normal pattern which you see.

Annett Weber – BHF-BANK AG

Okay, thanks.

Kurt Bock

You’re welcome.

Magdalena Moll

Then we had a final question, Neil Tyler, JPMorgan. Neil?

Kurt Bock

Okay.

Magdalena Moll

Okay. And then Ronald, we will – we’re still checking and doing some mess here. So if you allow me we will get back to you after this call and I give you the explanation.

Kurt Bock

And as you all know Ronald very well, and he is probably is correct his assessment, but we try to give you our view. What I can say you really have to look at the after-tax earnings of Oil and Gas to get a better understanding for the earnings dynamics and that is certainly true in Q2 when we had this strange development with the Libyan earnings which we are missing. EBIT coming down, at the same time earnings after-tax is coming up and for that reason we provide you with this additional information.

Magdalena Moll

So with this ladies and gentlemen, we come to the end of our conference call. Before we close however, I would like to post a reminder here. You all have been invited to our Roundtable on Agricultural Solutions. This Roundtable and this is something very important and significant, will take place on August 8 in the United States.

We will have all the top management from BASF; Dr. Marcinowski, Head and also Dr. Eckes with us to discuss the crop protection as well as biotechnology business and on top, Mr. Fraley from Monsanto will join us to talk about the collaboration we have with Monsanto and then we have the opportunity to also see some testing fields in (inaudible) Illinois. So with this whoever hasn’t signed up yet and sees a good opportunity to join us. This is on August 8 in the U.S. so please call us and we can set this up for you.

We will next report on our third quarter results on October 27 and with this the management and we would like to thank you very much to that you have joined us today. Should you have any further questions please contact any member of the Investor Relations team and we will be very happy to help you on with any questions you may have.

So thank you for joining us and hope to see you soon. Bye, bye.

Operator

Ladies and gentlemen, the conference is now concluded. You may replace your handsets. Thank you very much for joining us and have a pleasant day. Good bye.

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