BASF's plastics business to continue on profitable growth path

BASF wants to further expand its strong position in the worldwide plastics business by firmly focusing its activities on customer and market requirements. This statement was made today (July 3,
2007) by Dr. John Feldmann, Member of the Board of Executive Directors of BASF and responsible for Plastics as well as Oil and Gas, at a press conference held in Frankenthal. The press
conference was held in the run-up to K 2007, the world’s largest plastics trade show, starting October 24, 2007 in D?ldorf.

“Since 2003, supported by the re-organization of our portfolio, we have been able to increase income from operations (EBIT) every year and we are also confident of achieving at least the
previous year’s level in 2007”, said Feldmann. He also announced an expansion of business with products offering differentiation potentials in the market: “By 2010, we want to increase the
share of innovative products and specialties for specific sectors and customers from about one quarter to about 40 percent compared to 2006”. The company intends to achieve this goal through
partnerships with its customers. Driven by its high competence in research and development, applications technologies and logistics, BASF intends to continue on its profitable growth path in
the plastics business.

The plastics market will overall develop strongly in the future: “Plastics are energy efficiency materials and for that reason alone will continue to be in great demand”, is how Feldmann sees
the future trend. Examples include the automotive, packaging and construction industry in which plastics contribute to lowering energy consumption and thereby reducing emissions.

The global demand for plastics will continue at an annual growth rate of about 5 percent up to 2015. BASF expects to see the highest growth rates in Asia, where since this year consumption has
outstripped total demand in Europe and NAFTA put together. “As the Asian national economies continue to develop and levels of personal prosperity rise, this demand will also grow substantially
beyond 2015”, forecasts Feldmann.

Feldmann explained the strategy for expanding the plastics business and highlighted the competitive advantages enjoyed by BASF:

● Concentration on areas of activity with sufficient differentiation potential in the market
● Continuous strengthening of efficiency, effectiveness and innovativeness in all areas of business
● Consistent realization of growth potentials in new applications and new customer sectors
● Full utilization of the product and service portfolio
● Positioning of plastics as energy efficiency materials.

In recent years, BASF has significantly strengthened its engineering plastics and polyurethanes business through investments and acquisitions. Sales of engineering plastics are therefore
expected to grow at an average annual rate of 9 percent up to 2010, a level significantly above the market average. With polyurethanes, BASF is continuing to expand the specialties business and
strengthen backwards integration into basic products. As regards styrenics, BASF has parted with sites and activities that are no longer competitive. A general strategy of analyzing all options
for activities with high earnings volatility and low profit margins is being pursued.

Feldmann further stated: “We lead the field with polyurethane systems and special elastomers and also have the best global production structures for basic polyurethane products.” BASF is
currently the only producer with facilities for manufacturing PUR basic products in all regions of the world. This means that the company can reliably supply its worldwide customers at all
times and support them with the necessary applications technology knowledge.

BASF is employing differentiated business models to allow it to tap even more profitably into the existing market segments. Polyamide intermediates, spinnable polyamides, styrene, polystyrene,
ABS and styrene-based foams are being marketed with the aid of a business model in which BASF presents itself to the customer primarily as a reliable and efficient supplier. More than 70
percent of plastics sales are currently being generated through this business model. BASF is gaining competitive advantages with high quality, reliable delivery service and low costs based on
high efficiency production operations and marketing processes.

For polyurethane basic products and innovative insulating materials like Neopor©, BASF anticipates above average growth rates and is expanding its production capacities accordingly.
Capacities for the production of Neopor© alone are to be trebled by the end of 2008.

Besides these standard products, BASF offers a wide range of products and specific solutions for individual sectors and customers. System houses for polyurethanes and compounding plants for
engineering plastics in combination with regional development centers offer scope for substantially upgrading and improving this product portfolio in cooperation with customers.

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