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Web Date: November 29, 2011

BASF Promotes Growth Agenda

Strategy: Firm targets 6% sales growth from high-margin businesses and emerging markets
Department: Business
Keywords: Europe, Germany, economic forecast, earnings, revenue, growth, battery materials, emerging markets

BASF announced it will expand sales an ambitious 6% per year until 2020 as part of a growth strategy that was unveiled for investors on Nov. 29. The German firm, the world’s largest chemical company, sounded a note of optimism that is rare in Europe these days, especially considering economic forecasts of growth in the world economy of just 3 % per year.

According to the new strategy, called “We create chemistry,” BASF expects to sell $153 billion in products by 2020, compared to $85 billion in 2010. The company plans to expand sales in emerging markets to 45% of revenues in 2020 from about 33% in 2010.

BASF will invest more than one-third of a projected $40 billion in capital expenditures through 2020 in emerging markets. “We already have leading positions and fast growing businesses in emerging markets, and this is something we will build on,” said chief executive officer Kurt Bock.

Rather than shed businesses, BASF said it will use its diverse portfolio to achieve growth. BASF operates oil and gas businesses and makes traditional chemicals, specialty chemicals, and functional materials. To get closer to downstream customers, BASF acquired specialty chemicals firm Ciba in 2009 and personal care ingredients maker Cognis in early 2010. The company said it will continue to shape its portfolio with an understanding of customer needs.

As part of a focus on its automaker customers, BASF said earlier this month that it will create a new global business for battery materials. The business will include the company’s offerings in cathode materials, electrolyte formulations, and products for next-generation lithium batteries.

Finally, chief financial officer Hans-Ulrich Engel said BASF will take actions to boost its share value by continuing its dividend policy and possibly buying back shares. It plans a competitiveness and profitability program that will contribute $1.3 billion to earnings by the end of 2015. Investors pushed the company’s stock price up 2% on Tuesday.

 
Chemical & Engineering News
ISSN 0009-2347
Copyright © American Chemical Society

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