BASF plans to strengthen its position as the world’s leading chemical company. In its further developed strategy “We create chemistry,” the company outlines how it wants to achieve this. The Chairman of BASF’s Board of Executive Directors Dr. Kurt Bock, Vice Chairman Dr. Martin Brudermüller and CFO Dr. Hans-Ulrich Engel presented the details at a press conference today in Ludwigshafen.
Bock pointed out that the company had achieved its leading position thanks to its successful strategy in the past years: “We will build on this and make a significant contribution to meeting the needs of a growing world population.” BASF sees population growth as a crucial trend that brings on the one hand enormous global challenges, but on the other hand offers many additional opportunities, in particular for the chemical industry. In accordance with sustainable development, BASF will play a role with regard to conserving resources, ensuring healthy food and nutrition and improving people’s quality of life. “We have summarized what we do as a company in our corporate purpose: We create chemistry for a sustainable future,” said Bock.
BASF targets profitable growth
The company has set itself ambitious goals. BASF forecasts that global chemical production will grow faster than global gross domestic product (GDP) through 2020. In this period, the company expects the global economy to grow by an average of 3 percent per year, and thus slightly faster than in the past 10 years, while chemical production is forecast to grow on average by 4 percent per year. BASF continues to aim to grow 2 percentage points above chemical production and thus increase sales by an average of 6 percent per year until 2020. Overall, BASF targets sales of approximately €115 billion and seeks to further increase profitability to achieve an EBITDA of €23 billion in 2020.
BASF adds value as one company
BASF supplies products and solutions to almost all industries. Its portfolio ranges from oil and gas, classical chemical businesses and customized products to functionalized materials and solutions. “The scope of skills and know-how that we combine under one roof is what sets us apart from our competitors. These factors include our innovative strength, our broad technology basis, our operational excellence and our global access to relevant customer industries,” said Bock. “We add value as one company by combining these strengths.”
BASF’s unique Verbund system offers enormous competitive advantages. The company will further develop this sophisticated and profitable system, which extends from production and technology to customers. In addition, BASF will sharpen its focus on customer industries. Committed, well-trained employees ensure that the entire Verbund functions efficiently worldwide.
Innovations for a sustainable future
Innovations from the chemical industry nowadays rarely rely on the development of new chemicals. Instead, new materials and system solutions are created by combining know-how from a variety of disciplines. “Innovations of this kind require a broad portfolio, interdisciplinary cooperation and a deep understanding of our customers’ value chains. We therefore will continue to develop our portfolio in the direction of customer-focused businesses,” explained Brudermüller. In 2020, sales of €30 billion and an EBITDA of €7 billion are to be generated with products that have been on the market for less than 10 years.
Furthermore, sustainability is becoming one of the main drivers of growth and value creation. BASF’s customers want sustainable products and system solutions, and the company’s employees expect BASF to closely integrate sustainability into its day-to-day activities. “More sustainability can only be achieved through innovation – and that is where chemistry plays an essential role,” said Brudermüller. In the future, sustainability will therefore be more strongly integrated into business decisions.
Business expansion in emerging markets
BASF’s sales to customers in emerging markets have almost tripled in the past 10 years and accounted for approximately one-third of total sales (excluding Oil & Gas) in 2010. In 2020, the company expects current emerging markets to contribute 45 percent to sales. Investments will boost the company’s future growth. Between 2011 and 2020, BASF plans capital expenditures of €30 billion to €35 billion. More than one-third of this amount will be invested in emerging markets. “We already have leading positions and fast growing businesses in emerging markets, and this is something we will build on,” said Bock.
Solid and shareholder-oriented financial strategyBASF’s financial strategy will continue to take account of the criteria needed to maintain its solid A rating. “This also includes our ambitious dividend policy and the possibility, in principle, of buying back shares,” said Engel. A new strategic excellence program, STEP, will also increase competitiveness and profitability. STEP is expected to contribute around €1 billion to earnings by the end of 2015.