BASF plans to strengthen its position as the world’s leading chemical company. The company further developed its strategy, “We create chemistry”, formulating a road map on how to sustain and develop their position in the market.
The chairman of BASF’s board of executive directors, Dr Kurt Bock, the vice-chairman, Dr Martin Brudermüller, and the chief financial officer, Dr Hans-Ulrich Engel, presented the details of this strategy at a press conference in Ludwigshafen recently. 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 foundation and make a significant contribution to meet the needs of a growing world population.”
BASF sees population growth as a crucial trend that brings enormous global challenges, but also offers many additional opportunities, in particular for the chemical industry. In accordance with sustainable development, BASF will play a role in 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, which is to create chemistry for a sustainable future,” said Bock.
BASF targets profitable growth
The company has set ambitious goals and forecasts that global chemical production will grow faster than global gross domestic product (GDP) by 2020. In this period, the company expects the global economy to grow by an average of 3% per year, while chemical production is forecast to grow on average by 4% per year. BASF continues to aim to grow two percentage points above chemical production and thus increase sales by an average of 6% per year until 2020. Overall, BASF targets sales of approximately €115-billion and seeks to further increase profitability to achieve an earnings before interest, taxes, depreciation and amortisation (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 customised products to functionalised 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 characteristics 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.”
The company’s unique Verbund system offers enormous competitive advantages. It 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
Today innovations from the chemical industry 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 customers’ value chains. We 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. 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. “Sustainability can only be achieved through innovation, and that is where chemistry plays an essential role,” said Brudermüller. “In the future, sustainability will be more strongly integrated into our business decisions.”
Business expansion in emerging markets
BASF’s sales to customers in emerging markets have almost tripled in the past ten years and accounted for approximately one third of its total sales (excluding oil and gas) in 2010. In 2020, the company expects current emerging markets to contribute 45% to its sales. Investments will boost the company’s future growth. Between 2011 and 2020, BASF plans capital expenditures of €30-billion to grow 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 we will build on this foundation,” said Bock.
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"We create chemistry" BASF further develops its corporate strategy. Dr. Kurt Bock, Chairman of the Board of Executive Directors (center), Dr. Martin Brudermuller, Vice Chairman of the Board of Executive Directors (right) and Dr. Hans-Ulrich Engel, Chief Financial Officer (left).
Photo: BASF - The Chemical Company, 2011