The Chairman of BASF’s Board of Executive Directors Dr. Kurt Bock, Vice Chairman Dr. Martin Brudermüller and CFO Dr. Hans-Ulrich Engel outlined how BASF plans to strengthen its position as a leading chemical company.
LUDWIGSHAFEN, Germany – The Chairman of BASF’s Board of Executive Directors Dr. Kurt Bock, Vice Chairman Dr. Martin Brudermüller and CFO Dr. Hans-Ulrich Engel outlined how BASF plans to strengthen its position as a leading chemical company.
The company has set 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 three percent per year, and thus slightly faster than in the past 10 years, while chemical production is forecast to grow on average by four percent per year. BASF continues to aim to grow two percentage points above chemical production and thus increase sales by an average of six percent per year until 2020. Overall, BASF targets sales of approximately EUR 115 billion and seeks to further increase profitability to achieve an EBITDA of EUR 23 billion in 2020.
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 EUR 30 billion and an EBITDA of EUR 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 be more strongly integrated into business decisions.
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 EUR 30 billion to EUR 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.
BASF’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 EUR 1 billion to earnings by the end of 2015.