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BASF | Strategy and Financial Highlights Information from ICIS

 

Edited from “Letter from the chairman”, annual report and company website

 

BASF states that as a result of the “extremely difficult business environment caused by the global economic crisis” it has to face some exceptional challenges in 2009. It will do this by following its key strategy of “shaping the future together and staying the world's leading chemical company”. In addition, it will continue to fully integrate Ciba Specialty Chemicals which it acquired 95.8% of in April 2009.

 

Opportunities and risks

 

BASF says that one of its strengths is that it acts quickly and decisively even in difficult times.

 

“We have started to respond to the plummeting demand early on, with capacity adjustments, plant shutdowns, flexible work models and short-time working. We apply these measures with just as much rigor as our strict cost management policy, ongoing optimisation of working capital and our longer-term programmes for boosting efficiency. In this way, we secure our strong cash flow and our solid financing structure,” says chief financial officer, Kurt Bock.

 

BASF states that the integration of the acquired Ciba businesses involves extensive restructuring. It expects this to yield synergies of at least €400m/year from 2012 onwards. By the end of 2010, annual savings of approximately €300m are to be achieved. Overall, the integration process is expected to entail cash costs totalling approximately €550m, thereof €150m in 2009.

 

“We are also expecting that the integration process will entail noncash costs totalling approximately €400m in 2009. The restructuring plans include a reduction of around 3,700 positions by 2013. We are reviewing options, including sale, restructuring or closure, for 23 of the 55 former Ciba production sites worldwide: decisions will be made about these sites by the end of the first quarter of 2010,” says Bock.

  

Strategies for value-adding growth

 

BASF says that it bases its actions on sustainability. Its goal is to grow profitably on a permanent basis. It will achieve this through operational excellence, innovation and investments in growth markets.

 

“We invest early in growth markets and are present in all important markets. Our active portfolio management, acquisitions and divestitures make us economically independent and more competitive,” says Bock.

 

Strong portfolio through acquisitions

 

BASF says it will strengthen its position and reduce the cyclical nature of its business through acquisitions. With the takeover of Ciba in April 2009, it will continue to expand its position in specialty chemicals.  

 

Value-adding growth through efficiency and effectiveness

 

At the end of 2008, BASF adjusted its production at an early stage to meet lowering demand. It states that its ongoing processes for restructuring and cost-cutting have been strengthened. Together with its ongoing programmes to increase efficiency, it expects a resulting contribution of over €1bn annually starting in 2012. BASF’s goal is to attain the next level of operational excellence.

 

Innovation creates market opportunities

 

By 2010, BASF expects investment in innovation and R&D to generate annual sales of more than Euro4bn, with at least 20% in the form of additional growth.

 

BASF further states that it has combined technology-driven issues of the future into the following five growth clusters:

 

(1) energy management;

(2) raw material change;

(3) nanotechnology;

(4) plant biotechnology; and

(5) white (industrial) biotechnology.

 

The following four strategic guidelines describe BASF’s “path to the future”, with which it will align its activities:

 

(1) earn a premium on its cost of capital;

(2) help its customers to be more successful;

(3) form the best team in industry; and

(4) ensure sustainable development.

 

Outlook


Due to the “extremely difficult business environment caused by the global economic crisis” BASF believes that all segments except for Agricultural Solutions will be affected by the recession.

 

“The indications are that the situation is stabilising at a low level. In North America the slump appears to be bottoming out and China is again beginning to see stronger growth. Nevertheless, a sustained upturn is not yet in sight,” says Bock.

 

“Restocking in several industries and regions as well as economic stimulus packages are improving demand but generally only in the short term. The global financial system remains fragile; overcapacity and rising unemployment are also depressing the situation further,” concludes Bock.

 

Please also see BASF fully prepared for unsteady recovery from recession - CEO, INSIGHT: BASF cuts Ciba deep in uncertain times and BASF plans to invest €2bn in Asia-Pacific, double sales by 2020 or go to ICIS news.

 

 

Download the The ICIS Top 100 Chemical Companies listing here

 

Financial highlights: BASF, year ended 31 December

 

2010

 2009

 2008

 2007

 2006

Sales (€ m)

63,873

50,693

62,304

57,951

52,610

Operating Profit (€ m)

7,761

3,677

6,463

7,316

6,750

Net Profit (€ m)

4,557

1,410

2,912

4,065

3,215

Total Assets (€ m)

59,393

51,268

50,860

46,802

45,291

Diluted earnings per share (€)

4.96

1.54

3.13

4.16

6.37

Number of Employees

109,140

104,779

96,924

95,175

95,247

 

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BASF Company Structure

BASF is one of the world's largest integrated chemicals companies with a portfolio ranging from chemicals, plastics, performance products, agricultural products and fine chemicals to crude oil and natural gas.
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