BY STEVE RANGER, EDITOR IN CHIEF
BASF has set out a new corporate direction - including dividing its businesses into ‘core’ and ‘standalone’ units. The company’s CEO Markus Kamieth said: ‘We are convinced that BASF is at a turning point.’
He said that while the chemical industry remains an attractive and growing business, it is also changing. ‘Competitive dynamics are certainly changing. The green transformation is changing; the setup of value chains and many other things are shifting. And this is why BASF also needs to and will change,’ he said in a presentation at the company’s 2024 Capital Markets Day in Ludwigshafen, Germany.
‘The strong and broad portfolio of chemical businesses at our core is what makes BASF most relevant to customers globally, across a wide variety of industries. Our standalone businesses serve distinct industries and are less connected to our integrated value chains. Going forward, we will unlock the value of these businesses,’ he said.
BASF is the largest chemical company in the world, has 112,000 employees and generated sales of €68.9 bn in 2023.
It will now have a set of four core businesses - Chemicals, Materials, Industrial Solutions and Nutrition & Care, made up of eight operating divisions – and a set of standalone businesses targeted at specific industries.
Kamieth said that 75% of the businesses in BASF’s core portfolio have a top-three market position in their markets. The four core segments accounted for around €40bn in sales in 2023, €6bn of which came from products on the market for less than five years. BASF said these core businesses will be the innovation and sustainability driver for the company.
The businesses that BASF sees as standalone are Environmental Catalyst and Metal Solutions, Battery Materials, Coatings and Agricultural Solutions. Environmental Catalyst and Metal Solutions as well as Battery Materials will be reported as separate divisions in the Surface Technologies segment in 2025. The company said it will provide these standalone businesses with ‘more strategic and operational flexibility’ but said it will continue to invest in them.
For BASF’s Coatings division, it will ‘explore overall strategic options’ for value creation and is preparing to divest its decorative paints business in Brazil. BASF said the Agricultural Solutions is being readied for a potential IPO, although the listing of a minority share is also an option.
The chemicals giant said its Battery Materials business was operating in an environment of ‘high market and technology risks’ and said it planned to focus on filling existing capacities and ‘exploring opportunities for collaborations’ along the value chain. It described the Environmental Catalyst and Metal Solutions (ECMS) business as well positioned but operating in a low-growth industry.
BASF said it would be making its operating divisions more accountable for success and create flatter hierarchies while reducing bureaucracy. It also said it would be using AI globally across the company to advance productivity and accelerate innovations.
The company said it is taking a ‘phased approach’ to the green transformation based on customer demand, and said that it already has thousands of products with reduced or net-zero product carbon footprints across its broad portfolio.
In a second phase, the chemicals giant will secure ‘increasing volumes’ of renewable feedstocks and is ramping up volumes of products with sustainable features. In 2022, BASF formed a unit for sourcing, making and trading renewable energy at scale; the company now plans to set up a dedicated unit for renewable feedstocks based on the same approach.
Europe’s chemical industry has been buffeted by high energy costs and also by the cost of transitioning to more sustainable and greener products.
While that’s an expensive process, it’s still not clear whether customers will actually pay a premium for more sustainable products - and how fast that switch to environmentally friendly products will take place. Kamieth said that by 2030 at the latest demand for green products or products with a green attribute – lower CO2 footprint, bio-based or recycled – will outpace supply.
The company also noted it remains fully committed to its own climate protection targets: by 2050, it aims to achieve net-zero greenhouse gas emissions for production (Scope 1), energy purchases (Scope 2) and purchase of raw materials (Scope 3.1). By 2030, it aims to reduce Scope 1 and Scope 2 emissions by 25%, compared with 2018, and reduce its specific Scope 3.1 by 15% by 2030, compared with the 2022 baseline.
The company said at its Ludwigshafen site some plants and production lines are no longer delivering sufficient earnings – either due to a lack of competitiveness or structural underutilisation. The closure of the adipic acid, cyclododecanone (CDon) and cyclopentanone (CPon) plants were announced at the end of August 2024, and the company said further ‘asset adjustment measures’ are currently being assessed.
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