BASF unveils a new strategy to maintain total carbon dioxide emissions

Basf takes full advantage of integration, innovation, sustainable development, digitalization and excellent operational advantages

By 2025, sales of products with outstanding contribution to sustainability will reach 22 billion euros without interest and tax on special projects. The profit before depreciation and amortization increased by 3 to 5 percentage points per year and the dividend per share increased by year by year. Dr. Martin Brudermueller, executive board chairman of BASF Europe, said at a new corporate strategy conference in Port Ludwig. He recalled the company's highlights in recent years: "Since 2012, our profit before interest, tax, depreciation and amortization of special items has increased by an average of 8% annually, significantly higher than the annual growth of fixed costs of 3%. Basf's profit growth is therefore faster than the 3.7% annual growth of global industrial production. In addition, the level of free cash flow has also been greatly developed in recent years, and in the near future achieved up to 15.4% of the returns on used capital. The primary goal of the new strategy is to achieve sales and sales growth.

Basf focuses on achieving organic growth in the business sector. In order to achieve this goal faster, BASF will focus more on customers and provide customized services and solutions. BASF will significantly simplify the architecture and process, optimize product mix, and further strengthen the Verbund system to become faster and more flexible. Bo Mule said: "We need to make organizational transformation, become more customer-centric and more agile."

The Asian market has become the key market of BASF and is also very important to the realization of the company's growth strategy. China has become the world's largest chemical market, accounting for 40% of the total global market, and will continue to promote the growth of global industrial production. "By 2030, China's share of the global market will expand to nearly 50%, and BASF will have to grow with it," Bo said. We will build a new integrated base in Zhanjiang, Guangdong, and expand the base in Nanjing, which will significantly enhance our growth level in this dynamic market.

Basf sets up ambitious financial and non-financial objectives

Basf's new strategy sets ambitious financial and non-financial objectives. Dr. Hans-Ulrich Engel, Vice-Chairman and Chief Financial Officer of BASF Europe, said: "We are growing faster than the market, aiming to achieve higher sales and sales growth than the global level of industrial production." At the same time, BASF hopes to further improve its profitability, aiming to increase the profit before interest, tax, depreciation and amortization of special items by 3 to 5 percentage points annually. "In addition, BASF aims to achieve a much higher rate of return on capital spent annually than the cost-to-capital ratio," Engel said. This means that we actually create added value. Basf also wants to maintain its leading position in the eyes of investors and create value above the average level of the chemical industry. "Therefore, we want to maintain sufficient free cash flow and increase the dividend per share year by year," Engel said. In order to achieve these ambitious goals, BASF is launching a new outstanding project, which will be implemented from 2019 to 2021, with an annual contribution of 2 billion euros starting from the end of 2021. The project will include measures in the fields of production, logistics, R&D, digitization, automation and organizational development. Basf has also set ambitious non-financial targets. "Even if we set a considerable annual production growth target, we are committed to maintaining global greenhouse gas emissions at 2018 levels until 2030," Bo said. This means that we are controlling the growth of carbon dioxide emissions while achieving organic growth. This goal covers major investment projects planned, such as the integrated production base to be established in Guangdong, China. To achieve this goal, BASF will improve its production base management process, improve efficiency, integrate resources, and, where possible, increase the proportion of renewable energy in the power supply. Bo Mule added: "Considering the high-tech level we already have in our production base, this is a challenging goal that must be achieved in a different way." He believes that this requires a suitable regulatory environment for Germany, Europe and the world. BASF has cut its greenhouse gas emissions by 50% from 1990 levels and doubled its capacity. In addition to achieving the goal of maintaining the total carbon dioxide emissions unchanged by 2030, BASF hopes to reach about 22 billion euros in sales of super-products by 2025. These products contribute significantly to the sustainable development of the value chain.

Bo Mule said: "Without our employees, all the goals can not be achieved. This is why we set the employee satisfaction index for the first time. We hope that more than 80% of employees think they can grow up in Basf and keep working at their best.

Work focus area

Bo Mule said: "We want to let customers experience a brand new Basf. Therefore, we will further adjust the organizational structure to make it more customer-centric and more efficient. We need to mobilize the enthusiasm of the whole company to meet the needs of customers better.