Germany – BASF today presented its new strategy. In doing so, the company indicated that it will say goodbye to a number of “standalone” businesses that focus on specific industries. These business units are less connected to the chemical value chain, which is precisely BASF’s strength.
BASF says it wants to create even more value for its customers and shareholders by reducing expenses and cutting costs. As a result, the company expects to pay at least 12 billion euros to shareholders between 2025 and 2028. The company plans to grow EBITDA to 10 to 12 billion euros by 2028. The company presents these ambitions in its new strategy: Winning Ways – Focus, Accelerate, Transform and Win.
Core business
First of all, BASF is going to revise its portfolio. In doing so, it distinguishes between business units it considers “core business”: Chemicals, Materials, Industrial Solutions and Nutrition & Care, and business units it sees as independent businesses: Environmental Catalyst and Metal Solutions, Battery Materials, Coatings, Agricultural Solutions. BASF says it will organize Environmental Catalyst and Metal Solutions and Battery Materials as a separate division from the Surface Technologies segment as of Jan. 1.
The German chemicals giant underlines the strength of the Verbund strategy for its core business activities. These are strongly intertwined and have high efficiency in terms of raw material use, operational excellence and costs. The company states that from these activities six billion euros in sales were achieved by 2023 thanks to the launch of new innovative prodcuts. In three quarters of the activities, BASF is among the market leaders. The company sees opportunities precisely there to maintain and expand its strong position.
Standalone
The previously mentioned “standalone” business will have more autonomy and flexibility. For now, the company says it will continue to invest in these business units. But sales are the obvious choice. For example, it already indicates that it wants to get rid of the dyeing activities in Brazil. For Agricultural Solutions, it foresees a separation of operations in 2027. As for battery materials, the company sees a rapid growth market, with high market and technology risks. BASF is seeking cooperation with other parties for this division. The catalyst business already has greater independence since last year and provides a strong cash contribution.
Part of the new business strategy is also the simplification of the organization, a flatter hierarchy and less bureaucracy. The various business units will become more autonomous and also more responsible for their own success and will be judged accordingly. The company is also looking at where artificial intelligence can contribute to accelerating processes and innovation.
Chemistry
BASF continues to maintain a strong focus on chemistry, especially in this changing market with an eye on raw materials and energy transition. The company wants to apply greater amounts of renewable raw materials in its processes. The company is also setting up a specific business unit for this purpose. The expenditure of activities focused on the transition is estimated at 600 million euros per year in the period up to 2028.
The Ludwigshafen site – the subject of drastic measures, reorganizations, and plant closures in the recent period, will continue to see facilities closed in the coming period. BASF indicates that a number of plants and production lines are unprofitable because they are uncompetitive or structurally underutilized. In addition to the already announced closure of the adipic acid, CDon and CPon plants, BASF is also considering shutting down other production facilities. The chemical company had already committed to saving about 2.1 billion euros at the German site by the end of 2026.
