BASF increases sales but won't achieve goals for 2015

Strategic sales and earnings targets for 2015

At the telephone conference, the company gave an update on the "We create chemistry" strategy and the related financial targets for 2015, which were originally published in 2011.

From today's point of view, BASF will not achieve its ambitious financial targets for 2015 (sales: €80 billion; EBITDA: €14 billion). The growth rates for gross domestic product, industry and chemical production for 2010 to 2015 are lower than originally expected:

• BASF now expects the average annual growth of global gross domestic product to be about 0.8 percentage points lower (prior assumption: 3.4% p.a., current assumption: 2.6% p.a.).
• Growth of industrial production is now assumed to be 3.4% p.a., versus a previous assumption of 4.6% p.a.
• The company now assumes the growth of chemical production to be 4.0% p.a. instead of 4.9% p.a. – still growing well above GDP and industrial production.

Bock: "The reasons for this weak global economic development are obvious: reduced growth dynamics of emerging markets and a delayed recovery in the European economy." In addition, there has been higher than expected margin pressure for some basic products and partially in the Performance Products segment. This is why BASF has initiated a restructuring program in this segment, which will contribute about €500 million to earnings from 2017 onwards.

For 2015, BASF now expects sales and EBITDA to be in line with market expectations. For EBITDA, they are between €10 billion and €12 billion. As usual, the company will provide an outlook for 2015 at its Annual Press Conference on February 27, 2015, and give an update on its long-term targets.

Bock: "With regard to our strategic direction, we are on track. Even in this somewhat more difficult environment, we will continue to grow profitably."
The operational excellence program STEP is ahead of schedule. "By the end of 2015, we now aim to achieve improvements of €1.3 billion, €300 million more than initially planned," said Bock.

New set-up of global research platforms

Innovations are an essential pillar in the "We create chemistry" strategy. In 2020, BASF aims to generate €30 billion of sales with products that will have been on the market for less than 10 years. The basis for these innovations is effective and efficient research and development. To achieve this ambitious goal, BASF is further developing the research organization and bundling its competencies in three global platforms:

• Advanced Materials & Systems Research with headquarters at BASF's Innovation Campus Asia Pacific in Shanghai by 2016
• Bioscience Research headquartered in Research Triangle Park, North Carolina, starting January 2015
• Process Research & Chemical Engineering headquartered in Ludwigshafen

The stronger presence outside of Europe will create new opportunities for building up and expanding customer relationships and scientific cooperations. All three research platforms will be established globally to support the R&D needs of BASF's customers. This will strengthen the R&D Verbund and also increase BASF's attractiveness as a partner and an employer in the regions.