BASF Voices Confidence Despite "Dark Clouds"

March 5, 2010
Chairman Jurgen Hambrecht expects BASF's sales to grow again in 2010 and that the company will outpace global chemical production.

BASF says it's demonstrated its strength in the global economic crisis by acting quickly and decisively: through the successful integration of Ciba, by further increasing research and development expenditures, and by investing in growth markets. "We have shown that we have the right strategy. We are therefore confident that we will succeed in further strengthening BASF's leading position," says BASF's Chairman Jürgen Hambrecht.

After the dramatic drop in late 2008 and the further decline at the beginning of 2009, the capacity utilization of BASF's plants in large parts of the business was at a historic low. Demand recovered over the course of the year, especially in Asia. BASF says it took quick and decisive measures to adjust capacities and increase efficiency, and so was able to stabilize and improve earnings from quarter to quarter.

In 2009, sales declined by 19% to €50.7 billion (US$68.8 billion). In 2010, BASF expects global industrial production to grow by just under 5%, albeit from a very low level. "The slow recovery is continuing. The fourth quarter of 2009 was encouraging and gives us grounds for confidence. The worst is behind us, even though dark clouds remain. 2010 will be a transitional year with uneven development from region to region. Overall, there are no signs of a self-sustaining, long-term recovery," says Hambrecht.

Nevertheless, BASF is seeing growth in most of its markets, which are, however, emerging from a deep recession.

The company expects a moderate increase in global gross domestic product (+2.7%) and significant growth in global chemical production (excluding pharmaceuticals) (+5.3%).

In view of this economic situation, Hambrecht expects BASF's sales to grow again in 2010 and that the company will outpace global chemical production. Because the economic situation remains fragile, BASF will continue to rigorously implement its efficiency and restructuring programs. The company will also continue to adjust its investment plans to the current market conditions.

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In addition, BASF started an image campaign – "We create chemistry" – to sharpen its brand profile.

BASF creates chemistry: This is the central idea of the company's new global image campaign that just launched at the beginning of March. BASF is combining its market communications and targeting decision-makers in business and society with a single global campaign that will run in print, television and online media.

The advertising motifs focus on global trends such as the future of mobility or energy efficiency, as well as solutions for minor everyday problems such as waterproof adhesive bandages. In its campaign, BASF combines chemistry as the science of interactions between substances with the interaction between people and their environment. The recurring theme is the reconciliation of apparent opposites: A house made of bank notes stands in a wintery landscape and above it appears the caption "Warm houses love energy bills" – a surprising statement at first sight. But BASF resolves the contradiction. A wide variety of intelligent insulation materials lower energy consumption and thereby help to reduce energy costs.

"Chemistry creates added value for all groups in society. The global campaign shows just how important strong and positive relations with customers, partners and employees are to us," says Hambrecht. Chemical Processing has lauded BASF's stance in playing up it's being a chemical company. (See: "German Company Proud of Chemical Ties.")

Indeed, in Fortune magazine's 2010 list of the “World’s Most Admired Companies,” BASF has been ranked the top company in the chemical industry. Industry experts voted BASF into top position in the chemical industry in the categories of product and service quality, global competitiveness, and quality of management. In addition, for all industries, BASF is ranked number two in Germany. “To once again be awarded as the world’s most admired chemical company is encouraging and a welcome recognition of our efforts. Even in difficult times, we continue to actively shape our future,” says Hambrecht.

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