BASF relies on decentralized strength for chemical leadership

In a strategic realignment, the Ludwigshafen-based chemical giant BASF is aiming for increased profitability by spinning off key business units into independent subsidiaries. According to Chief Financial Officer Dirk Elvermann, the goal of this restructuring is to accelerate performance improvement and to intensify customer proximity as well as to sharpen competitive alignment. "A growth business requires a different type of management than one that is primarily focused on return on investment," Elvermann explains and emphasizes that an adapted structure will meet the new requirements. To be able to compete in the fiercely contested market, BASF plans to place special emphasis on entrepreneurial performance and demands that the spun-off businesses achieve ambitious targets in terms of operating result before interest, taxes, depreciation, and amortization (EBITDA) as well as cash flow. The controlled handling of funds is considered essential, as European chemical companies in particular face special competitive challenges. The restructuring, which was already announced in December, will affect the segments of agrochemicals, battery materials, and paints and coatings, which will henceforth operate as legally independent subsidiaries. This is intended to allow for more effective management of areas not immediately considered part of the core business. Despite considerations of separation, CEO Martin Brudermüller reaffirmed that a sale of these business units is not planned. Regarding the presence in future markets, the first European center for battery material production and recycling was opened in Schwarzheide in June. The Coatings division operates out of Münster, and Limburgerhof serves as the hub for BASF's global crop protection and seed activities – evidence of the spatial as well as strategic diversification of the chemical corporation.