BASF moving toward new levels of performance
* Company holds Investor Day in New York
“BASF is today less cyclical, more customer-oriented, earns a premium on its cost of capital, and creates shareholder value – four things that make it stand out as The Chemical Company,” said Dr. Jürgen Hambrecht, Chairman of the Board of Executive Directors of BASF Aktiengesellschaft. Hambrecht and other board members spoke to more than 100 analysts and investors at the company’s annual Investor Day event in New York (June 24-25, 2007). This year’s event is being held in the United States to give North American investors a closer insight into BASF’s business segments and the group’s overall growth strategy.
“BASF is today the largest chemical company in the world by sales and market capitalization, with a top three market position in over 75 percent of our businesses,” said Hambrecht. “But we won’t rest on our laurels – our clear goal remains achieving profitable growth based on our four strategic guidelines: earn a premium on our cost of capital; help our customers to be more successful; form the best team in industry; and ensure sustainable development.”
In his presentation, Hambrecht highlighted some of the recent steps BASF has taken to achieve its goal. The company’s ongoing cost reduction efforts, its active portfolio management and focus on innovative products are not only being positively reflected in BASF’s EBIT development and share performance, but also in its overall structure. For example, BASF’s portfolio is becoming less cyclical and is expected to have a larger share of customized solutions – products developed together with customers or tailored to meet specific customer needs – in 2007 compared with 2005.
“BASF has earned a premium on its cost of capital over the last three years and expects to at least earn its cost of capital in any given year, even if there is a downturn in economic conditions,” said Hambrecht. BASF is also striving to earn its cost of capital in all of its business segments in any given year. In addition, the company expects to grow sales by an average of 2 percentage points per year above the chemical market, aided by investments totaling €10.7 billion between 2007 and 2011.
Shareholders are also set to benefit from BASF’s strong performance and cash flow generation. The company has increased its dividend in 10 of the last 12 years and aims to further increase its annual pay-out in the future, or at least maintain it at the previous year’s level. In addition, BASF plans to buy back shares for a total of €3 billion in 2007 and 2008.
Other highlights in the presentations held at the Investor Day included an overview of BASF’s five growth clusters: energy management, nanotechnology, white (industrial) biotechnology, plant biotechnology and raw material change. In its research strategy, BASF concentrates major technology-driven issues of particular relevance to the future in these clusters. Between 2006 and 2008, more than €900 million will be allocated for the research activities pursued within the five growth clusters.
BASF’s Catalysts division was also presented to investors. Following its €3.8 billion acquisition of Engelhard last year, BASF has established itself as the number one supplier of catalysts worldwide, and expects to grow sales by 7 percent per year in the medium term – faster than the market.
The presentations will be available on June 25, 2007, (14:00 CET), at www.basf.de/share.
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