BASF expects annual sales of over €4 billion from product innovations as of 2010

* Research budget for 2006 rising 20 percent to €1.3 billion
* Research spending of €1.4 billion budgeted for 2007
* Spending on growth clusters set to rise to €850 million in 2006–2008


BASF expects to generate annual sales of over €4 billion as of 2010 from new or improved products and applications that have been on the market for a maximum of five years. Up to 20 percent of that sum will be in additional sales, i.e. revenues not generated simply by replacing existing products. “Innovations are the basis for profitable growth at BASF. Our goal is to expand our leadership through the continuous development of new products and solutions for our customers, and to constantly improve our competitive position through process development,” said BASF Research Executive Director Dr. Stefan Marcinowski at the ”Journalists and Scientists in Dialog" event in Ludwigshafen. Sales from product innovations are set to increase to more than €5 billion per year in 2015.

BASF’s research and development expenditures in 2006 will amount to almost €1.3 billion, which is 20 percent more than the comparative figure for 2005 (€1.06 billion). A further increase in expenditures to €1.4 billion is planned for 2007. These amounts go toward the expansion of BASF’s global research activities, for example the worldwide expansion of research laboratories and the establishing of regional development centers. “We are continuously injecting new ideas into our research pipeline. Our acquisitions in the areas of catalysis, construction chemicals and plant biotechnology give us exciting new sources of profitable growth,” Marcinowski added.

BASF combines key technology-driven topics of future relevance in five growth clusters: energy management, raw material change, nanotechnology, plant biotechnology and white biotechnology. These are cross-sectional technologies, which transcend the conventional demarcation lines between specialist areas and drive success on the basis of interdisciplinary and international cooperation. As part of the research and development expenditures, a total of approximately €850 million has been earmarked for research activities in the five growth clusters for the period from 2006 to 2008. BASF expects annual sales of €2-4 billion from innovations arising from these growth clusters as of 2015.

At the “Journalists and Scientists in Dialog” event, experts from BASF, DaimlerChrysler AG and the Karlsruhe Research Center will discuss background issues and trends concerning this year’s topic “Raw material change: coal, oil, gas, biomass – where does the future lie?” About 60 international journalists will attend the meeting in Ludwigshafen.

The finite resources of the fossil raw material oil as well as its high price have prompted a long-time search for alternative sources. This is an issue that is also high on BASF’s agenda. How soon can a raw material change take place? What are the raw materials of the future? Are natural gas and biomass viable alternatives at this moment in time? Or is coal about to make a comeback? BASF’s development and research departments are addressing these issues in a variety of ways.

The most important starting materials for most of the BASF value chains today are olefins and aromatics, which are mainly produced from naphtha in steam crackers. The alternative raw materials are natural gas, coal and renewable raw materials. BASF experts identify methods for the utilization of alternative raw materials in our growth clusters and analyze these chemical and biochemical processes in terms of technological viability, economics and ecological compatibility. €100 million has been budgeted for research in the “raw material change” growth cluster from 2006 to 2008. €160 million has been set aside for research in the “white biotechnology” growth cluster.

BASF is the world’s leading chemical company: The Chemical Company. Its portfolio ranges from chemicals, plastics, performance products, agricultural products and fine chemicals to crude oil and natural gas. As a reliable partner to virtually all industries, BASF’s intelligent system solutions and high-value products help its customers to be more successful. BASF develops new technologies and uses them to open up additional market opportunities. It combines economic success with environmental protection and social responsibility, thus contributing to a better future. BASF has over 95,000 employees and posted sales of more than €42.7 billion (approximately $50.4 billion) in 2005. Further information on BASF is available on the Internet at www.basf.com.

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Daniel Smith

Corporate Media Relations

BASF

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