German Chemical Giant BASF Takes Differentiated Approach To Steering Businesses For More Profitability: Details

BASF SE BASFY disclosed a strategic move to transform into a customer-focused organization.

The company plans to adjust its specific business models and processes further, with businesses less deeply integrated into the Verbund to gain more space to meet the needs of their particular customer industries while keeping the benefits of an integrated company. 

The company plans to apply this approach to Battery Materials and Coatings in the Surface Technologies segment and Agricultural Solutions.

"We are combining the benefits of a more differentiated approach to steering individual businesses with the advantages provided by the Verbund and our setup as an integrated company," said Dirk Elvermann, Chief Financial Officer.

BASF will continue to manage its Verbund businesses, which include the Chemicals, Materials, Industrial Solutions, and Nutrition & Care segments. 

New KPIs: As of January 2024, BASF plans to change the KPIs, with a stronger emphasis on EBITDA before special items and cash flows in the short to medium term.

BASF has also introduced new KPIs for its operating divisions, with targeted EBITDA before special items margins of 23% or higher in the midterm for Agricultural Solutions, 30% or higher (excluding metals) by 2030 for Battery Materials, 17% over the cycle for Verbund businesses and 15% or higher in the midterm for Coatings businesses.

Emission target: By 2030, BASF targets reducing its specific Scope 3.1 emissions by 15% vs. 2022 across the portfolio – from 1.57 to 1.34 kilograms of CO2 per kilogram of raw material bought.

Also, the company commits to achieving net-zero Scope 3.1 emissions by 2050.

Also Read: Cheniere Energy Inks Long-Term LNG Deal With BASF

Price Action: BASFY shares traded higher by 2.01% at $12.16 on Thursday.

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