December 11, 2007

 

BASF reorganizes to gain agility, focus on high-margin additives

 

 

BASF AG, the world's largest chemical maker, will reorganize its business into six divisions to move products to market more quickly and created value-added growth.

 

The company announced it will be divided into agriculture, chemicals, functional solutions, performance products, plastics and finally oil and gas divisions as of Jan. 1, the company said in a statement.

 

The change would add a new segment, Functional Solutions into the existing five.

 

Functional Solutions will combine catalysts, construction chemicals and coatings and focus on the automotive and construction industry, BASF said.

 

BASF said it is moving away from chemicals such as ammonia toward engine coolants and higher-margin additives, where prices have risen as much as 20 percent. Service related products are also another area it is expanding upon.

 

Care Chemicals, a new operating unit that combines products for the pharmaceutical industry and for food and feed, will be established as part of the Performance Products segment.

 

Within Plastics, the specialty plastics and foams business units will be transferred from Styrenics to the Performance Polymers, the company said. 

 

Chief Executive Officer Juergen Hambrecht said in a statement the changes would help investors better assess BASF by combining similar businesses into their own segments.

 

Hambrecht earlier predicted record earnings this year.

 

However, competition in Asia and higher material and energy costs may affect BASF's profitability next year, analysts warned.

 

BASF last year posted sales of US$52.6 billion (US$77 billion).