BASF Report 2023

Business and Competitive Environment

BASF’s global presence means that it operates in the context of various local, regional and global developments. These include:

  • Global economic and political environment
  • Legal and political requirements
  • International trade agreements
  • Industry standards
  • Environmental agreements (such as the E.U. Emissions Trading System)
  • Social aspects (such as the U.N. Universal Declaration of Human Rights)

BASF holds one of the top three market positions in around 80% of the business areas in which it is active. Our most important global competitors include Arkema, Bayer, Celanese, Clariant, Corteva, Covestro, Dow, DSM-Firmenich, Evonik, Huntsman, SABIC, Sinopec, Solvay, Syngenta, Wanhua and many hundreds of local and regional competitors. We expect competitors from Asia and the Middle East in particular to continue to grow in significance in the years ahead.

Our measures in Europe

The situation in Europe remains challenging. Low market growth and structurally higher gas prices compared with other regions are weakening the competitiveness of the European chemical industry. The comprehensive requirements resulting from the European Green Deal are an additional burden on the industry.

As a reaction to this, BASF announced concrete measures for a cost savings program in nonproduction units with a focus on Europe in February 2023. These measures include the systematic bundling of services in hubs, simplifying structures in divisional management, the rightsizing of service units, and increasing the efficiency of R&D activities. Taking into account new positions to be created, this is expected to result in a total reduction of 2,600 positions worldwide. The cost savings program was launched in 2023. We expect annual cost savings in nonproduction areas to reach more than €600 million by the end of 2024 and more than €700 million by the end of 2026. These figures include measures related to Europe in the Global Business Services and Global Digital Services units. Additional measures in these two service units in other regions will probably contribute a further €200 million.

In addition, in 2023, BASF took measures to adjust production structures at the Verbund site in Ludwigshafen, Germany. These adjustments include the shutdown of the caprolactam plant, the plants for cyclohexanol, cyclohexanone and soda ash, one of the two ammonia plants and the fertilizer facility. In addition, the shutdown of the TDI plant and the precursor plants for dinitrotoluene and toluylenediamine was also announced. Furthermore, the production capacity of adipic acid will be reduced in Ludwigshafen, Germany. The following plant shutdowns have already been completed as of 2023: TDI plant, plant for TDI precursors, ammonia plant and the fertilizer facility. Further shutdowns will be implemented gradually until the end of 2026. These measures in production are expected to affect around 700 positions. BASF expects to reduce fixed costs in this way by more than €200 million per year.

Together with the savings from the aforementioned cost savings program focusing on Europe, we expect total annual savings of around €1.1 billion from the end of 2026.

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