BASF Leverages Growth Opportunities in Asia Pacific
At the BASF Roundtable Asia Pacific for investors and analysts in London, the company presented details on how it aims to grow profitably in the region by building on its strengths. The company considers itself well positioned and adapting quickly to changing environment in Asia Pacific.
BASF expects gross domestic product and chemical production in Asia Pacific to continue to outgrow other regions, despite the recent slowdown. “China did not grow as fast as we had assumed. We saw low growth in mature Asian markets. India and South East Asia are picking up slightly. Overcapacities in some commodity product lines have contributed to a changing business environment,” said Sanjeev Gandhi, member of the Board of Executive Directors of BASF SE and responsible for Asia Pacific. “However, even under the ‘new normal,’ Asia Pacific is the growth engine for the world economy. We still see great potential for BASF as the fundamentals have not changed.” BASF now estimates the compound annual growth rate (CAGR) for real chemical production through 2020 for Asia Pacific at around 5.6%, still well above the world average of 3.7%.
Following significant capacity additions in Asia Pacific between 2012 and 2016, BASF will selectively expand its local production network in the region in the coming years. Planned investments of around EUR 3.5 billion between 2016 and 2020 will focus on areas where BASF is technologically leading, has a competitive advantage and expects robust market growth. BASF’s target to produce around 75% of the products it sells in Asia Pacific in the region by 2020 remains valid. Functional, structural and operational excellence will help BASF drive profitable growth in the region. With an expected contribution of around €250 million, Asia Pacific is a significant contributor to BASF’s global operational excellence program DrivE, which targets an annual earnings contribution of EUR 1 billion from the end of 2018 onward.
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