BASF BASF

BASF Group's business structure includes five main segments: chemicals, specialty products, functional materials and solutions, agricultural solutions, oil and gas. BASF shares are traded on stock exchanges in Frankfurt (BAS), London (BFA) and Zurich (BAS).

Performance indicators

2023: Earnings before interest and taxes collapse to €3.8 billion

BASF SE profits fall as lower margins outweigh cost cuts. Earnings before interest and tax fell to 3.8 billion euros ($4.1 billion) in 2023 from 6.9 billion euros in 2022.

High electricity costs due to Germany's refusal to supply gas from Russia are putting pressure on German industrial producers.

The chemical company is cutting investment by 4 billion euros.

2022

Receiving a loss of 1.4 billion euros due to Germany's refusal to supply gas from Russia

On January 17, 2023, the German chemical concern BASF published a report on work in 2022. The company suffered significant losses due to the energy crisis and the curtailment of operations in Russia.

BASF revenue in 2022 amounted to €87.33 billion. This is 11% more than in 2021, when the group received €78.6 billion. Analysts predicted an average result of about €87.95 billion. Profit before interest and taxes (EBIT indicator) amounted to €6.88 billion, which is €890 million less compared to 2021 (€7.77 billion).

BASF made an annual loss of 1.4 billion euros

At the end of 2022, BASF received a net loss of €1.38 billion. For comparison: in 2021, net profit was demonstrated at €5.52 billion. The negative result is related, in particular, to the depreciation of the assets of the Wintershall Dea subsidiary, which is engaged in the exploration and production of natural gas and oil around the world. On January 17, 2023, the Wintershall Dea supervisory board approved the board's decision to withdraw from Russia. It is said that in the current geopolitical situation, it is inappropriate to continue activities in the Russian Federation.

Wintershall Dea intends to completely leave Russia in the prescribed manner in compliance with all applicable laws and rules. Wintershall Dea concluded that it no longer meets the IFRS control criteria, the company said in an official notice.

The loss associated with the departure of Wintershall Dea from Russia will amount to €5.3 billion. In general, the assets of this company depreciated by €7.3 billion. The company says that the decision to curtail Russian business is connected with a government decree providing for the introduction of maximum gas prices, above which Gazprom cannot buy it from joint enterprises with Wintershall Dea. In the Russian Federation, Wintershall Dea conducted exploration and production of natural gas and gas condensate.^[1]

Loss of 51 million euros due to leaving Russia

BASF lost 51 million euros in the second quarter of 2022 due to withdrawal from Russia and Belarus. Impairment of assets in this amount. In addition, the company has reserved 27 million euros for obligations to customers, suppliers and employees.

Extreme uncertainty still prevails in the current situation. Future events may have a significant and adverse impact on the effectiveness of assets and lead to their further impairment, the BASF said in a statement quoted by Interfax.

BASF lost 51 million euros due to leaving Russia

BASF CEO Martin Brudermüller said during a conference call following the publication of the company's statements that at the moment all its European enterprises are sufficiently provided with natural gas supplies.

If the German government declares the highest level of danger in the country due to the reduction in gas supplies from Russia, BASF will still be able to provide gas to its largest enterprise - the chemical complex in Lukvigshafen, although with a reduction in its load, said Brudermüller.

According to the head of BASF, the company intends to use gas alternatives where possible, and has already cut production volumes at enterprises that require especially large volumes of gas.

BASF decided to stop current activities Belarus in Russia and by the beginning of 2022 July. The exception is business "supporting food production, as war carries the risk of triggering a global food crisis." As a source RBC familiar with BASF's plans clarified, by July 10, 2022, all remaining imports should have stopped, and the Pavlovoposad plant was planned to be stopped.

The report also reported a 26% increase in net profit in the second quarter of 2022, to 2.1 billion euros. The company's revenue rose 16% to reach 23 billion euros. EBIT, excluding one-time factors, remained at the level of the second quarter of 2021. Revenue growth was affected by the rise in price of the company's products in almost all business segments.^[2]

Research activities

In 2016, spending on scientific development and research amounted to about 1.9 billion euros, which is slightly less than in 2015, when almost 2 billion euros were allocated. This is due to structural changes in the biotechnological activities of the plant. BASF conducted approximately 3,000 studies in 2016. The research projects involved about 10,000 employees worldwide. An important foundation of the concept of integrated production sites (Verbund) remains a partner global network in various disciplines, which includes about 600 universities, research institutes and companies.

BASF Master Builders Solutions

BASF's Construction Chemistry Division under the Master Builders Solutions brand offers solutions for the construction, maintenance, repair and renovation of buildings and structures. These solutions are based on more than 100 years of experience in the construction industry. The portfolio of developments covers concrete and cement additives, chemical solutions for underground construction, waterproofing systems, sealants, repair and protective mixtures, high-quality mortars, grouting for equipment, floor coatings, tile glue, deformation joints, as well as solutions for the protection of wood, etc. The number of personnel of the construction chemistry unit is about 6,000 people. In order to comprehensively (from concept development to practical implementation of the project) solve specific tasks facing our customers, we combine competencies in various regions and areas of activity, and use the experience gained during the implementation of numerous construction projects around the world. Production sites and sales centers of the construction chemistry division are located in more than 60 countries. The turnover in 2016 amounted to about 2.3 billion euros.

BASF Catalysts

BASF Catalysts [1] is a supplier of catalysts for industrial processes and environmental protection. The employees of the division have extensive experience in developing technologies that help keep the air clean, produce various fuels and ensure the production efficiency of numerous chemicals, plastics and other products, including advanced battery materials. Based on an advanced research base, on the desire for innovation and deep knowledge in the use of precious and non-ferrous metals.

History

2023

Sale of oil and gas production company Wintershall Dea to British Harbor Energy

The chemical concern BASF in December 2023 sold its oil and gas company Wintershall Dea to the British company Harbor Energy. Wintershall's offices in Hamburg and Kassel will be closed - with more than 800 people laid off three days before Christmas.

British oil company Harbour Energy acquires production and development, as well as exploration rights unrelated to Russia, for $11.2 billion in cash and stock. Thus, Germany is losing its only oil and gas company.

Reduction of 2,600 employees and closure of two plants due to refusal to buy gas in Russia

In February 2023, it became known that BASF will cut 2,600 jobs, about 2% of the total number of employees, in order to achieve cost savings, as the largest chemical company in Europe tries to continue working without cheap Russian gas.

The chemical giant will close a number of plants, including two ammonia and fertilizer plants, cutting 700 jobs at its main Ludwigshafen plant in Germany. BASF said the deteriorating global economy forced the early termination of a €3 billion ($3.2 billion) share buyback program.

2022: Termination of operations in Russia, except for one business

On April 27, 2022, the German chemical concern BASF announced the termination of almost all activities in Russia due to the special operation that the Russian Federation began in Ukraine.

The Board of Executive Directors of BASF SE also decided to curtail the remaining activities of the company in Russia and Belarus by early July 2022. An exception to this decision is the business of supporting the production of food - the company said in a statement quoted by RIA Novosti.

On April 27, 2022, the German chemical concern BASF announced the termination of almost all activities in Russia due to the special operation that the Russian Federation began in Ukraine.

BASF explained that the decision to stop activities does not concern the business of supporting the production of food, since the situation in Ukraine can cause a global food crisis.

By the end of April 2022, BASF employs 684 employees in Russia and Belarus. The company decided to continue providing support to its staff in both countries until the end of 2022. By the end of April 2022, detailed plans are being developed for an orderly termination of BASF activities in Russia and Belarus. In 2021, these states accounted for about 1% of BASF's total sales.

In early April 2022, Swiss media warned that if chemical giant BASF ceased operations in Russia, "there would suddenly be a shortage of building materials or semi-finished products everywhere."

The automotive industry will no longer be able to make windshields, that is, supply cars, the food industry will face a shortage of important ingredients, pharmaceuticals will also suffer, the Swiss television channel SRF argued at the time.

BASF recalled that from March 3, 2022, the concern stopped carrying out new operations on the territory of the Russian Federation and Belarus. In addition to these countries, the company operates in about 80 more states.^[3]

2021: Creation of a consortium to introduce quantum technology to industry

In mid-June 2021, BMW, along with BASF, Boehringer Ingelheim, Bosch, Infineon, Merck, Munich Re, SAP, Siemens and Volkswagen, created the Quantum Technology and Application Consortium (QUTAC), whose members intend to develop a large number of examples for use in industry to create demand for quantum computing. According to QUTAC, this will accelerate the development of technology in Germany and Europe. Read more here.

2020

$72.5m compensation for people who used asbestos products

At the end of July 2020, it became known that the world's largest chemical manufacturer BASF should pay $72.5 million for trying to hide asbestos contained in numerous talc products, including children's balloons. The total cost of the settlement, including legal costs and other expenses, is almost $100 million.

BASF's Engelhard Corp. division owned a Vermont mine that supplied talc for industrial and consumer use, such as wall panels and balloons, the court found. However, the talc in question in the lawsuit, that is, sold between 1967 and 1983, contained an asbestos impurity and could not be used. The company has so far denied the allegations and claims it only used that talc for industrial purposes.

BASF to pay $72.5 million to sell asbestos products

Numerous lawsuits began to come back in the 1970s, and subsequently this struggle of individuals with BASF and other manufacturers of construction products turned into the longest mass litigation in US history. According to a 2005 study by Rand, companies and insurers paid at least $70 billion to settle claims for injuries related to asbestos-containing products.

Among other legal proceedings, the case of fraud of lawyers defending large companies was also considered. The plaintiffs presented evidence showing that officials at the law firm Engelhard "rigged the game from the beginning." As a result, the Federal Court of Appeals in Philadelphia reopened the case. Thousands of people who used goods containing asbestos will be compensated, according to the latest court ruling. The settlement also allows plaintiffs who have dropped their cases beyond the statute of limitations to resume them.^[4]

Issue of corporate bonds in the amount of 2 billion euros

On May 28, 2020, the chemical concern BASF placed bonds worth 2 billion euros. The volume of the first tranche amounted to 1 billion euros, the term of circulation of bonds will be 3 years with an annual coupon income of 0.101%. The securities will be used for general corporate financing. This became known on June 1, 2020.

In the second tranche, BASF issued for the first time "green" seven-year bonds worth 1 billion euros with an annual coupon income of 0.25% to finance the production of green products and sustainable development projects. The concern provided attractive conditions due to a stable financial situation and position in the field of sustainable development.

We are pleased with the placement. The demand for our bonds from investors confirms the stable financial situation of the company and the correct choice of direction in a corporate strategy based on sustainable development. The initial placement of "green" bonds firmly fixed the trend for sustainable development also in the financial strategy of BASF, comments Hans-Ulrich Engel, chief financial officer of BASF.

BASF has developed a system of financial instruments that stimulate attention to environmental criteria. Such a system allows the concern to finance products and projects that bring obvious benefits to the environment and society, and green bonds have become an organic part of it. The bonds are fully aligned with the company's corporate goal of creating chemistry for a sustainable future. BASF strives to improve the quality of life of people, and therefore offers products and solutions that are designed to promote reasonable resource consumption and overcome new challenges.

2019

Wintershall DEA education

In April 2019, it was announced that the German company Wintershall (a subsidiary of the BASF concern) and the company DEA (Deutsche Erdoel AG) Mikhail Fridman completed the merger procedure. As a result, Wintershall DEA, as announced, became the largest independent gas and oil producer in Europe.

As a result of the transaction, BASF, the owner of Wintershall, received 67% of Wintershall DEA, and LetterOne Fridman, German Khan and Alexei Kuzmichev, who controlled the DEA, - the remaining 33%. See Wintershall DEA for details.

Opening the Virtual Resource Center for Design and Construction

On January 24, 2019, BASF announced the opening of the Center for Virtual Resources for Design and Construction (VDC), which provides access to building information modeling (BIM), as well as digital tools to help select and use products. An international group of experts in various areas of the construction industry (design, engineering, etc.) will inform customers, designers and architects about the assortment of construction chemistry Master Builders Solutions.

As of January 2019, the group's portfolio of proposals contains over 200 BIM objects. In the near future, it will be replenished with more than 400 models (including waterproofing systems, floor and protective coatings, solutions for repairing concrete structures, control systems and much more), which will cover 13 segments of the construction industry. All these digital solutions from the BASF brands (Master Builders Solutions, Watson Bowman Acme, Senergy and Neopor) are available in 10 languages. In the future, it is planned to expand this portfolio.

Specialists from Master Builders Solutions have created an online planner, a tool that not only helps professionals quickly find the right solutions for their projects, but also adapts flexibly to changing requests, providing key information at all stages of planning.

Users are provided with access to an extensive database of documents (technical sheets, product declarations, certificates), as well as, if available, to information and videos about the projects implemented.

The total number of downloads is already measured in thousands, and customers note the convenience of using objects and their accuracy. We are based on international industry standards and modern approaches to construction. We are interested in cooperation with companies in the construction industry. Digital technologies are increasingly penetrating this area, so our Center for Virtual Resources for Design and Construction is a good way to support construction industry professionals in mastering digital approaches.

BASF was among the first among manufacturers of construction chemistry to develop an internal corporate standard for BIM content, regulating quality control and maintenance. This document is based on samples of current international standards.

Customers, designers and architects can easily connect to digital resources from anywhere in the world through various libraries and platforms.

The global center page serves as the main information platform containing links for convenient access to BIM libraries, tools, educational materials and contact data.

2018

Opening a plant in Finland and signing an agreement with Norilsk Nickel

On October 22, 2018, BASF announced the creation of a site for the production of battery materials for the European automotive market in Harjavalta (Finland). The company will be built next to the nickel-cobalt plant of PJSC MMC Norilsk Nickel ( Norilsk Nickel). BASF and Norilsk Nickel signed a long-term agreement for the supply of nickel and cobalt raw materials, which is produced at the Norilsk Nickel refining plant. The terms of the agreement provide for reliable supplies from a local source of raw materials for the production of batteries in Europe.

The project funding is part of BASF's €400 million multi-stage investment plan, announced in 2017 and based on the production of battery raw materials, which was launched in Harjawalt in 2018. The launch of the enterprise is scheduled for the end of 2020 and will fully provide about 300,000 electric vehicles per year with BASF materials for batteries. The Harjavalta plant will use local renewable energy sources, including hydro and wind energy, as well as biomass energy.

BASF's investment in a facility in Finland helps support the European Commission's value chain initiative in the production of batteries in Europe. BASF continues to consider options for additional locations in Europe to build new battery material plants.

"The joint placement of BASF production and the Norilsk Nickel refining plant in Kharyavalt will provide exclusive access to local supplies of nickel and cobalt. Our high nickel cathodic materials are key components for providing increased battery power capacity and increasing electric vehicle life for our customers. With international production capacity, BASF will be able to facilitate the European growth strategy of original equipment manufacturers and key electric vehicle battery suppliers through a robust supply chain and close collaboration. " Jeffrey Lu, Senior Vice President, Battery Materials, BASF

"This agreement is an important component of Nornickel's large-scale strategy to increase its presence in the international battery materials market and establish long-term cooperation with leading manufacturers of cathode active materials." ' Sergey Batekhin, Senior Vice President, Head of Norilsk Nickel Sales, Procurement and Innovative Development Block "

BASF buys Advanc3D Materials and Setup Performance

In early July 2018, the German chemical concern BASF announced the purchase of two manufacturers of materials for three-dimensional printing. We are talking about Advanc3D Materials and Setup Performance. The purchase should be an important step forward for BASF, which is looking to expand its influence in the field of 3D printing - the introduction of selective laser sintering technologies for will allow BASF to attract new customers in the automotive and light industries. Read more here.

The first results of the application of 3D models of human sebaceous glands for skin care products

In March 2018, BASF and CTIBiotech announce the first results of the application of 3D models of human sebaceous glands for skin care products. Experts have demonstrated the production of physiological sebum outside the body in a three-dimensional model of human sebaceous glands and how to regulate it with active ingredients.

Sebaceous glands help skin stay hydrated and protect it from the effects of external factors such as severe weather, environmental pollution and microbial attacks. Sebum is a secret that these microscopic exocrine glands secrete, lubricates and softens skin and hair.

At the NYSCC Cosmetic Congress, BASF Care Creations and the CTIBiotech Cell Therapy Research Institute presented the first results of a joint study of 3D tissue models for the development and testing of bioactive skin care substances. After two years of research, experts demonstrated both the production of physiological secretion of sebaceous glands outside the body in a long-term culture of a three-dimensional model of the human sebaceous gland, and the regulation of secretion with active ingredients.

Thanks to the application of the technology of three-dimensional models of human sebaceous glands developed by CTIBiotech, scientists managed to improve the portfolio of three-dimensional models of BASF skin. The new 3D technology provides skin care researchers looking to study sebaceous gland function for age-related, microbial and inflammatory skin changes with a powerful platform.

"Working with BASF allowed us to test in action a strong technology for skin care research in a short time," comments Dr. Nico Forraz, CEO of CTIBiotech. "This positions CTIBiotech as a world leader in innovative and even revolutionary technologies for biological cell samples used in the field of skin cosmetics."

"Compared to current artificial research methods, 3D models developed by CTIBiotech allow for analysis in conditions closer to human physiology and metabolism in sebaceous glands," comments Dr. Sabina Payne, Project Leader at BASF. - This is how their technology helps us accelerate the development of innovative and reliable ingredients for the skincare market. Our understanding of the metabolic process in sebaceous glands serves as the basis for the development and testing of advanced cosmetic bioactive substances for applications in the field of skin care, particularly oily skin care. "

its expertise and expertise in developing solutions for the skin care treatment and cosmetics market, BASF understands the benefits of collaborating with experts in tissue engineering," adds Professor Colin McGookin, Chief Scientific Officer and President of CTIBiotech. "The next evolution of the sebaceous glands model will be based on 3D bioprinting technology, which will allow us to fully reproduce micro-glands in a model with real skin thickness in the laboratory."

2017: Largest acquisition - €5.9 billion for Bayer S/S assets

In October 2017, Bayer announced the sale of a significant portion of its agricultural assets to BASF. The value of the transaction amounted to 5.9 billion euros (about $7 billion) - a record amount for BASF.

Under the terms of the agreement, BASF receives assets from Bayer related to the production of seeds such as cotton and soybeans, as well as the herbicide business under the Liberty brand.

Bayer sells BASF agribusiness for $7 billion

In addition, the agreement involves the transfer of intellectual property and property, as well as more than 1.8 thousand employees mainly in the USA, Germany, Brazil, Canada and Belgium. 

We are using an active approach to resolve possible issues on the part of regulators to facilitate the successful completion of the deal with Monsanto, "said Bayer Chairman Werner Baumann.

The revenue of the units that Bayer sells to BASF at the end of 2016 amounted to 1.3 billion euros, and profit before taxes, interest, depreciation and amortization (EBITDA) - 385 million euros.

BASF's decision to acquire seed assets represents something of a change in its previous view of response needs to the industry's recent consolidation in agriculture, according to Morgan Stanley analysts.

The sale of agribusiness became a necessary measure for Bayer before buying the American Monsanto for $66 billion. This deal was announced in 2016, by October 2017 it is being checked by European regulators.

Reuters notes that the amount of the deal with BASF to sell part of Bayer's business  is less than experts' expectations - this may mean that the company does not need much money to finance the largest takeover. 

With the merger of Bayer and Monsanto, there will be a company that will control more than a quarter of the global seed and pesticide market.^[5]

2016: Revenues €58bn

At the end of 2016, BASF sales amounted to about 58 billion euros.

Business in Russia

2018: Regional Office in Novosibirsk, Construction Chemistry Division

On April 3, 2018, the regional office of the BASF concern, a world manufacturer of construction chemistry, was opened in Novosibirsk. The event was the next stage in the implementation of the strategy of expanding the concern's presence in the Siberian, Ural and Far Eastern federal districts.

It is expected that the opening of an office in Novosibirsk will allow BASF to accurately assess the potential of the Siberian Federal District and analyze the possibilities for optimizing logistics, reducing costs and transportation costs.

"Siberia has a well-developed dealer network, the presence of an office and the presence of our employees in the region will allow us to even better understand the needs of customers, respond quickly to requests and offer solutions to specific construction problems facing our customers," said Sergey Vetlov, General Director of BASF Construction Systems. "Thus, we have taken another step towards the implementation of our strategy of presence in Russia."

The regional office employs specialists who offer comprehensive solutions and technologies for the construction, repair and reconstruction of buildings and structures, as well as technical support at the facilities. At the same time, interaction with customers involves preliminary examination with departure to the place, selection of recipes taking into account the peculiarities of raw materials (if necessary) and training.

According to BASF, the company has already accumulated extensive experience in the region at large infrastructure facilities, such as the Sayano-Shushenskaya hydroelectric power station, Bratsk pulp and paper mill, with entertainment centers, for example, the Akvamir water park, where tile laying systems were used, which made it possible to commission the complex six months earlier.

Given its many years of experience and scientific base, BASF announced its readiness to participate in the most difficult projects. The solutions of the concern have proven themselves at critical facilities, such as the Western high-speed diameter in St. Petersburg, the Golden Bridge in Vladivostok. The company also has participation in the construction of international sports facilities in Krasnoyarsk, Yekaterinburg, Kazan, Sochi and other cities.

The construction chemistry division of Master Builders Solutions has a production complex in the Moscow region, factories in Kazan and St. Petersburg.

Notes