Tags: BASF | profitable | mix | BASFY

BASF Shifting to More Profitable Mix

By    |   Monday, 07 Nov 2011 01:07 PM

BASF (BASFY) is the world’s largest chemical company, and it aims to stay that way by shifting to a more profitable product mix of specialty chemicals and away from cyclical commodity chemicals.

To accomplish that, BASF has bought new companies and divested itself of some old ones. For example, it bought Ciba in 2008 for 3.4 billion euros (now about $4.7 billion), giving BASF a No. 1 position in plastic additives, coating, and paper chemicals.

Last year, BASF acquired Cognis for 3.1 billion euros. Cognis makes chemicals for body lotions, cleaning products, shampoos, and food. Its compounds also are used in mining, synthetic lubricants, coatings, and crop protection.

A German firm, BASF has six massive production facilities around the world that combine vertical and horizontal integration to regulate energy and waste flows and make sure byproducts don’t go to waste. These facilities allow the company to curb its energy consumption, make its production more efficient, and keep its transportation costs down.

Emerging markets

The company is increasing its activity in emerging markets, the source of the world’s highest economic growth rates. BASF announced in August that it will invest in a world-scale production site for acrylic acid, butyl acrylate, and super absorbent polymers in Brazil.

In July it announced a major expansion in the Mideast, with the construction of a modern plant for customer-specific antioxidant blends in Bahrain.

BASF has a joint venture with Monsanto (MON) to work on genetically modified crops that can withstand harsh environmental conditions. Their work may pay off in coming years.

In the third quarter, BASF’s profit dipped 4 percent to 1.2 billion euros ($1.7 billion) from a year earlier. Revenue gained 12 percent to 17.6 billion euros ($24.3 billion).

Among 39 analysts tracked by the Financial Times, 15 rated BASF shares a buy as of Oct. 21, while seven rated them outperform, and 14 rated them a hold.

The company next reports around Jan. 27.

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BASF (BASFY) is the world s largest chemical company, and it aims to stay that way by shifting to a more profitable product mix of specialty chemicals and away from cyclical commodity chemicals. To accomplish that, BASF has bought new companies and divested itself of some...
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Monday, 07 Nov 2011 01:07 PM
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