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Last Update: 03/12/2009
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Part of the audited Consolidated Financial Statements and Management´s Analysis

BASF Group outlook and opportunities

Shaping the future – especially in difficult times

Planned capital expenditures by segment 2009-2013

Planned capital expenditures by segment 2009-2013 (pie chart)
1 Excluding investments in the Nord Stream and Yuzhno Russkoye projects
In a drastically worsening economic environment, BASF is facing major challenges in 2009. Our global business declined sharply in the fourth quarter of 2008. Since the beginning of 2009, there has been no recovery in the demand for chemical products, and there is currently no sign of a reversal of this trend. Nevertheless, the current economic situation offers opportunities for our business.

Forecast

The impact of the global financial crisis on our sales and procurement markets intensified dramatically in the fourth quarter. We are in the midst of a global recession: Growth rates are dropping significantly in all regions, customers continue to reduce their inventories, and a recovery is currently not in sight. The year 2009 will confront us with major challenges. The continuing global recession will cause the chemical market to shrink. Any forecast is currently subject to great uncertainty.
More information can be found in the chapter "Economic Environment"

Planned capital expenditures by segment 2009-2013

Planned capital expenditures by region 2009-2013 (pie chart)
1 Thereof 23 percentage points for Oil & Gas

Despite the acquisitions of Ciba Holding AG and Revus Energy ASA, we expect a decline in sales compared with 2008 and an even greater decline in income from operations, which will be negatively impacted by integration costs. We nevertheless aim to at least earn our cost of capital and keep our dividend stable. These goals are extremely ambitious in the current economic climate. We will maintain strict cost and spending discipline and rigorously implement our global restructuring and efficiency programs.

In the current environment, the improvement of operating cash flows and the reduction of our working capital take priority. For this purpose, we have reduced the capacity utilization rates of our production facilities. We remain committed to our conservative financing strategy. The planned investment in property, plant and equipment for the years 2009 to 2013 will be approximately €10.3 billion, and will therefore most likely be below the level of depreciation. This figure does not include acquisitions.

Dividends and share buybacks

We aim to increase our dividend annually or at least maintain the level of the previous year.

We are currently turning our main focus to the financing of the BASF Group, not least because of the acquisition of Ciba Holding AG. In view of the economic situation, we have stopped our share buyback program.

OUTLOOK


The year 2009 will confront us with major challenges. The continuing global recession will cause the chemical market to shrink. Any forecast is currently subject to great uncertainty. In this environment, despite the acquisitions of Ciba Holding AG and Revus Energy ASA, we expect a decline in sales compared with 2008 and an even greater decline in income from operations. We nevertheless aim to at least earn our cost of capital and keep our dividend stable – all in all, extremely ambitious goals in the current economic climate.


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