BASF on Dec. 7 announced that it plans to make its agriculture solutions and battery materials businesses legally independent by 2026 to give them more freedom and bolster profits, as both have come under pressure in Europe’s energy crisis.
“We want to raise the profile of these business units and steer them more strongly with their own performance indicators,” CEO Martin Brudermüller told reporters. “It is a measure to boost their performance; we have no intention to sell them.”
The separation of the two units, which employ a combined 2,500 people in Germany, follows the example of the successful coatings division, which has operated independently since 2010.
Europe’s biggest chemicals maker has doubled down on slashing operating costs after reporting falling earnings as the industry struggles with high energy prices and waning demand. The manufacturer is reducing investments by €4 billion ($4.3 billion) over the next four years to deal with the headwinds.
BASF also said it will change its short- and mid-term forecasting performance indicators from next year. The company will be focusing more on cash generation while also adapting the steering of its individual businesses.
BASF announced on Dec. 20 that current Asia Head Markus Kamieth, 53, will take over from Brudermüller in April. Brudermüller, 62, has been in the post since 2018 and his contract is due to run out early next year. He will become the Non-Executive Chairman at Mercedes-Benz.
Kamieth, a chemist, has worked at BASF since 1999 and has been running the Asia region for the past three years. It is the market Brudermüller focused on, with a €10 billion factory currently under construction in Zhanjiang, China.
The incoming CEO will have to tackle issues weighing on BASF in its home region, Warburg analyst Oliver Schwarz told Bloomberg. “BASF has considerably higher energy and raw materials costs in Europe than competitors,” Schwarz said. “Kamieth will need to work on raising profitability from the start, and this will not be easy as structural disadvantages in Europe are not going to disappear.”
Germany’s chemical producers see the industry still mired in a deep recession with a recovery unlikely to take hold before 2025, the German Chemical Industry Association VCI said last week. According to a survey, nearly one in 10 respondents said they were permanently closing production processes due to challenging industry prospects in the country.
BASF is borrowing $1.5 billion worth of privately placed debt, Bloomberg reported this week, citing people with knowledge of the matter. Energy-intensive manufacturers in Germany were particularly hard hit by last year’s energy crisis and are still struggling to ramp up production amid subdued demand.