BASF Plans New Ag Business Structure

DECATUR, Ill. (DTN) -- The German chemicals giant BASF has announced plans to separate several of its businesses to unlock earnings potential. Agricultural Solutions was specifically named in the reorganization.

The announcement was made during an update for investors and analysts on Dec. 7, in Ludwigshafen, Germany, by Martin Brudermuller, chairman of the Board of Executive Directors of BASF SE, and Dirk Elvermann, chief financial officer.

The company plans to take a more "differentiated approach" to operating several individual businesses within BASF. During the question-and-answer portion of the presentation, Elvermann stated there are no plans to sell the agriculture business.

"We are not doing that as a preparatory step to monetize the business, to lose control or to generate sales proceeds. We are doing that in order to have a really clearly defined business that can better compare itself with the competition, that has its own steering KPIs (key performance indicators) and that is also doing hard benchmarking," he said.

BASF provided the following statement to DTN: "For more than 100 years BASF has been committed to agriculture. To stay competitive and continue to grow with our customers, we have an ambitious growth plan fueled by innovation.

"Differentiated Steering is the next step, enabling us to become more agile, flexible and even more customer-focused while keeping the benefits of being an integral part of BASF Group. We will enter into our own Agricultural Solutions company structure with dedicated legal entities, and all Agricultural Solutions dedicated companies will continue to be owned by BASF. A benefit of establishing these new structures is that we will be able to better meet farmers' needs more efficiently with a more agile team, being faster and having more freedom to operate.

"Ultimately, we want to make it easier to do business with BASF through a more seamless and reliable experience," the statement read.

In the past, BASF has focused on integrating businesses across the value chain, an operating philosophy called "Verbund." In a corporate news release, the company explained that businesses with a focus on a single industry will be more stringently steered by industry specific KPIs, while businesses more deeply integrated into the Verbund will be steered along value chains.

In November, Bayer announced during a quarterly earnings call that it is exploring a restructuring of its business. Read DTN's coverage of that announcement here: https://www.dtnpf.com/….

Find DTN's coverage of seed innovation coming from BASF here: https://www.dtnpf.com/….

Read more about a soybean cyst nematode trait coming from BASF: https://www.dtnpf.com/….

Find the news release from BASF and links to the investor call: https://www.basf.com/….

Pamela Smith can be reached at pamela.smith@dtn.com

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