Business Models of the Segments
Our segments’ business models are aligned with their specific strategic action areas. Innovation and sustainability are the cornerstones that will enable us to continue to be successful with our products and with our customers in the future and to collectively master the challenges that lie ahead.
Strategic alignment of the segments
The Chemicals segment is at the heart of the Verbund. Its production facilities reliably supply BASF’s other segments with chemicals to produce higher value-added products and in this way, contribute to the organic growth of the BASF Group. It also markets high-quality basic chemicals and intermediates to customers in downstream industries.
The segment creates value through process and product innovation and invests in research and development to implement new, sustainable technologies and make existing technologies even more efficient. Thanks to our integrated manufacturing processes, the carbon footprint of some of our products is significantly lower than that of our competitors. Technological leadership, operational excellence and a clear focus on individual value chains are among our most important competitive advantages. We concentrate on the essential success factors of the traditional chemicals business: leveraging economies of scale and the advantages of our Verbund, high asset availability, continuous optimization of access to raw materials, lean and energy efficient processes, and reliable, cost-effective logistics. We are continuously developing our value chains and are expanding our market position – especially in Asia – with investments and collaborations in growth markets.
Furthermore, we are constantly improving our global production structures and aligning these with regional market requirements. For example, we are modernizing our chloroformates and acid chlorides plant in Ludwigshafen, Germany so that we can continue to reliably support our customers’ growth with these products.
BASF’s Materials segment supplies high-quality plastics precursors and develops new plastics applications, high-performance materials, systems and digital solutions. Our product portfolio is unique in the industry. We aim to grow mainly organically by differentiating ourselves with our application expertise and industry knowledge and by creating maximum value in our isocyanate and polyamide value chains. Advanced material simulation capabilities are a unique selling point in the industry and enable us to meet customer requirements individually.
To provide added value to our customers and society, we are working on new circular economy solutions and more sustainable production processes that use resources as sustainably as possible. BASF is active along the value chain for important durable plastics, from monomers to polymers and their formulated specialties. With our specific technology knowledge, we are working to shape and close cycles and convert plastics back into primary products for the chemical industry. This is how we help to reduce plastic waste, save fossil resources and avoid carbon emissions in plastics production. Examples include Ultramid® Ccycled™, which is made from raw material based on end-of-life tires, biomass balance products and certified compostable bioplastics. With these solutions, we aim to meet growing demands in all key markets and help our customers to meet their sustainability targets.
We are continuously expanding the range of applications in our portfolio with tailor-made services and product offerings. Our global production network means that we can provide our solutions wherever our customers are.
The Industrial Solutions segment markets and develops ingredients and additives for industrial applications. These include fuel and lubricant solutions, ingredients for paints and coatings, electronic materials and plastic additives. We concentrate on research and development with the aim of enabling more efficient resource use and developing more sustainable products and processes, for example, in polymer dispersions, resins and plastic additives. At the same time, this also enables our customers to contribute to sustainability through their applications and processes. Other focus areas are efficient production setups, backward integration in our Production Verbund’s value chains, capacity management, and technology and cost leadership.
Our global presence enables us to operate close to our customers and their industries. As a reliable partner, we offer high-quality products at attractive prices. We work on new solutions together with our customers and strive for long-term partnerships that create profitable growth opportunities for both sides. To achieve this, we draw on our innovative strength and our many years of experience and in-depth industry expertise. Through our in-depth application knowledge and technological innovations, we strengthen customer relationships in key industries such as the automotive, electronics, plastics and coatings industries.
In the Surface Technologies segment, the focus is on the protection, modification and development of surfaces. Together with our customers, we develop novel products and technologies for catalysts, coatings and battery materials. We also offer precious and base metal as well as surface treatment services. Our aim is to drive growth by leveraging our portfolio of technologies to find the best solution for our customers in terms of functionality and cost. This in turn helps our customers to drive forward innovation in their industries and contribute to sustainable development.
Key growth drivers for us are the positive medium-term development of the automotive market, especially in Asia, the trend toward sustainable, low-emission mobility, and the associated rise in demand for battery materials for electromobility. We are developing customized, more sustainable solutions in these growth areas for battery materials, emission control, recycling and functional coatings in close cooperation with our customers. Our specialties and system solutions in these areas enable customers to stand out from their competitors.
The automotive industry is currently undergoing a fundamental transformation. As one of the largest chemicals suppliers to this industry, we will further strengthen our focus on battery materials and recycling and pursue our ambitious growth plan. We are also establishing a new entity (BASF Environmental Catalyst and Metal Solutions) within the Catalysts division for mobile emissions catalysts, automotive catalysts recycling and associated precious metal services. The carve-out process started in January 2022. The new organizational structure prepares the business for the upcoming changes in the internal combustion engine market and allows for future strategic options.
In the Nutrition & Care segment, we strive to expand our position as a leading provider for nutrition and care ingredients for consumer applications. We will continue to develop our capabilities in areas such as biotechnology and broaden our portfolio with bio-based and biodegradable products. One example is the Verdessence™ product line launched in 2022, which offers sustainably sourced biopolymers for personal care applications. This supports our customers in meeting the ever-growing consumer demand for natural and organic cosmetics.
Our enzymes business enables us to pursue a targeted, accelerated marketing strategy and expand our portfolio for natural and biotechnological products. Furthermore, we are investing in natural and biological substances. BASF supplies excipients for human therapeutic drug formulation. Our biopharma ingredients serve a variety of markets, from bioprocessing and formulation of proteins to vaccines and antibodies.
In addition, acquisitions expand our business with new business models and sustainability trends in consumer markets. Future growth in our markets will be driven by trends like growing consumer awareness and the resulting demand for sustainable product solutions, natural and organic ingredients and their traceability. Moreover, the shift toward individualization and local production supports new players and business models. Digitalization, a focused technology and product portfolio, and close cooperation with our customers is crucial to meeting these dynamic market requirements both now and in the future.
In the Agricultural Solutions segment, we are working to achieve the right balance between economic, environmental and social value creation for a sustainable and efficient agricultural sector.
Efficient farming is fundamental given that the world’s population is expected to increase by about two billion1 people between 2022 and 2050. While the demand for food, feed, fiber and energy is growing, natural resources are limited. Balanced agriculture is a key enabler in producing enough healthy, affordable food and responding to changing consumer behavior while reducing the impact on the environment.
As one of the world’s leading agricultural solutions companies, we are making a positive impact on sustainable agriculture and food systems. Our innovation-driven strategy for agriculture focuses on selected crops and their appropriate cultivation systems in specific regions. We integrate sustainability criteria into all business and portfolio decisions. In doing so, we help farmers achieve better yield, protect the planet and produce economically.
We leverage our expertise in research and development and our deep understanding of the way individual growers manage their farms to provide offers across technologies. These include novel solutions for seeds, traits, crop protection and digital products tailored to the farming needs of their region and crop systems.
1 Source: U.N. World Population Prospects 2022