“BASF SE (BAS) plans to invest 10 billion euros ($13 billion) in the Asia-Pacific region as it shifts research and procurement to the world’s fastest growing chemical market to help double profitability there.
The Asia-Pacific division, which saw margins deteriorate to 10 percent last year, has a “good chance” to reach the average profitability of the group, Martin Brudermueller, deputy chief executive officer and head of the region, said today at a press conference in Hong Kong. On a group level, BASF aims to lift margins to 20 percent by the end of the decade from a current 14 percent.
The world’s largest chemical company will hire 9,000 people and double sales to 25 billion euros in Asia-Pacific by 2020. Competition in the region is intensifying and BASF is looking to avoid developments in the agrochemical market, where it fell behind peers expanding in Asia.
“The competitive environment has become sharper and more challenging than we had thought,” Brudermueller said today. “We have to change and accelerate the change. We have to be creative and take out costs.”
One-quarter of research and development will take place in the region in an effort to shift the Ludwigshafen, Germany-based company’s focus to a service provider from a chemical producer and differentiate it more from local competitors, Brudermueller said.
