OREANDA-NEWS. "We are well on track with our 'We create chemistry' strategy despite a challenging environment. We are growing BASF with the goal of making it even more profitable," said Dr. Kurt Bock, Chairman of the Board of Executive Directors of BASF SE, at the BASF Investor Day 2015 in Ludwigshafen.

Growth in chemical production to outpace global GDP
BASF expects chemical production to continue to grow well above global GDP until 2020. However, the business environment has changed since the company introduced its "We create chemistry" strategy in 2011. "Major markets did not grow as fast as anticipated. The oil price has been unpredictable and has decreased substantially. Geopolitics have contributed to higher volatility," said Bock. As a result, BASF has slightly adjusted its expectations for the global economic environment from 2015 to 2020 (compound annual growth rates; assumptions from 2011 in parentheses):
* Growth of gross domestic product: 3.0% (3.2%)
* Growth in industrial production: 3.5% (3.7%)
* Growth in chemical production: 3.9% (4.0%)

The development varies by region
: The emerging markets will remain the global growth drivers; Asia Pacific is already the largest chemical market today. BASF projects that Western Europe will get back on the growth path, but on a low level. Competitive feedstock costs and an expanding economy will drive the growth of chemical production in North America.

In the next years, BASF aims to grow sales slightly faster than global chemical production; the company wants to grow EBITDA well above global chemical production. "We will continue to add value as one company. Our Verbund approach was the reason for our success over the past 150 years and it will serve us very well also in the future," said Bock. In order to achieve its goals, BASF has set the following priorities for its business.

: This year, BASF will achieve its target of generating EUR 10 billion of sales with products and solutions that have been on the market since 2010. BASF aims to maintain its R&D spending at around 3% of sales excluding Oil & Gas.

Investments: Following a number of years with large capital projects, BASF will bring down capital expenditures to levels slightly above depreciation in the coming years.

Continuous portfolio management: In about 70% of its businesses, BASF has a top three market position. BASF will add new specialty and solutions businesses through its innovation pipeline as well as acquisitions. The company will, however, also continue to look for better owners of businesses that only provide a low strategic fit.

Sustainability: BASF has conducted sustainability assessments on approximately 98% of its entire portfolio of more than 60,000 specific product applications. The company aims to further increase the proportion of products and solutions, which make a substantial sustainability contribution in the value chain.

Operational excellence: BASF has announced a further operational excellence program called DrivE - Drive Efficiency. It will run from 2016 to 2018 and targets an annual earnings contribution of EUR 1 billion by the end of 2018.

BASF will remain focused on cash generation. From 2010 to 2014, BASF had free cash flow of more than EUR 15 billion. Over these five years, BASF paid out EUR 12 billion in dividends. "We remain committed to deliver attractive returns. Our goal is to earn a significant premium on our cost of capital. We will continue our progressive dividend policy," said Dr. Hans-Ulrich Engel, Chief Financial Officer of BASF.