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Balance Sheet 12
Concentrating on our strengths
Result below that of previous year –
plastics restructuring continues.
Strengthening the core sectors and, at the same time, tapping
into new fields: BASF’s plastic divisions have set
themselves ambitious goals. In 2003, BASF already came
closer to achieving these goals, but this has not yet translated into
an improvement in the largely disappointing operating results. We
look back upon a year marked by acquisitions in the realm of engineering
plastics, new capacities for polyurethanes and the closing of
plants for styrene plastics. Moreover, 2003 will be remembered as a
year plagued by very high raw material costs and very unfavorable
exchange rates. Major new acquisitions, expanded capacities and
plant closings on a small scale: these were all activities that left their
imprint on BASF in 2003. Before the backdrop of difficult market
conditions, BASF succeeded in boosting its sales by 3.7 per cent
last year, to a total of Euro 8.8 billion. Nevertheless, BASF did not
manage to compensate for the higher raw material costs and the
unfavorable exchange rates, which translated into a sharp drop in
earnings before interest and taxes (EBIT) from Euro 582 million to
Euro 296 million (minus 49%).
Cooperation
with partners
On May 1, 2003, BASF turned over its fiber business to Honeywell
and, in return, acquired their engineering plastics business. At the
end of the year, the business of polyamide-6,6 materials was
purchased from Ticona. Dr. John Feldmann, member of the
executive board in charge of this field, makes a positive assessment
of the takeover as he states, “This has made us into a leading world
supplier for our customers in this field”. In the meantime, 500 former
Honeywell employees, as well as their customers and production
facilities, have been integrated into BASF. BASF continues to put
stock in efficient, world-scale plants strategically situated in the most
significant markets, at times in cooperation with partners. For
instance, in 2003, BASF started the construction of a site for the
Dr. John Feldmann
makes a positive
assessment of the
Honeywell acquisition.
production of isocyanates in Caojing, China, an undertaking that is
going to be operated jointly with Chinese partners and Huntsman,
an American company. This will create capacities that will also allow
us to supply other companies such as, for example, Bayer. At the
same time, the Polyurethane Plastics Division started up a new
installation for TDI in Yeosu, Korea, and also considerably expanded
the production of MDI in Antwerp, Belgium.
Together with the Japanese company Toray, the Engineering
Plastics Division is going to build an installation for polybutylene
terephthalate (PBT) in Kuantan, Malaysia. The closure of styrene
plastics plants was on the agenda. In this vein, the division discontinued
the production of ABS in Geleen, The Netherlands, closed
the Styrolux plant here in Ludwigshafen, and is also going to shut
down the facility for polystyrene compounds as of July 1, 2004.
Within the scope of these measures, BASF has also sold its business
with polystyrene compounds to Spartech Polycom SAS. With
this step, the styrene plastics division is steadfastly pursuing its
standard product strategy of concentrating on a portfolio with just a
few product lines, a few production sites and highly efficient
marketing processes. BASF also interprets the concept of highly
efficient marketing as being synonymous with the expansion
of e-commerce. BASF’s eCommerce activities such as the
PlasticsPortal (www.plasticsportal.com) chalked up sales of over
one billion euros in 2003 – in some business fields, this accounted
for more than 50 per cent of their sales.