By Pierre Bertrand and Helena Smolak

 

BASF intends to adapt the operating model of its battery materials and agricultural units, a move that faces opposition from German trade union IG Bergbau, Chemie, Energie.

The move seeks to boost profitability in those units by granting them the space to adjust their models and processes, the company said.

BASF said that it will also apply its new business approach to its coatings unit to meet the needs of their specific customer industries.

"We are combining the benefits of a more differentiated approach to steering individual businesses with the advantages provided by the Verbund and our setup as an integrated company," Chief Financial Officer Dirk Elvermann said in a statement Thursday.

The change will be supported by adapted IT and governance frameworks, BASF said.

Germany's IGBCE union, in a statement, said that BASF will spin off the three businesses and that they will transferred to legally independent units.

The IGBCE added the process is to be completed by 2026 and, though the move isn't expected to cause employee redundancies, its benefits and risks were unclear.

"We did not wish for a spin-off of parts of the company's business units", Sinischa Horvat, works council chair.

A BASF spokesperson said the units will remain an integrated part of the group, but will be given more freedom in their management. Employees will be transferred to the newly established units, the spokesperson said.

BASF will continue to apply its integrated Verbund business model comprising its chemicals, materials, industrial solutions and nutrition and care units, but with a much tighter focus on resource use, the company said.

The company said that it intends to generate value by bundling demand and through synchronized and deeply integrated production.

The disclosure of the differentiated steering approach, came as the company also said Thursday that it plans to reduce its scope 3.1 emissions--those from the production of purchased goods and services--by 15% relative to 2022, by 2030.

BASF said that it will reduce emissions to 1.34 kilograms of carbon-dioxide equivalent per kilogram of raw material bought, compared with 1.57 previously.

It added that it targets an earnings before interest taxes depreciation and amortization margin of 17% for its Verbund businesses, 30% or higher for its battery materials unit by 2030, 15% or higher in the midterm for its coating unit, and 23% or higher for its agricultural solutions unit.

 

Write to Pierre Bertrand at pierre.bertrand@wsj.com and Helena Smolak at helena.smolak@wsj.com

 

(END) Dow Jones Newswires

December 07, 2023 08:21 ET (13:21 GMT)

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