BASF may sell construction chemicals unit to boost revenues: report

German chemicals group BASF is looking to hive off its construction chemicals unit either through outright sale or merger with a partner as part of the group’s efforts to cut cost and boost revenues and earnings.

BASF, which reported an 8 per cent increase in sales during the quarter ended 30 September 2018, to €15.6 billion on the back of higher sales, however, saw its earnings before interest and taxes decline by 14 per cent to €1.5 billion, mainly due to lower contribution from the chemicals segment
Reports said BASF’s new Chief Executive Martin Brudermueller is planning to sell the group’s Construction Chemicals unit or find a merger partner for it, as part of his efforts to boost the group’s revenues.
BASF’s Construction Chemicals unit is the world’s largest maker of chemical additives for concrete. Its products have been used in some of the prestigeous projects, including construction of the world’s longest railway tunnel in Switzerland as well as London’s new underground train line - the Elizabeth line.
However, the unit has failed to bring enough cash for BASF to let it compete successfully on its own over the longer term.
“Neither are we satisfied with the (group) business development nor with our share price development,” Brudermueller told journalists in a conference call after the chemicals giant released third-quarter results.
Brudermueller, who took over in May, is scheduled to outline his strategic vision in more detail on 20 November after reviewing more portfolios. But, he said, the decision on construction chemicals did not imply a policy change.
“The unit has a very low degree of integration into the rest of the BASF network and it does not fully meet our expectations regarding profitability,” said finance chief Hans-Ulrich Engel.
Construction Chemicals had sales of 2.4 billion euros ($2.7 billion) in 2017 with about 7,000 staff and Baader Helvea analyst Markus Mayer said it could be valued at 2.4 billion-3 billion euros.