Investor Update 2021 - BASF's new Verbund site in Zhanjiang
Investor Update 2021 - BASF's new Verbund site in Zhanjiang - Transcript Q&A September 27, 2021
That is why I would assume that the share of own manufactured products in China will
go up. I don't have a specific number for you, but I would assume that we will be landing
north of 80%- even 85%. I think this is a very safe number because also in other
divisions growth and investments that we are doing outside of Zhanjiang, potentially in
China, the key driver will be what Martin said: It is investments in China for China.
Martin showed the breakdown between the investment, the capex that we put aside
until at least in the next five years for the Zhanjiang Verbund site and battery materials
(see slide 27). Then you saw the on average €2.6 billion for investments in ongoing
business. It is our task to allocate enough resources for profitable growth in our
remaining operating divisions and global activities. Here I do not see that the share of
investment or capital for growth will be lower than in the past. This is, of course, the
strategy that we have, now detailing out the capex spend for the next years. But, of
course, there will be sufficient capital available for attractive growth projects also going
forward for other businesses.
Martin Brudermüller: Markus, I think we should say: We have also tightened the belt
already over the recent years, made money more competitive with more projects. That
was something which we clearly articulated in 2018 already, when we said we are
growing more with organic growth than with acquiring. Now, certainly, in this period,
we put this on top. We will look twice into this. But I can only amplify what you said:
There will be money for every important project in BASF which we deem to be
necessary for profitable growth and certainly also for maintenance and taking care
about the existing assets.
Gianmarco Migliavacca (Neuberger Berman): How comfortable are you that
Chinese authorities will not interfere with the Verbund site management? How are local
regulatory risks, e.g., change in taxes, local policies mitigated?
Stephan Kothrade: We all read and hear about a lot of interference from the side of
the Chinese government with companies. But we can also see that the chemical
industry is clearly not in the focus. This is different. It is about companies that are in
the limelight, that are part of the daily life of Chinese citizens, be it in e-commerce, the
retail space, technology, tutoring, gaming etc. BASF is clearly a front runner in
environmental protection, health and safety in China. The way how we operate our
sites is highly important for the Chinese government, also to use us as a role model.
We are welcome to invest in China. I don't see a change that all of a sudden there
would be negative interference, be it via tax instruments or be it via telling us how to
operate our sites. It is the contrary. We share our knowledge about emission control,
about health and work safety with other companies within the framework of chemical
associations and with our partners in the joint ventures. This is seen as a very positive
contribution in alignment with the agenda of China.
Martin Brudermüller: Let me add on that because I think this is something that moves
you all the time when we talk about how the general environment is to work with China
and decoupling and the tensions with the US.
The overall development geopolitically is worrying, very clearly. It is not encouraging
what is going to happen; it is kind of a tit for tat. That is the one part.
But the other part is: If you look at a real number, how, e.g., the U.S. economy and the
Chinese economy are interlinked with each other, in both directions, import and export,
it is actually severe. I cannot imagine that there is the rationale now to fully decouple
those economies. I think that would hamper a lot of companies, also, by the way, U.S.
companies, Chinese, but certainly also German and European ones.
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