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
the today-achievable technology landscape, the best recipe to achieve these low
carbon dioxide emissions is still the Verbund integration that we plan now, I would say,
on the best and so far, most sophisticated level in Zhanjiang because it's a greenfield
site and we benefit from planning this right from the get-go.
Martin Brudermüller: We are also launching the Product Carbon Footprint at the end
of the year. I think if you do the mathematics here, you will see that we compare
ourselves in China with a lot of competitors that somehow have at least one component
based on coal, whether it's the energy or a raw material like syngas, which is normally
produced totally by coal in China. As we explained, we won't do it and we even recycle
CO2. You can imagine that these are all contributions, including the renewable energy,
that I'm quite sure will have an advantage and add diversification by our Product
Carbon Footprints of our products from this site.
Tim Jones (Deutsche Bank): When forecasting sales and EBITDA from the new
Guangdong site, do you assume that customers in China will pay the required
premiums to cover the higher costs associated with "greener” products? Do you see
any regional differences in customer attitudes towards paying for higher cost "green"
products between Europe, the US and China?
Stephan Kothrade: What I can see is that we are engaged already in many
discussions with customers. It is with multinationals, but increasingly also with local
customers who want to understand our CO2 footprint. They want to understand the
CO2 burden that comes with a product they use in their own value chain. We are
working on this. We will be one of the first companies in China to provide this
transparency. That is why we also are a front runner when it comes to securing
renewable power for our sites. You may have read that we are the largest buyer of
renewable energy in the Yangtze river delta. We are number one in Jiangsu Province,
we are number one in Shanghai, we are number two in the Pearl River delta, so in both
most important industry regions of the country. Of course, we aim at a very high share.
At the same time, we ensure competitive pricing. If there is a cost adder, this has to be
passed on to customers. But I see the willingness to enter into such a dialogue
because, ultimately, it will also enable our customers further downstream to achieve
their sustainability targets. This is what we have to do in a dialogue. I am very confident
that this is the trend. You see the seriousness of Chinese government when it comes
to sustainability in the country.
Laurent Favre (Exane BNP Paribas): Can you provide more details on capex spent
on the new site, through the end of 2021, and a broad estimate of annual capex over
the next four years? What tax rate should we assume, the standard 25% rate in China
or will you have rebates?
Markus Kamieth: First of all, covering the last part of your question with regard to the
tax rate: I think it is too early to discuss this here. I think for the time being, certainly a
general tax rate is probably good enough for your models. However, as you can
imagine, with a project of the size, we also have discussions with authorities in China
around the taxation of our investments of the business. As Martin indicated, there are
also developments in the respective area where we invest to establish, e.g., a free
trade zone. There are still ongoing discussions, therefore I would say, too early to give
you a precise indication. My recommendation would be: Look at it with your standard
rates and assume that there could be certain upsides for BASF.
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