Business Strategy and Outlook
| Rob Hales, CFA |BASF is the world’s largest chemical company, competing in almost every major chemical category. Given its German roots, around half of sales are generated in Europe, but investment is largely focused on higher-growth emerging markets, particularly China. End markets are widely diversified between industrial uses, energy, and transportation, but also less cyclical areas such as consumer goods and agriculture. The company was built on the production of basic commodities such as petrochemicals. However, its current strategy targets a shift toward speciality chemicals and customised solutions. We view this as a wise endeavour, given the increased pricing power and lower cyclicality typically associated with speciality chemicals.