BASF plans to invest €10.7 billion over the next four years to help drive sales growth faster than the market's, even if it means a fall in profits, the company said today.
Chief Executive Juergen Hambrecht told investors in New York that sales growth at the world's biggest chemicals company should outpace that of the market by 2 percentage points.
But earnings before interest and tax could drop as a result. Hambrecht said EBIT should be between €5 billion and €8 billion in 2010, compared with €6.75 billion in 2006.
Nonetheless, Hambrecht said the company planned to reward investors by buying back €3 billion worth of its own shares in 2007 and 2008 and increasing or at least maintaining the level of its annual payout.
BASF has raised its dividend in 10 of the last 12 years.
In a statement released to journalists, Hambrecht said: "BASF expects to at least earn its cost of capital in any given year, even if there is a dowmturn in economic conditions."
BASF expects the global chemicals market to grow by 3 per cent annually until 2012. Its own sales will be strengthened by last year's €3.8 billion acquisition of US-based Engelhard, which made it the world's biggest catalyst supplier. BASF expects this part of its business to grow at an average of 7 per cent annually in the medium term, also 2 percentage points more than it expects for the wider market.
The €10.7 billion in planned investments include a total of over €900 million on research and development until 2008 in a programme that started in 2006. Its R&D focus is on the five growth areas of energy management, nanotechnology, industrial biotechnology, plant biotechnology and raw material change, BASF said.