BASF Seeds Growth in South America

BASF predicts even more growth for South America in 2019 than this year, in its latest economic, corporate governance and environmental sustainability report, “BASF América del Sur Informe 2017” report, released in Spanish in June.

The company takes a close look in the report at its broad business footprint in South America, where it earned €3.68 billion last year, with the help of its five sub-regional business centers: Brazil, headquarters of its Sur unit including Argentina, Bolivia, Paraguay and Uruguay; its Oeste unit including Chile and Perú; and its Norte unit including Colombia, Venezuela and Ecuador.

BASF reported that in 2017 it had an increase in the volume of production in South America of 9.7 percent with respect to 2016. “In the decorative paints business in Brazil, sales were up slightly on the prior-year figure: currency effects and slight price increases had a positive impact, while demand declined slightly,” the company reported earlier this year in its global combined report.

The company also reported that “We anticipate a continuation of the slow economic recovery in South America. In Brazil, demand for investment goods and durable consumer goods will presumably pick up slowly and export demand will develop solidly. We expect the Argentinian government to continue its path of reforms. Declining inflation rates should strengthen private consumption, and rising demand should also improve the investment climate.”

For the region as a whole, BASF anticipates a regional two percent Gross Domestic Product growth rate this year, and a 2.4 percent GDP rate in the following two years. South America overcame the severe recession of 2016 – with 2017 GDP growth up by 0.8 percent, the company reported. “In Argentina, the economy picked up significantly as a result of economic reforms and grew by 2.8 percent (compared with −2.2 percent in 2016). The Brazilian economy also expanded, with a growth of one percent (compared to −3.6 percent in 2016) on the back of higher agricultural exports and an increase in industrial production. With the exception of Venezuela, where the economy again contracted significantly, average growth in the other countries in the region was on a level with the previous year,” the company reported.

“In South America in 2017, we completed the implementation of a series of structural measures that increase our productivity and further sharpen the focus on our customers’ needs. We also aim to expand our sales channels. The objective is to better develop new customer segments, for instance with digital sales channels, especially in the faster-growing South American markets,” the company reported.

To help foster future growth in South America, the company indicated that “in 2017 five strategic measures were defined: go to market; the materialization of sustainability; sales increases of the integrated portfolio; and the offer of innovative products and solutions; and effectiveness in marketing and sales.”

Among the many environmental and social programs the company is involved in, energy efficiency is on standout. “There was an increase in energy efficiency of 2.6 percent compared to 2016, a result supported by initiatives of Triple E — Energy Efficiency Excellency, which aims to increase the competitiveness of the organization through greater energy efficiency, the promotion of the sustainable improvement of energy costs and the reduction of environmental impacts,” the company reported. The goal for 2025 is an increase in energy efficiency in South America by seven percent.