BASF Corporation, BASF's North American subsidiary, announced that its ongoing restructuring programs would yield an additional $150 million in annual fixed cost reductions by mid-2007. The company expects one-time costs of $80 million arising from these measures.
The added savings are beyond the originally targeted $250 million already achieved and will bring the total fixed cost reductions for the restructuring program announced in early 2003 to $400 million annually. This goal was reached in the second quarter of 2005, 18 months earlier than scheduled.
In addition to the cost reductions, the company expects to see its earnings before interest and taxes (EBIT) rise by $200 million on an annualized basis by 2007 as a result of the company's Commercial Effectiveness program. Commercial Effectiveness involves the adoption of new pricing methodologies and business models, as well as focusing technical and developmental capabilities on customers with whom BASF can grow profitably.
“The upward revision in their targeted cost reduction program is the result of two factors,” said Klaus Peter Löbbe, member of the Board of Executive Directors of BASF Aktiengesellschaft and Chairman and CEO of BASF Corporation, BASF's North American subsidiary. “First, they have expanded the scope of some restructuring projects, and, secondly, they are further improving the efficiency of their larger manufacturing sites through intensive benchmarking.”
The benchmarking program will identify specific process, productivity, and technology enhancements that will increase each site's overall effectiveness while maintaining the highest standards in safety, health, and environment.
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