BASF Report 2021 Management’s Report – Business Models of the Segments 33 Business Models of the Segments Markets and consumer behavior are moving faster than ever, presenting our customers from a variety of industries and regions with a wide range of challenges. These include managing limited natural resources amid rising demand and the trend toward sustainable products. Our segments’ business models help to solve these challenges and show how we implement our corporate strategy in practical terms. Chemicals Strategic alignment of the segments Industrial Surface Nutrition & Agricultural The Chemicals segment is at the heart of the Verbund. It reliably Chemicals Materials Solutions Technologies Care Solutions supplies BASF’s other segments with chemicals to produce higher Verbund synergies Catalysis value-added products. It also markets high-quality basic chemicals Process technology and intermediates to customers in downstream industries. In this Automotive industry way, the Chemicals segment makes a significant contribution to BASF’s organic growth. Recycling and renewable raw materials Biosciences We create value through process and product innovation and invest Formulation in research and development to implement new, sustainable tech- Digitalization and artificial intelligence nologies and make our existing technologies even more efficient. Technological leadership, operational excellence and a clear focus Strategic focus Economies of scale in High-performance Additives Surface technology Ingredients for Connected offer on individual value chains are among our most important competi- basic chemicals and plastics platform platform consumer products across technologies intermediates for farmers tive advantages. We concentrate on the critical success factors of Innovation and Improved and Applications, Polymer dispersions, Battery materials, Biotechnology, Active ingredients, the traditional chemicals business: leveraging economies of scale sustainability focus new processes recycled and bio- resins coatings natural active seeds and traits, and the advantages of our Verbund, high asset reliability, continuous based materials ingredients, digital solutions formulations optimization of access to raw materials, lean and energy efficient processes, and reliable, cost-effective logistics. We continuously improve our value chains and are expanding our market position – Materials Additional differentiators are our products that contribute to the especially in Asia – with investments and collaborations in growth circular economy and our more sustainable production processes. markets. The Materials segment develops new plastics applications, BASF is active in substantial parts of plastic value chains, from high-performance materials, systems and digital solutions. Our monomers to polymers and their formulated specialties. Combined Furthermore, we are constantly improving our global production product portfolio is unique in the industry. We aim to grow mainly with our specific technology knowledge, this offers us the unique structures and aligning these with regional market requirements. organically by differentiating ourselves from our competitors with our ability to shape and close cycles ourselves. One concrete example For example, we closed a production plant for butanediol in Kuantan, systems-oriented application expertise and industry knowl- is our pilot projects for recycling used mattresses: Based on a wet Malaysia, in 2021. We also plan to expand our 2-ethylhexanoic acid edge, and creating maximum value in our isocyanate and polyamide chemical process developed by BASF, precursors recovered from plant there, which is scheduled for startup in 2024. value chains. Our advanced material simulation capabilities are a old mattresses can be used to produce new mattress-sized unique selling proposition in the industry and enable us to operate blocks of flexible polyurethane foam. Other examples include our TM close to our customers. ChemCycling project, biomass balanced products and certified