Basf (ETR:BAS) executives told analysts that 2025 finished weaker than expected as the company faced currency headwinds, declining prices across most segments, and persistent margin pressure in upstream chemicals. In its fourth-quarter and full-year 2025 earnings call, Chief Executive Officer Markus Kamieth and Chief Financial Officer Dirk Elvermann outlined progress on the company’s “Winning Ways” strategy, including portfolio actions, cost reductions, and major project start-ups, while warning that 2026 is likely to remain a “transitional year” for the chemical industry.
Fourth-quarter trends: lower sales and EBITDA despite volume growth
Kamieth said fourth-quarter sales “declined considerably” year over year due to strong currency headwinds and slightly lower prices, even as BASF achieved slightly higher volumes. All segments reported volume growth except Chemicals, with the biggest gains in Surface Technologies, Agricultural Solutions, and Nutrition & Health. By region, BASF posted a 13% volume increase in China and “solid growth” in North America, while Europe saw slightly lower volumes.
Fourth-quarter EBITDA before special items fell to EUR 1.0 billion from EUR 1.4 billion a year earlier, including an estimated EUR 110 million currency-related headwind.
Segment commentary: upstream pressure, strength in Surface Technologies, stable Ag margins
Management described a “challenging” environment in upstream businesses due to supply-demand imbalance and margin pressure. In Chemicals, volumes were only slightly lower, but petrochemicals prices declined considerably due to lower raw material prices and global overcapacities, contributing to weaker specific margins. Materials reported slight volume growth driven by Monomers, but prices fell in both divisions, resulting in slightly lower margins.
Industrial Solutions operated in a subdued market environment (with electronic materials cited as an exception), posting slight volume growth while prices and specific margins declined slightly.
Nutrition and Care faced difficult market conditions. BASF reported slightly higher segment volumes due to strong growth in Nutrition & Health, while Care Chemicals volumes declined on lower demand in home care, industrial and institutional cleaning, and ole surfactants. Kamieth said consumers’ shift toward “white label” products reduced demand from global brand owners. Lower vitamin prices weighed on Nutrition & Health pricing, while Care Chemicals “almost maintained” year-ago price levels. The segment posted “considerably lower” specific margins due to competitive pressure.
Surface Technologies, now focused on emissions catalyst and metals solutions (ECMS) and battery materials after coatings-related businesses were classified as discontinued operations following the transaction agreement with Carlyle, delivered “considerably higher” volumes and prices in both divisions and “strong” specific margin growth.
Agricultural Solutions navigated crop commodity prices below historical averages and elevated farmer financing costs. BASF said the segment increased volumes and kept prices nearly flat, leaving specific margins “virtually stable” in the quarter.
Full-year 2025: EBITDA down, net income up, free cash flow improves
For full-year 2025, BASF reported EBITDA before special items of EUR 6.6 billion, down from 2024, driven by lower margins and negative currency effects totaling EUR 235 million. Elvermann noted the EBITDA margin before special items (excluding metals) remained “almost stable” at 12.3%.
Net income improved 25% to EUR 1.6 billion. Net income from shareholdings rose to EUR 1.3 billion from EUR 602 million, mainly due to higher earnings contributions from the at-equity participation in Wintershall Dea.
Free cash flow increased by around EUR 600 million year over year to EUR 1.3 billion. Operating cash flow declined to EUR 5.6 billion from EUR 6.9 billion, driven primarily by changes in other operating assets related to increased precious metal trading positions. Elvermann also highlighted a “substantial dividend” from Wintershall Dea tied to reimbursements under German federal investment guarantees; BASF, which holds 72.7% of Wintershall Dea, received about EUR 900 million after tax in 2025 and expects nearly EUR 800 million after tax in the first half of 2026, with around EUR 500 million already received in January.
Capital spending declined sharply. Payments for property, plant, and equipment and intangible assets fell by almost EUR 2.0 billion to EUR 4.3 billion, which management said reflects passing the peak investment phase for the Zhanjiang Verbund site.
Portfolio actions and major projects: coatings value unlock, Ag IPO readiness, Zhanjiang ramp
BASF said it made “swift and successful” progress on portfolio measures in 2025. The company highlighted two coatings-related transactions: the divestment of the decorative paints business to Sherwin-Williams and the agreement signed with Carlyle involving BASF’s remaining coatings activities. BASF said it plans to close the Carlyle transaction in Q2 as previously announced and expects to retain a 40% equity share after closing. Based on the two transactions, BASF valued its coatings business at an enterprise value of EUR 8.7 billion, implying an approximately 13x EV/EBITDA (2024, before special items).
In Agricultural Solutions, management pointed to what it called a “very strong” 2025 performance: sales of EUR 9.6 billion, EBITDA before special items of EUR 2.1 billion, and an EBITDA margin before special items of 22%. Segment cash flow was EUR 1.5 billion. BASF reiterated it is on track to achieve IPO readiness in 2027, with legal entity and ERP separation expected to be complete in all regions by early 2027, and said it is targeting the Frankfurt Stock Exchange as the listing venue.
Also in January, BASF agreed to acquire biological insect control group AgBiTech, citing its Nuclear Polyhedrosis Virus-based insect control technology. The transaction is expected to close in the first half of 2026.
On capital projects, BASF said it successfully started up all 32 key production lines at its integrated Zhanjiang Verbund site “on time and below budget,” including a world-scale flex-feed steam cracker. Management expects the site to run at high utilization rates but projected a slightly negative earnings contribution in its first year due to start-up costs; in the Q&A, Elvermann quantified expected 2026 EBITDA impact as negative by up to EUR 100 million, with positive earnings expected from 2027 onward.
BASF also provided an update on its MDI expansion in Geismar, Louisiana, which it described as its largest-ever U.S. investment at $1 billion. The company expects start-up in Q3 2026 and said the project will double Geismar MDI capacity to about 600,000 metric tons per year.
2026 outlook: wide range, FX headwinds, cost and CapEx discipline
Management said it does not expect a meaningful market upswing or significant easing of geopolitical tensions in the near term. BASF’s 2026 planning assumes $65 per barrel Brent and an exchange rate of $1.20 per EUR. BASF guided to EBITDA before special items of EUR 6.2 billion to EUR 7.0 billion and free cash flow of EUR 1.5 billion to EUR 2.3 billion. CapEx is expected to fall to EUR 3.4 billion, including roughly EUR 0.6 billion tied to Zhanjiang.
By segment, BASF said Nutrition & Care and Chemicals are likely to increase earnings “significantly,” Industrial Solutions expects a slight increase, Materials and Agricultural Solutions are forecast to be slightly lower due to currency, and Surface Technologies is expected to decrease “significantly” mainly due to positive one-time effects in ECMS in 2025. Kamieth also cautioned that first-quarter 2026 could face up to EUR 200 million of currency headwinds on EBITDA before special items compared with the prior-year quarter.
On costs, Elvermann said BASF achieved an annual cost reduction run rate of about EUR 1.7 billion by the end of 2025, exceeding the original year-end target. The company now expects annual cost savings of EUR 2.3 billion by the end of 2026 (up from EUR 2.1 billion previously). BASF also outlined further streamlining in Global Digital Services and Global Business Services, including plans for a digital hub in Hyderabad and expanded global hubs in India and Kuala Lumpur.
For shareholder returns, BASF said it will propose a EUR 2.25 per share dividend for 2025 and reiterated its plan to distribute at least EUR 12 billion to shareholders from 2025 to 2028 through dividends and buybacks. The company repurchased about EUR 355 million of shares by year-end 2025 as part of a buyback program of up to EUR 1.5 billion scheduled to conclude by the end of June 2026.
About Basf (ETR:BAS)
BASF SE operates as a chemical company worldwide. It operates through six segments: Chemicals, Materials, Industrial Solutions, Surface Technologies, Nutrition & Care, and Agricultural Solutions. The Chemicals segment provides petrochemicals and intermediates. The Materials segment offers advanced materials and their precursors for applications and systems comprising isocyanates, polyamides, and inorganic basic products, as well as specialties for plastics and plastics processing industries. The Industrial Solutions segment develops and markets ingredients and additives for industrial applications, such as polymer dispersions, resins, additives, electronic materials, and antioxidants for automotive, plastics, paints and coatings, electronics, and energy and resource industries.
