Basf (ETR:BAS) executives outlined a challenging 2025 marked by geopolitical uncertainty, volatile markets, and significant currency headwinds, while pointing to progress on major projects, portfolio actions, and cost reductions as the company works through what it expects will be another “transitional year” in 2026.
2025 results: sales pressure, weaker EBITDA, stronger net income
Chairman of the Board of Executive Directors Markus Kamieth said the fourth quarter and full year did not develop as BASF had anticipated, echoing the company’s January 22 pre-release. In the fourth quarter of 2025, sales declined “considerably,” driven by strong currency headwinds and slightly lower prices, partly offset by slightly higher volumes. Volumes grew in all segments except Chemicals, with particularly strong increases in Surface Technologies, Agricultural Solutions, and Nutrition & Care. Regionally, BASF reported a 13% volume increase in China, solid growth in North America, and slightly lower volumes in Europe.
Fourth-quarter EBITDA before special items fell to €1.0 billion from €1.4 billion a year earlier; management said currency headwinds lowered that metric by around €110 million in the quarter. For the full year 2025, BASF reported EBITDA before special items of €6.6 billion, down from 2024, driven by lower margins and negative currency effects totaling €235 million. CFO Dirk Elvermann said the EBITDA margin before special items (excluding metals) was “almost stable” at 12.3%.
Net income improved 25% to €1.6 billion. Net income from shareholdings rose to €1.3 billion from €602 million, which Elvermann said mainly reflected higher earnings contributions from Wintershall Dea, which is accounted for at equity.
Cash flow, balance sheet, and capital spending plans
Free cash flow increased by around €600 million year over year to €1.3 billion, according to Elvermann. Cash flow from operating activities declined to €5.6 billion from €6.9 billion in 2024, primarily due to changes in other operating assets related to higher precious metal trading positions. Elvermann also noted higher non-cash items and reclassifications versus the prior year.
He highlighted dividends received from Wintershall Dea in 2025, funded by reimbursements under German federal investment guarantees. BASF, which holds 72.7% of Wintershall Dea, received about €900 million after tax in 2025. For the first half of 2026, BASF expects to receive almost €800 million after tax through the same mechanism, with around €500 million already paid in January. In the Q&A, management added that a further roughly €300 million is expected to complete BASF’s share of the claim under that coverage, and that additional amounts of about €100 million could come in 2027/2028 related to a tax refund timing.
Capital expenditures fell sharply in 2025 as BASF moved past the peak investment phase for its new Verbund site in Zhanjiang. Payments for property, plant, and equipment and intangible assets dropped by nearly €2 billion to €4.3 billion. Looking ahead, BASF plans to reduce CapEx below depreciation and said it expects €13 billion of capital expenditures between 2026 and 2029, 20% lower than the four-year forecast given last year and more than 30% below its prior 2024–2027 planning. For 2026, BASF plans CapEx of €3.3 billion versus €4.0 billion in 2025, including only about €600 million for Zhanjiang after €1.6 billion in 2025.
On the balance sheet, total assets were €76.2 billion at December 31, 2025, down €4.2 billion year over year, which management said was mainly due to currency effects lowering non-current assets. The equity ratio remained stable at 45.1%. BASF reduced net debt to €18.3 billion and said it intends to use a substantial portion of portfolio-measure proceeds in 2026 to further strengthen the balance sheet, supporting its single-A rating.
Portfolio actions: coatings value, Agricultural Solutions IPO readiness, and biosolutions deal
Kamieth said BASF progressed “swiftly” with portfolio measures. The company’s agreement with Carlisle related to BASF’s Coatings business was described as a key milestone following the earlier sale of the decorative paints business to Sherwin-Williams. BASF expects to close the Carlisle transaction in the second quarter, as previously announced, and plans to retain a 40% equity share after closing. Based on the two transactions, BASF said the Coatings business is valued at an enterprise value of €8.7 billion.
Agricultural Solutions delivered what management called a “very strong” 2025 performance, achieving an EBITDA margin before special items of 22%. BASF reiterated it is on track to reach IPO readiness in 2027 and said separation work on legal entities and ERP systems is progressing, with completion expected in all regions by early 2027. The company also discussed its announced future management board for the agricultural business, headed by Livio Tedeschi, positioning the unit as an independently steered company ahead of a planned Frankfurt Stock Exchange listing.
In January, BASF announced that Agricultural Solutions is acquiring AgBiTech, described as a supplier of biological insect control solutions using nuclear polyhedrovirus technology. BASF said AgBiTech operates in Brazil, the United States, and Australia and serves growers of soybean, corn, cotton, and specialty crops. The transaction is expected to close in the first half of 2026.
Operations: Zhanjiang startup, U.S. MDI expansion, and cost savings
On operations, Kamieth said BASF successfully started up all 32 key production lines at the Zhanjiang Verbund site on time and below budget, including the steam cracker, which can use both naphtha and butane. Management expects a slightly negative earnings contribution in the first year due to startup costs, with positive earnings contribution expected from 2027. In the Q&A, BASF said the Zhanjiang steam cracker reached full utilization in February and that many downstream plants are ramping quickly, with some products requiring longer customer qualification periods.
BASF also highlighted its U.S. MDI expansion in Geismar, Louisiana. Kamieth said the final phase is on track, with production planned to start in the third quarter of 2026. The $1 billion project is BASF’s largest investment ever in the United States and is expected to double Geismar’s MDI capacity to about 600,000 metric tons per year.
On costs, Elvermann said BASF accelerated its cost-saving programs. By the end of 2025, the company achieved an annual cost reduction run rate of about €1.7 billion, €100 million above its original savings target for that date. One-time costs associated with the programs were €700 million in 2025, driven by higher severance provisions. BASF reduced planned one-time costs for 2026 to €300 million from €500 million and now expects annual cost savings of €2.3 billion by the end of 2026, up from €2.1 billion previously planned, with cumulative one-time costs expected to total €1.9 billion.
Management also pointed to organizational streamlining: between December 2023 and December 2025, BASF reduced the number of senior executives by 11%. Total headcount fell by 4,800 employees excluding about 1,000 hires at the China site. BASF discussed next steps focused on service organizations, including plans for a digital hub in Hyderabad, India, and two global business services hubs in Asia, with Kuala Lumpur focused on supply chain services and a new India hub focused on finance and HR; executives said detailed job figures were not yet available and would be discussed with employee representatives.
Shareholder returns and 2026 outlook
BASF said it will propose a dividend of €2.25 per share for 2025, which Kamieth said implies a 5.1% yield based on the year-end share price. The company also began share repurchases in November 2025 and had bought back about €355 million of shares by year-end.
For 2026, BASF said it does not expect a meaningful market upswing or significant easing of geopolitical tensions in the near term. The company’s planning assumptions include Brent at $65 per barrel and an exchange rate of $1.20 per euro. BASF forecasts EBITDA before special items of €6.2 billion to €7.0 billion and free cash flow of €1.5 billion to €2.3 billion, with payments for property, plant, and equipment and intangible assets estimated at €3.4 billion.
Management noted that the start to the first quarter has been “as challenging as expected,” with positive volume trends in China but weak development in other regions. BASF warned that currency headwinds could reduce first-quarter 2026 EBITDA before special items by up to €200 million due to the stronger U.S. dollar in the prior-year quarter. Looking ahead, executives said improvements in 2026 would need to be driven largely by BASF’s own actions—cost reductions, disciplined CapEx, and higher plant utilization—while they see early indications of gradual recovery later in 2026 and into 2027.
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.
