Basf (ETR:BAS) reported higher third-quarter earnings before special items, supported by price increases, volume growth and lower fixed costs across its core businesses, while narrowing its full-year earnings outlook upward.
EBITDA before special items rose 15% year over year to €1.6 billion in the third quarter, Chairman of the Board of Executive Directors Markus Kamieth said. He attributed the increase to stronger specific margins, solid volumes and restructuring-related cost reductions. All four core segments contributed to the improvement.
“BASF delivered another strong quarter with considerable growth in EBITDA before special items driven by all core businesses,” Kamieth said. The company reported price increases across all core segments during the quarter, while Chemicals and Nutrition & Care made the strongest contributions to volume growth.
Outlook Narrowed as Core Businesses Improve
BASF now expects 2026 EBITDA before special items of between €7.4 billion and €7.8 billion, raising the lower end of its prior outlook and slightly increasing the upper end. The company maintained its free-cash-flow forecast of €1.5 billion to €2.3 billion, citing continued uncertainty around geopolitical and global economic developments, particularly their effects on oil and gas prices.
CFO Dirk Elvermann said the company expects Chemicals, Industrial Solutions and Nutrition & Care to post fourth-quarter earnings above the prior-year period. Materials is expected to be around the previous year’s level, while Surface Technologies is expected to remain below it.
Kamieth said the company remains cautious about the fourth quarter despite some improving economic indicators. He noted that energy prices had risen sharply and said markets are generally better supplied than during the second quarter, when supply-chain disruptions associated with the Middle East conflict supported pricing and volumes.
On industry margins, Kamieth said BASF’s portfolio had moved “significantly above the trough” but had not yet reached normalized or mid-cycle levels across the group. He said the company sees both upside and downside risks for 2027, though he expressed some optimism that conditions could improve.
Cash Flow, Debt Reduction and Buybacks
For the first nine months of 2026, EBITDA before special items increased by more than €900 million from the prior-year period to €6.4 billion. Cash fixed costs declined about 3% to €11.8 billion, while net income reached €5.2 billion, including a €3.5 billion after-tax disposal gain from the coatings transaction with Carlyle.
Free cash flow for the nine-month period was negative €1 billion, compared with about negative €870 million a year earlier. Cash flow from operating activities fell to €823 million, primarily because net working-capital requirements increased by €1.5 billion.
Elvermann said the working-capital increase reflected higher receivables from stronger sales and higher inventory values caused by elevated raw-material prices. He said BASF expects stronger cash collections in the fourth quarter, although the pace of inventory reduction will depend largely on feedstock prices.
- Payments for property, plant, equipment and intangible assets fell about €980 million to €1.9 billion in the first nine months.
- BASF now expects full-year capital expenditures of roughly €2.8 billion to €2.9 billion, clearly below its February forecast of €3.4 billion.
- Net debt was reduced 20% from the end of September 2025, and BASF expects it to reach about €15 billion by the end of 2026.
- Fitch confirmed BASF’s single-A credit rating with a stable outlook.
The company bought back approximately €1.9 billion of shares between Nov. 25 and Oct. 23, 2026, as part of a program of at least €4 billion announced in September 2024. BASF’s equity ratio increased by nearly three percentage points to 47.2% despite the ongoing buyback program.
Agricultural Solutions and Portfolio Actions
Agricultural Solutions was a weaker area in the third quarter. Sales declined almost 20% to €1.4 billion, primarily because of lower volumes amid challenging conditions in South America and sales that had been brought forward into the second quarter ahead of an enterprise-resource-planning migration in the region.
Pricing was also pressured by competition in South America. Elvermann said unfavorable weather conditions affected volumes in South America, Europe, Asia and North America. The company expects the business to strengthen seasonally in the fourth quarter and said it should perform broadly in line with the fourth quarter of 2025, though full-year earnings are still expected to be lower than last year.
BASF said preparations for the planned initial public offering of Agricultural Solutions remain on track, with the business expected to be IPO-ready by mid-2027. The transition to separate legal entities and an industry-specific ERP system is largely complete.
The company also highlighted portfolio proceeds, including around €1.3 billion from sales of Harbour Energy shares to date. BASF continues to hold about 16% of Harbour Energy’s outstanding voting shares. Its coatings transaction with Carlyle generated net cash inflows of more than €6 billion, while the sale of Stahl Group’s specialty coatings business to Henkel produced more than €250 million in cash proceeds through BASF’s indirect stake.
Evonik Discussion and Capital Discipline
Kamieth addressed reports of a possible combination with Evonik, saying such a transaction could be strategically and financially compelling because the companies’ portfolios and strengths complement one another. However, he emphasized that BASF would only pursue a deal if it creates value for shareholders.
“Acquisitions are a could do, not a must do in our strategy,” Kamieth said. He said the company would not overpay and remains committed to shareholder distributions of at least €12 billion between 2025 and 2028.
BASF expects to continue smaller portfolio optimization measures but said investors should not expect anything “very significant” in terms of additional divestments. The company is also continuing restructuring efforts, having reduced employee positions by about 8,600 since January 2024, excluding divestiture-related reductions and workforce additions at its Zhanjiang Verbund site in China.
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.
