BASF's 2025 EBITDA declines by 9.5%, chemical business remains weak, and capital expenditure cuts boost free cash flow

Investing.com - BASF announced on Friday that full-year EBITDA before interest, taxes, depreciation, and amortization decreased by 9.5%. Its core chemicals business nearly broke even in the fourth quarter. The German chemical giant mainly relies on cutting capital expenditures to boost free cash flow.

2025 EBITDA before special items fell from €7.24 billion last year to €6.55 billion. Revenue declined 2.9% to €59.66 billion, weighed down by negative effects from the US dollar, Chinese yuan, and Brazilian real exchange rates.

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Free cash flow increased by 79.5% to €1.34 billion. However, this growth was almost entirely due to reducing payments for real estate, plant, equipment, and intangible assets from €6.2 billion in 2024 to €4.3 billion, while cash flow from operating activities decreased by €1.34 billion year-over-year to €5.61 billion.

As one of its four core businesses, the chemicals segment posted an EBITDA of €747 million for the full year, down 43.2% from €1.31 billion. In the fourth quarter, EBITDA was nearly zero, at a negative €1 million. The company expects significant profit growth in this segment in 2026 but did not provide details.

CEO Markus Kamitz stated, “Therefore, we are mainly focusing on what we can control within the ‘Winning Way’ strategic framework.” He added that the company has successfully launched its main plant at the new integrated facility in Zhanjiang, China.

Net profit increased from €1.3 billion to €1.62 billion, benefiting from €1.3 billion in special net income, mainly from compensation related to federal guarantees for assets seized from Wintershall Dea GmbH in Russia.

Earnings per share were €1.82, up from €1.45 last year. Adjusted EPS, excluding special items, fell from €3.51 to €2.24.

In Q4, special items resulted in a €1 million EBITDA loss, mainly due to restructuring costs related to the Ludwigshafen plant cost-saving plan. EBIT declined from €1.81 billion to €1.634 billion.

BASF proposed to keep the 2025 dividend at €2.25 per share, with free cash flow of €1.34 billion, below the annual payout of about €2 billion.

The company said it will use cash proceeds from asset portfolio adjustments to buy back up to €1.5 billion of shares between November 2025 and the end of June 2026, as part of its €4 billion share repurchase plan through 2028.

CFO Dirk Elvermann stated that BASF will reduce net debt from €18.78 billion to €18.33 billion by the end of 2025.

Elvermann said, “In 2026, we will use a large part of the cash from asset portfolio adjustments to further strengthen our balance sheet.”

By the end of 2025, the annualized cost savings run rate will reach €1.7 billion, exceeding the original target by €100 million. BASF now expects annualized savings to reach €2.3 billion by the end of 2026, up from €2.1 billion, with a one-time cost of €1.9 billion.

Staff numbers are expected to decrease by about 4,800 to 108,251 employees, excluding approximately 1,000 new employees at the Zhanjiang plant.

Among business units, surface treatment technology showed the most significant improvement, with full-year EBITDA rising 244.1% to €1.39 billion, mainly driven by environmental catalysts and metal solutions. The agricultural solutions segment’s EBITDA grew 16.1% to €1.93 billion.

For 2026, BASF forecasts EBITDA before special items of €6.2 billion to €7 billion, and free cash flow of €1.5 billion to €2.3 billion, based on €3.4 billion in capital expenditures, a EUR/USD exchange rate of 1.20, and Brent crude oil at $65 per barrel.

The company expects surface treatment technology to see a significant profit decline in 2026, due to positive one-time effects from environmental catalysts and metal solutions in 2025.

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