Basf: “Winning Ways” well in 2025, macroeconomic backdrop underpinning 2026

In the 2025 business year, the Basf Group faced an uncertain and very volatile global market environment with considerable headwinds. “We therefore mainly focused on the things we can control within the framework of our “Winning Ways” strategy,” said Basf CEO Markus Kamieth presenting the 2025 financial figures together with CFO Dirk Elvermann. The company reached significant milestones in its strategy implementation: “We successfully started up the major plants at our new Verbund site in Zhanjiang. We also accelerated our cost savings programs and significantly streamlined Basf’s organization. Moreover, we progressed swiftly and successfully with the announced portfolio measures,” Markus Kamieth added. However, the year 2025 and particularly the fourth quarter did not develop as anticipated for Basf Group.

In the 2025 business year, sales stood at 59.7 billion euros, compared with 61.4 billion euros in the previous year. Negative currency effects, mainly relating to the US dollar, the Chinese renminbi and the Brazilian real, had a significant impact on sales. Ebitda amounted to 5.6 billion euros following 6.2 billion euros in the prior-year period. Special items in Ebitda amounted to minus 936 million euros in 2025. Special charges of 937 million euros for restructuring measures were incurred primarily in connection with the ongoing cost savings programs, particularly for the program focused on the Ludwigshafen site. Ebit came in at 1.6 billion euros, down on the prior-year figure by 176 million euros. Depreciation and amortization included in Ebit amounted to 4 billion euros. Net income in 2025 rose to 1.6 billion euros. This resulted primarily from the year-on-year increase in net income from shareholdings, which was mainly due to the improved earnings of non-integral companies accounted for using the equity method. This increase was due to net special income of 1.3 billion euros, primarily in connection with reimbursements to Wintershall Dea arising from the federal guarantees for expropriated assets in Russia. Cash flows from operating activities amounted to 5.6 billion euros in the 2025 business year, 1.3 billion euros below the prior-year figure. Cash flows from investing activities amounted to minus 3.2 billion euros in 2025, after minus 5.1 billion euros in the previous year. Free cash flow, which remains after deducting payments made for property, plant and equipment and intangible assets from cash flows from operating activities, improved significantly due to lower capital expenditures. In 2025, free cash flow was 1.3 billion euros, compared with 748 million euros in 2024.

The Basf Group expects Ebitda before special items of between 6.2 billion euros and 7 billion euros in 2026. The Nutrition & Care and Chemicals segments are likely to increase their earnings significantly, while Industrial Solutions expects a slight increase in earnings. In the Materials and Agricultural Solutions segments, the company forecasts slightly lower earnings due to currency effects. Ebitda before special items in the Surface Technologies segment is expected to decrease significantly in 2026, mainly due to positive one-off effects in the Environmental Catalyst and Metal Solutions (ECMS) division in 2025. Basf Group’s free cash flow is expected to be between 1.5 billion euros and 2.3 billion euros. This is based on forecast cash flows from operating activities of between 4.9 billion euros and 5.7 billion euros, minus the expected payments made for property, plant and equipment and intangible assets in the amount of 3.4 billion euros. CO2 emissions are projected to be between 17.2 million metric tons and 18.2 million metric tons in 2026. The company expects higher emissions compared to the previous year mainly due to the startup of the Verbund site in Zhanjiang, China, while production volumes at other production sites will remain almost unchanged. Basf will counteract this increase with targeted measures to reduce emissions, such as further increasing energy efficiency, optimizing processes and continuing the shift to electricity from renewable energies.

In summary, Basf’s outlook is based on the following assumptions regarding the global economic environment in 2026: global GDP growth of 2.7%; growth in global industrial production of 2.3%; growth in global chemical production of 2.4%; an average euro/US dollar exchange rate of 1.20 dollars per euro; and an average annual oil price of 65 dollars per barrel.