The Right Horse! BASF Confirms Mid-Term Goals

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The past 12 months have shown, according to BASF decision-makers, that the current strategy addresses the right issues...

The chemical company BASF, which has been affected by the economic slowdown, has confirmed its medium-term goals. Last year, the company initiated a major restructuring to become more profitable again. In addition to cost-cutting measures and reduced investments, BASF aims to transition from a broadly diversified, integrated chemical company with many interconnected business units to a company with a core business comprising four divisions and several independent business units. "We are making good progress in implementation and are confident of achieving our financial goals for 2028," said CEO Markus Kamieth recently. Among other things, the company plans to achieve an adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda) of $11 to $13 billion, as further reported. The stock rose by 1.5 percent in the morning in a buoyant overall market. The company also confirmed its distribution plans: In addition to an annual minimum dividend of $2.40 per share, BASF announced last year that it would repurchase shares worth at least $4.4 billion between 2027 and 2028. The share buybacks could now start earlier. However, this is still dependent on transactions in the coatings sector.

BASF's Coatings Division is No Longer A Core Business

Previously, BASF announced that the sale of its Brazilian decorative paints business to Sherwin-Williams for $1.15 billion has been completed. The company also began exploring strategic options for its automotive OEM coatings, automotive refinish coatings, and surface technology divisions in the second quarter and has been closely monitoring the market. It has attracted significant interest from both financial and strategic investors. Therefore, Kamieth expects the transaction to be completed by the fourth quarter. BASF no longer considers the Coatings division part of its core business. Another key aspect of the restructuring is the planned IPO of the agricultural chemicals business. Kamieth confirmed that this division will be ready for the stock market by 2027. In contrast, management intends to retain the business involving systems and services related to catalysts and precious metals, which recently generated annual revenue of around seven billion euros, for a longer period. According to the board, this will extend beyond the year 2030, as BASF sees itself as the ideal owner of this segment.

BASF Continues to Anticipate A Challenging Business Situation

Going forward, BASF's core business will include the Chemicals division with basic chemicals and intermediates, the Materials division with advanced materials and precursors, the Industrial Solutions division with resins, additives, and electronic materials, as well as the Nutrition & Care division with products for the food and feed industry. This also includes ingredients for pharmaceuticals, cosmetics, and cleaning products. However, BASF has been suffering for some time from weak demand and declining prices. In addition to the sluggish economy, the company feels pressured by the rigid U.S. tariff policy. As a result, BASF cut its earnings targets in the summer, like several other chemical companies. The company also expects business to remain challenging in the near term.

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