REUTERS — German chemicals giant BASF has slashed the dividends it plans to pay out in 2025 and in the following three years to preserve cash as it grapples with weak demand in Europe and considers splitting off several businesses.
Its proposed annual dividend of at least US$2.51 is down from the $3.80, or $3.35 billion in total, paid this year in line with the previous two years.
The company previously had a dividend policy to maintain or improve its payout every year.
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Chief executive officer Markus Kamieth, at the helm since April, has continued his predecessor’s push to cut more than $2.23 billion in annual costs in Europe and reduce the group’s reliance on subdued markets there.
At the same time, BASF is in the most expensive phase of building a $11.17 billion chemical complex in China.
To mitigate the dividend decline, BASF is planning share buybacks by 2027 at the latest worth around $4.45 billion in total.
BASF said it is committed to combined distribution to shareholders — dividends and share purchases — of at least $13.4 billion through 2028, which it said was in line with previous years. The company will also lower investment in plants and equipment starting in 2026 because the new Zhanjiang site in China will largely be completed in 2025.
The company said it was forecasting 2028 earnings before interest, taxes, depreciation and amortisation (EBITDA) before special items of $11 to $13 billion, but that was contingent on “midcycle” to “upcycle” business conditions.
Analysts on average expect the company to achieve a 2028 EBITDA of about $12.29 billion, up from an adjusted $8.61 billion last year.
“Whilst its 2028, earnings targets are broadly in line with consensus, the reliance on mid/upcycle conditions with limited visibility in conjunction with the extent of the dividend reduction is likely to disappoint,” analysts at Jefferies said.
BASF also said it was preparing a divestment process for its decorative paints business in Brazil.
The company confirmed a report by Reuters that it is planning a partial listing of its agricultural chemicals business and that it is considering new ownership options for its coatings unit.
“The company is targeting readiness for a potential IPO. In the midterm, listing of a minority share (in the agriculture unit) is an option,” BASF said.
