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BASF Earnings Miss Guidance, Shares Dip
24 Jan
Summary
- BASF's 2025 adjusted EBITDA fell short of company guidance.
- Restructuring costs significantly impacted reported EBIT.
- Full-year sales were in line with expectations despite challenges.
BASF's share price experienced a decrease on Friday following the prerelease of its 2025 earnings, which fell below both the company's guidance and market expectations. The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2025 were reported at 6.6 billion euros, undershooting the company's projected range of 6.7 billion to 7.1 billion euros and the consensus estimate of 6.7 billion euros.
Reported EBIT stood at 1.6 billion euros, significantly lower than the 2.2 billion euros consensus expectation, largely due to substantially higher restructuring costs. BASF is currently engaged in a broad restructuring initiative, which includes optimizing its business portfolio, divesting non-core assets, spinning off its agricultural division, and reducing its workforce. The company indicated that these restructuring measures are progressing ahead of schedule.
Full-year sales, however, were reported to be approximately in line with consensus. This was attributed to a slight increase in volumes, which compensated for negative currency effects and a marginal decrease in prices. Net income exceeded expectations, bolstered by a higher-than-anticipated one-off dividend payment from Wintershall-DEA, a business recently sold to Harbour Energy. Analysts from J.P. Morgan anticipate that the weaker adjusted earnings could lead to further downward revisions for 2026 consensus estimates.
BASF is scheduled to release its complete full-year financial results on February 27. The current premium valuation of the company's stock may be vulnerable, considering potential future estimate cuts driven by ongoing structural and cyclical challenges. These results also suggest a potentially challenging earnings season for the broader chemical sector.
