Key Takeaways:
BASF SE reported second-quarter earnings that beat expectations, driven by higher margins, volume growth and a €3.5 billion after-tax gain from the sale of its coatings division to private-equity firm Carlyle.
"Stronger prices and higher volumes, as well as lower cash fixed costs, drove earnings growth in all but one segment," Chief Executive Markus Kamieth said on the company's earnings call Tuesday.
Q2 earnings before interest, taxes, depreciation and amortization before special items rose 54% from a year earlier to €2.4 billion, the Ludwigshafen, Germany-based company said. Net income jumped to €5.1 billion from €900 million a year earlier, reflecting the coatings disposal gain. Revenue for the first half was not directly comparable with consensus estimates, but the EBITDA beat was the largest in several quarters.
The coatings sale to Carlyle closed June 30 at an enterprise value of €7.7 billion, with BASF receiving about €5.8 billion in pre-tax cash consideration. The company now holds a 40% equity stake in the newly formed Surventis, allowing it to participate in future value creation while sharpening its strategic focus on core chemicals operations.
BASF raised its full-year 2026 EBITDA before special items guidance to a range of €6.9 billion to €7.7 billion, up from the prior forecast of €6.5 billion to €7.3 billion. The company left its free cash flow guidance unchanged at €1.5 billion to €2.3 billion, citing higher working capital tied up in receivables and inventories amid rising raw material prices.
The strongest earnings contributions came from the Materials, Chemicals and Industrial Solutions segments. Agricultural Solutions also performed well, with volume growth across all regions and an EBITDA margin before special items of about 29%. Surface Technologies was the main weak spot, as Battery Materials faced the end of subsidies and Precious Metal Services saw lower earnings.
BASF said it has already achieved a €2 billion annual run rate of cost savings, toward a €2.3 billion target by year-end. The company also announced a €1 billion share buyback program to run from August 2026 through April 2027, part of a broader plan to return at least €4 billion to shareholders by the end of 2028.
Shares of BASF's US-listed stock closed at $13.92, up 1.53%, and were unchanged in after-hours trading. The stock remains about 14% below its 52-week high of $16.25.
The guidance raise signals management expects the earnings momentum to continue through the second half, though geopolitical uncertainty from the Middle East conflict and persistent inflation risks remain headwinds. Investors will watch the Q3 results on Oct. 28 for signs of whether volume growth can sustain amid a mixed macro backdrop.
This article is for informational purposes only and does not constitute investment advice.
