BASF Bets on CoreShift Cost Drive to Fund Record Payout Promise

Europe's largest chemicals group pledges €12B to investors by 2028 while launching CoreShift efficiency program to cut costs 20%, despite macro headwinds and site job protections.

Europe's largest chemicals group is walking a tightrope between aggressive shareholder returns and a radical internal overhaul. BASF has pledged to return at least €12 billion to investors between 2025 and 2028 through a combination of minimum annual dividends of €2.25 per share and share buybacks. Yet to deliver on that promise, the company must simultaneously squeeze costs and navigate a punishing macro environment.

The answer lies in CoreShift, a sweeping efficiency program that targets a 20% reduction in cash fixed costs within the core business by 2029, measured against a 2024 baseline. The core operations — spanning Chemicals, Materials, and Industrial Solutions — generate roughly €40 billion in annual revenue. To steer the transformation, BASF created a dedicated "Core Transformation Office" that reports directly to the CEO. This mirrors an earlier-established Transformationsbüro led by Julia Raquet, which coordinates overhaul projects across the same segments. The two units appear to be complementary, with the newer office driving cost discipline while the older one manages broader strategic change.

The financial case for urgency is clear. In the first quarter of 2026, BASF posted a respectable volume increase, but currency headwinds and pricing pressure erased those gains. Revenue slipped by nearly €500 million to just over €16 billion, while adjusted operating profit before special items fell to roughly €2.4 billion from €2.5 billion a year earlier. Management stuck to its full-year forecast, targeting adjusted EBITDA of up to €7.0 billion. The next major check on progress will come in July 2026, when second-quarter results are released.

Investors, however, have not been spooked. BASF shares ended Friday at €51.58 (a separate data feed put the close at €51.68), down 1% on the day but still up more than 15% since the start of the year. The stock has recovered sharply from its 52-week low of €41.43. That rally has pushed the relative strength index to 89.5 — a level that typically signals severe overbought conditions in the short term. The shares are also trading precisely on their 50-day moving average, a technical inflection point that could determine near-term direction.

A key pillar of the stock's support is the buyback programme. The current tranche, worth €1.5 billion, is set to expire within weeks, and the company plans to repurchase a total of €4 billion of its own shares by 2028, cancelling them to reduce share capital. This, combined with the dividend floor, gives income-focused investors a clear payout picture.

Yet the cost-cutting drive faces a structural constraint at BASF's sprawling Ludwigshafen headquarters. A site agreement prevents compulsory redundancies at the main plant until the end of 2028, limiting the scope for rapid headcount reduction. Instead, the company is relying on process standardisation, harmonised IT systems, and broader deployment of artificial intelligence to wring out savings. The Ludwigshafen site will also be restructured as part of the CoreShift programme.

The balancing act is delicate: fund a €12 billion payout, invest heavily in the green transition, and keep the core business competitive — all while labour protections limit one of the quickest levers for cost reduction. The next few quarters will test whether BASF can deliver on all three fronts without breaking stride.