BASF’s Agribusiness Break-Up Nears as Currency Headwinds Dent First-Quarter Earnings

BASF proposes spin-off of Agricultural Solutions unit, reports Q1 revenue dip due to FX headwinds, and reaffirms €12 billion capital return target by 2028.

The German chemicals giant is juggling two big narratives on Thursday: a landmark structural shake-up that could reshape its future, and a first-quarter earnings report that underscores the persistent drag from foreign exchange markets.

Shareholders gathering in Mannheim for BASF’s annual general meeting are being asked to approve the spin-off of the company’s Agricultural Solutions division. If greenlit, the unit will become a legally independent subsidiary as early as May, paving the way for a Frankfurt stock market listing targeted for 2027. Livio Tedeschi, who already runs the agribusiness, is slated to take the helm of the new entity.

The move reflects a growing recognition that agrochemicals and specialty chemicals operate on fundamentally different cycles and face distinct regulatory landscapes. Market observers view the separation as a logical step that could allow both sides of the business to respond more nimbly to their respective market conditions.

Currency Woes Mask Underlying Volume Strength

While the strategic agenda dominated headlines, the first-quarter numbers painted a more mixed picture of the day-to-day business. Group revenue came in at €16.02 billion, roughly 3% below the prior-year period, as a weak US dollar and a softening renminbi wiped more than €100 million off the top line.

Earnings before interest, taxes, depreciation and amortisation, adjusted for special items, slipped to €2.4 billion from €2.5 billion a year earlier. Chief Financial Officer Dirk Elvermann noted that without the currency drag, BASF would have matched last year’s operating profit level exactly.

The bright spot was volume growth, particularly from China, which helped lift sales volumes across most divisions. That momentum, combined with a lower tax burden, pushed net profit up to €927 million.

Free cash flow improved markedly from the first quarter of 2025 but remained negative — a seasonal pattern typical of the first three months given the cyclical nature of the agricultural business.

Dividend, Buybacks, and the €12 Billion Promise

Management is proposing an unchanged dividend of €2.25 per share for the 2025 financial year. If approved, the payout will be made on May 6, with shares trading ex-dividend on May 4.

Beyond the immediate payout, BASF is pressing ahead with a multi-year capital return programme. The company has already spent nearly €789 million on share buybacks through mid-March. The longer-term ambition, laid out by the board, is to return at least €12 billion to shareholders through a combination of dividends and share repurchases by 2028.

Cautious Outlook Amid Geopolitical Risks

Despite the solid start to the year, the group is keeping its full-year guidance unchanged. BASF still expects adjusted EBITDA in a range of €6.2 billion to €7.0 billion and free cash flow of between €1.5 billion and €2.3 billion.

Elvermann flagged rising energy costs and geopolitical tensions — particularly in the Middle East — as key risks for the remainder of 2026. The average of the guided EBITDA range, roughly €6.6 billion, sits below some market expectations.

Analyst sentiment remains split. Goldman Sachs retains a “Buy” rating with a €63 price target, praising the company’s resilience. UBS, by contrast, stays at “Neutral” with a €52 target, pointing to currency exposure and geopolitical headwinds as limiting factors.

Cost Cuts Provide a Buffer

With external conditions providing little tailwind, BASF is leaning heavily on internal measures. The company’s strict cost-cutting programme is on track to deliver annual savings of €2.3 billion by the end of 2026, providing a cushion against the uncertain macroeconomic backdrop.

Shares in BASF were trading at €54.08 on Thursday, little changed on the session but up roughly 21% since the start of the year. The stock remains within striking distance of its 52-week high of €54.70, reflecting investor confidence that the company’s strategic overhaul and operational discipline can offset near-term headwinds.