BASF’s CoreShift Cost-Cutting Drive Gains Urgency as Buyback Program Nears Completion and Payout Promises Loom

BASF launches 'CoreShift' to slash fixed costs 20% by 2029, but end of share buyback removes stock tailwind; dividend yield over 4% but uncovered by earnings.

BASF is pressing ahead with a sweeping overhaul of its operations at the same time as a key shareholder-friendly measure runs its course. The German chemical giant has laid out plans to slash fixed costs by up to 20% by 2029 under a new initiative dubbed “CoreShift,” but the end of its current share buyback program in June removes a tailwind that had been supporting the stock.

The CoreShift program targets four core segments — Chemicals, Materials, Industrial Solutions, and Nutrition & Care — which together generate roughly €40 billion in revenue. The company aims to achieve savings through simpler processes, harmonised IT systems, and greater use of artificial intelligence. Chief executive Markus Kamieth described the plan as “one of the biggest optimisation programmes for BASF – a new operating system for the group.” Job cuts are inevitable, though no figures have been disclosed yet; talks with employee representatives have only just begun. Julia Raquet will lead the newly created Core Transformation Office.

The urgency of CoreShift is underlined by the imminent closure of a €1.5 billion share buyback program, which is expected to be completed by the end of June. Since its launch, BASF has repurchased roughly 27.8 million of its own shares, helping to lift earnings per share — first-quarter 2026 EPS came in at €1.06, up from €0.91 a year earlier. That support will soon disappear, leaving the company to rely on operational improvements to sustain its longer-term payout ambitions.

BASF has promised to return at least €12 billion to shareholders between now and 2028, split into roughly €8 billion in dividends and €4 billion in buybacks. For 2025, the planned minimum dividend of €2.25 per share would translate into a yield of over 4% at the current share price of €50.55. Analysts caution, however, that the dividend is not fully covered by current earnings. Chief financial officer Elvermann has indicated that a substantial portion of the proceeds from the planned sale of the Coatings business will be used to strengthen the balance sheet.

To offset the European cost headwinds, BASF is expanding its presence in North America through two new partnerships. On the supply side, the company has teamed up with Encina Development Group to source chemically recycled benzene-based feedstocks for its “Ccycled” product portfolio, which replaces fossil-based raw materials. On the distribution front, Univar Solutions has been appointed exclusive distributor of the plasticiser Hexamoll DINCH in the US and Canada. Both moves are designed to secure market share in North America while Europe remains under pressure from high energy costs and regulatory uncertainty.

Electricity prices in Germany remain a particular concern. A webinar scheduled for 11 June, featuring representatives from Grant Thornton and IHK NRW, is expected to provide concrete details on a subsidised industrial electricity price after the European Commission granted state aid approval. For BASF, clarity on the level of relief and associated investment obligations could significantly improve planning certainty for its flagship Ludwigshafen site, which the group has repeatedly cited as a competitive disadvantage.

The wider industry backdrop remains challenging. Germany’s chemical industry association VCI is warning of a downward spiral driven by rising costs, investment reluctance, and uncertainty. It expects production to fall and industry revenues to decline by 3.5% in 2026. Supply chains and energy prices continue to be strained by the conflict in the Middle East. BASF is responding by cutting capital expenditure by 20% for the 2026–2029 period and targeting EBITDA before special items of between €6.2 billion and €7.0 billion this year.

Portfolio reshaping is also underway. The sale of the Silicates business to PQ is expected to close in the second half of 2026, while an IPO of the agricultural solutions division is planned for 2027.

BASF shares have gained roughly 13% since the start of the year, but remain about 8% below the April high of €55.05. Technically, the stock is in neutral territory with a relative strength index of 42.4 and trades about 3.5% below its 50-day moving average, suggesting a lack of upward momentum. The next major test comes on 30 July, when the group publishes second-quarter results. Investors will be watching closely to see whether management adjusts its full-year guidance and whether CoreShift has already started to leave a measurable mark on the bottom line.