BASF's Two-Speed Quarter: Record Profits Meet a Shrinking Rhine
Published on 08/08/2026 at 02:51 | Redaktion boerse-global.de
The Ludwigshafen-based chemicals giant is enjoying a rare moment of tailwinds from two directions at once. Chinese chemical imports into the European Union collapsed by nearly a third in April 2026 compared with the prior year, according to Eurostat data analyzed by Handelsblatt, as the war over Iran pushed up shipping costs through the Strait of Hormuz and made European producers comparatively cheaper. That dynamic turbocharged BASF's second-quarter adjusted earnings, which climbed 54 percent. Rivals felt the same breeze: Evonik's profit rose 25 percent, while Lanxess boosted revenue by 7 percent.
The market has taken notice. BASF shares closed Friday at €51.48, up 1.18 percent on the day, with an 8.04 percent gain over the past month and a 15.87 percent advance since the start of the year. The stock sits 6.49 percent below its 52-week high of €55.05, set in April — a remarkable recovery from last autumn's troughs.
A Record Low at Kaub
Yet the Asian tailwind has a domestic flip side. The Rhine water level at Kaub fell to 24 centimeters on Friday — the lowest reading ever recorded, edging past the previous 25-centimeter mark set in 2018. For the Ludwigshafen site, that translates into rising transport costs. BASF has deployed its special vessel "Stolt Ludwigshafen," which can still carry up to 800 tons at a gauge of 30 centimeters. The local chamber of industry and commerce warns that Rhine shipping below 40 centimeters is barely economically viable. Lanxess CEO Zachert reported that only one smaller operation at his company has faced a brief shutdown so far — a sign that the strain remains contained across the sector but is clearly building.
For investors, the risk calculus is shifting: the China-driven windfall is widely seen as temporary, while Rhine logistics problems are structurally recurring and could weigh on costs if the dry spell persists.
The €1 Billion Buyback Engine
Against this backdrop, BASF has opened a new chapter in its share repurchase program. The company is buying back its own shares worth up to €1.0 billion through the end of April 2027, after which the shares will be cancelled and the share capital correspondingly reduced. The launch coincides with a raised annual forecast and a historically strong quarterly profit — a double signal that has underpinned the stock. The program forms part of a €4 billion total volume announced in September 2024, running through the end of 2028. Between November 2025 and June 2026, BASF had already acquired shares worth around €1.5 billion. In total, 31,600,261 shares are slated for cancellation, representing roughly 3.5 percent of share capital — a meaningful tightening of the share count that could lift earnings per share.
A Coatings Windfall Reshapes the Balance Sheet
The capital return rests on an exceptionally strong second quarter. Revenue rose 16 percent to €17.2 billion, up from €14.8 billion a year earlier. EBITDA before special items reached €2.4 billion, comfortably beating both the Vara analyst consensus of €2.1 billion and the prior-year figure of €1.6 billion. Net profit surged to €4.2 billion from just €108 million in the year-ago quarter, driven by a €3.5 billion after-tax gain from the sale of the Coatings business.
That disposal — completed at the end of June with financial investor Carlyle at an enterprise value of €7.7 billion — sits at the heart of the portfolio overhaul. The European Commission approved the acquisition in June under EU merger control rules, but required Carlyle to divest Nouryon's global polysulfide business to protect competition in the aerospace sealants market.
The proceeds are visibly flowing into balance-sheet repair. BASF has announced it will repay bonds and loans with a nominal volume of €1.6 billion early in the third quarter. Combined with the buyback, the capital allocation strategy is clear: deleveraging on one side, shareholder returns on the other.
Flaring Up in Ludwigshafen
Meanwhile, the company has flagged a technical measure that will soon be visible at the Ludwigshafen site. Starting August 10, flaring activity with flames, soot formation, and noise will occur in the northern part of the plant. The cause is the restart of a steam cracker following repairs — the unit splits naphtha at around 850 degrees Celsius into ethylene and propylene, key building blocks for plastics production. The flaring is expected to last into early the following week, with authorities informed.
The restart is routine post-maintenance, yet it underscores how tightly production capacity in Ludwigshafen is linked to operating results. With the cracker back at full capacity, BASF can better exploit the favorable demand situation created by declining Chinese imports. But the Rhine remains a bottleneck for raw material and product flows — an uncertainty that neither profit leaps nor a friendly share price can fully resolve.
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Analysts Split on the Outlook
The analyst community has responded with divergent views. UBS's Christian Bell raised his price target from €52 to €55 on July 31 and lifted earnings estimates, while keeping a Neutral rating. Berenberg's Sebastian Bray had already moved his target from €47 to €50 on July 29, calling it a "good full quarterly report," but maintained a Hold. JPMorgan struck a notably more cautious tone, holding its Underweight rating with a €40 price target — by far the lowest among the assessments cited. The gap between €40 and €55 illustrates just how differently the market reads the lasting impact of portfolio streamlining and operational recovery.
The second-quarter results also prompted BASF to lift its full-year outlook in late July. The company now expects EBITDA before special items of between €6.9 billion and €7.7 billion, up from a previous range of €6.2 billion to €7.0 billion — a signal that, despite a challenging European chemicals environment, the group is gaining operational momentum. Whether that momentum can survive both a drying Rhine and the eventual fading of the China effect remains the open question for the months ahead.
