BASF Se

BASF reported Q2 EBITDA before special items of EUR 2.4 billion, up 54% year over year, and said earnings rose in all segments except Surface Technologies. For the first half of 2026, EBITDA before special items was EUR 4.8 billion, up EUR 715 million versus the prior-year period. Net income in the first half improved by EUR 4.2 billion to EUR 5.1 billion, including a EUR 3.5 billion after-tax disposal gain from the Coatings transaction. Cash flow from operating activities in Q2 declined to EUR 524 million, free cash flow was minus EUR 189 million in Q2 and minus EUR 1.6 billion in the first half, and cash fixed cost in the first half declined around 4% to EUR 7.9 billion. BASF raised full-year 2026 EBITDA before special items guidance to EUR 6.9 billion to EUR 7.7 billion and kept free cash flow guidance at EUR 1.5 billion to EUR 2.3 billion; the EBITDA range remains wide by EUR 800 million because of geopolitical uncertainty.

Markus Kamieth framed the quarter as proof that BASF’s Winning Ways strategy is working, citing stronger prices, higher volumes and lower fixed costs across most segments. He emphasized that the company is making progress on restructuring, portfolio actions and the build-out of Agricultural Solutions as an IPO-ready standalone business by mid-2027. His tone was confident but guarded: he pointed to better preparedness at Ludwigshafen and on the Rhine, but repeatedly noted that geopolitics, inflation and demand uncertainty could still weigh on the second half.

Dirk Elvermann focused on the financial quality of the quarter and the cash implications of BASF’s transformation. He highlighted first-half EBITDA before special items of EUR 4.8 billion, cash fixed cost down around 4% to EUR 7.9 billion, net income of EUR 5.1 billion, and net debt down EUR 4.2 billion to EUR 17 billion, with an equity ratio of 44.6%. He also said Q2 operating cash flow was burdened by higher receivables, inventory tied to higher raw material prices, and around EUR 200 million of transformation spending, while CapEx payments were EUR 713 million in Q2 and are likely to come in below the EUR 3.4 billion full-year forecast.

Analysts pressed BASF on M&A priorities, Rhine river supply disruption, Agricultural Solutions pricing and inventory, Middle East-driven petrochemical pricing, and the timing of cash taxes from the Coatings sale. Management said M&A is becoming more attractive in a consolidating chemical industry, but BASF remains focused on value creation and strengthening the core rather than chasing growth for its own sake. On operations, they said Rhine water levels are a concern but materially less threatening than in past low-water periods, Ag Q3 should meet or exceed last year despite weather and pricing pressure, and the Coatings sale tax payment will largely occur next year. They also said Q3 overall should at least meet last year, with potential upside depending on macro conditions.