BASF Se

BASF reported Q2 2026 EBITDA before special items of EUR 2.4 billion, up 54% year over year, with earnings growth 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; cash fixed costs declined by around 4% to EUR 7.9 billion; net income improved by EUR 4.2 billion to EUR 5.1 billion, including a EUR 3.5 billion after-tax gain from the Coatings transaction; and free cash flow was minus EUR 1.6 billion. In Q2, operating cash flow was EUR 524 million and free cash flow was minus EUR 189 million, while payments for PP&E and intangibles were EUR 713 million. BASF raised 2026 EBITDA before special items guidance to EUR 6.9 billion to EUR 7.7 billion, kept free cash flow guidance at EUR 1.5 billion to EUR 2.3 billion, and left the CO2 outlook unchanged. Management also said annual cost savings are on track to reach around EUR 2.3 billion by year-end, with a EUR 2 billion run rate already achieved, and said CapEx will likely come in below the full-year EUR 3.4 billion forecast.

Markus Kamieth framed the quarter as proof that BASF is executing its Winning Ways strategy, citing stronger market positions, restructuring progress, and portfolio simplification. He emphasized that the new China Verbund, local-for-local production, and feedstock/trading flexibility gave BASF an advantage during Middle East-related supply disruptions, while also noting solid underlying volume growth across regions. His tone was upbeat but measured: he repeatedly stressed value creation, focus on the core, and a cautious view of the macro backdrop despite better-than-expected operating momentum.

Dirk Elvermann focused on the improved financial performance and the cash implications of higher activity and restructuring. He cited H1 EBITDA before special items of EUR 4.8 billion, cash fixed costs of EUR 7.9 billion down around 4%, net income of EUR 5.1 billion, and free cash flow of minus EUR 1.6 billion; for Q2, he pointed to operating cash flow of EUR 524 million and free cash flow of minus EUR 189 million. He explained that working capital tied up cash through higher receivables and inventories from higher raw material prices, plus around EUR 200 million of transformation spending, but said BASF still expects to achieve full-year free cash flow guidance and likely spend below the EUR 3.4 billion CapEx forecast.

Analysts focused on M&A, Rhine water levels, Middle East pricing, third-quarter earnings, Agricultural Solutions pricing, and the new CoreShift cost program. Management said M&A is becoming more relevant as chemical industry consolidation accelerates, but BASF remains disciplined and focused on value creation; on Rhine levels, Kamieth said BASF is far better prepared than in past low-water events and expects limited disruption. On Q3, management said they expect to at least meet last year’s Q3 earnings and see potential for more depending on macro conditions, while also flagging Ag Solutions as seasonally weak, with Q3 earnings expected to meet or exceed last year despite weather and pricing pressure.