Berliner Boersenzeitung - Germany's BASF to focus on 'core units' in major overhaul

BASF is the world's largest chemicals group and a crucial supplier for the automobile, agriculture and construction sectors.

Like other industrial groups in Germany, it has been hit hard by higher energy costs in the wake of Russia's war in Ukraine and weaker demand in key markets such as China.

As part of what it called "a new direction", BASF said it planned to cut spending and was looking at different "options" for non-core segments, including a potential listing of its agricultural products business.

In the coming years, BASF "will focus on strengthening and profitably growing its core businesses", which it defined as the chemicals, materials, industrial solutions and nutrition segments.

The other units -- including battery materials, coatings and agricultural solutions -- were considered "standalone businesses that serve specific industries".

"We will continue to invest in our standalone businesses but will also pursue active portfolio options where this adds value for BASF and its shareholders," CEO Markus Kamieth said in a statement at the start of an investors day in Ludwigshafen.

For its agricultural solutions unit, which includes herbicides and seeds, BASF is considering "listing a minority share" in the mid-term, the statement said.

The group is also preparing the sale of its decorative paints business in Brazil.

BASF has been ramping up its presence its China, and is building a 10-billion-euro ($11-billion) chemical plant in the southern province of Guangdong.

- Ludwigshafen in focus -

BASF reiterated that it was targeting annual savings of around 2.1 billion euros by the end of 2026, including by bringing down costs at its historic Ludwigshafen site.

BASF did not give an update on potential job losses at the site, which is the largest of its kind globally and employs around 39,000 people.

But it said that "selected plants and production lines" at Ludwigshafen lacked competitiveness and that measures to address this "are currently being assessed".

"The Ludwigshafen site will be leaner but stronger. It will have a better competitive position in the European market," BASF board member Katja Scharpwinkel said in the statement.

BASF also announced it would lower dividend payments.

It now aims to pay a dividend of at least 2.25 euros per share in the coming years, compared to 3.40 euros per share in 2023.

Overall, the group aims to distribute at least 12 billion euros to shareholders from 2025 to 2028 through a combination of dividend payouts and share-buybacks from 2027 onwards.

BASF also unveiled "new financial targets" over the medium term, saying it expected earnings before special items (EBITDA) of 10-12 billion euros in 2028.

Shares in BASF were trading more than 2.6 percent lower by 0900 GMT.

(T.Renner--BBZ)