BASF Stock: Earnings Outlook Boosts Market Position

BASF has forecasted an increase in adjusted operating profit (EBITDA) for the current fiscal year, projecting between €8.0 and €8.4 billion compared to €7.86 billion in the previous year. Though this outlook partially falls below analyst expectations of approximately €8.4 billion, the market responded positively to the announcement. After initial losses of up to 2.7 percent, BASF shares reversed course and moved into positive territory, trading nearly 2 percent higher at €49.63 by midday, placing it among the top performers in Germany's DAX index. The chemical giant anticipates volume growth of about 3 percent across all business segments in 2025, aligning with expected market developments. However, shareholders should prepare for a reduced dividend, as the company plans to distribute only €2.25 per share for 2024, significantly less than the previous year's €3.40, in accordance with its revised dividend policy.

Cost-Cutting Initiatives Yield Results

The company's ongoing cost-reduction programs have achieved permanent annual savings of approximately €1 billion by year-end, exceeding September-end figures by €200 million. BASF appears well-positioned to reach its targeted annual savings of €2.1 billion by the end of 2026. About €100 million of the current savings stem from the cost-cutting program for the Ludwigshafen site announced in February 2024. Management characterized the start of the new fiscal year as "not exciting" but "okay," while acknowledging potential margin volatility, particularly regarding recovery in the upstream business throughout the year. The stock currently trades about 10.5 percent below its 52-week high of €54.93, but significantly above its August low of €40.18, with analysts setting an average price target of €54.22, suggesting further upside potential.