BASF, the world's largest chemical company, faced a challenging start to the year as it reported a slight decline in sales during its annual general meeting on May 2, 2025. The company announced a 0.9 percent decrease in revenue, bringing it down to 17.4 billion euros. This decline was accompanied by a 3.2 percent drop in EBITDA, which fell to 2.6 billion euros. Additionally, BASF's net profit decreased significantly from 1.4 billion euros to 808 million euros, largely due to special effects related to the sale of shares in wind farm projects.
Dirk Elvermann, BASF's Chief Financial Officer, emphasized that the company managed to hold its ground in a "increasingly challenging environment." He noted that the EBITDA before special items remained nearly at the same level as the previous year's quarter and aligned with average analyst estimates. Elvermann stated, "We produce locally for local markets. Particularly in these challenging times, this makes us more resilient than others and is a competitive advantage."
Despite the downturn, BASF's Executive Board confirmed its forecast for the full year, expecting an EBITDA before special items to range between 8.0 billion and 8.4 billion euros. However, the company acknowledged that the production in the chemical industry and its customer sectors was significantly impacted in the first quarter due to anticipated tariff increases from the United States.
The ongoing uncertainty surrounding trade policies, especially under the administration of President Donald Trump, has raised concerns about the future development of BASF's business. Elvermann remarked, "The further development depends largely on trade policy decisions by the USA and its trading partners." He cautioned that a reliable quantification of the impacts on the global economy is currently not possible.
In the agricultural sector, basic chemicals, and ingredients for food and care, sales volumes also experienced a decline. However, a weaker US dollar provided some relief to the company. On the stock market, BASF shares saw a decrease of 1.75 percent, falling to 43.85 euros following the announcement of the quarterly figures.
Elvermann's statements highlighted the company's strategy to produce locally, which he believes will mitigate the direct effects of tariffs. He pointed out that while the direct impacts might be manageable, indirect effects stemming from market participant uncertainty and changing customer demands in sectors like automotive and consumer goods could pose challenges.
As the company navigates these turbulent waters, the upcoming months will be crucial for BASF. The firm is currently undergoing a significant restructuring plan initiated by new CEO Markus Kamieth, who took the helm in September 2024. Under this plan, certain business areas are expected to be sold, and the agricultural business may go public. This marks the first dividend cut for shareholders since 2010, reflecting the company's need to adapt to current market conditions.
The annual general meeting was held virtually, and it was the first for CEO Kamieth, who is tasked with steering BASF through its ongoing crisis. Market analysts have noted that while the quarterly results were somewhat expected, the uncertainties surrounding US trade policies will be a focal point for investors moving forward. Chetan Udeshi from JPMorgan remarked that the retained outlook did not present any surprises, but the increasing uncertainties surrounding indirect tariff effects on business operations remain a concern.
Investor sentiment was mixed after the quarterly report. While some analysts found the results to be in line with expectations, concerns lingered regarding the potential impact of a slowing global economy on BASF's recovery. The company’s stock performance has been volatile, reflecting broader market trends and investor reactions to the ongoing trade disputes.
To protect against further escalation in the trade dispute, it has been suggested that investors maintain a stop-loss order at 31.00 euros. This strategy aims to safeguard investments amid ongoing uncertainties.
In conclusion, BASF's latest financial results reflect both the challenges and resilience of the company in a complex global market. As it navigates tariff uncertainties and a restructuring phase, the coming months will be critical for its recovery and long-term strategy.
