BASF increases EBITDA before special items in 2024 due to strong performance of its core businesses
Decline of 13 percent in standalone businesses
In a challenging market environment, BASF Group’s EBITDA before special items (income from operations before depreciation, amortization and special items) increased in the full year 2024 to €7.9 billion. “We performed well thanks to the strong performance of our core businesses, which increased their EBITDA before special items by 18 percent compared with 2023,” said Dr. Markus Kamieth, Chairman of the Board of Executive Directors of BASF SE, when presenting the financial figures for 2024 together with Chief Financial Officer Dr. Dirk Elvermann. Overall, there was a 2 percent rise in EBITDA before special items of the BASF Group. In the core businesses, EBITDA before special items grew considerably, mainly because of higher volumes. This was partly offset by earnings declines in the standalone businesses. In the Agricultural Solutions segment, EBITDA before special items declined considerably, mainly as a result of developments in the glufosinate-ammonium business. The steep drop in precious metal prices and lower sales volumes in the Catalysts division were the main reasons for the slight earnings decline in Surface Technologies. The EBITDA margin before special items of BASF Group reached 12.0 percent, compared with 11.1 percent in the previous year. Excluding the revenues from precious and base metals, the EBITDA margin before special items of BASF Group rose from 12.6 percent in 2023 to 13.1 percent in 2024.
Financial figures for 2024
In the 2024 business year, sales stood at €65.3 billion, compared with €68.9 billion in the previous year. Considerable volume increases in the core businesses, coupled with slight volume growth in Agricultural Solutions, more than compensated for the decrease in sales volumes in Surface Technologies, which was due to the weak momentum in the automotive industry. The overall decline in sales, however, was mainly due to competition-driven price decreases in all segments. A particularly pronounced decline was seen in precious metal prices in the Surface Technologies segment. Currency effects further dampened sales performance.
EBITDA amounted to €6.7 billion, compared with €7.2 billion in the prior-year period. EBIT came in at €2.0 billion, down on the prior-year figure by €206 million. Depreciation and amortization stood at €4.6 billion (previous year: €4.9 billion). This included impairments in the amount of €702 million, which mainly related to the battery materials business in the Surface Technologies segment. In the previous year, EBIT included impairments totaling around €1.1 billion.
Net income came in at €1.3 billion, compared with €225 million in 2023. Net income from shareholdings increased by €798 million to €598 million. This was mainly due to the improved earnings of non-integral companies accounted for using the equity method. This was particularly due to a disposal gain of €390 million related to the sale of Wintershall Dea assets to Harbour Energy.
BASF Group’s cash flows in 2024
In the 2024 business year, cash flows from operating activities were €6.9 billion, down by €1.2 billion on the prior-year figure. The decline was mainly caused by €1.4 billion less cash released from net working capital.
Cash flows from investing activities totaled minus €5.1 billion in the 2024 business year, after minus €5.0 billion in 2023. Payments for intangible assets and property, plant and equipment increased by €803 million to €6.2 billion and were mainly incurred in connection with the construction of the new Verbund site in South China. “The investment is progressing on time and in budget,” said Elvermann: “Overall, we remained €300 million below our original forecast of €6.5 billion.”
Cash flows from financing activities amounted to minus €1.5 billion, compared with minus €2.9 billion in 2023. The repayment and addition of financial and similar liabilities was reduced and their net change resulted in an overall improvement in cash flows from financing activities.
Free cash flow, which remains after deducting payments made for property, plant and equipment and intangible assets from cash flows from operating activities, amounted to €748 million, compared with €2.7 billion in 2023.
Proposed dividend of €2.25 per share
As part of its new strategy, BASF continues to offer its shareholders an attractive dividend yield. In the medium term, the company is committed to keeping the overall distribution to shareholders at least at prior-year levels through a combination of dividends and share buybacks. BASF has set itself the target of distributing at least €12 billion to shareholders from 2025 to 2028. Specifically, the company strives to pay out a dividend of at least €2.25 per share annually or distribute around €2 billion per year to BASF shareholders. The proposed dividend for the 2024 business year is consequently €2.25 per share.
Status of cost savings programs
“We are well on track to achieve the targeted €2.1 billion annual cost savings by the end of 2026,” said Elvermann, commenting on the progress in implementing the cost savings programs. “By the end of 2024, we already achieved a total annual cost reduction run rate of around €1 billion, of which around €100 million is related to the Ludwigshafen Cost Improvement Program announced in February 2024.” BASF incurred cumulative one-time costs of approximately €900 million related to the implementation of the cost savings programs by year-end 2024. This amount is about half of the total one-time costs BASF anticipates by the end of 2026. By then, the company aims to have concluded all programs and will benefit from the full amount of savings on an annual basis.
BASF Group’s outlook for 2025
In 2025, the BASF Group’s EBITDA before special items is expected to increase to between €8.0 billion and €8.4 billion (2024: €7.9 billion). All segments, with the exception of Chemicals, are likely to contribute to the increase in earnings. In particular, earnings in the Petrochemicals division will be impacted by rising fixed costs in connection with the startup of the new Verbund site in China and scheduled turnarounds.
The company forecasts the BASF Group’s free cash flow to be between €0.4 billion and €0.8 billion (2024: €0.7 billion). This is based on expected cash flows from operating activities of between €5.6 billion and €6.0 billion, minus expected payments made for property, plant and equipment and intangible assets in the amount of €5.2 billion.
CO2 emissions are expected to be between 16.7 million metric tons and 17.7 million metric tons in 2025 (2024: 17.0 million metric tons). The company anticipates additional emissions compared with the previous year from higher forecast production volumes based on rising demand. BASF will counteract this increase with targeted measures to reduce emissions, such as increasing energy efficiency and optimizing processes, as well as continuing the shift to electricity from renewable energies.
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