BASF SE has announced a significant cut to its dividend, reducing it to at least €2.25 ($2.51) per share, down from €3.40 last year. This decision comes as Europe’s largest chemicals manufacturer prepares for an investor update amid rising energy costs and slowing demand in China.
Strategic Focus on Core Businesses
The German company is aiming to enhance returns within its primary sectors, which include chemicals, industrial solutions, and nutrition. In contrast, BASF is exploring “active portfolio options” for its remaining divisions, which encompass agriculture and battery materials. Notably, the company is preparing to sell its decorative paint business in Brazil as part of this strategy.
Market Reaction
Following the announcement, BASF’s shares dipped by as much as 2.1%, contributing to an approximate 8.5% decline in the company’s stock this year.
Reset Under New Leadership
These strategic shifts mark a reset under the leadership of new Chief Executive Officer Markus Kamieth. Germany’s energy-intensive industries are grappling with persistent high energy prices, even after a decrease from the record levels experienced post-Russia’s invasion of Ukraine. Compounding the issue, a downturn in global demand—especially from China—has significantly affected profit growth across various sectors.
Future Financial Plans
BASF has set a target for a share buyback program, estimated at around €4 billion, starting in 2027. This initiative is expected to lead to total shareholder payouts of at least €12 billion between 2024 and 2028. Additionally, the company has intensified cost-saving measures at its primary site in Ludwigshafen.
Potential Listing for Agricultural Chemicals Division
Recent reports suggest that BASF is considering preparing its agricultural chemicals division for a potential public listing in the coming years. This segment, which produces crop protection products such as herbicides and fungicides, generated approximately €10 billion in sales last year.
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