Ladies and gentlemen, good morning and a warm welcome to BASF's Conference Center here at Ludwigshafen for our annual press conference, and a warm welcome to all those participants that follow us online today. There's a live stream on our website and also on LinkedIn. You're going to talk today to Markus Kamieth, who is the Chairman of the Board of Executive Directors, and Dirk Elvermann, our CFO, and we will start right away with the presentations and maybe a very short piece of housekeeping.
The language is German, and for those of you who would like to speak or listen in English, there are headsets, and if you want to ask your question in English, you will also get an English answer. Now, during the first five minutes, you may take photographs, maybe without flash, please, and after the first five minutes, we ask you to stop taking photographs. That's it with the introductory remarks and the floor is with Markus.
Thank you, Nina. Welcome to Ludwigshafen, but before I start with my presentation, I'd like to do one thing. I'm allowed to do so. Congratulations to Frau Geibel. We are very glad that you came here on your birthday. It shows your great interest in BASF, and I thank all of you for your interest in BASF, and I'm glad that we can meet in person again, and it's my first annual press conference here in Ludwigshafen, so looking forward to it. Today we're talking about the year 2024, the year when the BASF team launched the Winning Ways strategy, the year in which we put ourselves on the right track for future success, and I can tell you now that I am very positive about what I have seen so far.
This is because the BASF team has delivered in 2024 as well, even though our market environment was challenging again last year. BASF performed well thanks to the strong performance of our core businesses, where we leveraged our good market positions. Here, we were able to grow EBITDA before special items by 18% compared with 2023. Across the BASF Group, EBITDA before special items increased by 2%. We reduced our capital expenditures to a lower level than expected, and we continue to improve our net working capital management. This led to a free cash flow of around EUR 750 million. We thus exceeded our own forecast range of EUR 1.1 to EUR 1.6 billion. And we are also making good progress in terms of our portfolio management. You've reported on the sale of our decorative paints business to Sherwin-Williams.
For us, this marks an important step in fully unlocking the true value of our standalone businesses. As you can see, we are taking decisive action and are swiftly implementing our plans. I am proud of how the team responsible worked with determination and speed to bring about this sale. Let's begin with an overview of BASF's performance in the fourth quarter of 2024. Sales of EUR 15.9 billion matched the level of the prior year quarter. BASF Group's volumes, excluding precious and base metals, increased by 3% thanks to the agricultural solutions segment in particular. The chemicals and industrial solutions segments also increased volumes in the last quarter of the year. Prices, excluding precious and base metals, were slightly positive. Overall, prices steadily recovered throughout 2024. In the fourth quarter of 2024, EBITDA before special items improved by 19% and amounted to EUR 1.6 billion.
The considerable increase in earnings was supported by the strong finish by the agricultural solutions team. Earnings were also higher in the nutrition and care and chemicals segments, as well as in other. I'd like to provide a snapshot of how the markets and the segments' volumes and specific margins developed in the fourth quarter. The market environment for our segments remained largely unchanged, while for two segments, chemicals and nutrition and care, the development was positive. In the final quarter of the year, the agricultural solutions segment in particular experienced very positive sales volume momentum. The segment achieved strong volume growth in all crop protection indications, as well as in seeds and traits. The chemicals segment achieved solid volume growth in the fourth quarter. The surface technology segment recorded lower volumes, particularly in mobile emission catalysts and precious metal services.
Here, it was noticeable that global light vehicle production was stagnant in the fourth quarter of 2024 compared with the prior year quarter, according to the current data, and that the proportion of ICE vehicles declined. We were able to maintain our specific margins in the fourth quarter and improve them in three of six segments. We improved margins in the materials segment, especially in the MDI value chain, as well as in the nutrition and care and surface technology segments. Let's move on to the development of EBITDA before special items in the full year 2024. As I mentioned at the beginning, earnings in the core businesses increased by 18%. In the nutrition and care industrial solutions, chemicals and materials segments, EBITDA before special items grew, mainly due to higher volumes. Overall, volume growth in the core businesses was 5% in 2024.
In Europe, the core businesses achieved remarkable volume growth of 6%. This is a clear testament to the strong competitive position of our core businesses in their respective markets. The strong performance of the core businesses more than offset lower contributions from the standalone businesses in the agricultural solutions and surface technology segments. Earnings in other were also lower. Overall, EBITDA before special items of the BASF Group rose slightly. Let me provide some additional color on the challenges our surface technologies and agricultural solutions segments are facing. Globally, 89.5 million light vehicles were produced in 2024, representing a decrease of around 1% compared with the prior year. In this environment, full year earnings in the surface technology segment declined on account of the catalyst division, and particularly due to the lower contributions from precious metal trading activities. In contrast, the coatings division was able to improve earnings slightly.
In 2024, the market for crop protection and seed products was characterized by high channel inventories at the distributors, low customer demand, and continued destocking in an overall environment of falling prices. Compared with the record year in 2023, earnings in BASF's agricultural solutions segment declined, mainly on account of the difficult market conditions in the glufosinate ammonium business. Overall, our agricultural solutions segment performed well in a challenging market and competitive environment. We finished the year with a strong fourth quarter and a full year EBITDA margin before special items of 20%. As previously announced, we are actively conducting portfolio management with respect to our standalone businesses, and we are delivering. Just as we announced at the presentation of our strategy, we want to fully unlock the value of our standalone businesses.
The agreement to sell our decorative paints business to Sherwin-Williams marks a first portfolio step in line with our Winning Ways strategy. The multiple of this transaction is at the higher end of previous multiples in the paints and coatings industry and significantly above the trading multiple of BASF. We thus achieved a clear premium for this business. In the second quarter of 2025, we will approach the market to explore strategic options for our remaining coatings activities, which include automotive OEM coatings, refinish coatings, and surface treatment. In agricultural solutions, we are also making good progress. We are currently focusing on executing the legal separation and the implementation of a dedicated ERP system by 2027. In parallel, with the support of financial advisors, our team is beginning to prepare for the IPO readiness, which is also targeted for 2027. So far from my side.
With that, I hand over to you, Dirk.
[Foreign language] Thank you very much, Markus, and a warm welcome to all of you. Now let's have a look at the financial details of the BASF Group for the full year 2024. EBITDA before special items rose by around EUR 200 million thanks to the considerably increased earnings of our core businesses. Markus, you already mentioned that. The adjusted EBITDA margin before special items increased from 12.6%- 3.1%. In our core businesses, the margin improved by two percentage points compared with 2023 and accounted to 13% in 2024. EBIT before special items reached EUR 3.9 billion, an increase of 3% compared with the prior year. Special items in EBIT amounted to EUR -1.9 billion, and I will provide further details in a moment on that. Net income came in at EUR 1.3 billion compared with EUR 225 million in the previous year.
Net income from shareholdings increased by EUR 798 - 598 million, and 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 EUR 390 million related to the sale of Wintershall Dea assets to Harbour Energy. Cash flow from operating activities decreased by EUR 1.2 - 6.9 billion in 2024 and were in the forecasted range. We again managed to achieve cash inflows from changes in net working capital in 2024. With a cash inflow of EUR 360 million, changes in net working capital were, however, considerably lower than the strong cash inflow of EUR 1.8 billion in 2023. Payments made for property, plant and equipment and intangible assets rose by EUR 803 million - EUR 6.2 billion, particularly on account of the construction of the Verbund site in South China that we're building.
The investment is progressing on time and in budget. Overall, we remained EUR 300 million below our original forecast of EUR 6.5 billion in the CapEx. Free cash flow amounted to €748 million, exceeding the forecasted range of EUR 0.1-2.6 billion. Now on the special items. As I just mentioned, special items in EBIT amounted to minus EUR 1.9 billion and were mainly caused by restructuring costs and impairments. Restructuring costs were incurred in all segments. They included restructuring in glufosinate ammonium in the agricultural solutions segment and one-time costs for our ongoing efficiency programs. Impairments were focused on battery materials in the surface technology segment. Other charges were mainly related to the class settlement of the litigation proceedings related to so-called aqueous film forming foam products in the United States. This settlement was reached in May 2024, and we agreed to it without the acknowledgment of a legal obligation.
Now let's turn to the BASF Group's CO2 emissions. Even though our production increased, Scope 1 and Scope 2 emissions remained almost stable this year compared with 2023 and amounted to 17 million metric tons. This figure is within the forecast range that we published in February 2024. This was possible because we once again focused strongly on measures to increase energy and process efficiency, as well as our efforts to increase the share of electricity from renewable sources. In 2024, the proportion of electricity from renewable sources rose to around 26% from around 20% in 2023. Specific Scope 3.1 emissions amounted to 1.58 kg of CO2 per kg of raw materials purchased compared with 1.67 in the previous year. This reduction was mainly achieved by a change in the raw materials portfolio. Furthermore, we sourced first raw materials with lower PCFs from selected suppliers.
Now let's talk about the cash flow in the fourth quarter. In the fourth quarter 2024, cash flows from operating activities decreased by EUR 806 million - EUR 3.5 billion, mainly due to lower cash inflows from changes in net working capital. In the fourth quarter of 2024, changes in net working capital led to a cash inflow of EUR 2.4 billion compared with a strong cash inflow of EUR 3.2 billion in the prior year quarter. Given that net working capital cannot be reduced indefinitely, the fourth quarter 2024 figure highlights our strong commitment to growth with high capital efficiency. Payments made for property plant and equipment and intangible assets rose by EUR 257 million - EUR 2.3 billion, particularly on account of the construction of the Verbund site in South China. Free cash flow amounted to EUR 1.2 billion compared with EUR 2.2 billion in the fourth quarter of 2023.
Thus, ladies and gentlemen, let's talk about the balance sheet at the end of December 2024 compared with year-end 2023. Total assets rose by EUR 3 billion and amounted to EUR 80.4 billion. The increase in non-current assets was mainly driven by additions to property, plant and equipment due to our investments in the Verbund site in South China. Current assets declined slightly compared with the end of 2023. At the end of 2024, equity stood at around EUR 37 billion. At 45.9%, BASF's equity ratio remained very healthy. Net debt increased by EUR 2.2 billion to EUR 18.8 billion at the end of 2024, mainly on account of higher long-term debt. BASF's single-A credit ratings reflect our strong balance sheet and prudent financial policy, I believe. I would now like to provide some details about our capital expenditure policy between 2025 and 2028.
As previously announced, we aim to grow with high capital efficiency by reducing capital expenditures, increasing the utilization of existing assets, and optimizing our net working capital. After the startup of the Zhanjiang Verbund site, which will begin in the second half of 2025, we will bring down CapEx below the level of depreciation. For the BASF Group, we plan capital expenditures of EUR 16.2 billion between 2025 and 2028. During this four-year period, around EUR 3 billion relates to the new Verbund site in China, of which EUR 2 billion will be spent already in 2025. Overall, we plan total capital expenditures in 2025 of EUR 5 billion compared with EUR 6 billion in 2024. This reduction by EUR 1 billion is primarily associated with lower CapEx for the Zhanjiang site following the peak of investment in 2024.
And let me add, which is very important, that we have sufficient own capacities in our key markets to support volume growth as planned in the foreseeable future without major new investments. Ladies and gentlemen, today I would also like to give a short update on the implementation of BASF's cost savings program. We are well on track to achieve the targeted EUR 2.1 billion annual cost savings by the end of 2026. By the end of 2024, we already achieved a total annual cost reduction run rate of around EUR 1 billion, of which around EUR 100 million is related to the Ludwigshafen cost improvement program announced in February 2024. We incurred cumulative one-time costs of approximately EUR 900 million related to the implementation of the cost savings program by year-end 2024. This amount is about half of the total one-time costs we anticipate by the end of 2026.
By then, we aim to have concluded all programs and will benefit from the full amount of savings on an annual basis. By the end of 2025, this year, we expect to have achieved a total cost reduction run rate of around EUR 1.5 billion and cumulative one-time costs of around EUR 1.3 billion. And with that, back to you, Markus.
Thank you, Dirk. Thank you, Dirk. Ladies and gentlemen, the board of BASF SE is fully committed to attractive shareholder distributions via dividends and share buybacks. As announced in September 2024 at the Capital Market Day, we aim to distribute at least EUR 12 billion to shareholders from 2025 - 2028. The aggregate dividend payment of at least EUR 8 billion in the four-year period will be complemented by share buybacks, which we target from 2027 onward at the latest and which are expected to amount to at least EUR 4 billion. BASF's strong balance sheet and strong cash flows will support dividend payments and share buybacks. In line with our previous announcement, we will propose a dividend of EUR 2.25 per share for the business year 2024 to the annual shareholders meeting. Based on the year-end share price, this offers an attractive dividend yield of more than 5%.
In total, we will pay out around EUR 2 billion to our shareholders. Now I will move on to the outlook for the BASF Group. Our 2025 forecast assumes that a moderate rise in goods demand will support the expected GDP and industrial production growth. Challenges such as high geopolitical and trade policy uncertainty will weigh on the confidence of companies and consumers. For the global chemical industry, we anticipate slightly higher growth compared to the expectations for GDP and industrial production. Based on these assumptions, BASF Group's EBITDA before special items is expected to rise to between EUR 8 and EUR 8.4 billion in 2025. All segments are forecast to contribute to the increase in earnings, with the exception of chemicals.
Here in chemicals, EBITDA before special items is expected to decline slightly compared with the prior year figure, mainly as a result of higher fixed costs associated with the commissioning of the new Verbund site in China and scheduled maintenance shutdowns. We forecast the BASF Group's free cash flow to be between EUR 0.4 and EUR 0.8 billion in 2025. This is based on expected cash flows from operating activities of between EUR 5.6 and EUR 6 billion, minus expected payments made for property, plant and equipment and intangible assets in the amount of EUR 5.2 billion. The continued high investment-related cash outflow is mainly due to investments in the new Verbund site in China. Compared with 2024, however, the outflow is expected to be around EUR 1 billion lower, as Dirk already mentioned.
You will have noted that we have added two columns on our outlook slide to give you more transparency on our earnings power and on the impact of the startup, the new site in Zhanjiang in 2025. As previously indicated, the burden on EBITDA before special items in 2025 is expected to be around EUR 400 million. On free cash flow, we expect the burden to be around EUR 800 million. This includes the earnings impact as well as the impact on net working capital. In other words, our outlook ranges would be higher by these amounts if you disregarded the effect of the Zhanjiang startup. CO2 emissions are expected to range between 16.7 and 17.7 million metric tons in 2025. This anticipated increase compared with the previous year is likely to result from higher production volumes based on rising demand.
We will continue to implement targeted emission reduction measures and further transition to electricity from renewable sources. Overall, we are approaching 2025 with confidence. As I just outlined, we anticipate limited tailwinds from the market. Most improvements we aim to achieve will need to be driven by our own efforts, and we are aware of this. I'd like to highlight three topics that we will prioritize in 2025. First, we will advance our portfolio management for the standalone businesses to create value for BASF and our shareholders. We also want to further strengthen our core businesses. Our teams will roll up their sleeves to address our lower-performing businesses. We strive for strong market positions. This is our ambition. Second, we will continue to advance the construction of our new Verbund site in China and will begin with the startup in the second half of the year.
The goal remains to start up most of the plants by the end of the year. We have every confidence that our teams in Zhanjiang will successfully master this task, which is unique in terms of size and complexity. And third, we will drive forward our restructuring measures to bring down costs in line with current market conditions. The Ludwigshafen site remains a clear focus of these measures. Our aim is that our efficiency measures at least compensate for inflation. As I conclude, I'd like to remind you once again of the core of our Winning Ways strategy. We combine active portfolio steering, operational discipline on capital and costs with our new winning culture to create more value for our shareholders. And now, Dirk and I will be happy to take your questions. And back to you, Nina.
Thank you. We'll start with Q&A and let us raise hand. Mr. Liesmann has already seen you. Yes, please start.
Yeah, thank you. Hello. I'm interested. You ended with the Ludwigshafen site, the effects of the two cost-saving programs on the job positions in Ludwigshafen. So what do you expect in terms of numbers of jobs all in all?
Well, thank you very much, Mr. Liesmann, for the question. Well, we decided for the restructuring programs over the last two years to be driven with high intensity and also to make the cost targets very transparently. But we also decided not to talk about target personnel savings figures because, firstly, particularly in today's phase that we're on or the phase that we're in now, we have to define the measures still, which then lead to the savings and costs.
Then every personnel figure that we communicated at this very point in time would be very rough. A figure that we just discussed about might mean that it raised a lot of attention, too much attention on jobs and positions. Let me also say that, of course, EUR 1 billion in addition can only be achieved also here in Ludwigshafen if you also reduce personnel costs. Katja Scharpwinkel already said it too, that a major part of these EUR 1 billion also is due to job reductions. That's a significant reduction of the headcount. How big it is, we cannot say with finality. It will be the result rather of what we work around here over the next month.
Okay, thank you very much. I go down the list in which I saw the raised hands. Tom Brown, please, you're next.
Good morning. Thank you. Just two quick questions. First off, I was curious about your opinion on the commission's new Clean Industrial Deal and the Omnibus. Do you think that will help to safeguard European industry? And if not, then what could? And just a short second question. Just impairments have been a big brake on overall profits the last two years. And I just wondered how you saw that panning out for 2025 and if there's any kind of measures that you see taking any more write-downs to come? Thanks.
Yeah, thank you, Tom. Maybe Dirk, you take the second question on the balance sheet. I tried to answer your question on the announcement that was made, I think, yesterday or the day before in Brussels. I think it was a very significant announcement from my perspective. Because, as I said already, since I took over as CEO of BASF, I felt for the last 10 months a significant change in narrative when it comes to what policymakers are prioritizing, what politicians, both in Berlin, Brussels, other areas are talking about, and that competitiveness of industry is becoming more front and center of what they are thinking about.
I think the announcement yesterday clearly shows that the new EU Commission is very committed to trying to find ways to increase competitiveness and to, let's say, also change the regulatory environment and the policy framework to making sure that Europe stays competitive. I think it's more than needed. We all know this, especially since earlier this year, the change in US administration made clear that Europe needs to stand on its own feet. However, I also have to say what I have seen so far is the very famous step in the right direction. However, the famous step in the right direction typically doesn't get you where you need to be. I think I'm positive because the narrative is changing. I think the politicians are setting now on a very high level the right priorities.
But I'm also cautious because in the past, we have seen a lot of announcements and the corresponding action has not always lived up to the expectations. So I'm in a little bit of a wait-and-see mode, if you want. But I stay supportive and I stay overall reasonably optimistic that we might see a change and a stronger focus on restoring competitiveness of industry in Europe. And I think this is what we all should be fighting for.
Yeah, Tom, on impairments. CFO doesn't like impairments. The good thing is the entire team doesn't like impairments. So there were good reasons to do it this year. You were all aware of the ongoing weakness of e-mobility, particularly in Europe. So we were not the only ones who had to impair, and the impairments were very much focused on e-mobility. Talk about the last couple of years. There was always something. There was oil and gas, again, for good reasons, but more importantly now looking into the future. And we said it also in the speech, want to run the company with high capital efficiency and very prudent about our capital base. So we want to protect that, and we will protect it with our strong balance sheet.
Going forward, the clear goal is to minimize. We're never completely excluded. Minimize impairments so that also our return on capital, which is still at a level of 5%, where it should be at 10%, is increasing over time as we forecast it in the strategy.
Okay. Then Herr Kikkuth from CLB. Mr. Kikkuth, please. Mr. Kikkuth.
T wo short questions. Topic: high energy costs in Germany and in Europe. Will the ratio basic chemicals, specialty chemicals change at BASF production-wise? Second question. One of the big industrial trends today apparently is mobile autonomous robotics in the foreseeable future. Any considerations in how far the use of such technologies could save costs in BASF's service?
Thank you, Mr. Kikkuth, for your question. Let me try to answer your question about energy. I try to be brief. Of course, you can spend a whole day talking about this. Energy costs in Europe are high. In some cases, you cannot influence this. In other cases, this is an arbitrary thing. Political basic conditions mean that energy costs are higher than they have to be.
In Germany and in Europe, I think we should tackle this issue full of courage and willingness to take decisions given what will be decided in Brussels and hopefully in Berlin very soon. On the other hand, there are reasons for high energy costs in Europe that we cannot change. For example, we don't have a lot of gas reserves in Western Europe. So the gas price in Europe for the time being will remain higher compared to the U.S. And these changes, of course, also change competitiveness of different regions among themselves because this is one of the very essential products for the chemical industry. And regarding value chains in Europe, specific products in the foreseeable future cannot be produced at a competitive level in Europe. Talking about ammonia, because it's easy to explain this, ammonia has a very high gas share.
In Europe, there will be not such a lot of production, and we will rather import ammonia from regions in the world where gas is less expensive. The advantage of having production near non-expensive energy sources will decrease though steadily. The turnaround point when it is better to produce products in Europe differs depending on the value chain. It will not change dramatically looking at the whole range of chemical products. I think some products in five to 10 years will have a higher import share compared to today. This definitely is not the end of chemical industry in Europe, as some people say, but we will need changes. Mobile autonomous robotics. Let me start, and maybe you can add to it. Because one topic is extremely important to us, and that's AI.
As every company, of course, we are confronted with this enormous wave of innovation regarding AI, and mobile autonomous robotics is maybe a little bit interesting in this environment. As a company, of course, we are always interested in using automation in production and many other areas and drive it where it makes sense. Sometimes there is a physical chair where you can use a robot. Sometimes it's only bits and bytes, so this is a topic we're interested in, but we don't expect an enormous game changer here in the years to come. AI is a little different. Yes, it's different when it comes to AI, so let me base my answer on the economic rationale. Chemical industry, of course, always needs to improve the profit situation, and we are in a good situation because we have favorable upscaling effects that we can use.
This goes for AI in our company. At a very early point in time, we started rolling out AI within the company. We do so in different areas. In research with lab assistants, in production with digital twins and Plant GPT. We also do it in sales and marketing. We always do so with the clear goal of really having tangible efficiencies derived from this. We don't use the so-called playground approach that we test umpteen things. No. We focus on areas where we can tap efficiencies. I think we're still at an early stage, no mature level yet, but I think we are on the right track to really see efficiencies in the years to come.
Miss Weiss-Reuters.
Thank you. Plant closures in Ludwigshafen. Do you have more clarity on this? Last year, we heard that 16% of the 900 production units are under scrutiny. What is the current situation? How many will there be? And then you said in your key markets, you have enough capacities in order to safeguard volume growth without new major investments. Is it true that the U.S. tariffs will not shift anything in the direction of the U.S.? And well, after three years of a deficit in Ludwigshafen, when do you think you will be back in the black range?
Okay. First, plant closures. In the strategy, we presented this analysis, especially when it comes to Ludwigshafen, to show which production plants in Ludwigshafen are competitive. This doesn't tell you anything about the profitability. We just try to find out which are sustainably competitive, for example, compared to imports from the Middle East, the U.S., China, to Europe.
And the conclusion was that the majority of production plants we have in Ludwigshafen are competitive and will remain so in the long run. There are some with a question mark. There can always be some shifts with a risk. And there are some where we know in the long run this will not be the most favorable way of producing such products. That's the analysis. Now, analysis meets the real world. And looking ahead, we try to see how in form of capacity adjustments and adjustment, can we contribute to the competitiveness of Ludwigshafen? That's one thing. And the other thing is, what about the development of the market environment in Germany and Europe?
We try to understand which measures will be required in the years to come, given the ambition to save another EUR 1 billion in Ludwigshafen. Plant closures are something that we plan, but we will only communicate them once this has been decided and we'll start implementation. There's no direct accumulation from the 16 plants to a closure program, but these are individual decisions where the market and environment in Europe has to be considered. Plants will be closed. Don't expect a huge wave in the future, but step by step, there will be a capacity adjustment process. On capacities, yes. Dirk already told you over the last years, we invested in all regions. By the way, we are often talking about our site in China, but we also invested in Europe. For example, C2 value-adding chain in Antwerp.
This is where we invested strongly, also in Ludwigshafen. We built new capacities here too, and also in the United States, for example, with expanding our Geismar site for MDI, so that's over $1 billion, for example. So we created good preconditions to achieve this growth. The short-term changes that might occur due to tariffs or other trade stream changes for us in chemistry do not lead to a lot of rethinking when it comes to asset footprints, so distributing our production capacities. Because we think in longer investment cycles and a short term of tariffs usually doesn't mean that this basically changed. With some customers, it looks different, but all in all, I'd say we are on track and we will not be way-sided by any uncertainties in our strategy, and then maybe on the question, when will we be positive again in Germany?
Miss Weiss, we have improved by EUR one billion. The EBIT of BASF SE is with minus EUR one billion. That doesn't make us happy, but it's one billion better. So what is necessary? What's necessary is that we continue the cost savings programs that we announced and that we confirm that we really go through with them. We cannot fall behind them, but we really have to materialize and realize these savings. But that will give us the opportunity and also the right to also better use the capacity utilization of our assets because the Ludwigshafen site is not at the point of utilization where it should be.
So capacity utilization has to be improved. And then also we believe that in Europe, we have the right to be the strongest chemical company that with cost leadership, we can enter customer markets and that we also can gain consolidation effects.
As the strongest chemical company, we want to be strong at the European market. First, save costs, then have our competitiveness and take market shares. Maybe a last thought on that. I touched upon that in the presentation. 6% volume growth in Europe. I mean, that's something. Just look around. When you look around Europe, that's almost never to be seen. We do have a right to win in the market. And this is what we rely on. We want to use this strength. And at the same time, we have this ambition to be competitive, and we have to adapt to an environment that changed massively.
The chemical market in Germany since COVID approximately shrank by 15%. And that is something everybody has to deal with in the chemical industry. And we want to deal with it better than many others. So it needs responsibility. We showed our strength on the market already this year.
Mr. Müller-Arnold from Spiegel.
Yeah, thank you very much. I have two questions. First is a little more technical. The planned IPO of agricultural. You can go a different length. So is it only a minority that goes to the stock market, or will it be more? And the second is more political. While we're talking, we have the first talks between CDU and SPD in Berlin. So if you had some wishes of what the next government might do to strengthen the Ludwigshafen site, what would that be? Would you do the first question?
Yes, of course. Mr. Müller-Arnold, first of all, with the preparation of the IPOs for agricultural solutions, we first and foremost, we really want to show the full value of the EBITDA, of the business of agricultural solutions.
The separation is already a preparation of the IPO. And then we take one part once the market is ready and is ready for us. So part of the shares will then be brought on the market. We still don't know how big this share will be. We will make that depending on the market situation and the interest. I expect the interest to be rather high. And at this point, we do not want to think any further because first of all, we will position the business correctly and show the correct value first. Well, yes. And then your second question, what is our expectations when it comes to the negotiations between the coalition partners in Berlin? Well, many of these subjects are important for industry, you know. So we're talking about reducing red tape.
We are talking about reasonable framework conditions for investment and also energy costs, of course. And some basic things are very important for me too, which we have to focus on again in Germany. For example, education and infrastructure. But let me say it differently, what our expectations really are. So we had an election, which was not so easy for the country. We saw that both on the left and the right wings, voters voted more. So these wings won. And so those that now form the government will have to show that they really can do it, that they can solve the problems of the country and that in the sense of the country and in the interest of the country, they want to take one step forward. And part of that is also to be fast in forming a new government.
One advantage here is that we have a two-party coalition, which is possible. It's two parties that know each other very well. The people in these parties know each other very well, and I hope that there will be fast in forming a government, which will then concentrate on the very important things in the country and also be decisive about it. Not small and small, not fragmented, so my fear is that very often politicians have a large range of problems and then they turn the screws slightly everywhere, but such a country and such an economic system is like a company. If you do a little everywhere, not much will change, so I would expect them to concentrate on some important points and really change those significantly so that things change.
And so if we have these signals, a fast forming of a government, decisive action, and then also the signals that certain subjects will be changed significantly and basically, that will bring back confidence and trust. Because everybody is looking at Germany, asking themselves, how will they go on? Is there a positive momentum? Will there be confidence and optimism again? Can I bet on Germany again, so to speak? And we need a leadership here which has this feeling, which can do that, which moves the right things to bring us forward. A fragmented approach, I don't know. This will not bring about the targets that we are hoping for.
Miss Dostert from the SZ, please.
I have questions on the job reduction, headcount reduction. Well, these figures are already there. Miss Scharpwinkel, a few months ago, already gave us a few figures. Are they not valid any longer? The next question, you said that you have not reached the point of full capacity utilization. I think it is difficult for the entire site, but maybe you can tell us how much it is for Ludwigshafen and where should it be? Then ammonia, you are right. Everybody gives that example. But could you give us a second or third example too? What is also difficult for Germany? And maybe also, what can we do in Germany? What are the major investments that you plan at BASF for Germany as a market? And have you already invited Mr. Merz, or are you still waiting and seeing what he does?
And another question. Excluding the pandemic, you are the first Chairman of the Board of Executive Directors that doesn't want to have a virtual ASM, even if it might show your shareholders in an analog fashion why you want to reduce here.
Right. Headcount reduction. Well, you mentioned figures that Miss Scharpwinkel quoted. If she mentioned figures, they are the true figures. Katja will not announce figures which are not valid. I don't know exactly which figures you're referring to. The restructuring projects within and around Ludwigshafen consist of several components. We started with restructuring of production assets around the ammonia value chain, including the TDI plant. Then we had a project regarding Europe, and in addition to this, we now have a project for Ludwigshafen. This is why there are different figures, different calculations, which maybe all in all are, of course, not wrong.
But I do not want to put a headcount reduction figure in the shop window. Of course, I understand your curiosity. But from today's point of view, I don't know the figure because I don't know which measures will we really implement in the next two to three years in order to reach the EUR 2.1 million. There are a number of measures possible, but a lot of decisions still have to be made. So for me, it's an unusual step to pretend I knew this headcount reduction figure, announce it, and then every quarter, it will be calculated how much have we achieved already. So I don't want to really put such a headcount reduction figure in the fall because at the end of the day, it's about the competitiveness of our site. This is what we focus on.
Regarding our workforce, we want to communicate adjustment measures regarding headcount where required. I want to be able to tell our workforce as soon as possible in year planned. This will be the effect and maybe X of Y jobs will be made redundant. A discussion regarding a headcount reduction figure for the whole site, I think, does not help me at all. I think it would trigger a lot of non-positive reactions, if I may. Also regarding the time, we have five people requesting the floor. Miss Dostert, if it's okay with her that we answer your question on capacity utilization, ammonia afterwards, and the others later. I can be very brief. I have not invited Mr. Merz. I only met him once in my life, but you gave me an idea. Maybe it's not bad to invite him to Ludwigshafen.
Maybe that's something I could do, but so far, no. Ammonia. There are other examples. Ammonia is easy to understand, but in the chemical industry, there are other examples. For example, cracker products and polyolefins. I do not think Europe will see growth again regarding polyolefin capacities. We will see restructuring in terms of polyolefins in Europe because they can be reduced at lower prices in Europe or in the US. Investments for Ludwigshafen. Maybe this is something where we could have a separate discussion because Nina knows this. I think we do not talk enough about the investments we make in Europe. We invest a lot also in new plants in Europe, and maybe we can discuss this separately. I'd like to do so. The annual shareholders meeting. We, as BASF, whenever it was possible, that is, after COVID, we had a face-to-face ASM, unlike other companies.
We've done so in recent years, and as a Board of Executive Directors, we decided there is this opportunity to have a virtual ASM, which is less expensive and less work compared to a face-to-face ASM. We looked at the experience of other companies, and this experience was really positive, and this is not a basic decision. We just said we'd like to try it to understand, does it work for us? Do we really save the costs we expect to save? Does it work for the shareholders? Does it mean less quality for them? How does it feel, and afterwards, we will decide what works better for us and for the participants. Is it virtual or face-to-face, so we really take a neutral position. It was not a fundamental basic decision, but the idea to just try it.
Mr. Gross, please.
Thank you. Last year, when it comes to savings, you had to add. Now there are two cost-saving programs. Can you now say that was it? Is BASF positioned well enough regarding costs? So do we see a kind of relief here? And regarding job redundancies, how significant will it be? Will it be without dismissals for operational reasons? I think the site agreement will expire at the end of the year. So maybe you can also tell us something about the negotiations regarding a new site agreement. And investment, of course, we can discuss this at some other time. But you mentioned EUR 5 billion for this year and how much of this will go to China. Can you give us a total for Ludwigshafen?
Should I try?
Yeah, give it a go.
Okay, cost-saving programs. EUR 2.1 billion as true savings programs is what we announced. And so far, no more cost-savings programs are in the pipeline where we say, okay, this is when the next program will start. This is not our way of thinking. What we want to do is we address a very urgent requirement for saving costs. And then we would like to enter a mode where productivity improvement as a continuous development is part and parcel of our business.
We don't want to need further cost-saving programs. We want to set a new benchmark focusing on efficiency and say productivity improvement is a continuous thing. For example, that inflation can be offset by a better efficiency in production. So that's crucial when it comes to our idea about efficiency. Site agreement? No, no, no. I would like to add to this. Dirk explained it in a great way, but one more idea.
At the end of the day, it's not up to us to decide, that's it. No, competitors will. We need to be competitive, and the biggest and most efficient chemical site has to be competitive, and the competitors decide when it's okay, not us, and that's the idea behind it. When we now communicate a figure, this would imply that will be it. We don't know as of now. We cannot tell you. So we always have to be the first ones in the race. Site agreement, we communicated this that we will negotiate with the heads of the works council. Miss Scharpwinkel and her team will do so. I just heard that initial negotiations have taken place. Constructive, that's always the case at BASF.
Looking forward, what is important for the company, what is important for the Ludwigshafen site, my impression here is works council and management are in full agreement here. I expect these discussions to lead to an agreement. Regarding the next site agreement, it has to match the strategy and the idea to be competitive. Well, I will wait for the results of the negotiations. I'm not involved myself, but so far, I don't think anything goes wrong there. When it comes to dismissals for operational reasons, of course, based on the current site agreement, to make sure if at all possible to avoid dismissals for operational reasons. Everybody will tell you this. So far, we don't think that we have to act in a different way, but this has always been the spirit on site, and we want to abide by this for the future.
Mr. Reitz, asking you not to ask too many questions because we don't have so many times left.
Well, some of my questions were already answered, but let me just go back to the challenges to make the site competitive. So let me come back to that because what you told us about it yet triggers another question. Is it even more important than we imagine? It's one-tenth of the cost saving until the end of the year.
That's what you already achieved. You told the colleague that we are EUR 1 billion better in Germany, but it's not enough. So how do we have to imagine that to work out? So what about the other nine-tenths of the cost savings that you want to achieve until the end of 2026? And what about this challenge? How big is it? It's figures that we can see. We have the headcount figures and all that. I would like to understand it better.
Okay, let me start maybe. So with the cost savings program for Ludwigshafen specifically, we only started in the end of 2024. So when you start such a program, first of all, there are costs in order to achieve the savings. And then there is the ramp-up of these savings until 2026. And we're full on track, fully on track here. So we are at the point that we had planned for at the end of 2024. Yes, and we did have earlier restructuring programs, of which we have already achieved more, so more impact, and it contributes. And you say it's a big challenge? Yes, and it is. So EUR 1 billion in cost savings at the Ludwigshafen site on the basis of the programs started in 2022 and 2023.
I once said internally that the billion is not just lying out there at the perimeters of the site, and we just have to collect it. No, it's not only that we save costs where it is easy. It is a challenge. We have to turn around every single stone to find more potential, so we have workshops here at BASF. We have discussions. We work out strategies of how we can save costs, variable costs, for example, in procurement, but also structural costs when it comes to organization, but also asset-related costs. How can we save? All this is discussed, and I think this is to be praised. People are very motivated. They know what this is all about, and as good as possible, I mean, nobody thinks it's a great job to save costs, and it's no fun, really.
But we do have a clear view looking forward, and that motivates people to, well, to contribute. And it's a positive momentum, but everybody knows that it is painful. So yes, you say it's a challenge, and yes, it is a challenge. I do agree fully. The size that we're looking for when it comes to headcount reduction, well, with the information that we communicated, just use it. You won't be wrong here, but I can't endorse a figure now and signing it because it will probably be wrong in six months' time. That's the point. But if you know basic arithmetics, then you can calculate it.
Miss Eschbacher, please.
Yes, maybe on the savings program of EUR 1 billion. To stay on track, how much do you want to achieve this year? How much would you want to save here? And on savings too, you could also save in the investments in Green Deal. I mean, the EU alleviates the Green Deal. The United States goes into a totally different direction. What do you make of that?
Well, let me start with the second point. Well, I wouldn't agree fully with what you said, that we should save our investment in green transformation. I wouldn't describe it like that. But what we said in our strategy is that, of course, our transformation efforts when it comes to green transformation have to be reinterpreted. So we had a very target-oriented and ambition-oriented transformation. Now we want a market-based and value-based transformation. So what stands behind that? We can only transform as quickly without having significant capital outflow. We can only transform as quickly as our market and customers transform. So we want to be a little faster than our customers.
That's true. But we do not want to invest in unchangeable decisions that then might be wrong. And this is, I think, the idea that many have today, both on the political side, but also on the entrepreneurial side. And this is how people understand transformation. So five, six years ago, we started with enthusiasm, and we now realize that many of these investments will pay out on the long run. So what we try is to reduce the capital invested here and thus make this transformation less risky and more feasible. And for example, how do we do that? Or what is our plan here? We do not rely so much on building new plants, which rely fully on a green technology, but we take our existing assets, as for example here at the Ludwigshafen site, and use green raw materials to achieve the green transformation.
Green raw material, of course, is more expensive. I have to pay more for it, but I can modulate. How much of it do I really use? If I once make the decision to buy an olefin machine fully green, then I have to utilize it fully green. And this is a risk that we want to shift into the future because if not, it will be too much of a financial stress. And this brings us to the line of modulating the risk and adapting to the speed of green transformation of our environment. And how fast do we proceed? Well, very quickly. The worldwide programs, including Ludwigshafen, here we aspire that we want to drive it forward. At the end of 2025, we want to achieve EUR 1.5 billion.
Of the EUR 1.5 billion more that we want to achieve this year and have to achieve, most of it, or a big part of Ludwigshafen, is already included.
We have two questions still left, and I ask you to please be very brief, Miss Höchler from Wirtschaftswoche.
Yes, I have two fast questions, brief questions. First, the U.S. president is, well, trying to increase tariffs. What about your view on the United States? How do you prepare for this risk? And then Finland, the battery plant in Harjavalta, I don't know how to pronounce it. What is the state of the situation? Is there still hope that this is going to happen?
Let me start with batteries, and you can do tariffs. Battery materials, Harjavalta, the plant has been mothballed, you know? So the plant exists. It has a license to operate, but we don't need it at the moment, so we have reduced costs to make sure the plant is physically there, but there is no operation, and we reduce headcount there. That's the situation now, and I already talked about the difficult situation of the battery market in Europe, and this is going to last. The opportunity for the battery market to see a positive development in the years to come does exist.
That cell production will be increased. There is this opportunity. We don't know when it will come. We just know that everybody is kind of waiting, so when it will get started, we don't know, and then maybe we can start up the plant in Harjavalta, but for the time being, it has been mothballed. Tariffs.
Miss Höchler, of course, we are dealing with this question as many others, and there is uncertainty regarding the timeline and the scope. Of course, we do thousands of calculations, but I can give you a clear figure today. This is something I cannot do. Where are we? A region with a high share of local production. Most of it, and this goes for all the regions, Europe, North America, Asia, South America. A lot of products are manufactured in this respective region for the region, so we are not affected by tariffs. Of course, to a minor extent, we are affected by tariffs. We are talking about maybe a low triple-digit million EUR amount. The question is, will it only be tariffs? Will there be retaliation? Then the opportunity of so-called mitigation.
Our ODs are very active when it comes to thinking about opportunities to mitigate possible effects. But it remains a risk regarding this year, and we cannot really qualify it and quantify it. And we think our customer industries could be affected by tariffs. And these are effects we don't know today either. Okay, there is a potential. It doesn't make us really nervous, but it keeps us going, I must say. So we need to think about it. Something else, because many people are thinking about it, as Dirk outlined, we don't really know what will the implementation look like. But one thing is important to me. If it becomes difficult for the chemical industry, BASF, compared to other competitors, is in a better position. We will not be hit that hard because our strategy has always been to manufacture in the market for the market.
Depending on how you look at it, we are the second or the biggest chemical company in the United States. We are well positioned locally. If the chemical industry is hit, we are hit the least. This, of course, is something crucial for us.
Miss Martin, Bloomberg.
Thank you. One question, you said that the other coatings activities will be looked at. What are the options you have in mind? Joint ventures, minority sales?
Right now, we are very open. We said that in Q2, we would approach the market. So initial talks with banks will take place. Normally, they support us here. We intend to look into the coatings business the way it is positioned today to understand, is it possible together with partners or investors to increase the value here?
But we want to remain open to understand what kind of interest do we see. And currently, you know, you have to keep an open mind. So we, first of all, want to try to understand what are possible options here. And we don't want to now announce a timeline or anything else because we've always said for BASF and for the shareholders, we need a value-increasing option. And today, we don't know how we can achieve this. This is not an evasive answer. We want to remain open because an open mind, I think, is also a value element now. Okay, great. Thank you very much to all of you and to you. And before we close, two pieces of information for the TV and radio colleagues. If you registered for statements, please approach our colleague, Miss Busch-Hülte-Ding, waiting for you at the door.
And we will bring you to the rooms prepared for this. And snack lunch is available outside. We look forward to meeting you out there for talks. And our virtual shareholders meeting will take place on May 2nd this year, and we will announce our Q1 figures. So thank you very much, and see you next time. Thank you.