Ladies and gentlemen, welcome to our virtual conference for analysts and investors. It's a pleasure to have you join us online today. We are streaming this event live from our corporate headquarters in Ludwigshafen. A replay will later be available. Please allow me two organizational remarks before we begin. Today's presentation contains forward-looking statements that may not prove to be accurate. We do not assume any obligation to update these forward-looking statements above and beyond the legal requirements. We will be using a chat tool today. Analysts and investors are requested to insert their questions in this chat tool below the video stream. You can fill in your questions already now during the presentation and of course, during the Q&A. I will read out these questions to the Q&A participants. Moving on to the full year 2022 reporting and today's investor update.
Martin Brudermüller, Chairman of the Board of Executive Directors, and Hans-Ulrich Engel, Chief Financial Officer, will start by providing you with an update and the details regarding our business development in Q4 and the full year. In the second part of today's presentation, Martin Brudermüller will then explain the measures that BASF is taking to strengthen its competitiveness in Europe and particularly in Ludwigshafen. Let's now move on to the presentation of Martin Brudermüller.
Good morning, ladies and gentlemen. Hans-Ulrich Engel and I would like to welcome you to our virtual conference for analysts and investors. Exactly one year ago, Russia invaded Ukraine. Since then, war has been raging in the middle of Europe. We condemn Russia's attack. For the Ukrainian people, it is a catastrophe. The past year has taught us all a harsh lesson. Peace and economic stability must never be taken for granted. The consequences for the global economy have been tremendous. 2022 was marked by great uncertainties, rising energy prices, inflation, and concerns about the widespread economic distortions. On January 17, BASF released preliminary figures for the full year 2022. Today, Hans and I will first provide you with further details regarding our business development in Q4 and the full year 2022.
Subsequently, I will present the decisive actions we are taking to strengthen our competitiveness in Europe and particularly in Germany. Let's start with the challenging macroeconomic environment. Over the course of 2022, the global macroeconomic environment has deteriorated significantly. There are currently no signals of substantial improvement in the short term. Russia's war against Ukraine, high inflation, and the sharp increase in energy prices led to a slowdown in consumer demand, particularly in Europe. To combat inflation, central banks raised interest rates considerably, which further dampened consumer spending. Demand in our consumer industries softened in the course of 2022, with two exceptions. According to the current data, global automotive production reached 82 million units in 2022 and thus increased by 6% compared with the very low level of previous year. Supply shortages, particularly for the semiconductors, have gradually eased.
For 2023, we expect a slight increase to around 84 million units. Global agricultural production also continued to grow moderately in the course of 2022. Overall production growth was lower than in 2021, partially due to the normalization of growth rates after higher than average growth in 2021. Production growth was impacted by longer spells of drought in several regions, as well as production disruptions in Ukraine as a result of the war. Let's now look at chemical production by region. Full year growth is shown on the middle bar. Based on currently available data, global chemical production grew by only 2.2% in 2022. While the markets in China and North America grew, chemical production declined massively in Europe and also fell in Asia, excluding China.
Chemical production growth in China slowed slightly in 2022 compared with a strong baseline in 2021. This was mainly due to lower demand as a result of COVID-related lockdowns. In North America, chemical production growth increased compared with the previous year. In 2021, growth had been negatively impacted by the freeze in the Q1 and the hurricanes in summer and autumn. Chemical production in Europe declined substantially. Lower demand and higher energy prices led to shutdowns of selected production capacities, especially in the H2 of 2022. This was particularly apparent in Germany, where chemical production declined by around 12% in 2022. Lower demand and higher energy prices were also the main reasons for the decline in chemical production in Asia, excluding China.
As the following slides will mainly focus on BASF's business performance in Q4 2022, I will also briefly comment on chemical production in the last quarter of the year. In Q4 2022, global chemical production increased by only 1%. A considerable increase, which was surprising in the overall weak environment, was only seen in China. This was particularly driven by a base effect, as chemical production in China had been negatively impacted by electricity cuts in the fourth quarter of 2021. All other regions recorded a decline in chemical production, which was most pronounced in Europe. Moving on to BASF. In Q4 2022, our sales decreased by 2% to EUR 19.3 billion, mainly on account of lower volumes. Sales volumes declined by 15%. With the exception of Agricultural Solutions, all segments recorded lower volumes.
Sales prices increased by 9%. All segments were able to increase prices except for Chemicals, where prices declined on account of weak demand. Portfolio effects of -1% were mainly caused by the sale of the kaolin minerals business, which had been part of the Performance Chemicals division until the divestiture. Currency effects of +4.5% had a positive impact on sales, were primarily related to the US dollar. Let's now move on to our earnings development by segment in Q4 2022, compared with the strong prior year quarter. The overall decline in EBIT before special items resulted largely from considerably lower contributions from the Chemicals and Materials segments. In Q4 2022, these two segments contributed only EUR 65 million to BASF's group EBIT before special items, compared with EUR 933 million in the prior year quarter.
This was mainly due to lower volumes and margins on the back of low demand and high energy and raw material prices. In total, earnings in BASF's fourth quarter downstream segments improved by EUR 229 million and amounted to EUR 393 million. While Agricultural Solutions and Surface Technology were able to increase earnings, EBIT before special items in Nutrition and Care and Industrial Solutions declined compared with the prior year quarter. In the full year 2022, EBIT before special items decreased by EUR 890 million to EUR 6.9 billion, compared with a very strong performance in 2021.
Considerably higher earnings in BASF's downstream segments partially compensated for significantly lower earnings in BASF's upstream segments. Margins in the chemicals and the materials segments were extraordinarily high in 2021 and in the H1 of 2022, but declined significantly in the H2 of the year. Now I would like to hand over to Hans for further details on our financial performance.
Thank you, Martin. Good morning, ladies and gentlemen. In the following, I will provide you with further details of BASF Group's financial figures in the fourth quarter of 2022 compared with the prior year quarter. I will start with EBITDA before special items, which decreased by 36% and amounted to EUR 1.4 billion. EBITDA amounted to around EUR 1.4 billion too, a decrease of EUR 862 million. At EUR 373 million, EBIT before special items declined by 70%. Special items in EBIT amounted to -EUR 254 million compared with +EUR 1 million in the fourth quarter of 2021. The special items were mainly related to non-cash effective impairments on plants in Ludwigshafen. EBIT decreased by 90% to EUR 119 million in Q4 2022.
Income from non-integral companies accounted for using the equity method amounted to -EUR 4.7 billion compared with +EUR 112 million in Q4 2021. The strong decline was driven by non-cash effective impairments on the shareholdings in Wintershall Dea AG in the amount of about EUR 4.7 billion in Q4 2022. These impairments resulted in particular from the deconsolidation of the Russian exploration and production activities of Wintershall Dea due to the loss of actual influence and economic expropriation. The remaining value of the Russian participations of Wintershall Dea declined significantly and further write-downs were made on the European gas transportation business. You have probably noticed that the impairments I just mentioned are lower than the amount we had in our pre-release on January 17. This deviation resulted from the further analysis of the accounting implications of the deconsolidation.
Net income amounted to -EUR 4.8 billion compared with EUR 898 million in Q4 2021. The decline was driven by the impairment charges. Let's now look at BASF's operational earnings development from a regional perspective. Our competitiveness in Europe, and particularly in Germany, has declined. In 2015, Germany, Europe excluding Germany, and the other regions each contributed around one-third to BASF Group's EBIT before special items. In the strong business year 2021, Europe, including Germany, contributed only one-third, while the other regions contributed two-thirds. After the strongest-ever H1, earnings softened in the further course of 2022, and we saw a particular deterioration in our German operations.
In the H2 of 2022, the contribution of Germany was even negative, and we ended the year with an overall EBIT before special items contribution of minus EUR 126 million. This shows how important a balanced regional footprint is for our risk management. We will therefore continue to strengthen our business growth outside of Europe while adapting our business in our home region to reflect the changed framework conditions. One explanation for the earnings decline in Europe are the elevated energy costs in the region. In 2022, our operational earnings were burdened by additional energy costs of EUR 3.2 billion globally. Europe accounted for around 84% or EUR 2.7 billion of this increase, which mostly impacted our Verbund site in Ludwigshafen.
Higher natural gas costs accounted for 69% or EUR 2.2 billion of the overall increase in energy costs. Again, the main impact was on Europe and on Ludwigshafen. In 2022, we reduced our natural gas consumption by around one-third in Europe. This was primarily due to lower production volumes. Nevertheless, as mentioned before, we incurred EUR 2 billion in additional costs for natural gas in Europe alone compared with 2021. I would now like to provide some more details on the current situation for Wintershall Dea in Russia. In practical terms, Wintershall Dea no longer has any means of exerting influence on its holdings. De facto, Wintershall Dea has been expropriated in Russia. Let me give you some examples. The Russian joint ventures are no longer allowed to pay dividends to the parent company in Germany.
There are retroactive legal price caps for gas and gas condensate, which lead to losses in the Russian joint venture companies. The cash holdings of the Russian joint ventures have been transferred to Gazprom without the consent of Wintershall Dea. In addition, the voting rights of Wintershall Dea's representatives on the boards of the joint ventures were restricted by decree of the Russian government. Wintershall Dea, therefore, intends to fully exit Russia in an orderly manner, as BASF has done in its businesses, with the exception of those that support food production. What are the consequences for BASF? We had to revalue our stake in Wintershall Dea. Non-cash effective impairments amounted to EUR 6.5 billion in 2022, reducing net income from shareholdings accordingly.
Let me also mention that Wintershall Dea had a strong operating performance outside of Russia and paid around EUR 1 billion in dividends to BASF from its non-Russian businesses. This made a strong contribution to BASF Group's cash flow in 2022. We stand by our decision to exit the oil and gas business and are sticking to our strategic goal of divesting our share in Wintershall Dea. Let's now look at the details of our cash flow development in Q4 2022. Compared with the prior year quarter, cash flows from operating activities improved by EUR 1.1 billion to EUR 4.5 billion. The increase was mainly driven by changes in net working capital, in particular as a result of a decline in accounts receivable and significantly lower inventories.
Cash flows from investing activities amounted to minus EUR 1.9 billion, compared with minus EUR 692 million in Q4 2021. In the prior year quarter, cash flows from investing activities benefited from a cash inflow of EUR 1.1 billion from the sale of BASF's 49% share in Solenis. Payments made for property, plant, and equipment and intangible assets rose by 26% to EUR 1.9 billion. Free cash flow thus increased by EUR 749 million to EUR 2.6 billion in the fourth quarter. Let's turn to BASF's financial and non-financial targets. As explained before, the market environment was challenging. Therefore, we were only partly able to achieve our targets. In 2022, BASF sales volumes declined by 7%, while global chemical production grew by 2.2%.
Excluding precious metals, BASF Group sales volume declined by 3.6%. The lower production rates, particularly at our sites in Europe, were the main reason for the decline in volumes. EBITDA before special items declined by around 5% to EUR 10.8 billion, mainly on account of lower contributions from the chemicals and materials segments. Our 2022 ROCE of 10% was above the cost of capital rate of 9%. As we have a separate slide on the dividend in just a moment, I will move straight on to our CO2 emissions, which declined to 18.4 million metric tons in 2022 from 20.2 million metric tons in 2021. This was mainly driven by the significant reduction in production volumes and the temporary shutdown of emission-intensive plants.
We continued to expand the number of sites partially or fully powered by renewable energy expect to see a further meaningful increase in the use of electricity from renewable sources in 2023. Ladies and gentlemen, despite the challenging market environment, we have achieved a very solid free cash flow. We are committed to our shareholders will propose a dividend of EUR 3.40 per share to the annual shareholders meeting. Based on the year-end share price, this offers a high dividend yield of 7.3%. In total, we will pay out EUR 3 billion to our shareholders. This amount is more than covered by the free cash flow generated in 2022.
In line with the company's priorities for the use of cash and in view of the profound changes in the global economy in the course of 2022, we have, however, decided to terminate the share buyback program as of today. Since starting the program on January 11th, 2022, BASF bought back shares for a total of EUR 1.4 billion. I will now give you more detailed information on our five-year CapEx budget. Between 2023 and 2027, we plan capital expenditures of EUR 28.8 billion. CapEx in this period will be higher than in the prior planning period from 2022 to 2026, in which we budgeted EUR 5.6 billion. The main reasons for this increase are our two major growth projects, the Verbund site in Zhanjiang and our battery material activities.
These two growth pillars are key to drive BASF's future organic growth and will on average account for roughly EUR 2.7 billion of CapEx per year during the next five years. On average, the investments in our transformation toward net zero will account for around EUR 400 million per year in this period and will then increase towards 2030. In particular, due to the construction of our Verbund site in Zhanjiang, the share of CapEx in the region Asia Pacific will rise to 47% between 2023 and 2027. The European share is budgeted to reach 36% and the North American share 15%. The remaining 2% relate to South America, Africa, Middle East, and to investment projects that have not yet been assigned to a specific region.
Investments in BASF existing businesses will on average amount to EUR 2.7 billion per year. We will ensure a high level of discipline regarding the CapEx required to maintain and to profitably grow these businesses. For 2023, we plan total capital expenditures of EUR 6.3 billion compared with around EUR 4.1 billion in 2022. Now I will hand back to Martin for the outlook and information on our measures to increase BASF's competitiveness.
We anticipate only moderate growth in the majority of our customer industries in 2023. Our forecast assumes that the war in Ukraine will continue but not escalate further. The further developments of the war and its effects on economic growth are still subject to a high degree of uncertainty. We are assuming that an acute gas shortage with regulatory cuts to energy-intensive industries in Europe will not materialize. We expect that China's departure from its zero COVID strategy will have a positive impact on demand and will stimulate growth globally. Based on these assumptions, we expect the global economy to grow by only 1.6% in 2023. We forecast growth of 1.8% for global industrial production, while global chemical production is likely to expand by 2% in 2023.
Our planning assumes an average exchange ratio of $1.05 per EUR and an average oil price of $90 for a barrel of Brent crude. We anticipate elevated and very volatile gas prices in Europe. In few of these factors, we forecast BASF Group to generate sales of between EUR 84 billion and EUR 87 billion in 2023. EBIT before special items is expected to decline to between EUR 4.8 billion and EUR 5.4 billion. We expect a weak H1 of 2023, followed by an improved earnings environment in the H2 of the year due to recovery effects, especially in China.
Based on the weaker earnings performance and slightly higher cost of capital BASF is forecast for BASF Group in 2023, we anticipate a ROCE of between 7.2% and 8%. We expect CO2 emissions of between 18.1 million metric tons and 19.1 million metric tons as a result of moderate growth in production and slightly higher capacity utilization at emission-intensive plants. We will now move on to the measures to increase the competitiveness and profitability of BASF Group. I will focus on two areas in the second part of today's presentation. We will begin with the cost savings program focusing on Europe that we announced in October. This will be followed by a longer section on the adaption of our Verbund structures in Ludwigshafen.
Europe's competitiveness is increasingly suffering from over-regulation, slow and bureaucratic permitting processes, and high costs for most of the production input factors. This has resulted in many years of low market growth. High energy prices are putting an additional burden on our profitability and competitiveness in Europe. Our cost savings program focuses on rightsizing our cost structures in Europe, and particularly in Germany, to reflect these circumstances. We will implement the program from 2023 to 2024. On completion, the program is expected to generate annual savings of more than EUR 500 million in non-production areas. What do we mean with non-production areas? These include service, operating, and research and development divisions, as well as the corporate center. Roughly half of the cost savings are expected to be realized at the Ludwigshafen site.
The measure under the program include the consistent bundling of services and hubs, simplifying structures in divisional management, the rightsizing of Global Business Services, as well as increasing the efficiency in R&D activities. Globally, the measures are estimated to have a net effect on around 2.6 thousand positions. This includes the creation of new positions, in particular in the hubs, and program costs are expected to amount to around EUR 400 million. This will cover training and qualification measures, relocation costs, and severances packages. Employee representatives in the relevant bodies have been and will continue to be involved regarding the various measures. Let's now move from the non-production areas to production at our largest site worldwide in Ludwigshafen. This is a schematic picture of the Ludwigshafen Verbund site today in terms of inputs and outputs.
We require vast amounts of natural gas as an energy source to power our plants and as a feedstock for our products. Today, renewable energy and renewable feedstocks still play a relatively small role. As outputs, we currently sell significant volumes of several base chemicals to the market. We mainly use base chemicals within the Verbund to produce a vast range of around 8,000 downstream products for European and global customers. As a collateral output, the site emits about 7 million metric tons of carbon dioxide per year. Based on 2021 figures, the Ludwigshafen site accounts for about 4% of Germany's natural gas consumption. In view of the large amount of gas we consume, it comes as no surprise that our competitiveness in Ludwigshafen suffers in times of elevated energy prices. European gas prices skyrocketed to unseen levels in August.
Since then, prices have declined. We expect them to stay considerably higher in the long run compared to what they were over the past several years. Furthermore, lower market growth in Europe has negatively impacted supply and demand dynamics in several value chains. We are therefore undertaking structural measures to improve our competitiveness over the long term, in addition to the cost savings program we have initiated. During the past months, we have carried out a thorough analysis of our Verbund structures in Ludwigshafen. By assessing our asset base in detail, we reached a deep understanding of how to ensure the continuity of profitable business while making necessary adaptations. Let me now highlight the major changes we will be implementing. Let's start by looking at the ammonia value chain. Ammonia is the largest consumer of natural gas as a raw material in Ludwigshafen.
Currently, we operate two ammonia plants at the site, which you see in a simplified diagram on the left side of the slide. Ammonia is an important input factor for caprolactam, and with that, for polyamide 6, adipic acid, as well as nitrogen fertilizers. Caprolactam, in particular, has seen tremendous buildup of capacities in recent years, especially in China. As a result, European exports to Asia were already under pressure before the sharp increase in Europe's energy prices. To reduce our exposure to the market, we intend to close our caprolactam production in Ludwigshafen. BASF caprolactam plant in Antwerp is sufficient to serve captive and merchant market demand in Europe going forward. By closing the caprolactam plant in Ludwigshafen, we will significantly reduce captive demand for the precursor ammonia. In turn, this allows us to close one of the two ammonia plants as well as associated fertilizer facilities.
At the same time, we will use the changes as an opportunity to optimize our polyamide 6 production network and further strengthen this important business for BASF Group. High value added products such as standard and specialty amines and the AdBlue business, for example, will be unaffected and will remain competitive. They will be supplied via the second ammonia plant at the Ludwigshafen site. Let us now move on to the next value chain, adipic acid. As one of the main precursors of polyamide 6.6, adipic acid is an essential part of our engineering plastics business. In addition to serving captive demand, we sell production volumes to the merchant market. Over recent years, however, margins in this part of the business have been steadily eroded due to overcapacities in Asia and lower than anticipated domestic market growth. This situation became even worse with the sharp increase in European energy prices.
In response to this changed market environment, we will reduce our adipic acid production capacity in Ludwigshafen and will close the precursor plant for cyclohexanol and cyclohexanone, as well as the production of soda ash. With these measures, we will reduce our merchant market exposure while improving our overall earnings. Adipic acid production at our joint venture with DOMO in Chalampé in France will remain unchanged and has sufficient capacity to supply our business in Europe. We will also continue to operate our polyamide 6.6 production plants in Ludwigshafen. The third value chain I want to address is the TDI production complex in Ludwigshafen. Over the past years, both MDI and TDI have gone through significant demand and profitability cycles. Overall, market demand for MDI is healthy as expected and continues to grow.
Demand for TDI, however, did not grow as expected and has been especially weak in Europe, Middle East, and Africa. We do not expect this to change. As a result, our TDI complex in Ludwigshafen has been underutilized and has not met our expectations in terms of economic performance. This situation has further worsened with sharply increasing energy and utility costs. We have therefore decided to close our TDI plant and the precursors plants for DNT and TDA. We remain fully committed to our European customers, and will continue to serve them via our global production network with our existing TDI plants in Geismar, Louisiana, Yeosu, South Korea, and Shanghai, China. As I mentioned earlier, we thoroughly analyzed our asset base in Ludwigshafen. This included the gas intensive acetylene value chain, as well as olefins from our two steam crackers in Ludwigshafen.
While we identified some optimization potential in these value chains, our analysis shows that these assets will remain competitive in the long term, even under the changed framework conditions. In total, 10% of the asset replacement value at the site will be affected by the measures. This will likely affect around 700 positions in production. However, we are very confident that we will find suitable positions for most of the affected employees since there are vacancies in production and many colleagues will retire in the next few years. The measures will be implemented stepwise by the end of 2026, and are expected to reduce fixed costs by more than EUR 200 million per year. These structural changes will also lead to a significant reduction in power and natural gas demand at the Ludwigshafen site.
Consequently, CO2 emissions in Ludwigshafen will be reduced by around 0.9 million metric tons per year. This corresponds to a reduction of around 4% in our global CO2 emissions. Since the start of the Russian war against Ukraine, we have analyzed in depth what factors influence the gas consumption of our Verbund, both positively and negatively. When uncertainties regarding gas supply first arose, we mentioned 50% as a minimum for operating the Ludwigshafen Verbund site. Now, we are able to continue operations even if the gas supply were to drop as far as 30% of our average consumption in 2021. This is thanks to optimization measures that including using the by-product ethane from our steam crackers to feed our acetylene plant, and the recommissioning of sections in the synthesis gas plant that is independent from natural gas.
We are now executing further projects that will reduce gas consumption in Ludwigshafen even further. By the end of this year, we will convert two of our four natural gas turbines in our combined heat and power plants to allow operation with either natural gas or fuel oil. Gas allocation would nevertheless force us to shut down many production plants at the site, but under optimal conditions and with major gas consumers taken offline, we would, however, still be able to run the Ludwigshafen site at a supply rate of around 10% of our average gas consumption in 2021. Thanks to a possible partial conversion to fuel oil, we would thus be able to avoid a complete shutdown. I congratulate the BASF team for its creativity and dedication in developing the required solutions during the last 12 months.
Reducing the demand for natural gas is one of the elements in the transformation of the Ludwigshafen site. We want to develop Ludwigshafen into the leading low emission chemical production site in Europe, and are initiating further changes needed to achieve this. The green arrows indicate the timelines for preparations and investments, while the extended arrows indicate that the transformation along the particular levers has more or less entered steady state. We are exploring how we can best accelerate the transformation and how we can move forward most efficiently with regard to abatement costs. We are making good progress. As part of the gray to green lever, we will secure further supplies of renewable energy in line with our make and buy strategy.
With regard to the electrification of the Ludwigshafen site, we are taking steps to establish the platforms and infrastructure that we need to supply the site with renewable electricity and hydrogen. We are planning the use of heat pumps and cleaner ways of generating steam. In a transition phase, we are also looking into possibilities for using carbon capture and storage for hard to abate CO2 streams before moving to carbon capture and utilization. In addition, we will employ new CO2-free technologies such as water electrolysis to produce hydrogen. Finally, we plan to use the flexible entry options offered by our Verbund to switch from fossil to circular and renewable raw materials. We are working towards net zero by 2045 for our Ludwigshafen site to comply with the German government's target.
However, to achieve this goal, we are highly dependent on external factors over which we have little or no influence. These include the timely availability of significant amounts of additional renewable energy and the public infrastructure that is needed to connect the Ludwigshafen site to supplies of hydrogen and electricity. Our highly integrated production Verbund in Ludwigshafen is a tremendous asset that offers great flexibility. That is what BASF has shown over the past 157 years as we have changed raw materials from coal tar to coal and oil, and from coal to oil to natural gas, and now to alternative raw materials and renewable energy. Once again, we want to build on the opportunities offered by the Verbund to ensure a successful transition. Fossil resources will be increasingly replaced by renewable energy and renewable feedstocks.
Production of base chemicals will be focused more on captive use within our production Verbund. It will reduce sales volumes to the market for some products. Our broad and varied portfolio of downstream chemicals will remain unchanged. Our products will have lower product carbon footprints, thanks to the increasing use of non-fossil raw materials. The CO2 emissions from the site will be considerably lower. We will employ carbon capture and utilization to use a portion of the carbon dioxide that is emitted as a source of carbon for our production processes and thus generate our own raw materials. Ludwigshafen will remain the largest and most integrated site in the BASF Group. However, in future, the site will focus more on supplying the European market. We are convinced that the measures we are taking will strengthen the long-term performance and resilience of the Ludwigshafen site.
The measures I have presented today help us not only to secure, but to increase our competitiveness and thus support BASF's future profitable growth. In summary, we are initiating a cost savings program with focus on Europe and undertaking smart changes to our production structures in Ludwigshafen. Together with the initiatives that are already running in our global service units, we will reduce fixed costs by around EUR 1 billion by 2026. These steps are part of the constant evolution that BASF has undergo repeatedly in the more than 150 years of its history. We are driving change proactively. We are convinced that this will enable us to weather the economic storms around us and prepare BASF Group for the future. I'm concluding my remarks. I want to re-emphasize what BASF stands for.
You can rely on BASF to continue to deliver what is known from us and what we are respected for. Connectedness lies at the core of BASF and is exemplified by our Verbund. The flexibility of our Verbund is clearly demonstrated by the measures we have taken, and we will continue to take to reduce our natural gas demand. We will build on the benefit it offers, both in Ludwigshafen and at other Verbund sites worldwide. Our global footprint with production assets close to our customers in all regions proves to be the right setup, particularly in a world that is becoming increasingly multipolar. With our ongoing investments in China and the United States, we continue to improve our regional footprint. We are expanding our global presence in growing market segments, for example, in the battery materials value chain.
Our transformation towards net zero will enable us to provide our customers with a complete portfolio of products that have a reduced or even net zero carbon footprint. This will differentiate us from our competitors. Here, too, the Verbund plays an important role, and we will be supported by our powerful global R&D teams. All of these things would not be possible without our employees. I'm therefore proud that we can count on such a great team at BASF. I thank the team for its commitment in these challenging times. Thus, our shareholders can rely on BASF for value generations over the long term. Thank you. Now, Hans and I am ready to take your questions.
Thank you, Martin and Hans, for your presentations. Now let's move on to the Q&A. Obviously, financial market participants have understood how this works. We have quite a couple of questions already in the system. I would like to begin with 2 questions on current trading. The first one is from Christian Faitz, Kepler Cheuvreux. Can you share with us what you see in terms of current demand trends in your chemical activities? Key customer industries, regions. Would you share the observation that there's going to be a recovery in the H2 of 2023, catalyzed by growth in China?
Yeah, I mean, I think it became very clear in the Q4 performance that really the world markets and the demand has cooled down in all over the world, in all regions. With a strong emphasis, however, I would say, in Europe. That is also the conditions we started now with in the first months of 2023. There is again, in January, a negative volume development of around -15%. We can see, however, when we talk about with our customers, that there is a little bit of more positive or, let's say, less negative sentiment out there.
It is not translating yet into further demand and also not translating into additional order intake. I think the only area where we really see a positive development and the mood getting quickly better is in China, because the second wave of COVID after the Chinese New Year, where basically the people mingled all over the country, has actually not come. We see overall that there is a mood change. I would expect as I know the Chinese government by having lived there 10 years, that they take this opportunity to stimulate also the relatively low sentiment in the consumer consumption currently. We would expect that maybe the recovery in China even takes on a little bit earlier than expected.
Definitely China is the most important part to start with a a little bit of turnaround. It has also the capabilities, we know that from the 2008, 2009 crisis, that it has the capacity also to stimulate the world. That is about so far as it looks like. For Europe and for Germany, I would say the outlook is less positive in the moment, and we cannot see turning points. Nevertheless, some of the politicians have recalled that a recession will not come. Let's have a little bit more patience, but I think this first spark that might come to change the environment a bit might come out of China.
There's another question on current trading from Charlie Webb, Morgan Stanley, with a bit of an additional part: Can you provide some color of what you are seeing in Q1 in terms of demand profitability compared to Q4, excluding ag? You covered that already. How has demand evolved? Are there any signs of recovery in China after Chinese New Year? That's clearly covered. Now a new part, what are the implications of the lower gas costs?
Charlie, thanks for the question. Lower gas costs for sure compared to the year 2022 on average in Europe. If I compare back to the period prior to 2022 with today's gas prices in Europe of let's say around about 50 EUR per megawatt hour, that is at least double of what we are used to with respect to historic prices. I think we always need to keep this in mind. What we see is certainly that the decline in natural gas prices, we don't have decline in natural gas prices only. There are certain raw materials also where we see that price increases are no longer there, or even certain price declines in specific areas.
If we think about that helps a little bit in a situation where demand, as just explained by Martin, across the industries, is low. It provides some support for the specific margins. We've seen that in January, and it continues in the month of February. I think the over-arching theme in the end is that as explained by Martin, demand has not yet really picked up. I want to say with respect to that, there are two exceptions, and you see this in Q4 in two segments, and the two segments are first and foremost Agricultural Solutions, and then Surface Technology. In the ag industry, we've seen consistently strong demand in 2022. That continues now also in the beginning of 2023. Auto in particular, or transportation in particular, in the H2 of the year 2022 has picked up. We see also this continuing now going into the year 2023.
We move on to the next question related to CapEx. It's from Andrew Stott, UBS: Could you please detail the reasons behind the higher five-year CapEx guidance, at least relative to the previous five-year cycle? Could you also comment on the timings of the closures of the facilities in Ludwigshafen?
Yeah, Andrew, thanks for your question. I think, as explained also in prior years, this is now the time period, where we see the full impact of the two big growth projects, the Verbund site in China. You see the increase by around EUR 2 billion in CapEx spend for the year 2023 compared to 2022. We'll see all of this peaking in the year 2024, and then from then on, a decline. 2025 still on what I would call an elevated level. And then from 2026 on, we'll see BASF again in an environment with respect to CapEx spending that all of us are used to.
The increases compared to the prior year or 5-year plan have a number of reasons, not the least of them are currency developments that we need to take into consideration. You're adding obviously also a year with 2027 that is compared to prior year term and the year 2022 that's dropping out at a higher level. When you compare the 5-year plans, that is the key explanation there. With respect to the shutdowns, if I got that question correctly, that'll be phased between 2023 and then end of 2025 going into 2026. That will be a process over the next years.
We have 2 questions on the topic of dividends. I will read out both because it's a bit overlapping. The first one is from Sam Perry, Credit Suisse. Does BASF stand by its ambitious dividend policy of increasing the per share dividend each year, given the flat payment of EUR 3.40 per share in 2022? Does that mean this policy no longer holds? Should we expect a flat dividend for 2023 given the profit outlook? That was Sam Perry's question. I read out Jaideep Pandya's question on On Field Research. What is the outlook for BASF to cover its dividend? If we think that EUR 5 to EUR 5.5 billion is more the mid-cycle range, and with CapEx burden of EUR 5.7 billion on average, how do you intend to cover the EUR 3.5 billion dividends? Not that large, it's EUR 3 billion now, yeah, in the coming years.
Yeah, thanks for the question on the dividend. I think, first and foremost, what we're doing for the year 2022 is keeping the dividend at the level of the year 2022. In other words, we keep it at EUR 3.40. I think when we launched in 2018 our new corporate strategy, talked about dividend policy, we said that our ambition is to increase year-over-year. I think we also had the proviso in there that for very challenging years, and I can tell you that 2022 certainly falls in the category of very challenging. You have heard what additional energy, in particular, natural gas costs we had to digest in the year 2022.
For years like that, we always said that we would then consider to keep the dividend flat, and this is what we're doing for the year 2022. The payout overall, and Stephanie, you've mentioned that already, will be in the order of magnitude of EUR 3 billion, provided that the annual general meeting supports our proposal. Going forward, when we launched our dividend policy, and looking at dividend, what we always said is, dividend payments depend on the free cash flow. You've seen us generating strong free cash flow despite all the challenges and all the difficulties in the year 2022. Cash flow actually, free cash flow at above EUR 3.3 billion. Fully covering the dividend payment for the year 2022, and free cash flow also going forward, will clearly be a guidance for our dividend payments.
Mm-hmm. We have several questions on the adaptations of the Verbund site in Ludwigshafen. I'll start with Tim Jones, Deutsche Bank. Are the measures you have announced today in Germany everything that you plan to do and have agreed with the unions, or should we assume there could be more cost-cutting and plant closures that may be in the pipeline but have not yet been formally agreed?
Tim, we have been looking, I think about in about 70% of our assets, the most relevant, in terms of all the energy flows and CO2 generation. I would say the program we come with now is, I think what you have to expect for the years to come. I think we did it solidly. We have also made scenarios for some others, and I mentioned the acetylene plant, which is a large consumer of natural gas, certainly also heavily hit in 2022. If you look into the global situation, then this regains its competitiveness. It's also very important value chain and branches out into a lot of final consumer products at the very end. We will focus on these measures now.
I mean, we have given you, I would say, a fairly detailed view today. You can imagine, you know that. There's precursor plants, there's tie-ins, there is connections and nuts and bolts into the Verbund. In order to do that, it's basically an operation on the open heart while you produce. That will also take some of the time which we have to digest. It also includes the major part of the really energy-intensive part. From that perspective, you don't have to expect that is now more to come over the next years. Can I exclude that we have to do further adaptations over time?
I think it strongly depends on how Europe develops, because currently, if you look in the market development, the chemical market in Europe lost 6% of its volume last year. Germany even -12%. The expectation going forward for this year is not good either. We don't talk about a growth scenario in Ludwigshafen in Europe. There are many ifs and there are many questions in terms of market which then has to be counted. I think what we have done now is a robust scenario for the years to come to prepare our assets here to do the next step of transformation and staying competitive. I think that is it for the next years.
There's a bit more specific questions on the closures in Ludwigshafen. It's from Markus Mayer, Baader Helvea. Why does the closure of plants in Ludwigshafen not trigger further impairments? Do you not need to write down the TDI plant? Is the TDI plant closure more linked to the energy situation or to production issues the plant had?
First of all, let me say some of the plants I have mentioned, adipic acid, caprolactam are part of BASF structure for a long time. These are rather old plants that have been totally depreciated. From that point of view, you don't see any write downs or impairments coming with that. I think I mentioned also that they have been under pressure also from market points in terms of utilization, and now really they get another hit by the energy prices. This is I think why we also have a good opportunity to now, let's say, restructure one of the oldest parts, I think, in the Ludwigshafen part. The TDI plant is certainly a more new one, and I think I mentioned that also here.
I think the most disappointing part is actually the market development in Europe, which is significantly below what we have expected. It grows below 1%, most probably going forward the next 10 years. If you look onto the supply balance, supply-demand balance on a global point of view, we have a very low utilization on the global level for all the plants. It is also a product which is not so difficult to transport, much easier than actually MDI.
That is, you can run that as a global business. This is why actually all the assets all over the world can participate in regional markets. I think this is one of the major aspects also where we see not the scenario that we can really fully load these plants economically in terms of a market development. When it comes to the depreciation part, I quickly hand over to Hans, because that is the only plant that has a little bit less history in BASF than the other ones.
Yeah, Markus, when you look closely at the Q4 PNL, you see that there is a quarter of billion EUR in special items there. The vast majority of that are write-down/impairments on plants in Ludwigshafen, resulting from the high gas and energy costs. In other words, part of the closures that we are now announcing. I'd say, digesting that in a quarter is a significant number.
We continue. Another question related to that topic area, Mubasher Chaudhry from Citi: With regard to the various shutdowns announced, is there any option to bring any of these plants back online should the demand picture improve in the medium term?
No, I think this is more or less excluded because first of all, when you start to shut down these plants and you really want to reduce the fixed cost, you have also to dissolve the teams and have really to get the fixed costs off and also not stay with remnant costs or holding a team for such a moment. You don't gain anything. We will then clean up the plants, and we will really shut them down. We will not demolish everything on right on the spot. We don't need the space in Ludwigshafen. We will then do that or use it or demolish it when we need the certain phases also for growth again.
I think in order to really tap into this, roughly EUR 200 million of fixed cost reduction, you really also have to eliminate the structures. I would also say once you have started to to then bring down an ammonia plant, which is branching out as a very important raw material also, you adapt a lot of service utility precursor plants then to the new, to the new scenario. You certainly also reduce cost in these plants if they have lower capacities. If you, if you do that in a way that you actually say more in a mothballing thing, then you do not get the cost reduction. For that reason, we decided to do that for good.
Now we have couple of questions related to the outlook. I'll begin with Andreas Heine Stifel. Where does BASF see future growth in chemicals in Europe, and how can the Ludwigshafen Verbund site contribute to this growth?
I mean, Andreas, I think, I mean, first of all, I think we gave you the vision for Ludwigshafen. There were several media reports that this is now a total deindustrialization in Germany, and certainly a large site like Ludwigshafen is in the middle of that. I think given our actions, it is sizable, and it is, I would say, courageous, bold steps, but it is not shutting down Ludwigshafen. As I mentioned, I mean, many times we have actually adapted the site, and we are deeply convinced that Ludwigshafen with its excellent position and also the widespread portfolio we have, basically being connected to all value chains and to many, many customers here in Europe, we want to keep that position going forward. There will be a lot of regulational changes, so Chemicals Strategy for Sustainability.
There is all the CO2 topic where we want to be the first in line that actually can supply our customers solutions and products that are in line with all these regulatory changes and have also the lowest CO2 footprint. I think that is actually something where you can grow your business even against the odds because if your customers want to have low carbon products and that is not efficient in the market, you can actually also take away market share from others. That is a little bit our part of the formula because what I do not expect with the overall situation that Europe will return in the medium run into a growth area where we come back to growth areas which we have maybe known 15 or 20 years ago.
I think that is not to expect with all the regulatory situation and also the high uncertainty when it comes to business cases for investments in Europe. We have to make the best out of that, and this is also why we said we focus more on European customers. Ludwigshafen comes from a global thought, but I think if you talk about the situation of competitiveness in Europe, that you can competitively supply customers all over the world is more difficult. You have to do that in Europe with all the add-ons and the competitive advantage which I just mentioned. We have to make something out of a low market growth environment, steal a little bit growth by taking away market share from others by having better offers.
That is a little bit the name of the game, but let me also clearly say, we will significantly invest in Ludwigshafen in this oil transformation. That is a long journey which we have to do. We also invest outside of Ludwigshafen for doing that. The wind parks, our first big wind park in the in front of the Dutch coast is a very expensive investment which we do actually for Ludwigshafen. We clearly want to have Ludwigshafen in a very, very strong position in Europe, and this, with this also contributing to the profitability of BASF globally.
Now a bit more specific question on the outlook from Markus Mayer, Baader Helvea. On what assumptions are the upper and the lower end of the EBIT before special items guidance range based?
You want to say something?
Markus, very good question. I'd say the following. We've given you the macro data, we've given you what we think with respect to a key currency, which is the US dollar, and for oil. I can also tell you this was probably the most challenging budgeting process that I have experienced in my career. There is so much uncertainty there at this point in time. Think about topics like gas price development. Think about where we were with respect to gas prices in November and December last year, and where we are now towards the end of the winter.
I don't know too many people who were of the opinion that gas prices in Europe at this time would be around EUR 50 per megawatt hour. Most people back in November, December had more a range of EUR 100-150 per megawatt hour in sight. What I would try to say, there is a very high uncertainty out there. We've tried to factor all of this in, and we've given you a range that we've narrowed down to the extent possible. We factored in the fact that we had very weak Q4, very low demand there, dropping towards the end of the quarter. Not a big surprise in a low demand environment. On top of this came the usual year-end working capital optimization.
n the expectation that there should be an improved economic environment, at least in the H2 of the year, hopefully already from Q2 on, we will see something. All of that made it into this guidance. And again, let me say this was probably the most challenging budgeting process, and as a result of that, also the most challenging discussion around what do we actually give as guidance
Let me add one point which I think is really important. I mean, we had the best H1 of BASF's history last year, which is the baseline for this year's performance. I think if we go forward with the environment we have told you will see a significantly lower H1 year. Our budget is also a little bit more back-loaded than it is normally.
This really whereby it expects that there has to be some recovery in the H2, which I said could be very well stimulated from China, which is actually what we have seen in 2008 and 2009 already. It's not a hypothetical idea. It could really happen like this. I would like to make this remark because you will see a significant difference in the H1 year this year compared with last year. Because of the base effect, it will look a little bit more, let's say, different than it did maybe in the past.
Now there's a question from Georgina Fraser, Goldman Sachs. It's with a combination of outlook and the measures announced for Ludwigshafen. What are your midterm energy cost assumptions for Europe? What was the scenario under which the plant closure decisions have been taken?
Georgina, what we've done is we worked with the overall assumption that the very competitive, not to say price-advantaged gas deliveries from Russia, will not play a role in Europe and in particular in Northwestern Europe going forward. What does that lead to? That leads to the question, what will be price setting for Northwestern Europe going forward?
We think that there is a high likelihood that the price for Northwestern Europe for natural gas, and then resulting from that to a certain extent also for power, will be set on the basis of LNG imports. What are the key sources for LNG imports? As we all know, that is the U.S. and also Qatar. We think there is a high likelihood that the base for price will be Henry Hub price plus then the cost of the LNG supply chain. In other words, from the liquefaction transportation to gasification, that cost is somewhere in the order of magnitude of $5-$6 per million BTU.
Henry Hub plus supply chain costs for LNG is what we think will form the basis for prices going forward. We also think it will take probably about two years to get to this situation. This is, with all the problems in the entire system currently, probably the time to establish a full LNG supply chain. You know, the situation in Germany, where thankfully, the first FSRUs, so the floating terminals are now up and running. To create and establish an LNG import structure will take a bit of time. In the end, these are the assumptions that we used. In other words, With respect to natural gas, and also power, a situation where prices should be higher in Europe than they were in the past.
Maybe to add one part on that, because, I mean, competitiveness is a relative thing and not an absolute thing. If you now hear politicians talking, okay, energy prices getting low now, so all the danger, everything is off that, of the political agenda, or as a society feel safe. I think if you actually take the current prices of the rough, roughly EUR 50 per megawatt hour you have today, and you compare it with the low number you have in the Henry Hub in the moment, you have actually a factor of six in between Europe and the US. That is quite significant if you are in the energy-intensive business. We have. That's what I said this earlier when I got the question of Tim, whether there's more to come.
I think we have a robust scenario with different scenarios where we actually back-tested that situation. I can only warn that this is not a topic that is quickly off. I mean, we have really to look into the whole value chains in Europe. It's not only about our step. We have to bring the materials still competitively to our customers. Also our customers throughout the value chain, they have to take care about their competitiveness, that they keep their market share, that they keep their export businesses.
If they would actually also fail, you will see a further softening of the demand in the long run, which makes it difficult to keep the whole ecosystem of Europe, which is one of the very last remaining or the only ones where you have full value chains and interlinked value chains. I would say we will do our share, I hope also our customers are bold enough to restructure and take the right steps to ensure that the whole value chain stays competitive. We have talked to a lot of customers about that is also what we cannot totally factor in on our own exercise. We have to do our step, the others have to do their share.
Related to customer industries, we have one further question from Christian Faitz, Kepler Cheuvreux. How confident are you that your number one customer industry, automotive, will see sustainable demand once the supply chain-induced bottlenecks are solved? In other words, when the order backlog has been worked off.
Maybe I take that one. I mean, as Hans said, we have a 6.2% growth last year that will be a little bit lower this year because there was also pre-buying effects in China because of stimulation measures. We continue to think that the automotive industry is rather helping the overall economic development this year than actually slowing it down. We had lots of different times in the past, and you know that this is a very important industry for us. I think, what is also important to mention, yes, we had our traditional business with our European long-term customers, but in the meantime, we have also sizable business in China with local companies, with those companies who actually started the race and partially take over also market share.
I mean, there's also a company like Tesla that is taking its share. I mean, we have our business with all of these different customers everywhere in the world. I think that is also important to drive our automotive business to support also those customers, particularly who have the most winning and innovative concept. I regard that the automotive industry will still be a very important one.
If you take also the investments and the innovation they spend over all over the world, this will be also one of the very innovative companies in the future, particularly with the transformation into electromobility, where we are with our battery materials one more time in. Just to remind you that actually the share of chemicals in a car is going up in an electric car compared to a combustion engine car. Overall, I think that is still a very important focus and factor also of BASF's profitable growth going forward.
Another question on the automotive industry from Tim Jones, Deutsche Bank. Martin, you make it very clear that Europe is not supporting you due to overregulation and bureaucratic processes. Are you therefore still confident that Europe is the right region to invest in battery materials? Should you not just focus on the US and China?
Tim, you know me that I'm an optimist, but I have to admit, with all the work I do also on the political scene here in Brussels and in Berlin, because I have currently the role of the president of CEFIC, the European Association for the Chemical Industry, it is really tough, if you look into all the regulatory packages that are coming and that affect the chemical industry. We have already more than 7,000 pages of regulation for the chemical industry out of the Green Deal.
My guess would be it is 20,000 pages at the very end. It is tough, particularly for the small and medium-sized enterprises to cope with all that. That is doing its share in a low-growth environment, in a high-cost environment, to really convince that you have to invest here. That is not really easy. On the other hand, we have a big asset base here.
We want to keep that asset base and to make it contribute to the BASF Group. This is why I hope also that the IRA, which is now in everyone's mouths, which is a very simple American answer, actually to focus on OpEx while the Europeans focus on CapEx. You get your funding to invest, but then no one takes care whether you earn money with it. The Americans actually ask you to take your own risk and take your investment, but they take care of these tax rebates that you can make money with it. I hope that this also gets a little bit its inroads into the way how we actually try to design our future.
I still do not give up on that, and we can actually not give up on that because of the footprint we have here. I think we shared today that we think with our way to go also for the energy transformation and to do that together with the customers, I think is the right way to go forward. That is then maybe Europe's way into a future. Let's see whether this formula works at the very end. It will not BASF not to do its contribution that this somehow works for Europe.
We have a question on the announcement of this morning related to the share buyback program from Chetan Udeshi, JP Morgan. The net debt to EBITDA ratio was 1.5 at year-end 2022, and might be close to 2 at year-end 2023 based on guidance. One would expect buybacks to be counter-cyclical, so why cut the share buyback now with full year 2023 guidance also in line with consensus?
Yeah, Chetan, thank you for that, your question. Let's go back to the point in time when we started the share buyback program, that was in the middle of January, 2022. The world looked different from the look that it has today. We have certain priorities with respect to our cash utilization. Number one is organic growth, and I've explained earlier, or Martin and I have explained earlier, how the year, 2023 will look with respect to CapEx, so significant increase there. That we had fully on the agenda when we entered into or when we launched the share buyback program.
What we didn't have on the agenda were the significant changes that we experienced following February 24 of last year. I alluded already to the significant additional cost for energy and natural gas, in particular, EUR 3.2 billion hitting the BASF Group there. Overall, we came to the conclusion that we need to be a bit more protective with respect to cash. You've seen the dividend decision that we made in line with our dividend policy. We think it's the right thing to do at this point in time to be a bit more cautious and to be a bit more protective with respect to cash. Hope this helps.
I have a couple of more questions from Chetan Udeshi. I will go through them, even though it doesn't match topic-wise completely. I heard Martin mention EUR 1 billion in cost savings by 2026, EUR 1 billion. If I add the EUR 500 million in the non-production area and the EUR 200 million from the adaptions at the Ludwigshafen Verbund side, this totals only EUR 700 million. How do you get to the EUR billion? I think it was in the speech a little bit.
Yeah. I mean, it's very simple. I think we mentioned also that as part of our strategy, empowerment, simplification, differentiation, which we explained you a lot of measures also in the past, the embedding and then also the restructuring of the so-called Global Business Services. There is a bigger project that contributes about EUR 200 million, and I mentioned that in the speech. There is also a contribution from the IT landscape side. If you take these components and you add them, which are under execution already, you end up to this EUR 1 billion.
Another question from Chetan Udeshi, JP Morgan, related to the outlook. I think you, Martin, mentioned or talked a little bit about this already. What do you think about Q1 consensus of EUR 1.9 billion for EBIT before special items? It seems high to me, but any feel from you would be helpful.
Chetan, now I was already very explicit also in the H1 year and made you aware that this looks different than actually the last year. I mean, I think this is the number that is out, which you have in the consensus. I would not dare now to make a more statement also on the Q1 result. I think it's also a little bit too early. I think I made the hint that we actually expected China to come maybe kicking in later, more in the H2, or at least at the end of the Q2.
Now I think after Chinese New Year has been early and this expected or, yeah, where everyone thought this second wave might really put China on its knees, that everyone has Corona, which is actually not coming, that might help us even to get some contribution in the Q1 to get a little bit more air into the business development. It's, I think, too early to say that, and I would leave it by leaving you with an expectation of a significantly lower H1 year as such.
We are coming back to the adaptations at the Ludwigshafen Verbund site. Another question from Jaideep Pandya, On Field Research. What is the timing of the shutdown of the TDI plant? In the past, you said that your plant had a good cost structure with backward integration. Is the closure related to Wanhua's 250 KT plant?
I mean, Jaideep, I think I said most about this. I think the biggest disappointment is actually the market development, because if you make up your mathematics with the capacities you have, supply, demand and the growth, you cannot expect that you load this plant over the next years or until end of the decade in a basically in a market environment that grows below 1%. I think that is would be needed. We had also some technical difficulties at the beginning. We have been disappointed by some of the components and the quality aspects that have been there. I think if you look into that, and I said TDI can travel relatively easy and you look also on the capacities that have actually been built.
I think if you remember right, it was some more than 500,000 tons or 500 KT's, in the last three years. I think there's another 250 coming up from this year actually. You also see that utilization rate globally is not really improving significantly until the end of the decade. I think looking into all of that cost position, energy costs, utilization, load of the plant and everything brought us to the conclusion that that is the step we will take. Also for competitive reason, please understand that I don't go further in all the details, but that will be a rather quick step than now to expect that we have to wait another year or whatever. It will be in a recent time that we do this.
Charlie Webb from Morgan Stanley has a related question. It's a bit broader, not only focused on BASF. Is new TDI production off the cost curve at current energy prices and no longer competitive domestically? It's a bit hard to talk for others.
I mean, I think I mentioned it already. I mean, I said that competitiveness is a relative term. I mean, if you look into the energy situation in some of the countries where other production positions are, depreciated plants, very well established plants also in their local and regional markets where their space load is then. They have also a good and a better, let's say, competitive position gained now over the recent times since Europe got in this difficult situation. That also import material is coming into Europe. For that reason, yes, it's a good example where Europe as such, I would say, has lost competitiveness.
Related to the Verbund side measures, but now, related to sales, from Andrew Stott, UBS. What will be the loss of sales from the closures in Germany? I realize there is a set of assumptions given reconfiguration of global utilization in some cases, but an approximation would be helpful.
I mean, I think there's not so much sales lost. There's a little bit lost from that, but I dare to give you a number now on that one. It is rather insignificant, I would say, when you look at the size of BASF and also what we add in terms of growth. We steps out of some of the merchant markets, but we also shut down something and increase the utilization of not completely utilized plants on other sides. You have to take both of these components, which then add up to the result. There will be a loss, but in sales, but not a real significant. Please understand also for competitive reason that I would not like to give you a number on that.
I think you should not make big worries on that. Let me also say one thing because we have couple of questions here. I think what we do here and what we propose today and where we took the decision once again shows that the Verbund is much more flexible than people always think. They think if you take one piece out of the domino game out, then everything collapses. In fact, it does not. You can adapt all that, and this is what we do. Once again, it is complicated. Everyone has to be on board, but we know how to do that. You know that this is our strengths. Just wanted to make this addition one more time because sometimes people say the Verbund is so rigid. Actually, it is a great demonstration that it's not.
Indeed. There's another question related to the Verbund, a bit more general one from Chetan Udeshi, JP Morgan. Did BASF look at the Verbund structure itself as part of the recent analysis? If I push you a bit, 2 out of 6 key segments had EBIT loss in Q4 2022, and group EBIT is down 70% year-on-year and is at the lowest level in any fourth quarter since the financial crisis.
I mean, you should also not now think that the Verbund in Ludwigshafen is BASF. I mean, I think we have shown you the regional contributions also with the overall negative result from our German operations. That means actually more than EUR 7 billion of EBIT before special items came out of the structures outside of Germany, where we have also significant Verbund structures and our Verbund sites contributing there. I think given the difficult year we had, particularly the H2 last year, and the huge cost of energy we had to digest, I think actually EUR 6.9 billion as a group result is a rather strong one in that environment. That's why we think this is robust, and it is actually to a large extent also supported by Verbund structures outside of Germany and Europe.
I think that proves that the Verbund is strong, which we always claim. Certainly when we do the analysis, we always look into the Verbund as such because of the transformation we have in mind, this electrification. We have to look into that much broader also in the right order of measures you have to take. Particularly in this energy transformation road, which we have embarked on, we have to look at the Verbund as such in a much bigger scale than we have maybe done in the past.
There's a related question to, in this case, region North America. It's from Sebastian Satz, Barclays. Can you elaborate to what extent BASF may be able to benefit from various government support packages for the energy transition? I'm specifically thinking about the U.S. Inflation Reduction Act, for example, blue ammonia, or the discussions of an industry power price in Germany.
Yeah. Thank you, Sebastian, for your question. Of course, we are looking into the incentives that come with the Inflation Reduction Act, which by the way, is the misnomer of the year, 2022. That's different. That is a different story. As you know, what we do as BASF, we invest in the markets where our customers are. We're investing in North America for our North American customers, we're investing in Europe for our European, and in Asia for our Asian customers. That's our basis, basic philosophy. This basic philosophy will not be changed as a result of support schemes such as, for example, the IRA. We are looking into it. There can be certain activities that clearly benefit.
As you know, we have big activities in the U.S. Gulf Coast. We have a major investment in our site at Geismar, Louisiana, the new MDI plant there. You look at what we've just announced with respect to the 5-year CapEx plan, where, round about, EUR 4 billion, EUR 4 billion-EUR 4.5 billion is earmarked for North America for the next 5 years. You see this is a significant investment that we intend to do there. Yes, in areas such as, for example, carbon capture and storage, the IRA provides, I would say, highly attractive incentives. We'll certainly look into that. Again, basic philosophy is, we produce where our customers are.
The industry power price in Germany?
Pardon?
The industry power price in Germany.
On the industry power price in Germany, I'd say we need to see where that discussion is actually going. There are lots of ideas floating around at this point in time. You've seen, as an example, last year, a situation where we came from a support system, a gas support system, or gas cost support system, in the end carried by the industry, to bail out the importers. You've seen what happened then afterwards, , something that was created on the left side, then turned around to something that looked completely different. With an industry price, I'd say let's wait and see what the outcome of that discussion will be.
Maybe just one addition here. I mean, if you look on Germany in particular, but also Europe in general, maybe not France, but most of the other countries, they have rather had the approach in the past to make electricity and power expensive in order to drive energy efficiency. Now, I think in the environment where we are that you need to electrify, you actually need the electricity as cheap as possible in order to make that a competitive transformation. That is a major mind shift in the politicians' thinking, and this is why also the discussion on industry prices for electricity, we talk.
We say, If you want us to make our contribution, we had the question earlier, how likely it is that Europe makes its way, it strongly depends on how expensive power will be in Europe, and how you can actually, how quickly you can assess it. You know that, at least in Germany, there is a lot of the power price also determined by tax for energy, by transportation costs through the grid. It's not only the production cost. On the other hand, we had, I think, a major learning that particularly offshore wind in the North Sea from a production cost is actually competitive.
Part of that principle has also to be that the governments have to put the industry in place to take their own investments, to generate their energy like we have always done with our cogeneration plants based on natural gas. Do that in future also with renewables. Also generating a framework which is not over-regulated, which also then allows that critical infrastructure is actually to be used without cost. I think that is a major mind shift that has to happen in some of the countries, but it has also to happen on the European level, where we need desperately an EU single market for energy. Currently, we are very much far away from that by national concept. That will be a very critical determining step of Europe's future competitiveness.
This is a related question, at least to the EU framework, from Charlie Webb, Morgan Stanley. You mentioned the disappointing backdrop for EU chemical production and over-regulation. Do you sense any change in sentiment from your discussions? Will the European chemical industry, in part or in whole, fall under the EU IRA?
I mean, as I said earlier, I mean, this understanding that the U.S. is going on OpEx and the Europeans more on CapEx, I think this is just making its way now into the minds of people who are now working on the answers. My concern is currently that we want to answer the IRA with the next regulatory packages, I think this is not doing the job. We have to also impact there and make people understand.
I see that there is a certain nervousness in Brussels about what the right answer is, because I think there's all the fundamental data about the growth and how much we lost now in this situation in terms of competitiveness. Whether we really get the right answers, I think it's too early to say. I can at least say that there is major concern which was not there some months ago before the IRA came out.
We have now a few questions on Wintershall Dea. The first one was from Matthew Yates, Bank of America. You got EUR 700 million in cash from Wintershall Dea in Q4, which I think related to the 2021 results. Having generated EUR 2.5 billion free cash flow ex Russia in 2022, what dividend would you anticipate proposing to the Wintershall board to be paid in 2023, and what is the timing of this?
Matthew, thanks for your question. First of all, sizable dividend payment from Wintershall Dea all based on the results of the non-Russian business numbers, as stated by you. With respect to the dividend decision for 2022, we expect a meaningful dividend obviously also in the year 2023. In the end, that is a decision that still has to be taken. At this point in time, I don't want to speculate with respect to the dividend payment coming from Wintershall Dea.
A more practical question from Oliver Schwarz, Warburg Research, also related to Wintershall Dea. Why was there a discrepancy between the EUR 5.4 billion write down in Wintershall assets in Q4 and the now recognized EUR 4.7 billion? What changed in the meantime?
That's pretty obvious. If you look at the announcement that we made in the middle of January, and you look at today's figures, the positive news is there is improvement. The not so positive news is that there is a discrepancy. The reason for that simply has to do with the complexity of the accounting that needs to be done. What is it in particular? You first of all look at the Wintershall Dea figures, and you see that on a Wintershall Dea level, you are at overall impact of Russian business, including on midstream, and Germany onshore. I think the figure was EUR 7.1 billion or EUR 7.2 billion.
In BASF books, this ends up in the end as EUR 6.5 billion. At the point in time where we did the release, due to having to communicate the deconsolidation, which due to the developments between, let's say, the 22nd of December with the new price decrease in Russia, and then the final step on, I think that was January 16th, the restrictions with respect to voting rights of board members coming from so-called unfriendly states. There was no other way than to deconsolidate, and we had to do everything at a very fast pace.
What we had not fully reflected at that point in time, were in particular effects, and going in different directions, in other comprehensive income. There was a different movement, in particular a translation movement, in Wintershall Dea books compared to the books of BASF SE, which had to do with different timing. Long story. In the end, the amount of impairment is about EUR 800 million lower than what we originally announced.
Another question from Oliver Schwarz, Warburg Research, again related to Wintershall Dea. The presentation says that BASF is standing by its strategic goal of selling its share in Wintershall Dea. An IPO as the most likely option is no longer mentioned. Any ideas on the timing and on the form of the divestment?
Oliver, as you know, we've made several comments with respect to timing. There was always something since 2020 that happened, that then precluded us to implement according to the original plans. I think the most important statement to make at this point in time is really, we are clearly committed, and we're working on the exit diligently. If there's more to be reported, we will certainly let you know.
I think with that you answered. There were a few more questions from Laurent Favre, Sebastian, Bray, Wintershall Dea, that is covered. I switch back to TDI and a question from Sebastian by Berenberg. There's quite a lot of TDI capacity exiting the market as a result of changes announced. Will BASF need to spend on expanding assets elsewhere to compensate for this? Will you need additional shipping capacity for TDI? Also, how much soda ash capacity is being shut?
I mean, first of all, a clear no. No, we don't need additional CapEx to expand capacities in other sites. We really can use existing capacities for covering our European market position. Certainly, we have to increase logistics. This is clear. You have to organize this. You have then to establish a supply chain that you also ensure that you have enough volumes here than in Europe from the imports to be on the safe side for your customers. This is all very clear. Please understand for the competitive reasons that I'm not going to talk about capacities now also for soda ash.
We move back to CapEx as a topic. There's a question from Michael Schaefer, ODDO BHF, on sustainability CapEx. You show that plant closures in Ludwigshafen may reduce CO2 emissions by 12% based on 2021 numbers. On your road to net zero until 2050, you earmarked EUR 3 billion-EUR 4 billion in CapEx until 2030. Are you now adapting this CapEx plan?
Maybe I try to answer this. I mean, we have a very detailed list of projects contributing to the 2030 target. I have also to say, the further you go to 2030, we still have certain options because there are more projects than actually we need in order to contribute to this target. We have also some choices. This is also where there is some uncertainty going forward, and this is also what Hans actually alluded to when he talked about the IRA. All of our major sites make their own plans of decarbonizing, because you cannot do that in a a blueprint one-size-fits-all because they are all in different circumstances. They all have different sources of CO2, and they have different legislation.
That means now that the plans of our American sites become maybe more attractive to go faster with the decarbonization share from non-European sites than these Europeans. That would mean that we also then reshuffle some of the funds to other regions, which maybe can contribute to CO2 reduction in a more economic way, faster, less regulated, easier permitting process. There are many, many of these things. This is why towards 2030 and when some years before that, 2027, 2028, there will be then also another wave of projects in order to bring in the savings in 2030. There is an uncertainty. I think the guideline we gave you is still in line with what we told you earlier times as the budget which we need for 2030.
There is now the time where we have all these pilot plans. We have this water electrolysis facility here in Ludwigshafen. We have the heat pump projects. We have also the eFurnace for the cracker. We will then after 2025, we will have then projects that go into the scale, so there will be a little bit more, let's say, investment heavy than over the next 2, 3 years. I'm actually very thankful that we still have some options in staggering and reprioritizing how we actually deliver the target for 2030.
Another question on CapEx, this time the regional distribution or related to the regional distribution. Peter Clark, Société Générale, is asking it. Your planned five-year CapEx has risen again to almost EUR 29 billion, with Asia now almost half at EUR 14 billion. The spend is more than three times that planned in North America. You talk about the risk of not being in China, surely the risk of being in China is getting bigger for BASF.
Yeah, I mean, maybe I take that up again because I think you know the overall investment you have over there. That is also, you build a Verbund site either 100% or you don't build it, so you cannot cut it down because there is, if you basically do greenfield investment, which we do, and I think you saw some of the pictures with the massive preparation also from the Chinese side that handed over the land, more than 5 square kilometers, elevated 7.5 meters out of the ocean, partly a reclaimed land, so that had a longer ramp to be presented and prepared. We have a lot of infrastructure investments which we have to do at the very beginning because otherwise you cannot run the plants, and you cannot connect them.
That is why we have this investment. We can either decide not to do it at all. We cannot make half of that. I think the execution for this relatively large amount is a fairly ambitious one in just 3 years, and to bring that into operation in 2025, that is quite bold. This is why this adds up. There is also some other opportunities in Asia which come actually on top, and I think this is in terms of differentiation and diversification of risk and also regional contributions, I think also a good message. There's also with the battery value chain where I think an earlier question which we have not answered to is about battery material value chain investments in Europe. No, it's not only Europe.
It is actually a global plan. There will be also a significant CapEx for automotive value chain outside of Europe. I think with this diversification, we are actually very happy because if you look into the current shares from a regional point of view, we have some little bit slightly above 13% of the Chinese business to do in terms of sales and 10% in Germany. In terms of risk balance and risk management, we have to diversify our business outside of the region Europe. I think the numbers we have shown you show that they are very attractive and contributing quite a lot to our profitability.
I think in that respect, we are actually happy that we have these opportunities to put investments in the ground where we are totally convinced that they will profitably add on BASF's plans going forward. I think the China thing, I don't want to make a big discussion out of that because I think in the last meetings we have discussed about that intensively. We have done the maximum you can do in terms of looking into all the pros and the cons. Looking also at the sizable and very profitable business in China we have today over there, and the advanced stage we are in with this, and our conviction that this will be a super site, there's actually no reason to stop that plan, and it would have major implications.
For that reason, we came to the conclusion that it is the better element for BASF to be there and to make our part in China growing than actually stepping back for a potential risk that might happen. We have taken our decision. We are aware of the risks, we are also aware, very much aware about the benefits and the chances for BASF.
There's another question on the Zhanjiang Verbund site, from Christian Faitz, Kepler Cheuvreux. It's a short question, and I think it will be a short answer. "Is your EUR 10 billion Zhanjiang project still in budget from today's point of view?
Yes, it is.
That was the expected short answer. Now we have another question from Georgina Fraser, Goldman Sachs. "Did the reduction in gas consumption come mainly from reduced output? Can you quantify to what extent you are switching fuels and if that is still taking place?
I mean, I think as I mentioned, this extreme scenario that we can still run the site of, or at 10%, I mean, I made this addition here. That includes that a major part of the gas-intensive plants or where you need gas as a raw material, mainly are really down. That is very clear. That is not a scenario you would like to have. It is a difference whether you have to shut down some plants and you still keep the whole site running, or you have to really shut down the site. In that respect, the 10% is nothing which we are looking for that this is going to happen, because then we only need 10% of gas. We have actually then also a lot of production missing.
It is really a contribution out of knowing how you run the sites. It is additional ideas. As I mentioned, this one idea that you can use a side stream in the cracker which you normally burn. You take actually as a raw material feed for the acetylene plant, which is much cheaper than natural gas, even in this scenario today. You reduce your costs over there. It is several of these elements where just the BASF team is smart enough, again, to look into additional parts of the Verbund which can contribute.
There is a major part because we have two cogeneration plants to produce a major part of steam and electricity here at the site, which we actually prepare with half of the burners, so two out of four, to run them not with natural gas in the case when this is either expensive or allocated, that we have the chance then also to go for oil derivatives. That is increasing a little bit our CO2 emissions, clear, if we would fully do that, but it makes us much more independent from the gas side.
It is different components, but, I'm really happy that we had this flexibilization because the 50% were a scenario which I think had major concern on your side, on our side, and also on the customer sides, and we are very happy that our customers very much acknowledge there is actually no risk of a shutdown in Ludwigshafen anymore.
We have one final question, overall final question from Matthew Yates, Bank of America. It's on Ag. Your margins in Agricultural Solutions have been trending lower for many years and are well below the targets outlined in the CMD in 2019. Ag seems to be the part of the portfolio you are most upbeat on for 2023. Can you talk a bit more about the drivers and the size of profit growth this year?
Yeah, Matthew, I'm happy to take that question. You see significant improvement in the financial performance of our Ag Solutions business in 2022. That is driven by good volume development, but also and in particular by implementing price increases. You may recall that for the year 2021, we were not necessarily happy with the overall performance and in particular pointed to maybe missed opportunities with respect to price increases. The team has clearly performed on a different level in the year 2022. It's a great result that they've generated. The start to the year 2023 looks good. This comes on the basis of strong soft commodity prices. We've seen some volatility there.
Overall now entering the year 2023, if you look at historic averages, 2010 through 2021, all key crops, be it soy, be it corn, be it wheat, are at what I would call elevated prices. We don't see a reason why this should change. This should provide a good backdrop for also strong Agricultural Solutions business in the year 2023. Another factor that we see are sales channel inventories. The sales channel inventories are at normal to lower levels, let me put it that way. That should also support good, strong business in the year 2023. The team has also taken measures which they are implementing to improve the overall performance to get back to the margin targets that we have set for the ex- Agricultural Solutions business. Good step there in the year 2022, and more steps to come in 2023.
With that, ladies and gentlemen, we have come to the end of today's full year 2022 reporting, including an investor update. We hope you gained valuable insights. Should you have any further questions, please do not hesitate to send an email or call investor relations, a member of our team. Thank you very much for joining us today, and we wish you all the best and say goodbye for now.