Good morning, ladies and gentlemen, and a warm welcome to our press conference. Today, we are going to present the financial figures of BASF Group for the third quarter 2026. I would like to welcome our Chairman of the Board of Executive Directors, Markus Kamieth, and Dirk Elvermann, our Chief Financial Officer. Let me start with some piece of housekeeping. The conference language is German, with a simultaneous interpretation into English. The presentation you will see is in German. If you want to see the English version of the presentation, you can download it on basf.com, under media, or you find a direct link here in the chat. Let me start with a presentation of Mr. Kamieth, and afterwards, we are looking forward to your questions. The floor is yours, Markus.
Thank you, Thomas. Good morning. Dirk Elvermann and I are pleased to welcome you to today's press conference. Before we start with the discussion of our third quarter results, I would like to speak about our offer to Evonik. With our Winning Ways strategy, we strive to maximize the value of our stand-alone businesses and at the same time strengthen and grow our core businesses, both organically and through value-accretive M&A. I am convinced that a potential combination with Evonik would be a logical and meaningful step in this direction. The timing is right, not only for BASF, but also for the chemical industry. Consolidation in Europe is underway, and BASF is well-positioned to drive and shape it. From our perspective, the strategic and financial logic of such a combination is compelling. The portfolios and strengths of both companies complement each other very well.
A combination could create an even more competitive and significantly more resilient global player, building on the world's most advanced Verbund platform of BASF. Let me be very clear. Our commitment to financial discipline remains unchanged. This includes shareholder distributions of at least EUR 12 billion between 2025 and 2028. I also want to make clear, for us, acquisitions are a could do, not a must do, and we do not see them as vital for the success of our strategy. We will only pursue a potential transaction with Evonik if it is value-accretive for our shareholders. We will not overpay. Let's now turn to our results for the third quarter. I see three key takeaways. First, BASF delivered another strong quarter, with considerable growth in EBITDA before special items, driven by all core businesses.
Second, disciplined capital allocation enabled us to further reduce net debt, strengthen our balance sheet, and continue our share buybacks. Third, the strong year-to-date performance of our core businesses gives us confidence to narrow our focus range for EBITDA before special items upward. Let's take a closer look, starting with an explanation of the key drivers of sales performance in our core businesses. Here you can see how dynamics have evolved over the past three quarters compared with the corresponding prior year quarters. In the second quarter, following the escalation of the conflict in the Middle East, we increased prices, particularly in our upstream businesses. The positive momentum continued in the third quarter and was driven by price increases in all four core segments. During the first nine months of 2026, we also delivered volume growth in all core segments.
This was supported by the successful ramp-up of our new Verbund site in China and by our resilient integrated production network and local-for-local strategy. Volume growth accelerated in the second quarter, in part due to customers securing supply in the midst of heightened geopolitical uncertainty. In the third quarter, we continued to capture solid volume growth across our core businesses, with the strongest contributions coming from the Chemicals and Nutrition & Care segments. Currency headwinds eased over recent quarters and turned into slight tailwinds in the third quarter. Here you can see the regional volume and price developments in our core businesses compared with the prior year quarter. Following the strong momentum since the first quarter of 2026, we continued to deliver considerable volume growth in China, supported by our Zhanjiang Verbund site.
Driven by the ongoing Middle East conflict, significantly higher prices in China provided additional support, particularly in the upstream businesses. In Asia-Pacific, excluding China, we also delivered strong volume growth and achieved considerable price increases. In Europe, sales grew considerably on account of significantly higher prices. We increased prices in all core segments, particularly in Chemicals and Materials. Volumes were broadly stable overall. In North America, we achieved strong price increases and solid volume growth. Prices rose particularly in the upstream businesses. Volume growth was mainly driven by the Chemicals and Nutrition & Care segments. Moving on to our earnings development. EBITDA before special items rose by 15% to EUR 1.6 billion as a result of the strong performance across all core businesses. The earnings increase in the core businesses was mainly driven by higher specific margins, solid volume growth, and lower cash fixed costs.
By contrast, EBITDA before special items in the Surface Technologies segment was considerably below the level of the prior year quarter. This was primarily due to the earnings decline at Metivo, which was attributable to a positive one-off effect resulting from government grants in the prior year quarter. Metivo is the new brand name of the business previously called ECMS. Agricultural Solutions recorded a decline in earnings in the third quarter, and I will provide more information about this shortly. EBITDA before special items in other declined compared with the prior year period, among other things, due to high additions to bonus provisions. Let's turn to Agricultural Solutions. In the third quarter, which typically sees lower seasonal activity, sales declined by almost 20% to EUR 1.4 billion. The main driver was considerably lower volumes, resulting in part from the very challenging market environment in South America.
In addition, as we previously communicated, there was an expected effect in the third quarter because sales were brought forward into the second quarter ahead of the ERP software migration on July 1, 2026. The IT rollout in the region has now been completed, and pricing was mainly affected by high competitive pressure in South America. As a result, EBIT before special items declined compared with the prior year quarter. Lower fixed costs partially offset the decline. For the fourth quarter of 2026, we expect the usual seasonal strengthening compared with the third quarter. Portfolio management plays a significant role in the execution of our Winning Ways strategy. We continue to generate considerable cash inflows from portfolio measures. At the same time, we are sharpening the focus of our core portfolio and strengthening its strategic coherence. Let me briefly highlight our achievements.
This year, we have sold Harbour Energy shares and generated cash inflows of around EUR 1.3 billion to date. We still hold around 16% of our outstanding Harbour Energy shares with voting rights and will sell them over time, being mindful of value. We divested the decorative paints business in 2025 and completed the transaction with Carlyle in 2026 at a combined multiple of 13. This resulted in net cash inflows of more than EUR 6 billion. With our 40% equity stake in Surventis, we will continue to participate in the future value creation of the coatings business. We are also working on further portfolio measures. In early October, for example, the divestment of Stahl Group specialty coatings business to Henkel led to a cash inflow of more than EUR 250 million via our indirect participation in the Stahl Group.
This amount will be recognized in BASF Group's financial statements in the fourth quarter of 2026. The preparations for the planned IPO of Agricultural Solutions are on track, giving us confidence that the business will be IPO-ready by mid-2027. The transition of the global business into separate legal entities with an industry-specific ERP system is already largely completed. With that, I hand over to Dirk.
Well, thank you, Markus, and good morning, ladies and gentlemen. I would now like to take a look at the key financial figures of BASF Group in the first nine months of 2026 compared with the prior year period. At EUR 6.4 billion, EBITDA before special items increased by more than EUR 900 million compared with the prior year period. All core businesses contributed, with the highest contributions coming from Materials and Industrial Solutions. Cash fixed cost of BASF Group declined by around 3% to EUR 11.8 billion.
This is the result of the ongoing restructuring efforts, particularly in our core businesses. Net income came in at EUR 5.2 billion, including the disposal gain of EUR 3.5 billion after tax from the coatings transaction with Carlyle. Free cash flow was - EUR 1 billion. Considerably lower payments made for property, plant and equipment and intangible assets partly offset the decline in cash flows from operating activities.
We are making great progress streamlining our global organization. As you can see here, in the first nine months of 2026, we reduced more than twice as many positions as in all of 2025. Since January 2024, we have reduced the number of employees by around 8,600. Please note that this figure excludes both the reductions resulting from divestitures and the workforce buildup associated with our Zhanjiang joint venture. I will now explain the cash flow development in the first nine months of 2026. Cash flows from operating activities declined to EUR 823 million, mainly due to the EUR 1.5 billion higher net working capital requirements. This resulted primarily from two effects. On the one hand, higher sales led to higher trade accounts receivable. On the other hand, capital tied up in inventories increased as a result of higher raw material prices.
In addition, cash flows from operating activities were burdened by spending of around EUR 570 million related to the ongoing transformation of BASF Group. In particular, this related to cash-effective restructuring measures and the introduction of the new ERP systems needed in Agricultural Solutions and the core businesses. We continue to maintain a strict focus on net working capital management, as reflected in the two KPIs for our core businesses. Compared with the prior year period, average days of inventories valued declined by 6%, and average days of sales outstanding decreased by 3%. Payments made for property, plant and equipment and intangible assets decreased by around EUR 980 million to EUR 1.9 billion. Free cash flow thus came in at minus EUR 1 billion, compared with around minus EUR 870 million in the prior year period. Our full-year free cash flow forecast is unchanged.
In the fourth quarter, our operating divisions are expected to collect more cash from outstanding receivables than last year. However, the inventory reduction will largely depend on price levels. For the full year 2026, we now expect payments made for property, plant and equipment, and intangible assets to come in clearly below EUR 3 billion. In February 2026, we had forecast EUR 3.4 billion. We continue to deleverage too, and further strengthen our balance sheet. Compared with the end of September 2025, we had reduced net debt by 20%. We used a significant portion of portfolio proceeds to repay maturing financial debt and to redeem bonds and loans ahead of their maturities. We expect net debt to reach around EUR 15 billion by year-end 2026. The strengthening of our balance sheet supports our single A credit rating. This Monday, Fitch confirmed our single A credit rating with a stable outlook.
We also remain fully committed to attractive shareholder distributions via dividends and share buybacks. For 2024 and 2025, we paid total dividends of around EUR 4 billion to shareholders of BASF SE. Between November 2025 and October 23, 2026, we bought back shares for around EUR 1.9 billion. This amount is part of the overall program of at least EUR 4 billion that we announced in September 2024. Despite the continued execution of a share buyback program, our equity ratio increased by almost 3 percentage points to 47.2%, and this underscores our commitment to maintaining a strong financial profile. That brings us to the outlook. Back to you, Markus.
Thank you, Dirk. Ladies and gentlemen, as the business year has progressed and we now have greater visibility regarding the expected earnings development, we are able to provide a more specific forecast range for BASF Group's EBITDA before special items for 2026. We expect EBITDA before special items of between EUR 7.4 billion and EUR 7.8 billion. Compared with our previous forecast, we have raised the lower end of the range and slightly increased the upper end. Given the continuing uncertainties surrounding further geopolitical and global economic developments and their impact on oil and gas prices in particular, we maintain the forecast range for the free cash flow of between EUR billion 1.5 and EUR 2.3 billion. In view of this uncertainty, we are also leaving the macroeconomic assumptions published in July unchanged. Now Dirk and I will be glad to answer your questions.
Thank you, Markus. Thank you, Dirk. With this, we start the Q&A session, and same procedure. You can click on the hand icon in Teams, and then we will give you the floor. Please remember you are muted. Please do not forget to switch on your microphone. At the last press conference, it worked well. Please switch on your camera if possible, because then we can see you here in the studio and it's easier to answer your questions. We will start with questions in German, then we switch over to the English channel. Please ask your questions in the language of your channel, and then we will answer the questions respectively, and it works in both directions. Okay. Let's start with the first question. Now, who asked for the floor? Mr. Freytag, FAZ. Good morning, Mr. Freytag.
Hello, I hope you can see and hear me.
We hear you. We cannot see you yet. Oh, now we can see you. Thank you very much.
Well, normally I look better than here on the screen.
Same for us, by the way.
Okay, first question on Evonik, or maybe two questions. First of all, this increased offer you made, did you receive any reaction? From whom, and what was the reaction? The only public reaction we heard of was, the organization running Marl & Wesseling, SYNECT, who are quite skeptical. They said they would rather like to continue without the Verbund. Could you comment on that? One more question regarding Agricultural Solutions. You mentioned the business in Latin America is difficult. Maybe you can briefly explain what exactly the reasons are.
You will take over Mark... ?
Thank you, Mr. Freytag. Let me comment on Evonik. Regarding your first question, please bear with us that we cannot comment on the details regarding the transaction. We expect confidentiality from the other party. They can expect the same thing from us, and details including potential offers and so on, I cannot and I do not want to comment on that. I read the comment by the SYNECT management somewhere. It's not a contradiction. I think it was pointed out that this company running the site needs some degree of freedom. We see it the same way. This is why BASF InfraService & Solutions Lausitz GmbH, the operating company in Schwarzheide, is also structured in a very independent way. I can understand that management says, in order to make a company that is running a chemical park successful, we need certain freedom.
I didn't see any discrepancy in this. I am of the same opinion. There is no reaction as of now.
Did I understand you correctly?
I do not want to comment on that.
Okay, Mr. Freytag, this brings us to Agricultural Solutions. First of all, let me put this in perspective. the third quarter normally is the weakest one in Agricultural Solutions by tradition. In the third quarter, the issues were the technical migration of our IT systems. Markus Kamieth mentioned it in the presentation. Part of the sales in South America were booked in the second quarter, so they were missing in the third quarter. In South America, the business as a whole is difficult for the whole industry. Volumes went down, prices are under pressure. This is related to the weather. The weather conditions in South America as well were not very favorable for crop protection and seed product sales.
It is also related to the pricing opportunity of the farmers, so the income of farmers, how much can they pay for such products? This still is under a lot of pressure. This brings us to the fourth quarter. The fourth quarter is a seasonally stronger quarter. This also includes South America, but goes beyond South America, and we are very confident that our performance of the last fourth quarter can be repeated. So technical problems are behind us, and the team is highly motivated for a successful fourth quarter. Thank you very much.
Okay. Thank you. Olaf Lismann of Die Rheinpfalz is next. Hello?
How would you characterize the state of contacts to Evonik? Is it cautious, exploratory negotiations, or have negotiations already started officially or unofficially? My second question is, how does the low Rhine level, the water level of the Rhine, burden BASF, that is Ludwigshafen, and would you have to bear additional costs this year because of this?
Mr. Lismann, please bear with me. Status of talks, negotiations, I do not want to comment on this because this is part of the confidentiality. Confidentiality is very important. This is being discussed widely in the public. This is not what we wanted to happen, but apparently we weren't able to avoid that a lot of this is reported in public and some people make up stories about this, but we want to stick to confidentiality, and this is why I do not want to give you any details regarding negotiations or status of the discussions. Please bear with me. Regarding the Rhine water level.
I think at the last press conference, we mentioned it, the message we gave after the second quarter still applies. Our team has prepared very well for the now long phase of the low water levels. Individual bottlenecks, yes, we saw some in the area of raw materials and feedstocks, but you saw how our volumes are developing and overall it did not cause any significant economic damage for us. I do not want to deny that there were some bottlenecks here and there and problems with customer supplies, but this was limited to a shorter period of time. We use low water barges that are able to produce a lot of product, even if the water level is low, and we then switched to trains, to the rail and to the road, to trucks.
We are very satisfied with how our team dealt with this and how we went through this situation. Thank you.
The next question is from Bert Fröndhoff, Handelsblatt, please.
Yes, good morning. I hope you can hear me, and maybe you can also see me now. Okay, I have three questions. First of all, you said that every transaction that you make should not be burdening your financial targets of BASF. Could you say again which are the concrete targets, particularly when you're talking about de-leveraging? What are your targets there? Second question, whether it is one or some people who say, "Okay, BASF such a bad track record in the past." What is your comment on that? The third question is, before BASF, Syngenta will be the ones having an IPO with the Agricultural Solutions segment. There are EBITDA figures being discussed between 15 and 20. Can you comment on these figures and on the evaluation of this IPO?
Okay, I will start with deleveraging. We said very clearly that we want to have a disciplined approach, both when it comes to the target and also when we are talking about sales and ourselves. So we keep to our promises for our shareholders between 2025 and 2028 to cash out $12 billion, $8 billion of which in the form of dividends
Around about and EUR 4 billion about share buybacks. And we will not change this approach. And we are on a very good path towards this target. The first or second tranche of share buybacks is up and running, and we made a lot of this billion already, and we will also continue with the remaining tranches. This is very fixed in terms of our targets and also when it comes to our dividends that we want to pay out. At the same time, we have the possibility with paying into our portfolio measures that we did to strongly deleverage. Our orientation is our rating target. So we have a single A rating in the market. In the chemical industry, we are not alone here, but almost alone with this rating, and that is continuous to what we want to have.
And this is part of our discourse also with the rating agencies. You have seen that one of the three rating agency just now updated our rating and said, "Okay, everything that you do and everything you are planning means for us that you are a candidate for a stable rating." So that fits together. And both for us is equally important, a strong balance sheet and also attractive payouts or distributions to our shareholders. So you see the 70% or 47% digit, which is very stable. Yes, and maybe I can comment on the comment that BASF does not have such a good track record with acquisitions. I have heard that before. Well, let me put it this way. This is spread out, this rumor, but we do not quite understand it. We know our portfolio.
If you look at the core portfolio of BASF today and look for the strong parts carrying this attractiveness also in the third quarter, there is lot coming from acquisitions in the core business, both Ciba, Cognis, Engelhard. There is many businesses that today make out a very strong part of our portfolio. When it comes to acquisitions, looking back, you can always say, "Did you pay a fair, low, or high price?" Well, in some discussions that might be talked about, but to say that these acquisitions in the past have not improved BASF, well, there is no proof for that. We believe that our track record for acquisitions is much better than what was recently discussed. And we are very satisfied and looking forward, we believe that acquisitions are a viable way to strengthen our core business capital-wise, and I cannot say more about it, really.
Actually, if you really go into it, the track record of BASF to build a portfolio with acquisitions is good. Dirk, will you want to answer that?
Yes, I can do that. Answering the Syngenta question. We are very well on track when it comes to the preparations of the IPO readiness, and we have the timeline, which is confirmed. In the middle of next year, we will have concluded it. Already today, 80% of the business have been sourced out or carved out. We are doing good progress here. We are looking at ourselves because this is a very good and strong business, which on the Capital Markets Day in November will be also presented. We will also have a look at what do the others, and we have the four banks that accompany us closely.
We selected these banks, we published those. Then, of course, you look at the situation. You have one company that you mentioned. With all the other companies that move in this environment, there are slight differences. The listing location or the business model, and also the composition of seed and crop protection. In no case it really has a perfect fit, and you can never say, "Okay, if they succeed in this way, it will be the same for BASF." But of course, you have a look, you draw conclusions, and you work looking forward.
Thank you. Mr. Von Hofheinz's questions were answered, and Patricia Weiss from Reuters is next.
Good morning to Ludwigshafen. Please bear with me. I also want to ask a question for Evonik.
You said it is not a must, it is a can, and that you don't want to pay too high prices. Can you maybe say if Evonik continues not wanting to do this deal, that you will also take into consideration a hostile takeover, because you have some background here with the Engelhard takeover. It is 8,600 positions that have already fallen away. Is that the end of reducing positions or does it continue? If there is a merger with Evonik, you said that dismissals for operating reasons will be excluded, but of course, positions can be reduced also otherwise.
Yes. Maybe let me answer the question. Your first question was about hostile takeovers. This is not only a question, when it goes to transactions, it's also a hypothetical question, and this is what I don't want to answer at all. We assume that we made a very serious and valuable offer, and on this basis, we would like to initiate constructive talks. Everything else I don't want to talk about or speculate upon, and that will also lead into the wrong direction. The second question, position development on positions and job reductions. We always report 2024 to today.
You were mentioning 8,600. Of course, we are on a journey, and at the beginning of the year, we announced that with our CoreShift program until 2029, we want to further optimize our core business. The net cash fixed cost are to reduce by 20%, and that means, of course, that restructuring has to go on, and also positions have to be reduced. This is not finalized.
The momentum that you see now will continue for quite a while, because now in October, only now do we start with the measures of CoreShift. From now to 2028, 2029, you will continue seeing significant restructuring and also reduction of positions.
Okay, thank you. Then I would say, let's continue with the next question, and that comes from Hartmut Reitz, SWR.
Good morning, also from my part. I would like to talk about reduction of positions. Again, you gave us concrete positions, 8,600 globally. Can you also mention what the share of the Ludwigshafen site is in this figure? If I understood you correctly, this is real reduction. It doesn't include what was built up in Zhanjiang or what fell away by selling parts of the business. This is real reduction of positions.
You also said that the Evonik acquisition would be the right point in time. Really? I imagine that an integration of such a big company puts a strain on all employees, particularly also here in Ludwigshafen, so it's a lot of work. With these saving programs going on, are you not stressed enough already? Is it not quite a good point in time?
Okay, back to the timing. You have to bear in mind, and I don't want to talk about the mechanism of a potential transaction, but you have to bear in mind that this transaction of this size does not take place overnight. Comparable transactions, if you take a look at those, and looking at the status we have at the moment, you need approvals, all kinds of approvals, and until starting integration, this will take some time, and I already mentioned, even if we were to start right now, we do not expect a closing of such a transaction before, I would say, 2028.
That's realistically speaking. You need to bear this in mind. Some people think that in Q1 of 2027 something will happen. This is not true. This were something that takes place at a later point in time. We spent a lot of time thinking about this, thinking hard.
We diligently prepared this discussion with Evonik over a lot of months, and we thought about, do we have the resources, and what about how does it fit our resources, our availability of people that you need for a project like this? It was diligently prepared and well thought through, and we could go ahead. Regarding the Ludwigshafen site, Mr. Reitz, 8,600, this is the figure we published. We comment the reduction in positions in hindsight. What happened?
As a matter of fact, the majority affects Germany and Europe, and Ludwigshafen, you may say 1/3, 2/3 but it's a global program, and of course, more positions were affected in Europe and in Germany. Two thirds are Europe of the 8,600, just to make it clear. Of the 8,600, 2/3 affect Europe. Proportionately, the Ludwigshafen site is very big in Europe, but the exact figure, we cannot give you the exact figure.
Okay, thank you. Let's continue. Matthias Kros, Rhein-Neckar-Zeitung.
Great. Thank you very much. Good morning. We have a very fragile global economic situation, but you mentioned price increases that you realized almost everywhere. How is this possible? Is this due to your market power? Maybe you could comment on this. How much of the growth you reached is due to price increases? How sustainable is this growth? Redundancies, the situation looks a little better for BASF, and could we say that when it comes to the job cuts, do you have less pressure now compared to one, two years ago? It was good to hear for the journalists here that you no longer mentioned any plants that will be closed. Was this by coincidence? Is there something to happen there, or are you done with that? Maybe you can comment on prices.
Let me start with the job cuts and is there less pressure?
We don't feel any pressure being released now. Due to our strategy, we reached a situation where by structurally separating our stand-alone businesses, it enables us to develop our core better and make it fit for the future. We have to adjust costs, and the chemical market globally is becoming more and more difficult, and of course, we want to make sure that we can still win, and winning means growing.
So pressure, I don't want to call it pressure. It's an opportunity for us to start the CoreShift program right now. Of course, we will reduce structures, we will reduce HR costs. There will be a reduction in positions, but it is an opportunity to make sure that this purer, so to say, core business reaches another level. Our workforce would not confirm that there is less pressure.
It's rather the other way around because we now are starting to implement CoreShift, and of course, we will reduce HR expenses all over the world. I wouldn't call it reduced pressure. On the other hand, however, we can say that the efforts of the last two years we went through when it comes to restructuring now are reflected in the results. If you look at the earnings development quarter- by- quarter, it turns out more and more that the reduction of our cash fixed costs, that you really see this now. So the hard work, the difficult decisions now are reflected in profitability. We need to continue along this path. Regarding plant closures, very briefly, we can never say that in Ludwigshafen, a site of such complexity, of such size, we will have reached the end of closing plants and investing.
We are investing a lot of money at the moment. We are building a lot of new plants, new infrastructure projects. I always say that this is not mentioned often enough, and in future, we will close plants because it is part of the natural development process of Verbund Ludwigshafen. But at the moment, we do not have any plans to come up with major plant closures because we saw further development over the last two years. The analysis about which plants are competitive in Verbund Ludwigshafen, this shows that these numbers are going up. I think I mentioned this before. So we are on the right track in Verbund Ludwigshafen. We took the right measures, but it does not mean that we will stop acting. Mr. Kros, the prices. The price increases were triggered obviously by what happened in the Middle East at the end of Q1.
It then turned out that prices driven by raw material prices increased in the chemical industry. We noticed it first in our upstream businesses, where with a certain time lag, we were able to pass on prices, and this continued in our downstream businesses, specifically Nutrition & Care and Industrial Solutions. What are the reasons? Well, it turns out imports from Asia to Europe for some time showed disruptions. Fewer exports from countries such as Korea, Japan, India. China continued supplying. Other countries were running into difficulties. Now, this is more balanced, but we still have higher costs of transportation, and this is why prices, with a few exceptions, are slightly higher. Of course, a local supplier, we are a local supplier in Europe for Europe, is benefiting from this. One more comment, Mr. Kros, because this was part of your questions.
If you look at the volume development, so what kind of volume growth we can show. Compared to the chemical market, it is clearly better because the global chemical market sees slight growth, but only for one reason, because the chemical market in China is growing. Chemical market outside of China will shrink again, but we have relative volume growth. So it is not only our opportunity to pass this on due to the raw material prices, but it is volume growth, and this is because we are more competitive now.
Thank you. Marilen Martin from Bloomberg is next.
Hello. Yeah, good morning. I have a few short questions. First, on Care Chemicals, you were talking about the litigation. Can you maybe give a few more details if it is PFAS related or anything else? Then, in the analyst calls, you talked about some sales at individual plants or assets in Germany and Europe. Then the question on Evonik, if you say that this is your preferred target, what other acquisition targets have you looked at apart from that, and why is it your preferred target for a takeover? Maybe you can also talk about the synergy.
Well, let me start with the last question. You will understand that I will not give you analysis of all the candidates for possible acquisitions, but let me just say one thing. It is something that we have been preparing for a very long and systematic time. Many months of work went into that, which portfolio might fit into our company and what combination would be in the interest of our shareholders. We went through many different analyses and when weighing the different attractiveness criteria, part of it being the character, for example, innovation character of the portfolio, financial performance, but also performance and structural fit when it comes to synergies.
Looking at all these aspects, Evonik is an attractive and convincing case, and this is why we pursued it. But I do not want to go into any other details or speculate on anything. Other asset sales? Well, this morning I commented it saying that we will go on strengthening our core business, and this is why we want to do attractive portfolio management.
Time and again, we will have to have a look at business, which when it comes to performance or strategic outlook, do not contribute so strongly to our core business and maybe in other owner constructions might make more sense. We do not have any major plans, but yes, we have announced a few things. We announced, just to give you two examples, that our business with mining chemicals, well, we will try to find a buyer here and also for the feed enzyme business. These are smaller businesses where we always consider, well, can we add value here when we do smaller transactions, but do not envisage major divestitures, which we have not planned.
Care Chemicals, you maybe?
Yes, Ms. Martin. The claim has been running for a time, has nothing to do with PFAS, and the settlement is in an upper two-digit million figures, and it is finalized. There is no second round, so it is a smaller case here. Not much exciting about it, and it is all done with.
Thank you. So that brings us to Ms. Buchhorn from the manager magazin. Ms. Buchhorn.
Sorry, I am listening to myself just now. I have to switch this off. Okay, so good morning to you, [Savina]. Two questions. You were talking about CoreShift briefly, and you said that you are initiating the major measures now. So what exactly are you talking about? Which measures are you talking about? Then maybe briefly on Evonik, it is a complex situation. A lot is being discussed. How much time do you give yourselves to advertise this target, and when will you say, "Okay, now it is enough"?
Maybe let us be brief about your first question. I cannot comment it. I just do not want to comment it. It is not something which we just try. As I said, we have prepared for it for a longer time. It is a serious approach to make this offer, which makes sense and adds values for all the stakeholders. It is something that we are very much committed to, but it is not something which will draw out over a year. Somewhere in between is the truth, and I cannot give you any more details, and I do not want to speculate. We want to really commit ourselves to this, but we will not continue doing this without a result for years and years.
It has to be decided at some point whether it is feasible or not. CoreShift is very complex. It is a complex project. Maybe let me try to say that with this possibility that we separated the core businesses from the standalone businesses to build a new operating system for our core businesses. The core thought at CoreShift is that we do not want to individually optimize cost for the individual businesses. What we try is that we do a sort of cross-functional project for all of these. Let me give you an example. We do not go to every OD and ask them to optimize their costs in a certain function, for example, personnel, HR.
We rather say, "Okay, how can we optimize HR for this entire core portfolio for BASF?" We go through this function to function, and we put it on the list of our optimization projects that we already have. This is then a matrix of implementation measures, which will continue for the next three years with concrete measures. We started at the beginning of October, communicating to our employees, which are the guidelines for this new operating model. Now we discuss with the representatives of the employees, but also with the employees themselves, what that means for every OD and for every function. It is very complex.
It is a major restructuring program, but it clearly also has the claim to build a better BASF, a simpler BASF, where employees of BASF get the feeling that some challenges from the past, talking about complexity, for example, lack of speed, that all this gets easier and better, and so that we have a company, a BASF, which has more clout and is better for our employees, too, and which is also better in competition. It is a complicated project, and in the future, we will continue talking about it, but let me leave it here, because if not, I will continue for another 30 minutes explaining this.
Okay. Then Ms. Eschbacher from Mannheimer Morgen.
Well, thank you. Hello, Mr. Kamieth. Last week in your video, you advertised your approach to the Evonik employees. You also said that Evonik could benefit from precursor products that might come from the Verbund Ludwigshafen. It sounds as if it could be a strengthening of the Ludwigshafen site. Is that correct? Could you explain?
Well, thank you very much. I was not talking about the Ludwigshafen site. I was talking about the Verbund platform of BASF as such. It is something which we have worldwide. We have a basic chemical business which worldwide has Verbund sites, but not only Verbund sites. It is very competitive, and it produces important basic chemicals and products competitively.
We also sell downstream, and this is one of the criteria of BASF, that these long value-adding chains exist at BASF, so strong basic chemicals and upstream assets, plus a very big specialty chemicals, if you want to call them like that, or downstream portfolio. It is both, and that is what is typical for BASF. In combination with that, we would now build up the specialty part of BASF downstream so that this philosophy could be strengthened. So strong integration into competitive basic chemicals plus a very strong forward integration, if you will, of specialty chemicals. It is not the only reason. In the video, I just took it as one reason for synergies because it is very self-understanding. The synergies are multilayered. They take place in the market, in structures, but also in R&D, and also with subjects where you potentially benefit from a better scaling.
Let us take the implementation of AI, for example. Size makes a difference here. I cannot go through all these examples in a five-minute video. This one product part and this integration was not supposed to be so prominent, but I think it is quite understandable that with backward integration, you can be more resilient and then eventually also more competitive.
Thank you. Nele Höfler of WirtschaftsWoche, please.
Thank you. Hello. Two questions on Evonik to test how far we can go here. First of all, BASF over the past years wanted to be more independent from the German market, and now you invest in Europe and you want to buy something here. How does that fit together? Secondly, if Evonik will buy Ashland, what would that mean for BASF's plans? Thank you.
Well, the second question, actually, I have to say this is very hypothetical in terms of a question. I really cannot say anything about that. I have an opinion on that, but I do not want to talk about that here. There is enough said and written about it. On your first point, regional distribution and a balanced distribution over the most important markets is an important criteria also when selecting the companies that might fit with BASF. I believe that the public discusses it in the direction of having a bigger concentration of companies in Europe. If Evonik actually does the portfolio measures that it openly announced, for example, the selling of the so-called C4 business, then Evonik has a smaller Europe dependency of BASF today. In regional balancing, it would even help us a little bit.
The combination would be a little more balanced, not dramatically, but a little bit for the region. It is not a concentration in Europe, but it is a slight broadening, so to speak, of the entire regional split. Of course, both companies have a lot of resources when it comes to people, personnel concentrated in Germany because we have our headquarters here in Germany, making it a bigger central activities. That has nothing to do with the distribution of business.
There are no more questions of German journalists. We are able to address some questions from our English-speaking reporters on the line. I see first in place is Andrew Noel. Andrew, the floor is yours.
Hi. Good morning, and thanks for taking my questions. I wanted to take you back to the track record M&A question, and I felt that that annoyed you a bit, that reputation or those accusations. The question is, I guess there is some feel that there is a debate to be had about what happened to Ciba, Allied Colloids, water went into Solenis. You bought Master Builders Solutions for Evonik, and that got offloaded, and maybe Cognis as well, what has happened to Cognis after you have acquired it. My question is, would you be prepared to embrace complexity in a way you have not for years? What I mean by that is the number of SKUs, like a service-led model rather than volume-led, where you are shipping a kilo, not 100 kilos of product.
Andrew, I do not want to go into now a case-by-case study on our past M&A projects. Again, I did not want to come across as annoyed. I just think that it is now, let us say, a theme that I see over and over also portrayed in the media, where I just do not have the space to explain why I offer a different opinion, and that is why I just see it a little bit too prominent now, and I think there is some reason for this. Let me also just challenge you on one thing. You said, are we prepared to deal with high complexity and number of SKUs and so on. We just sold probably one of the highest valued coatings businesses, at least the majority of it, to Carlyle.
The complexity in the coatings business is by far exceeding anything that you will find in a company like Evonik or any other chemical company, and we have been able to run this very successfully, and you can see it in the valuation. This easy theme that BASF can only do large-scale commodity, low complexity, rail car type of businesses is just flat out wrong. If you look into the complexity of our Agricultural Solutions business, you also see that there is a tremendous complexity in this, and we run this very well. Now, you have to have the right execution model and the right setup within the company to make sure that your highly complex businesses are not suffering from maybe the need for standardization on the other end of the spectrum.
And that is, if you remember this, we have talked about this in the last years under this theme of differentiated steering. From my perspective, there is no limitation of complexity that I can imagine being run in BASF. So I think we have proven in the past that we can run specialty chemicals businesses very well. I always remind everybody that BASF has the largest specialty chemicals portfolio. And if you look at the success of our, for example, Care Chemicals business, that to a large extent is because we have made the Cognis business even better and even more global. So I think our track record is better than what is portrayed out there. I think we can handle complexity. We are a good company running downstream and highly complex specialty businesses. The reputation is a bit different.
I have to live with it maybe until I get a chance to prove otherwise, but we have the ambition to prove that we can be a great specialty chemicals company.
Thank you.
Awesome. I see there's Marie Van Oost from De Tijd. I hope I pronounced this correctly. I don't think so.
Yes, you did, actually. Hi, everyone. Hope you're all well. Thanks for taking so much time to answer our questions. I have three regarding Antwerp in Belgium. Given the challenging environment for the European chemical industry, particularly high energy costs and weak demands, how do you assess the competitiveness and the long-term prospects of your Antwerp site? Do you anticipate further restructuring or changes to production capacity? Secondly, you reported an impairment in your Monomers division, which has a significant presence in Antwerp, if I'm correct. Could you clarify which production sites or assets are affected? Lastly, a question about the Kairos@C project in Antwerp. BASF and Air Liquide have been granted an extension until the second half of 2027 to further develop this. Are you still committed to this investment, and what are the main obstacles preventing a final investment decision? Thanks.
Yeah. Thank you. I pass on to Dirk for the impairment question because you answered it also in the analyst call, so you are better prepared for this. Just a comment on Antwerp as a site. Antwerp is also one of our biggest and, in general, most competitive sites that we have around the globe. Has been very successful in the past, has always been, when it comes to operational efficiencies and effectiveness, one of our best sites in the world. Recently, I think the development of the European Chemicals market has also hit Antwerp significantly. That's why we also announced a significant restructuring program in Antwerp. Of course, within the Antwerp site, we have a lot of different types of assets, and we have very profitable and highly competitive assets, even in the current difficult environment, and we have more challenged assets.
That's not so different than Ludwigshafen, just on a slightly smaller scale. I cannot rule out any further adjustments of the Antwerp manufacturing footprint, but I can say that in general, especially now with the measures that we have initiated, I think Antwerp is on a track to be one of the most competitive chemical sites in the chemical industry in Europe. We very much build our future of the core business of BASF on the strength of the Antwerp site. Antwerp, as Ludwigshafen, will look differently in five years from now as it does today, but it will be part of the core strength of BASF also going forward. To this Kairos@C project, you rightfully said the decision timeline was extended, and there's a reason for this, because it is a very complex and a commercially very challenging project.
We have to take into account certain other developments, of course, that are happening in and around the chemical industry in Europe, and partly it is also affected by what is going to be the future CO2 regime in Europe. You know that there's this ongoing discussion about an ETS revision in Europe. All of these things will influence how does the business case for a large-scale CCS project in Antwerp look like. We are still in discussions with our partners. We want to make this work. We are dependent on certain subsidy schemes to get this project as a consortium then off the ground. We are also dependent of the boundary conditions that we will have for CO2 in Europe. All of this takes a little bit of time, but there's no need to now make a call today.
We have a time until end of 2027, and we take this very seriously, and we're in intense discussions with our partners.
Yeah. Hi, Marie, to your question on the impairment. This pertains to a so-called HMD plant, which is located in Chalampé in France. It's part of PA-66 value chain. Its major customer industry is auto. As we know, auto in Europe is weaker. On top we have import competitive pressure, so the margin profile for this plant for the foreseeable future is lower than we expected earlier. This is why we had to take this impairment, which does not mean that we are shutting the plant. Just the contrary, team has fighting spirit and production, and market competition goes on.
Thank you.
Wonderful. I think now we come to the last and final question from Tom Brown, from ICIS.
Hi, Tom.
Yes, good morning. Hi, good morning, everyone. Thank you for the opportunity. Just two questions to close off. First, I just wondered if you could say a little more about your rationale for the proposed joint venture with Highsun on the PA-6 chain. Also, would Highsun be forwarding more assets into this than their Geleen, Netherlands assets? It has been proposed as a 50/50 joint venture, so would they be potentially investing any equity to BASF in the deal? Is there any kind of proposed lock-in period on both sides? Just the second thing, you touched on Evonik looking to sell its C4 business and just for BASF in general, do you see a future in Europe where more of your feedstocks come from outside the region, either through your own assets or from other companies?
How does that play into your local strategy, and how do you see secure supply evolving in Europe more generally? Thanks.
Maybe I take both of them. I think the answers will be maybe for you disappointingly short, because on the PA-6 joint venture with Highsun, we cannot also say more than what we have published so far because we are right now not even at a signing stage of the joint venture, but we have only so far agreed on an MOU, to go into now negotiations about this. At this point in time, there is really not much more details that we can disclose. It is obvious that these are two strong players in the PA-6 value chain with a strong footprint in Europe. As you know, there are non-European assets that are potentially in scope. But the scope and the announcement that we have made so far is all we can share at this point in time. Everything else needs to be then part of a further negotiation.
Discussions on structure, on financing and so forth is all to be announced at a later point in time. Your question on feedstocks. We continue to believe that local for local is the default best option also when it comes to feedstock supply in all regions. Of course, Europe is, for some feedstocks, at a disadvantaged position, and some obvious feedstocks, like natural gas, naphtha, of course. We are exploring options also across the world to bring these feedstocks into Europe in the best possible economical way. On the other hand, we are exploring for, let's say, the variety of different feedstocks, always whether we can establish a local or a regional option that allows us to, at the end of the day, be more resilient with our operations also long-term.
Where we deviate from this local for local, it has to have a very strong economical case, and that is still our guiding principle also in a more and more challenging European environment where, of course, cost escalations on some feedstocks are to be expected. But there is no change in strategy or no change in perspective on trying to drive BASF into a local for local footprint as much as we can.
Great. Thanks a lot, Markus.
Thank you very much. That brings us to the end of this press conference. I do not see any further questions. I would like to say thank you for your interest, that so many of you have dialed in, so many interesting questions. If you have any additional questions or need additional information, we are available. Also, if you need some videos. The next appointment would be the figures for the entire year 2026. They will be presented on February 26, 2027, and that will be our annual press conference here in Ludwigshafen. Of course, we would love to welcome as many of you as possible. Thank you again and have a beautiful day.