BASF: Announced IPO Masks Challenges

BASF is executing its 'Winning Ways' strategy, focusing on cost savings, capex reduction, and divestments to improve financial flexibility. Divestments, including the Coatings and planned Agricultural IPO, will shrink EBITDA, making ambitious €7-9 billion post-IPO targets challenging for the core business. Shareholder returns are prioritized with €8 billion in dividends and €4 billion in buybacks through 2028, largely funded by divestment proceeds rather than core operations. Persistent energy price volatility and restrictive central bank policy remain unaddressed risks, casting doubt on BASF's ability to meet its revised financial targets. In 2024 BASF presented the 'Winning Ways' strategy to address the underperformance of the company. The mandatory organizational changes were announced, accompanied by a cost-saving program. Of course it was announced capex would be reduced.