Outlook 2026

Q1 2026

After a weak close of the year 2025, chemical production in the first two months of the first quarter of 2026 was initially characterized by stagnation in the EU, a moderate uptrend in the United States and a continuation of dynamic growth in China. Since March, developments have been influenced by the armed conflicts in the Middle East and the near-total closure of the Strait of Hormuz for maritime shipments of oil, natural gas and chemicals.

Even after the outbreak of war in the Middle East, early economic indicators and existing production data show continued growth in global chemical production. However, future developments will be increasingly influenced by the steep rise in oil and natural gas prices. In addition, there are also physical shortages of raw material deliveries from the Middle East, especially to Asia.

Future economic developments will be affected by high uncertainty about the progression of this conflict, especially with regard to opening the Strait of Hormuz and the impacts on the production and exports of energy and petrochemical commodities from the Middle East, as well as with regard to global demand.

Given the high level of uncertainty about how the conflict in the Middle East will play out, BASF is not changing its assumptions at this time regarding the global economic environment in 2026, which were presented in the BASF Report 2025:

• Growth in gross domestic product: +2.7%
• Growth in industrial production: +2.3%
• Growth in chemical production: +2.4%
• Average euro/dollar exchange rate of $1.20 per euro
• Average annual oil price (Brent crude) of $65 per barrel

From today’s perspective, the assumptions made in February regarding growth in global GDP, industrial production and chemical production may prove to be too optimistic. The oil price may be higher than our existing assumption, owing to impeded production and exports as a result of the conflict in the Middle East. The U.S. dollar may appreciate compared to the euro.

The BASF Group’s forecast for the 2026 business year published in the BASF Report 2025 is maintained:

• EBITDA before special items of between €6.2 billion and €7.0 billion
• Free cash flow of between €1.5 billion and €2.3 billion
• CO₂ emissions of between 17.2 million metric tons and 18.2 million metric tons

With regard to opportunity and risk factors, the statements contained in the BASF Report 2025 remain fundamentally valid. The forecast risks associated with lower prices did materialize in some cases in the first quarter of 2026. This had a negative impact on margins compared with the prior-year quarter, while volume trends were positive. We are closely monitoring the opportunities and risks relating to the conflict in the Middle East and will leverage opportunities and mitigate risks. Given the rapidly changing situation – especially with regard to energy and raw material prices as well as potential disruptions to global supply chains – it is currently impossible to reliably quantify or assess the resulting effects.

According to the company’s assessment, neither existing individual risks nor the sum of individual risks pose a threat to the continued existence of the BASF Group.

BASF Report 2025

Global economic development in 2026 will be determined by changes in trade policy conditions and ongoing geopolitical uncertainty. Temporary extraordinary effects from early orders and a corresponding buildup of inventories, which supported growth in the previous year, will not occur in 2026. The higher tariffs in the United States are redirecting the global flow of goods and leading to increasing competitive pressure in countries or regions with lower import barriers.

Against this background, we expect more subdued development of the global economy as well as industrial and chemical production in 2026. Our forecast for the BASF Group and its segments assumes that growth in global gross domestic product will be slightly lower and that of global industrial production will be significantly lower than the prior-year level. We expect a further decline in chemical production in the mature economies and weaker growth in the emerging markets. In China, growth will weaken but remain solid as demand from Chinese customer industries continues to grow, supported by exports. In the EU and the United States in particular, we expect a further decline in chemical production due to weak demand and, in the case of the EU, high import pressure. After automotive production increased significantly in 2025, we expect a slight decline in 2026.

Our planning was based on an average oil price of $65 for a barrel of Brent crude and an exchange rate of $1.20 per euro.

The BASF Group expects EBITDA before special items of between €6.2 billion and €7.0 billion in 2026 (2025: €6.6 billion). The Nutrition & Care and Chemicals segments are likely to increase their earnings significantly, while Industrial Solutions expects a slight increase in earnings. In the Materials and Agricultural Solutions segments, we forecast slightly lower earnings due to currency effects. Surface Technologies' EBITDA before special items is predicted to be significantly below the 2025 level, mainly due to the absence of one-off effects in the Environmental Catalyst and Metal Solutions (ECMS) division.

We expect the BASF Group’s free cash flow to be between €1.5 billion and €2.3 billion (2025: €1.3 billion). This is based on forecast cash flows from operating activities of between €4.9 billion and €5.7 billion, minus the expected payments made for property, plant and equipment and intangible assets in the amount of €3.4 billion.

CO₂ emissions forecast for the BASF Group

CO₂ emissions are expected to be between 17.2 million metric tons and 18.2 million metric tons in 2026. We expect higher emissions compared to the previous year mainly due to the startup of the Verbund site in Zhanjiang, China, while production volumes at other production sites will remain almost unchanged. We will counteract this increase with targeted measures to reduce emissions, such as further increasing energy efficiency, optimizing processes and continuing the shift to electricity from renewable energies.

¹ For EBITDA before special items and cash flow, “slight” represents a change of 0.1% to 10.0%, while “considerable” applies to changes of 10.1% and higher. “At prior-year level” indicates no change (+/-0.0%).

Disclaimer

This page contains forward-looking statements. These statements are based on current estimates and projections of the Board of Executive Directors and currently available information. Forward-looking statements are not guarantees of the future developments and results outlined therein. These are dependent on a number of factors; they involve various risks and uncertainties; and they are based on assumptions that may not prove to be accurate. BASF does not assume any obligation to update the forward-looking statements contained in this presentation above and beyond the legal requirements.