Outlook 2025

Q1 2025

Since the beginning of 2025, the United States has imposed a series of new tariffs on its trading partners’ imports. Some tariffs and countermeasures from trading partners have taken effect and remain in place, while others were temporarily paused after a short period of time. Trade between the United States and China now faces very high tariffs, which are likely to have a considerable impact on direct trade between the two economies.

Already in the first quarter, production momentum in the chemical industry and its customer industries was significantly influenced by reactions to anticipated tariff increases by the United States. Developments going forward will largely depend on the trade policy decisions made by the United States and its trading partners.

A reliable quantification of the impact on the global economy is not possible at this time. In light of the volatile situation, the assumptions published in the BASF Report 2024 regarding the global economic environment in 2025 remain unchanged for the time being:

• Growth in gross domestic product: +2.6%
• Growth in industrial production: +2.4%
• Growth in chemical production: +3.0%
• Average euro/dollar exchange rate of $1.05 per euro
• Average annual oil price (Brent crude) of $75 per barrel

The BASF Group’s forecast for the 2025 business year published in the BASF Report 2024 also remains unchanged:

• EBITDA before special items of between €8.0 billion and €8.4 billion
• Free cash flow of between €0.4 billion and €0.8 billion
• CO₂ emissions of between 16.7 million metric tons and 17.7 million metric tons

The risks of lower volumes and a price-related margin decrease cited in the BASF Report 2024 partially materialized in the first quarter of 2025 and led to a slight earnings decline compared with the prior-year quarter. There is still a great deal of uncertainty regarding volume and price trends for the rest of the year.

The volatility of the tariff announcements and the unpredictability of other decisions by the United States, as well as possible countermeasures by trading partners are causing a high level of uncertainty. Thanks to our global strategy of serving customers through local production in their respective markets, the direct impact of the tariffs remains limited. However, indirect effects are emerging, particularly in terms of demand for our products and prices. The resulting outcome cannot yet be assessed. We will continue to closely monitor developments in U.S. trade policy and whether other countries impose additional retaliatory tariffs or implement other measures.

For the remaining opportunity and risks factors, the statements made in the BASF Report 2024 continue to apply overall. 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 2024

Our forecast for the BASF Group and segments for 2025 is based on the assumption that a moderate recovery in demand for goods will support the growth in gross domestic product and industrial production. In particular, the decline in consumer price inflation and the associated increase in real incomes are expected to boost consumer purchasing power in the United States and Europe. However, challenges such as increasing geopolitical uncertainty and a further escalation of trade conflicts in particular, will weigh on business and consumer confidence. Following the decline in automotive production in 2024, we expect stagnation in 2025. For the global chemical industry, we anticipate slightly higher growth compared with expectations for gross domestic product and industrial production. Growth in the chemical industry should result primarily from the anticipated expansion of the sector in China and other emerging Asian markets. We anticipate an average oil price of $75 for a barrel of Brent crude and an exchange rate of $1.05 per euro.

In 2025, the BASF Group’s EBITDA before special items is expected to increase to between €8.0 billion and €8.4 billion (2024: €7.9 billion). The Materials, Nutrition & Care, Industrial Solutions² and Surface Technologies segments² are likely to contribute to this. For some, this may be primarily attributable to sales volume growth and, in some cases, also to higher margins. In the standalone business Agricultural Solutions, we forecast slightly higher volume-related earnings. EBITDA before special items for the Chemicals segment is expected to decrease slightly compared with 2024. In particular, earnings in the Petrochemicals division will be impacted by rising fixed costs in connection with the startup of the new Verbund site in China and scheduled turnarounds. The anticipated considerable earnings growth in the Intermediates division will only be able to partially offset this.

We forecast the BASF Group’s free cash flow to be between €0.4 billion and €0.8 billion (2024: €0.7 billion). This is based on expected cash flows from operating activities of between €5.6 billion and €6.0 billion, minus expected payments made for property, plant and equipment and intangible assets in the amount of €5.2 billion.

CO₂ emissions forecast for the BASF Group

CO₂ emissions are expected to be between 16.7 million metric tons and 17.7 million metric tons in 2025 (2024: 17.0 million metric tons). We anticipate additional emissions compared with the previous year from higher forecast production volumes based on rising demand. We will counteract this increase with targeted measures to reduce emissions, such as increasing energy efficiency and optimizing processes as well as continuing the shift to electricity from renewable energies through the shareholding in the Hollandse Kust Zuid offshore wind farm, for example.

¹ For EBITDA before special items and free 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%).
² The assumptions for the Industrial Solutions and Surface Technologies segments already take into account the reclassification of the chemical and refining catalysts business as of January 1, 2025, and are based on correspondingly adjusted figures for 2024.

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.