Chemical giant BASF is expected to see a slight increase in profits this year and plans to reduce costs by 2.1 billion euros.

Chemical giant BASF expects a slight increase in profits this year as growth in its agriculture and nutrition sectors helps offset soft demand for chemicals and coatings from the struggling automotive industry. The company said in its earnings report released on Friday that EBITDA profits excluding special items are expected to be between 8 billion euros and 8.4 billion euros this year, compared to 7.9 billion euros in 2024. BASF expects all sectors, except the chemicals division, to contribute to this growth. Meanwhile, its petrochemical business will be affected by rising fixed costs for a new plant planned to start operations in China in 2030. BASF CEO Markus Kameith said the expansion of the company's 10 billion euro plant in southern China will bring significant costs. Kameith, who took over as CEO in April last year, has been adjusting the company's strategy to address high energy prices and declining global demand. Earlier this month, BASF sold its coatings business in Brazil and is considering further divestments, including its agriculture and battery materials divisions. Sales in BASF's Surface Technologies division, which produces coatings, paints, and corrosion protection products, decreased by about 20% last year due to soft demand in the automotive industry. Although overall sales in North America increased in the fourth quarter, global sales were slightly down, mainly due to weak economic growth in regions like Europe. "Challenges such as the high GEO Group Inc. political and trade policy uncertainties will affect the confidence of companies and consumers... Most of the improvements we aim to achieve will rely on our own efforts," Kameith said. Additionally, BASF proposed a dividend of 2.25 euros per share, the lowest level in over a decade. Since the outbreak of the Russia-Ukraine conflict in 2022, which led to a prolonged surge in energy prices, the European chemical industry has struggled to keep up with its competitors. According to data from the European Chemical Industry Council, as of December last year, natural gas prices in Europe were nearly four times higher than in the United States. This impact is rippling through the entire industry, including paint manufacturer AkzoNobel (AKZOY.US), which plans to lay off 2,200 employees by the end of this year. BASF has been cutting costs at its largest chemical plant in Europe, the Ludwigshafen site. The company has started to close some smaller production units there and expects to reduce annual costs by 2.1 billion euros by the end of 2026. By the end of 2024, the company had already achieved annual cost savings of 1 billion euros. To boost returns in its core chemicals, industrial solutions, and nutrition businesses, the company plans to divest assets and is considering selling a minority stake in its agriculture division, which is expected to be completed by 2027.