BASF to cut dividend, list agricultural unit in restructuring plan

Multinational chemicals giant BASF saw shares fall on Thursday on the back of plans to slash its dividend and dispose of non-core assets, including the potential stock-market flotation of its agricultural arm.

In a statement ahead of its capital market day in Ludwigshafen, BASF said it was "setting a new direction for portfolio steering, capital allocation and performance culture", as it attempts to grow profitably and create shareholder value amid a tumultuous time for the industry.

An economic slowdown in China and Europe, along with a spike in energy prices and huge impairments on its Russian assets following the invasion of Ukraine, has seen the stock fall by around 30% over the past two years.

“We will put an even higher focus on cash. We will strengthen capital discipline with lower capital expenditures and continue our cost savings programs,” said BASF’s chief financial officer Dirk Elvermann.

As such, BASF said it was committed to keeping the overall distribution to shareholders on the same level as recent years, paying a dividend of "at least €2.25 per share" in 2024, compared with a payout of €3.40 last year.

Meanwhile, as part of its "stringent portfolio management", the company said it was planning to complete a "legal and ERP separation" of its Agricultural Solutions unit by 2027 in preparation for a potential IPO. "In the midterm, listing of a minority stake is an option," it added.

Agricultural Solutions, which comprise BASF's herbicides, fungicides and agricultural seed operations, generated €10bn in sales annually, making up 15% of group turnover.

"The strong and broad portfolio of chemical businesses at our core is what makes BASF most relevant to customers globally," said chair Markus Kamieth. "Our standalone businesses serve distinct industries and are less connected to our integrated value chains. Going forward, we will unlock the value of these businesses."

BASF's shares were down 2.7% at €44.11 by 1310 in Frankfurt.