BASF Targets Circular Raw Materials and 20% Cost Reduction as Buyback Winds Down
03.06.2026 - 11:42:39 | boerse-global.de
BASF is juggling multiple strategic push-pulls this summer. The German chemicals giant is racing to complete a €1.5bn share repurchase programme, rolling out a sweeping cost-cutting plan dubbed CoreShift, and deepening ties with US circular-economy specialist Encina – all while first-quarter results show revenue and earnings slipping. The convergence of these moves underscores the tension between returning cash to shareholders, restructuring the core business, and investing in longer-term raw-material independence.
The expanded partnership with Encina Development Group goes well beyond a conventional supply deal. BASF will advise the US company on procurement strategy and project planning for a circular chemicals facility planned for the US Gulf Coast, ahead of a final investment decision. Crucially, BASF gains a participation right – it can join Encina in future project developments, potentially including a capital contribution. No financial terms were disclosed, but the agreement builds on a June 2024 pact covering long-term deliveries of chemically recycled benzene from waste plastics. BASF intends to use the recycled benzene for its Ccycled product portfolio, replacing fossil feedstocks via a certified mass-balance approach, targeting packaging, textiles, automotive and consumer-goods customers.
The strategic bet on circularity comes at a time when BASF’s near-term operating performance is under pressure. In the first quarter of 2026, group revenue slipped to €16.0bn from €16.5bn a year earlier, dragged down by currency effects and slightly lower prices. EBITDA before special items fell to €2.36bn, down from €2.5bn in the prior-year period. Adjusted earnings per share dropped to €1.32 from €1.57, although reported EPS rose to €1.06 from €0.91. Management confirmed its full-year guidance: EBITDA before special items between €6.2bn and €7.0bn, and free cash flow of €1.5bn to €2.3bn. However, the company cautioned that its assumptions on global growth and industrial output may prove too optimistic.
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On the cost front, CEO Markus Kamieth has launched CoreShift – described as one of BASF’s largest optimisation programmes. The aim is to cut cash fixed costs in the core businesses by up to 20% by 2029, coordinated by a new Core Transformation Office led by Julia Raquet. Kamieth has signalled a leaner core business with fewer employees, though no specific job-cut number has been given. The Ludwigshafen headquarters, already the site of around 2,800 job reductions since early 2024, reported a loss for the fourth consecutive year, highlighting the depth of the adjustment needed in Germany.
The broader industry environment offers little relief. The German chemical and pharmaceutical association VCI described the start of 2026 as weak, citing burdensome bureaucracy, high energy costs and global turmoil. Uncertainty stemming from the Middle East conflict is also roiling energy and raw-material markets, and the VCI sees no reliable industry forecast for the year. BASF is sticking to its own guidance, but the headwinds make the outlook more challenging.
BASF shares closed at €50.84 on Tuesday, gaining about 13.6% year to date. That still leaves them roughly 7% below the 52-week high of €54.70, and the technical picture is mixed: the stock trades below its 50-day moving average of €52.20 but remains above its long-term average. The share buyback programme – which has so far retired 27.8 million shares and has a remaining volume of up to €1.5bn – is scheduled to wrap up by the end of June. The purchases have been executed via a mandated bank on Xetra and other trading venues, with the bought-back shares being cancelled.
The next major milestone comes on 29 July, when BASF presents its half-year report. That will show whether the industrial slowdown and currency pressures have been offset by volume growth and cost discipline in chemicals, materials and speciality applications. For the Encina partnership, the value will be measured over the long term – in secure raw-material streams and scalable Ccycled applications that reduce BASF’s reliance on fossil feedstocks. The buyback and CoreShift address the here and now; the circular economy bet looks further ahead. For now, BASF is keeping all balls in the air.
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