BASF raises 2026 outlook as markets brace for midterm volatility

Tech sector earnings loom after sell-off

Chip stocks saw a decline in value after Intel issued a warning regarding its fourth-quarter performance. Apple, Super Micro, AMD, and Palantir are now preparing to release earnings reports following a broader sell-off in the technology sector.

Market sentiment regarding Apple’s outlook for the quarter ending in December remains cautious. Despite a poor week for the AI trade, one stock categorized as part of the Mag Seven has maintained its strength.

BASF raises 2026 EBITDA guidance

BASF raised its 2026 outlook following a strong third quarter.

Q3 EBITDA before special items rose 15% to 1.6 billion euros, while the nine-month figure reached 6.4 billion euros, an increase of over 900 million euros compared to the same period last year.

BASF implements cost-cutting and debt reduction

Cash fixed costs for the first nine months fell by about 3% to 11.8 billion euros.

CFO Dirk Elvermann reported that BASF has cut net debt by 20% and anticipates it will reach approximately 15 billion euros by the end of 2026, maintaining the company's single-A credit rating. Free cash flow for the first nine months was negative 1 billion euros, compared to negative 870 million euros in the same period a year earlier, reflecting pressure from higher working capital needs.

Zhanjiang site performance impacts BASF results

The new Zhanjiang site in China performed slightly negatively during the third quarter and is projected to incur a loss of approximately 100 million euros for the full year 2026. Management reported that the Zhanjiang site experienced slightly negative EBITDA for the quarter despite operating at very high utilisation levels. Cliff Pemble is the CEO of Garmin.

BASF management expects gradual market recovery

CEO Markus Kamieth stated that the company is moving toward a more normal earnings environment, noting, "We are certainly now sitting at significantly above the trough and the lowest point where we were in the margin cycle". According to Kamieth, it is difficult to provide precise forecasts even three months into the future.

Executives do not expect a sudden improvement in 2027 beginning 1 January, but they do anticipate gradual progress resulting from restructuring gains and a modest market recovery.

BASF maintains financial flexibility

BASF reduced its 2026 capital expenditure guidance to between 2.8 billion euros and 2.9 billion euros, down from the earlier target of 3.4 billion euros. The company maintains a current ratio of 1.85, which management says provides adequate short-term financial flexibility.

InvestingPro assigned BASF a "GOOD" financial health score of 2.93, noting strong performance in profitability and price momentum. The company reported weak cash flow recently, which it attributed to rising inventories from higher feedstock prices and increased receivables following strong sales in September. Management anticipates strong cash collection in the fourth quarter.

Regarding portfolio strategy, BASF stated that acquisitions are considered an option rather than a requirement and that the company will maintain a disciplined approach. BASF shares were trading at $14.53 on 1 November, reflecting a 0.68% decline. This price is 12.3% above the 52-week low of $11.93 and 10.6% below the 52-week high of $16.25.

The Q3 2026 conference call was hosted by Head of Investor Relations Stefanie Leubner, with CEO Markus Kamieth and CFO Dirk Elvermann. The speech for the presentation is available at basf.com/q32026.

Oil prices and geopolitical risks

Oil prices recorded an increase of more than 10% during October. Markets are monitoring rumours suggesting that conflict in the Middle East could escalate in the days following the midterm elections.