BASF Shares Decline Following Proposed Dividend Cut for Next Four Years

Shares of BASF experienced a decline on Thursday following the company’s announcement of a dividend reduction. BASF proposed a minimum annual payout of €2.25 per share for the 2024 business year, which will be payable in 2025.

At 4:22 am (0822 GMT), the stock was trading 2.9% lower at €44.035. This reduction marks a decrease from the €3.40 per share distribution in 2023. The updated dividend policy is part of BASF’s larger corporate strategy aimed at balancing shareholder returns with long-term financial objectives.

BASF indicated that its plan is to distribute at least €12 billion to shareholders from 2025 to 2028. This total comprises €8 billion in dividends over the four-year period and €4 billion allocated for share buybacks, which are expected to commence by 2027 at the latest.

The proposed dividend of €2.25 per share represents an annual payout of about €2 billion. This strategy is designed to provide the company with financial flexibility as it concentrates on long-term growth and profitability.

BASF anticipates an EBITDA before special items ranging from €10 billion to €12 billion by 2028, under mid- to upcycle conditions. Furthermore, the company expects cumulative free cash flow to surpass €12 billion during the 2025-2028 period, with a projected return on capital employed of 10% by 2028.

Additionally, BASF expects to see a cash inflow of around €2 billion in 2024 due to its exit from the oil and gas sector, which will further bolster its financial objectives. The company also plans to decrease capital expenditures to below depreciation starting in 2026, following the commissioning of its Zhanjiang Verbund site in China in 2025.