Good morning, everyone. Welcome to BASF's conference call for analysts and investors on the fourth quarter and full year 2025.

Today's presentation is being recorded. All participants will be in listen-only mode throughout.

The presentation will be followed by a question-and-answer session. Today's presentation contains forward-looking statements.

These statements are based on current estimates and projections of the Board of Executive Directors and currently available information. Forward-looking statements are not guarantees of the future developments and results outlined therein.

These are dependent on a number of factors, they involve various risks and uncertainties, and they are based on assumptions that may not prove to be accurate. BASF does not assume any obligation to update the forward-looking statements contained in this presentation above and beyond the legal requirements.

With me on the call today are CEO Markus Kamieth and CFO Dirk Elvermann. Please be aware that we have already posted the speech on our website at basf.com/fy2025.

Now I would like to hand over to Markus.

Thank you, Stefanie. Good morning, everyone.

Dirk and I welcome you to our first conference call 2026. Let me start by highlighting the important milestones we have achieved in implementing our "Winning Ways" strategy.

In an uncertain and very volatile global market environment with strong headwinds for the chemical industry, we have focused on the things we can control. We successfully started up all major assets at our Zhanjiang Verbund site.

We accelerated our cost-savings programs and streamlined BASF's organization significantly. We progressed swiftly and successfully with the announced portfolio measures.

Let me also mention that the year 2025 and particularly the fourth quarter did not develop as we had anticipated. Our pre-release on January 22nd already gave you an indication of this.

Let's turn to the details of BASF's financial performance in the fourth quarter compared with the prior-year quarter. Overall, sales declined considerably because of strong currency headwinds and slightly lower prices.

We nevertheless achieved slightly higher volumes. All segments reported volume growth except for the Chemicals segment.

Volumes rose particularly in the Surface Technologies, Agricultural Solutions, and Nutrition & Care segments. From a regional perspective, we achieved a remarkable volume increase of 13% in China and posted solid growth in North America.

In Europe, we recorded slightly lower volumes. Compared with the fourth quarter 2024, prices declined in five of our six segments, most notably in Chemicals and Materials, due to ongoing competitive pressure.

We could only increase prices in the Surface Technologies segment, primarily owing to higher precious metal prices. Currency effects burdened sales in all divisions and were mainly caused by strong depreciation of the US dollar, the Chinese RMB, and the Indian rupee.

Portfolio effects slightly dampened sales growth. This was mostly related to the sale of our Brazilian decorative paints business.

Based on this underlying sales development, EBITDA before special items came in at €1 billion compared with €1.4 billion in the prior-year quarter. Currency headwinds lowered EBITDA before special items in Q4 by around €110 million.

Here you can see a snapshot of how the markets and our segments volumes and specific margins developed in the fourth quarter. Due to the ongoing supply-demand imbalance and the resulting pressure on margins, the business environment remained challenging, particularly in our upstream segments.

Despite the strong market headwinds, the Chemicals segment recorded only slightly lower volumes. Prices declined considerably in the Petrochemicals division due to lower raw material prices and continued price pressure from global overcapacities.

Specific margins in this segment decreased slightly, mainly driven by Petrochemicals. The Materials segment achieved slight volume growth because of higher volumes in Monomers.

Prices declined in both divisions, resulting in overall slightly lower margins. The Industrial Solutions segment operated in a subdued market environment.

Electronic materials were the notable exceptions. Overall, the segment was able to increase volumes slightly, with prices and specific margins declining slightly.

For Nutrition & Care, market conditions remained challenging in the fourth quarter. Nevertheless, the segment posted slightly higher volumes because of strong growth in the Nutrition & Health division.

The slight volume decline in Care Chemicals was driven by lower demand, especially in our home care, industrial, and institutional cleaning, as well as oleo surfactants businesses. In times of low confidence, consumers increasingly switch to white-label products, leading to lower demand from global brand owners, a stronghold of BASF.

The segment recorded lower prices on account of the Nutrition & Health division, especially driven by lower vitamin prices. The Care Chemicals division almost maintained its Q4 2024 price levels.

The segment reported considerably lower specific margins because of the challenging market dynamics and competitive pressure. Let's move on to Surface Technologies.

Please note that this segment no longer includes the automotive OEM coatings, automotive refinish coatings, and the surface treatment businesses. These businesses have been classified as discontinued operations following the signing of the transaction agreement with Carlyle.

The Surface Technologies segment, comprising ECMS and Battery Materials, recorded considerably higher volumes and prices in both divisions. The segment accordingly delivered strong specific margin growth.

Finally, let's look at Agricultural Solutions. Crop commodity prices remained below historical averages, and financing costs for farmers were still elevated.

Under these market conditions, the Agricultural Solutions segment managed to increase volumes and keep prices almost at the level of the fourth quarter 2024. As a result, the segment's specific margins remained virtually stable.

Let's move on to the development of EBITDA before special items in the full year 2025. Overall, EBITDA before special items of BASF Group reached €6.6 billion.

The decline compared with 2024 was mainly due to lower margins and negative currency effects. The latter amounted to €235 million in the full year 2025.

Due to continued low market demand and pressure on margins, earnings in BASF's core businesses, particularly in the Chemicals segment, declined considerably. Higher contributions from BASF's standalone businesses could only partially compensate for this.

I would now like to turn to our portfolio measures and what we achieved in 2025. Our agreement with Carlyle, signed shortly after we successfully divested our decorative paints business to Sherwin-Williams, marks an important milestone in unlocking the value of our Coatings business.

Under Carlyle's operational leadership, we want to create a leading coatings company and further upside potential for the 40% equity share we will continue to hold after closing. We are on track to close the transaction in Q2, as previously announced.

On the basis of the two transactions, BASF's Coatings business is valued at an enterprise value of €8.7 billion. The implied 2024 EV to EBITDA multiple before special items of approximately 13 times is evidence that we are unlocking the value of the Coatings businesses.

Let's move on to Agricultural Solutions. Our Agricultural Solutions team once again delivered a very strong performance in 2025.

With sales of €9.6 billion and EBITDA before special items of €2.1 billion, the business achieved an EBITDA margin before special items of 22%. The team also demonstrated its cash generation power and delivered a segment cash flow of €1.5 billion in 2025.

We are on track to achieve IPO readiness for this business in 2027. During the last 12 months, excellent progress has been made on the legal entity and ERP separation.

By early 2027, the separation will be completed in all regions. In November, we have announced the management board for the business, which combines extensive industry experience with the required capital market experience.

This management team, headed by Livio Tedeschi, will drive the transformation of Agricultural Solutions into an independently steered pure-play company. We also announced that we are targeting the Frankfurt Stock Exchange as a listing location.

The planned IPO of our Agricultural Solutions business will mark the next decisive step to unlock additional value for our shareholders. One more promising update on our agricultural business: in January, we agreed to acquire the biological insect control group AgBiTech.

This company has pioneered the use of nucleopolyhedrovirus technology to develop insect control solutions based on naturally occurring viruses. With operations in Brazil, the United States, and Australia, the company serves farmers growing soybean, corn, and cotton, as well as specialty crops.

This acquisition is an important step in the value creation journey of Agricultural Solutions. The new technology will complement our existing biosolutions portfolio and underscores the commitment to a more sustainable, holistic approach to agriculture, in line with the business strategy of Agricultural Solutions.

The transaction is expected to close in the first half of 2026. Now, from the standalone ag business to the most upstream part of our portfolio.

On time and below budget, we successfully started up all 32 key production lines at our integrated Zhanjiang Verbund site. A remarkable achievement and a testament to the capabilities of our team.

The startup includes a world-scale flex-feed steam cracker, which can use both naphtha and butanes as feedstocks. According to Linde's CEO, this was one of the fastest cracker startups ever.

Linde supports us with their cracker technology and engineering expertise, and contributed to this major achievement by our team in Zhanjiang. The team executed this complex task with outstanding dedication and success.

We are confident that we will operate the site at high utilization rates even in the current market environment. Nevertheless, we expect a slightly negative earnings contribution from the Zhanjiang Verbund site in its first year of operations, mainly due to startup-related costs.

From 2027 onwards, we expect the site to contribute positive earnings. Moving on to our MDI expansion in Geismar, Louisiana.

Also here, we are on track to conclude the final phase and are planning to start up in the third quarter of 2026. At $1 billion in total, the project marks BASF's largest investment ever in the United States.

Through this expansion, we are doubling our MDI capacity in Geismar to around 600,000 metric tons per year. This supports our growth in the profitable polyurethane value chain and the growth of our customers in MDI applications such as transportation, automotive, footwear, and furniture.

With this key project, we are deploying our leading MDI technology for the growing US market. With that, I will hand over to Dirk.

Thank you, Markus, and good morning, everybody. Let's now take a look at the financial figures of BASF Group for the full year 2025 compared with 2024.

At €6.6 billion, EBITDA before special items declined compared with the prior year. However, the EBITDA margin before special items, excluding metals, remained almost stable at 12.3%.

Net income improved by 25% to €1.6 billion. Net income from shareholdings amounted to €1.3 billion in 2025 compared with €602 million in the prior year.

This increase mainly resulted from higher earnings contributions from the at-equity consolidated participation in Wintershall Dea. Free cash flow increased by around €600 million compared with 2024.

More information is provided on the next slide. Cash flows from operating activities amounted to €5.6 billion compared with €6.9 billion in the same period of last year.

The decline was primarily driven by changes in other operating assets caused by an increase in precious metal trading positions. Furthermore, net income included higher non-cash items and reclassifications than in the prior year.

In 2025, cash flows from operating activities included a substantial dividend from Wintershall Dea. Reimbursements that Wintershall Dea received under the federal investment guarantees were distributed to the shareholders as dividends.

BASF, which holds 72.7% in Wintershall Dea, received around €900 million after tax in '25. In the first half of 2026, we expect to receive almost €800 million after tax through the same mechanism, of which around €500 million was already received in January.

Let me further explain this. Federal investment guarantees are insurances against political risks such as expropriation or war.

As with any insurance policy, coverage does not come for free. The guarantee beneficiary, Wintershall Dea, had paid insurance premiums for many years, a triple-digit million amount in total.

Now, Wintershall Dea is entitled to and has asserted its claim to insurance coverage. I will now turn to payments made for property, plant, and equipment and intangible assets.

These decreased by almost €2 billion to €4.3 billion in '25, which demonstrates that we have passed the peak investment phase for the South China Verbund site. Overall, free cash flow improved strongly and amounted to €1.3 billion.

Let's move on to our balance sheet. Compared with year-end 2024, total assets decreased by €4.2 billion to €76.2 billion at the end of 2025.

The decline was caused by lower non-current assets, mainly on account of currency effects. At 45.1%, BASF's equity ratio remains stable and very solid.

By year-end 2025, we reduced our net debt to €18.3 billion. In '26, we will use a substantial part of the cash proceeds from our portfolio measures to further strengthen our balance sheet.

The maturity profile of outstanding bonds will allow us to further reduce net debt considerably this year, hereby underpinning our current single-A credit rating. Let's turn to BASF's capital expenditures between '26 and '29.

We aim to grow with high capital efficiency by reducing capital expenditures, increasing the utilization of existing assets, and optimizing our net working capital. After the successful startup of our Zhanjiang Verbund site, we are now bringing down capex below the level of depreciation.

For BASF Group, we plan capital expenditures of €13 billion between '26 and '29. This is 20% lower than the four-year forecast we gave you last year, and more than 30% lower than our planning for 2024 to 2027.

In 2026, we plan total capital expenditures of €3.3 billion compared with €4 billion in '25. The reduction reflects lower capex for the Zhanjiang investment.

We now expect only a further €600 million in '26 after €1.6 billion in '25. With our current site and plant setup, we have sufficient own capacities in key markets to support our volume growth without requiring major new investments.

In the following, I will give you an update on the implementation of BASF's cost-savings programs. We are on an accelerated path.

By the end of 2025, we already achieved a total annual cost reduction run rate of around €1.7 billion. This represents an increase of €100 million compared with our original year-end target.

In 2025, the associated one-time costs amounted to €700 million. The increase in one-time costs in '25 of around €300 million was caused by higher provisions for severance payments.

In contrast, the planned one-time costs for '26 will be reduced from €500 million to €300 million. By the end of 2026, we now expect annual cost savings of €2.3 billion instead of €2.1 billion.

The cumulative one-time costs are now expected to amount to €1.9 billion in total. This shows the positive momentum in bringing down our cost base and the ongoing focus of management on this crucial topic.

On the right-hand side of this slide, you can see that between December '23 and '25, we reduced the number of senior executives by 11% and the number of employees by around 4,800 if we exclude the around 1,000 employees who were recruited at the Verbund site in China in the same period. This demonstrates that we are actively streamlining our global organization at all levels.

In 2026, we will further advance in this direction. Let's switch to our next value creation step in BASF's service organizations.

Against the backdrop of our successful portfolio measures and the differentiation between core and standalone businesses, we are now streamlining Global Digital Services and Global Business Services to meet the needs of our core businesses. In Global Digital Services, we are rationalizing and harmonizing BASF's IT application landscape and sharpening the digital service portfolio through consolidation and standardization.

In this context, we plan to open a cost-efficient digital hub in Hyderabad, India. We will streamline our existing location footprint and take out significant costs.

Building on competitive service levels and focused digitalization, these measures allow us to capture efficiency gains and achieve a significant workforce reduction. Similarly, in Global Business Services, we intend to streamline the service portfolio, drive automation, and establish cost-efficient global hubs.

We aim to bundle a significant portion of our business services in two global hubs in Asia. At the new global hub in India, we intend to bundle services with a focus on finance and HR.

The established hub in Kuala Lumpur, Malaysia, is foreseen to focus on global supply chain services in the future. Existing regional hubs will complement the setup.

With these decisive steps, we aim to harvest synergies and secure structural cost advantages. With that, back to you, Markus.

Thanks, Dirk. The Board of Executive Directors of BASF is fully committed to attractive shareholder distributions via dividends and share buybacks as part of our "Winning Ways" strategy.

In line with our shareholder distribution policy, we will propose a dividend of €2.25 per share for the business year 2025 to the Annual Shareholders' Meeting. Based on the year-end share price, this offers an attractive dividend yield of 5.1%.

In total, we will pay out dividends of around €2 billion to our shareholders. The second pillar of BASF's attractive shareholder distribution policy is our buyback program.

In view of cash proceeds already received and further proceeds expected, particularly from portfolio measures, we started buying back shares in November 2025. By year-end 2025, we repurchased shares of around €355 million.

The program, which has a volume of up to €1.5 billion, is scheduled to be concluded by the end of June 2026. It is part of the share buyback announced at the Capital Markets Day in September 2024 with a total volume of at least €4 billion until the end of 2028.

The earlier start of the program demonstrates our confidence in the financial strength of BASF. From 2025 to 2028, BASF aims to distribute at least €12 billion to shareholders via dividends and share buybacks.

Now moving on to our outlook for 2026. From today's perspective, we do not expect a meaningful market upswing or a significant easing of geopolitical tensions in the near term.

Our forecast for BASF Group assumes that GDP growth will be slightly lower and that global industrial production growth will be significantly lower than in the 2025 level. We expect a further decline in chemical production in the mature economies and weaker growth in the emerging markets.

Our planning is based on an average oil price of $65 per barrel of Brent crude and an exchange rate of $1.20 per euro. Based on these assumptions, we expect EBITDA before special items to be between €6.2 billion and €7 billion in 2026.

The Nutrition & Care and Chemicals segments are likely to increase their earnings significantly, while Industrial Solutions expects a slight increase in earnings. In the Materials and Agricultural Solutions segments, we forecast slightly lower earnings due to currency effects.

EBITDA before special items in the Surface Technologies segment is expected to decrease significantly in 2026, mainly due to positive one-time effects in the ECMS division in 2025. The BASF Group's free cash flow is expected to be between €1.5 billion and €2.3 billion.

Payments made for property, plant, and equipment and intangible assets are estimated to be reduced to €3.4 billion, of which roughly €0.6 billion stem from our Zhanjiang Verbund site investment. Let me add that from a market perspective, the start to the first quarter has been as challenging as expected.

In January, volumes continued to develop very positively in China, which is partly related to the timing of Chinese New Year. In the remaining regions, however, volume development has been weak.

Given the considerably stronger US dollar in the prior-year quarter, currency headwinds on EBITDA before special items could amount up to €200 million in the first quarter of 2026 alone. As I just outlined, 2026 is likely to be another transitional year with significant headwinds for our industry.

Most of the improvements we aim to achieve will need to be driven by our own efforts. We expect a gradual recovery of market conditions in the later part of this year and in 2027 and see promising early indications.

However, we are also mindful of short-term demand constraints due to geopolitical and trade-related effects. Let me highlight three topics that we will continue to prioritize in 2026.

First, we will continue to actively drive measures to structurally reduce costs by rigorously implementing our cost-savings programs, and we will bring down capex significantly below the level of depreciation. In parallel, we will hunt for volumes to increase the utilization rates of our plants.

Second, after the successful startup of our new Verbund site, it's now all about filling the assets and increasing utilization rates. Based on our highly competitive cost position, we are confident that we will achieve this goal fairly quickly.

Furthermore, we will focus on the completion of the final phase of the MDI capacity expansion in Geismar to capture further profitable growth in North America. Third, we will build on our successful portfolio measures to crystallize and unlock the value of our standalone businesses.

We will stay on course to further strengthen our core businesses by implementing the necessary measures. In summary, delivering on our "Winning Ways" strategy means combining active portfolio steering with capital discipline and strong operational execution when it comes to capex and costs.

Coupled with a winning culture, this will create value for BASF and our shareholders. Now Dirk and I are glad to answer your questions.

I would like to open the call for your questions. If you wish to ask a question, please press star and then enter 1 1 on your telephone.

For the best sound quality, we kindly ask you to be sure to unmute your phone and use your headset when asking your questions. Please limit your questions to only two at a time so that everybody has a chance to ask their questions.

We will begin with Alex [Wischil?] from Santander.

We then have Katie Richards and then Christian Faitz. Now Alex, please go ahead with your question.

Yes, thank you very much for taking my questions, Markus, Dirk. My first question is about the European chemical market.

We are seeing all these news about potential regulatory support, the CO2 discussion as well, German fiscal stimulus plan. If you can elaborate how you are pricing these potential tailwinds in your guidance?

The second question is about shareholder distributions. My question here is if considering the difficult market environment, if the total distribution of €12 billion, about €3 billion every year, is aggressive in the current market context?

Thank you.

Thanks, Alex. I will take the first question and Dirk will maybe take the second one.

Alex, it's, I think, a very fair observation that there's a lot of dynamic now also in the European market picture. Overall, I would say the actual demand picture in Europe stays challenging.

We had last year, 2025, a negative volume development of the chemical market in Europe by 2%, and we also expect a slightly negative development for 2026 in Europe. However, I believe that both on the European level and as well in member states in the European Union, governments and regulators have understood that an improvement of the framework conditions, not only for the chemical industry, but for the entire industrial, let's say, ecosystem in Europe, is needed.

That's why we are actually quite encouraged by the recent discussions also on the European level for easing some of the, let's say, challenging elements of the current regulation. You named one is of course the ETS system with the carbon costs currently increasing prospectively in Europe.

We have seen very constructive discussions on a European level, although it's too early to put this into any quantitative model, but we have for sure raised the awareness of, for example, ETS benchmark changes and so forth on the European level. I expect positive contributions based on the scenario that we had a few months ago.

On the other hand, there are, as I said, positive indications on some elements of the European economy. You've named the German stimulus package.

If you look at, for example, the recent development of the PMI, the Purchasing Managers' Index in Germany, we are for the first time in February above 50. For a long time we haven't been there.

That has to do with now the stimulus package, the infrastructure package, also becoming effective in real world. I talked to a CEO of a big construction company, and he also told me that now these requests for proposals are really coming through.

There is the expectation that there will be some effect now in 2026. Some indications on the positive side, I would say, for Europe, but overall it stays a challenging market from a demand perspective.

With this, Dirk.

Morning, Alex. I take your question on distribution.

Let me first say management is fully committed to the €12 billion distribution as also announced in the context of our strategy. Out of that, at least €8 billion from dividends and at least €4 billion from share buybacks.

You just heard also our progress in this regard, and you heard our dividend proposal for the year 2025. I would not call this approach aggressive.

I would call it balanced. With the cash flow that we are getting, plus the incoming cash proceeds from our portfolio measures, we will be in the position to do both: to distribute the amount to the shareholders, but at the same time also to significantly deleverage and therefore strengthen our balance sheet.

Fortunately so, for the time being, we do not have a big capital expenditures plan. We are now fully invested with the China investment coming onstream and the MDI investment in the US coming onstream in '26, there's no big capital expenditures to be expected from us in the next couple of years.

As we are also trimming the company on the cost side, being very cash-minded also in this regard. With all of that, we are very confident that we can deliver on the €12 billion.

Danke. Now we move on to Katie Richards, Barclays.

Please go ahead, Katie.

Hi, good morning. Thank you for taking my questions.

I've got two, please. One on Zhanjiang, and then also one on ETS.

Firstly, on Zhanjiang, could you give us a little more color on earnings contribution you would expect in 2026 from this site, please? In this regard, I'm looking at the income from integral companies line in the P&L, where you classify the BASF-YPC joint venture with Sinopec.

This line has fallen from €675 million in 2021 to about €2 million in 2024, now negative in '25, although I appreciate for other reasons. In this vein, why should investors believe that the new Verbund ramp-up will deliver any earnings at all beyond 2026, please?

My second question would be to follow up on the ETS and the recent headlines, which, as you just said, were constructive. I appreciate this is a significant headwind for BASF over time, but thinking long term, don't you think Europe risks weakening its decarbonization leadership if the ETS is diluted, especially when China's upcoming 15th Five-Year Plan is explicitly accelerating the green transition?

Thanks, Katie. I will take the second part of the question, looking at Dirk.

You cover then the first part on Zhanjiang and the earnings contribution from other facilities. Katie, I think the view on ETS it's a very complex one.

We are not advocating for removing or completely abandoning the ETS system in Europe. We just feel that the current system is too rigid and actually, at the end of the day, incentivizes decarbonization primarily in the chemical industry, I have to say, primarily to shut down assets or transfer production outside of Europe.

We need a revision of the system. We need a smarter system, actually the one that incentivizes the green transformation and does not put European industry at a competitive disadvantage.

I agree with you that overall, let's say, a strong momentum, but also potentially a leadership role of the EU in the green transformation is desirable. It, from my perspective, requires a bit of a smarter system and a revision of the ETS CBAM system.

I think I'm thinking along the same lines, but short term, we have to make sure that the competitive disadvantage of European production does not become overproportionally big and, at the end of the day, continue to erode European competitiveness short term. With this, Dirk.

Good morning, Katie. First, maybe on Zhanjiang.

We are expecting for the year '26, after the very successful startup of the plant, an still negative EBITDA contribution of, let me say, up to €100 million. This is still due to ongoing startup costs.

Even after the startup, you have some startup costs, this will still burden our business contribution in Zhanjiang, particularly in the first half of the year. Let me say at the same time that the earnings contribution from Zhanjiang to the segment Chemicals will be significantly stronger, i.e., much less cost than in the last year.

Yes, still in this year, we are expecting a negative contribution. For BYC, the BASF-Sinopec joint venture in Nanjing, which you have correctly spotted in others, we had a massive turnaround in the year 2025, and with that, the result for BYC was turning negative in the year 2025.

Going forward, we are, of course, mindful that with this big machine park that we have with the partner under operations there, we are turning into the positive territory again.

Thank you.

We will now move on to Christian Faitz from Kepler Cheuvreux. The following in the queue are then Laurent Favre, then we will have Chetan Udeshi, and then Sebastian Bray.

Now it's Christian Faitz, Kepler Cheuvreux. Please go ahead.

Yes, thanks. Good morning, Stefanie, Markus, Dirk, and team.

One and a half questions, please. What is BASF's current order book visibility in Europe, traditional chemical activities?

In that context, what is the feedback from your sales people on the ground in China, how demand has developed since the end of the Chinese New Year celebrations?

Oh, that's a very recent question, Christian. I have not talked to all our sales people in China over the last days.

I can tell you maybe coming to that question, order book visibility. We have not seen a significant change now over the last, I would say, couple of quarters.

This phenomenon that we, I think, talked in this call also quite a lot about is this shorter and shorter visibility of order books. That is not materially changing throughout the portfolio, I would say.

The insecurity in the markets is still high. I would say, as I said earlier, confidence in Europe in particular seems to be coming back on the producer side somewhat with a more positive outlook on 2026.

We also have, of course, in the US, consumer confidence now going in the other direction. There's still a lot of movement there, and this is why cautious order behavior is still there.

More short-term order behavior certainly is still the name of the game, to say. In China, as I said also in my speech, we have seen a tremendous volume growth in the fourth quarter and a very strong January as well.

Of course, here Zhanjiang is already contributing. We had, with the early start, almost a full January of operation, and also now February, where operations have run fairly well.

This continues to strong growth, and also on the demand side, I don't hear any major challenges. In China, it's pricing.

You have seen maybe statistics that China has now seen 40 months, 4-0, months of continued producer price deflation. That, of course, is the big problem for the industry in China in general, also our customers.

Volume in China is still growing at fairly high rates, and our outlook for the chemical market in China also this year is again significantly above everywhere else in the world. Volumes positive.

Thanks very much, Markus.

Now it's Laurent Favre, BNP Paribas.

Yes, good morning. Two questions, please.

The first one, Markus, around this ETS point. When we used to talk about natural gas in Europe and the end of war, I remember you telling us that energy prices were not a magic wand and that, more likely than not, you wouldn't necessarily benefit from lower natural gas prices as, I guess, margins conditions or utilization rates conditions would be such that you would pass on lower costs to customers.

What is different with the ETS situation, please? That's the first question.

The second one, around cash flow and share buybacks. At €1.5 to €2.3 billion, can I make sure that this free cash flow guidance includes the federal guarantees?

Should we assume that at the end of the first tranche of the buyback in June, you start straight ahead the second tranche, or are you looking for a certain catalyst to start it up? Thank you.

Thanks, Laurent. Dirk will take the second part.

I'll try to get a little bit closer to your first question. You always have to, I think, a little bit differentiate, Laurent, when we make some of these statements whether we're looking at BASF Group in general or whether we're looking at specific competitiveness of specific value chains and assets.

If we look on a product and asset level, of course, cost contributions of ETS are already today significant. Our message on ETS is that it is going to become a significant offset if we are not careful and if we continue to restrict the amount of certificates in Europe, then ETS costs, CO2 costs per ton in Europe, will become triple-digit relatively soon and will move further significantly up.

That's, of course, on a product and asset level, a significant disadvantage to the same people and also BASF producing the same products elsewhere. Now, you're right, on a company level, this is just one of many effects.

The ETS costs alone are not as big. Of course, natural gas is something that is predominantly a market equilibrium.

Natural gas is in Europe an LNG-based market mechanism, and in times of long gas markets, for example, we also have a chance to bring down the cost gap to US and Middle East significantly. Markets typically adjust to this.

Product markets adjust much less good to politically induced price signals like ETS taxes, for example. We are dealing with a lot of customers that also have buying opportunities in various different regions, and that's why I see a slight difference between, let's say, a totally market-based LNG price scheme versus a politically induced special regime in Europe that induces additional costs to producers with European assets.

I know it's a complicated topic, but I hope it gives you some color on how I'm looking at this.

To be clear, you're talking about the avoidance of an incremental negative, i.e., CO2 costs start to go up and you get fewer free allowances, as opposed to removing a cost that you have today, that you are incurring today?

I didn't quite get that question. Sorry, Laurent.

My point was the removal of the ETS, it would be the removal of a potential incremental risk in the future. It's not improving the situation of today.

We have significant costs of ETS today. I think I've been saying this also publicly that I talked about a triple-digit million euro amount already in '24 and '25.

It's a significant cost item. The discussion we have in Europe right now is about avoiding significant increases now in the next years, because with the tightening of the ETS market and the end of free allocations, I expect, actually, if we don't give that perspective of more free allocations, that the ETS costs will increase significantly.

This is what I'm worried about today. In that order of magnitude, you know the P&L of BASF, it is not the one and only golden bullet to reachieve competitiveness, but of course, it could become a big headache if politics don't act.

That's what we're advocating for, and as I said earlier to Alex's questions, I think we're optimistic that politics have understood this, and you've maybe seen also some politicians in Brussels indicating that there's an openness to discuss, for example, extension of free allocations, which, from my perspective, would be a good recipe.

Thank you.

Laurent, I take your questions on cash flow and share buybacks. First, confirm that our cash flow guidance of €1.5 to €2.3 billion includes the payments for the federal investment guarantee, which I outlined in my part of the speech.

Secondly, on the share buybacks, we will, as was mentioned by Markus, complete our first tranche, €1.5 billion, by June 2026. Whether we will start a second tranche immediately or later is not yet decided.

We will decide that later in this year. Would not rule out anything, but would also not yet say we will do that immediately.

One thing is clear: the €4 billion minimum share buyback program until end of '28, this is confirmed, but the timing of the second tranche is not yet decided.

Thank you very much.

Given the time and the length of our queue, I ask you to really restrict questions to the minimum. We have now Chetan Udeshi, J.P.

Morgan. He will then be followed by Sebastian Bray, Thomas Wrigglesworth, and Jaideep Pandya.

Now Chetan, please go ahead.

Hi, thanks for taking my questions. I actually have two quick ones just on Q1.

I was just wondering if you can give us a little bit more color. I heard you, Markus.

You talked about €200 million of FX headwind. I suppose we should have some underlying decline on top as well because you talked about margin pressure, weaker volumes.

Should the base case be that we at least have €300-€400 million year-on-year decline in EBITDA in Q1? The second question, I was just surprised by your guidance on Nutrition & Care about earnings increase.

What will drive that? Because the vitamin prices are worse than last year, and you yourself talk about the challenges that you have in your Care Chemicals business, especially given that you're so levered to the bigger customers who are losing share to regional customers, and there is also reference to pricing pressure in some of those businesses.

What will drive earnings growth in Nutrition & Care this year? Thank you.

Thanks, Chetan. Maybe on your Q1, you explained or you brought, I think, the right elements.

I think your hunch that Q1 could be lower than last year is the right one, although the order of magnitude that you have indicated from my perspective is too dramatic. I don't want to now give a specific Q1 guidance.

I think that that's why I mentioned it in the speech. Q1 is a very peculiar one because we have a couple of things that we face as headwinds.

The biggest one is currency, because we have this overproportional sensitivity on currency in Q1 because of our ag business. Of course, the spread is now between almost $1.20 and I think last year was $1.05 or something like this in the first quarter, it's a pretty significant comp issue that we have here.

The second one is that we also have some additional cost elements, especially early in the year, coming from some turnarounds. We are in a turnaround season now for two of our main crackers, one in Europe, one in US, Port Arthur, and we have also vitamin turnaround in Q1.

We are starting with a bit of headwinds on cost and FX on Q1. That's why, yes, there's a likelihood that we will be below prior year, but as I said, your order of magnitude is a bit too steep for me.

Nutrition & Care, yes, you're right. Vitamin prices are low right now, both in E and in A.

Overall, we are expecting, of course, a significant increase in volumes in the next year, because we are still after the force majeure, especially in Nutrition & Health, now in the phase of really increasing the volumes, and the volume increase is pretty steep. That will help to absorb also the fixed cost in our manufacturing and drive profitability up, even at low vitamin prices, of course, and the incremental profitability increase is still pretty significant.

Also on the Care Chemicals side, I think your comment was a bit too negative. I think I didn't want to portray it so negative in my speech.

Yes, we had a challenging dynamic over the last, I would say, six months, as I described it, but I would say overall, Care Chemicals markets, also home care, personal care, and also industrial and institutional cleaning, is overall healthy, and we see also volume recovery, and we have also strong self-help measures, plus we, of course, see also in Care Chemicals now new capacities coming onstream, and we are targeting already to have our new capacity in China, for example, filled up to 50% in this business in 2026. We have a lot of upsides also in Care Chemicals, I don't believe that the momentum we've seen the last months is going to sustain.

Thank you.

Move on to Sebastian Bray, Berenberg. Please go ahead.

Hello, good morning, and thank you for taking my questions. Can I ask one on the Surface Tech guidance?

I was surprised to see that this is so conservative for it's down year-on-year at EBITDA for 2026. Platinum group metals prices are up.

It looks as if Battery Materials did better in Q4. Autocatalysts seems to be doing quite well.

Why would the earnings in this segment decline year-on-year? My second one is on agriculture.

It looks as if BASF is calling the top of a market a bit in saying that the segment's EBITDA might decline slightly in 2026, although I appreciate there's an FX headwind. What is the company seeing at the moment on the pricing and volume side across seed and crop protection as we move into Q1?

Thank you.

Thanks, Sebastian. I'll take the Surface Technologies question and then Dirk will try to give you an answer on the ag part.

Yes, the guidance is down. We have had a significant one-time effect in 2025.

It was very significant, and it was a catch-up effect of last few years. This was, I don't know what the technical term is, who say refund or government grant, if you want, on this.

This certainly inflated the results 2025 somewhat. We will not have this in this order of magnitude going forward.

It will be a continued effect, but it will be in the low double-digit million, not so material in this for the segment going forward. On the precious metals pricing, you're right.

We have seen, of course, a strong increase in precious metals pricing. Rhodium, platinum, palladium are all up and steeply up.

We saw a lot of volatility, which typically also brings up our trading results quite a bit. It's not only the absolute level of pricing, but it's the volatility that drives, of course, profits in that segment.

Our scenario for 2026 at least is that we will see moderation of PGM prices. There's no guarantee, but that's the underlying assumption of the guidance for Surface Tech.

Less government grants, significantly less government grants, and a moderation of PGM prices and less volatility. That's basically the summary why we say as a net, it's a significant decrease.

Still a strong performance. I will tell you that, because we're very happy with the performance of the ECMS business in particular, and we also see that the Battery Materials team is doing a good job in increasing its profitability and, in a tough market environment, using all their levers.

Hi, Sebastian. To your question on ag, the ag business fundamentally will deliver another strong year.

Agronomic conditions remain positive or are very positive in 2026. Also, the channel inventories from the customers that we see right now are in the normal range.

Fundamentally, the business is good. Two things are dragging the business, and first and foremost is the FX effect.

We already mentioned it now a couple of times. The rollover from '25 to '26 was all smooth, but for the FX effect.

This is dragging us. Then, of course, on top of that, the soft commodity prices, they remain under pressure.

Farmers still are not back to the normal level of earning and buying power. These, I would say, are the two factors.

Fundamentally, we are okay for the business, save for the FX effect.

Thank you.

Now Thomas Wrigglesworth, Morgan Stanley, your turn.

Thanks. I'll ask my one question.

Just on the free cash flow expectations for 2026, you've called out very clearly the reimbursement benefits. You've identified lower capex, and those two together equate to €1.7 billion improvement in free cash flow year-over-year.

I'm interested to understand what you see as the offsetting negatives and headwinds that your free cash flow generation will face to get to the midpoint of your '26 guide. Thank you.

Tom, it's Dirk speaking. Maybe I take this one.

The negative is in a way a positive because we will incur in 2026 quite a high amount of severance costs from our ongoing restructuring. We already told you in the speech that we put into our P&L higher severance costs, €300 million more than originally anticipated, and this is because we are able to accelerate our programs, which means we are quicker achieving a positive run rate on the underlying costs.

Of course, it comes with a one-time cost, and this is the cash out for restructuring in the context of the restructuring. Second one, certainly the precious metal effects.

As we have quite some cash tied into precious metal, and depending on the price development, you saw already quite a big effect in 2025. You will see that ongoingly, and with Battery Materials business going up, you will see positives on the P&L, but you certainly see more cash then also tied in the cash perspective.

That, I would say, are the two big effects that I would like to share with you.

Thank you very much. Now

we will move on to Jaideep Pandya, Onfield Research. We will then have Tony Jones, James Hooper, and then Geoff Haire.

Now Jaideep Pandya, please go ahead.

Thank you. First question is around sort of the BDO investigation which happened in Europe around the anti-dumping.

Have you seen any change sort of in the approach towards anti-dumping from the EU, and could we see more products like BDO falling in this category given that the increased pressure on imports from both China, but also from North America and the Middle East? Been reading also about the shortening of the investigation time horizon.

The second question is around MDI. Given the expansion, could you just give some color around the trading dynamics, import/export balance, and the margin dynamics in the US given this was predominantly an import market back in the day for MDI, and how it will benefit you with the capacity expansion?

Thank you so much.

Jaideep, Markus here. Maybe I cannot comment now on the individual anti-dumping case.

Maybe two few comments on this. You are right.

The number of anti-dumping cases, in particular in Europe against Chinese producers, has increased significantly over the last years. It's a pretty steep increase.

That's just given the overall market dynamics and the strong export activity of Chinese companies, and there's actually quite a ground for a lot of these anti-dumping cases from my perspective right now. We have active discussions also with the EU Commission because, on the one hand side, the increasing number of anti-dumping cases stresses also the resources.

It's a very practical problem for the EU Commission because they don't have enough people to work on these cases, and that extends the time period now quite a bit. We have active discussions that, I think, from my perspective at least, the legal framework in the EU also would allow for much swifter implementation of, for example, provisional duties.

Here we already see that in the BDO case, I think there is discussions on either the BDO or the adipic acid case, I don't remember. There are already provisional duties put into place swifter than what we've seen in the past.

There's active discussion on that, but there's no also super quick fix solution in the political space, but I think it's something that we strongly advocate is needed in Europe. I am positive, and I also believe that you will see a counter-reaction by the European Union much stronger on protection against anti-competitive imports.

MDI, maybe Dirk is nodding. He can comment on this.

Good morning. Maybe on MDI, first of all, let me say this is and remains a very strong product for us.

It's one of the reasons why we're obviously also doing the investment in Geismar. Now, overall, if I look into what happened recently, the overall specific margins decreased recently due to weaker prices in all regions, and that is particularly driven by weaker demand that we saw in '25.

If I look into '26, one important driver is demand from construction. This is at least expected to improve slightly, driven by restocking that we will see in Europe, but also North America.

Then we will have to see how this is developing now in China after the Lunar New Year's holidays, but fundamentally, I would say this is and remains a strong product for us.

Let me just add to MDI. At the end of the day, the excess MDI capacity, if there is any, it is in China.

The path for, let's say, importing into the US would be product from China, and that, of course, given the current trade politics, has become more difficult. I think that overall is a case where the US trade policies certainly provide tailwind for BASF and the MDI expansion Geismar.

Support for this investment in Geismar. Overall, I think our investment is a significant contribution to further growth of the domestic industries in the US and to the self-sufficiency of US market with regards to that key ingredient.

Thank you so much.

Now Tony Jones, Redburn Atlantic. Please go ahead.

Oh,

good morning, everybody. Thank you for taking my question.

I've got two. It's a two-part question, really.

On the guidance, some of the positive comments that you talked about earlier on the call like potential regulatory easing, German stimulus, and some of the customer feedback, can you confirm if any of these factors are captured within the guidance range or just too late to make it into the targets? Then secondly related to it, in the Chemicals segment, EBITDA margins are now around 8%, the implied return on capital is low single digits.

With the guidance being quite cautious, does that now trigger another strategic review of your German and European upstream assets? Thank you.

I take the second second question. Given the overall market dynamics that we are seeing especially in upstream now, we don't consider now an additional or a new view, strategic view, on our upstream assets, sites, or business strategies, because we have gone through this assessment, as we said in 2024, of which assets in Europe in particular are fundamentally competitive versus our peers, and where we have not seen this, we have either taken already the appropriate action or we have flagged assets for potential restructuring in case they get into profitability issues.

That strategic view is done and it's still robust today. There's no need to review this.

Of course, we will operationally react to the market situation, market dynamics, and margin situation that we have, but strategically, for the most part, we are, let's say, well set up and our strategies remain intact. We have, on the last Capital Market update, given you a view on a few major construction sites, as I call it, in our portfolio, namely the polyamide upstream business, the plastic additives business, the vitamins business, and the BDO business.

Here we continue to challenge, of course, also the asset footprint with ongoing efforts, but no fundamental reassessment of our asset footprint. We believe we are competitive in Europe and North America and China in our major markets, and we just have to sustain, at the end of the day, a trough in the overall market situation with this asset setup.

Tony, maybe shortly on your first question, I can assure you that everything that we said today and share today is reflected in the guidance. The guidance is really updated.

We didn't stop to have a look into what we can share and offer today until the very last day. What will make us busy and still will keep the business on a relatively low basis will be the FX effects that we talked about.

This is a significant effect. Also the ongoing margin pressure and price pressure that Markus has talked about.

We have fully factored in the self-help measures that we will be taking also this year. We also factored in the positive volume effects that we also talked about by the segment.

I think the relatively wide range that we have to offer here is due to the ongoing uncertainty. We are all hearing and listening to the news each and every day, and we remain in a world of uncertainty.

You see that also in the confidence levels of the customer industries, we have to come up with a relatively broad range in the guidance. I think this is as good as it can get today, and we are, I would say, confident with the guidance that we are providing today.

That's wonderful, and that's very helpful.

Given the time, I suggest we can only take three more analysts in the queue, but really ask you to only ask one question. It's James Hooper, Geoff Haire, and then Matthew Yates.

Now James Hooper, Bernstein. Please go ahead.

Morning, everyone, and thanks for taking my question. My one question: can you give us a little bit of detail about the energy cost outlook just because you've got your partnership with Cheniere and we're expecting a lot more LNG supply coming into Europe?

Thanks.

James, it's quite simple. Energy outlook, we gave you the short-term outlook on oil.

We are forecasting, of course, always or we plan doing our planning based on oil, and we do the same on natural gas. The outlook on natural gas as most important energy carrier for the chemical industry, especially in Europe, is actually quite simple.

We believe that it is mid-term going to be an LNG-based pricing mechanism in Europe, and that means that on the long run, LNG pricing in Europe in a balanced market scenario will always have a certain offset versus the export price US Gulf Coast or Middle East. This is also the picture that we see, for example, today in future markets.

If you look out 2028, 2029, you can already buy natural gas futures in Europe, and this is in that range. We see a balanced market, and the LNG market dynamics globally will anchor, to say, the energy cost for natural gas in Europe.

That's our outlook, and so we're not so concerned, but we have to also acknowledge there will always be an offset of natural gas cost in Europe versus US, order of magnitude $5 to $7 per MMBtu.

Thank you.

Geoff Haire, UBS, your turn.

Good morning, and thank you for the presentation. Can I ask, at the lower end of your guidance, the €6.2 billion, what do you assume?

Is that just a continuation of what we're seeing in Q1, or is it that the world gets worse?

That's, of course, a tough one. It's the lower end of the guidance for a reason.

This counts in that also there's a lot of things in 2026 that could go also south. Dirk answered the question on the guidance, and made a comment also on the wide range of the guidance.

I can only remind everybody, we're giving a guidance for the next 10 months. Year-end is 10 months away.

If you look 10 months back, it was Independence Day, April 2nd, Mr. Trump standing in the Rose Garden.

A lot of things can happen in 10 months. Yesterday I've seen pictures of US aircraft carriers in the Persian Gulf.

I also don't know what the next months will be like. We just wanted to indicate with a rather wide range that there's a lot of insecurities, and we, of course, looked at some challenging scenarios for 2026 that could emerge, and that's how we set the lower end of the range.

If that gives you any feeling. It's the best guess we have today, late February 2026.

End of March, actually, there's a meeting between Mr. Trump and Mr.

Xi. Nobody knows what the outcome of this meeting is, and that could drive dynamics in 2026 also to the much much more positive than what we have in the books today, I might say that as well.

High unpredictability, I think, and that's why you see the guidance as it is.

Thank you.

Now final question from Matthew Yates, Bank of America.

Hey, good morning, everyone. Thanks for taking the question.

The midpoint of your free cash flow guidance, if I understand correctly, excluding the Wintershall compensation, is only a bit over €1 billion. That's less than half your dividend, and despite having capex at really minimum levels.

Maybe we're at the bottom of the cycle and profits recover, but if not, it makes me wonder whether BASF needs to push even harder with its cost cutting. I see your European headcount last year was down about 3%, maybe it goes down further in light of the provisions you took.

In that context, why did you agree in December to the labor agreement in Ludwigshafen for no compulsory redundancies for another three years? Say, I'm just wondering whether BASF needs to be more aggressive in how it's tackling its cost base in light of the environment we find ourselves in.

Thank you.

Hi, Matthew. Maybe we split this into two parts.

I start with the ongoing cost savings, and you are spot on. The cost savings that we have already now launched, they bring us to a point, but they will not bring us to an end.

What we said is rather than coming with new cost programs with certain amounts, we rather now engage in continuous productivity gains, continuous efficiency measures. A token of that is what you have seen in our announcement for the restructuring of the back-end service organizations.

We are, for both big services, Digital and Business Services, now going with parts of what we're currently doing in high-cost Europe, we are going to low-cost locations in Asia, notably to India. This is another measure that we are taking because we know exactly that with our programs so far, we will not do the full trick.

Therefore, spot on, we need to stay on the cost and cash awareness, and we will do that going forward. Maybe with that, over to you, Markus.

Also from my side, you can be assured that cost and, let's say, adaptation of cost to the market outlook that we have stays number one, two, and three priority for us at this point in time, because that is going to be key. You will see also when you look at personnel cost or personnel development, you will see an acceleration in 2026 versus 2025.

The reason is that, of course, some of these processes, in particular in Europe and in Germany, are slower than you would wish for, but that is just also the nature of the environment that we operate in. I cannot change this.

To your question on the labor agreement, I would also say that, of course, it is also often simplified as this is the agreement that, let's say, we commit not to lay off people for operational reasons. That is an oversimplification of what was actually agreed upon.

The new labor agreement for the site in Ludwigshafen here gives us much more flexibility to do structural changes than the old one, we have actually gained a lot of flexibility here because we had a consensus with our workers' council and the unions that further restructuring is needed to make the site more competitive for the future. This is actually a very positive step in the right direction that we took jointly.

The limiting factor for operational redundancies in Germany is actually not the site agreement. It is the German labor law, and that is the toughest or the limiting, let's say, regime that we have to apply to.

This is why the site agreement, I can only say for us as a board, is a significant positive step in the right direction. It offers us more opportunities to do structural adaptation at the site than ever before.

I cannot get out of the German labor law regime, which is something that is compulsory for every company that operates in Germany.

We are now at the end of today's conference call. We will present our first-quarter results on April 30, right before our Annual Shareholders' Meeting at the Rosengarten in Mannheim.

Should you have any further questions, please do not hesitate to contact a member of the BASF IR team. Thank you for joining us today, and goodbye for now.