Direct answer
Direct answer: BASF, Germany’s largest chemicals maker, raised its full year profit outlook for 2026 after a stronger third quarter. Sales rose 14 percent from a year earlier to 16.4 billion euros, and core operating profit rose 15 percent to 1.6 billion euros. The company now expects core profit of between 7.4 billion and 7.8 billion euros for the full year, up from its previous range of 6.9 billion to 7.7 billion euros.
What happened
BASF reported its third quarter 2026 results on October 28, 2026. Sales reached 16.4 billion euros, up from 14.3 billion euros in the same quarter a year earlier. The company said higher prices added 12 percent and slightly higher volumes added 2 percent, so the growth came mainly from charging more, with a small rise in the amount sold.
The headline profit measure BASF focuses on is EBITDA before special items. EBITDA is earnings before interest, taxes, depreciation and amortisation, and “before special items” means one off costs are stripped out, so the figure aims to show the underlying operating performance. That measure rose by 213 million euros to 1.6 billion euros, up 15 percent from a year earlier, with all core businesses contributing. The margin stayed at 10.0 percent, the same as a year earlier, meaning BASF kept 10 euros in core operating profit for every 100 euros of sales.
The full reported picture was more mixed. Reported EBITDA was unchanged at 1.2 billion euros because special items of minus 437 million euros offset the operating improvement. Earnings before interest and tax fell to minus 98 million euros, and net income fell to 155 million euros from 172 million euros a year earlier.
On cash, the quarter also showed pressure. Cash flow from operating activities was 1.1 billion euros, and 507 million euros was tied up in inventories, largely because raw material prices rose. Free cash flow in the quarter was 523 million euros. BASF kept its full year free cash flow forecast unchanged at between 1.5 billion and 2.3 billion euros, so the rest of the year will need a stronger cash result to reach that range.
BASF said the strong year to date performance of its core businesses gave it confidence to narrow its forecast upward. Bloomberg reported that this was the second time BASF had raised its full year outlook this year, after higher prices and volumes lifted earnings. For context on how European shares have traded through a volatile October, see the recent post on European shares ending their best month since June on a sour note.
Why it matters for beginners
Chemicals sit near the start of many supply chains. BASF makes products used in farming, cars, construction, packaging and everyday goods, so its results give a read on both industrial demand and input costs. When BASF says prices rose 12 percent, that is a reminder that higher prices can lift a company’s sales even when the volume it sells rises only slightly.
The gap between core profit and net income is also a useful lesson. A company can report a stronger core result and still see net income fall, because one off items, interest, taxes and other charges sit below that core line. Reading both figures gives a fairer picture than either one alone.
Cash is the third lesson. Profit on paper is not the same as cash in the bank. When raw material prices rise, a company may need more cash tied up in stock, which can hold back cash flow even in a good sales quarter. That is why BASF’s unchanged free cash flow forecast matters alongside its raised profit outlook.
What to watch next
- Whether BASF can turn the stronger fourth quarter profit into the free cash flow it still forecasts for the full year.
- Whether prices stay high, or cool if raw material costs ease and demand softens.
- Whether volumes pick up, since the third quarter growth relied mainly on prices rather than much higher volumes.
- BASF’s comments on a possible combination with Evonik. Chief Executive Markus Kamieth called a deal a logical and sensible step, but said BASF would only proceed if it creates value for shareholders, not at any price.
- The full year results due on February 26, 2027, when investors can check the final outcome against the new 7.4 billion to 7.8 billion euro range.
FAQ
What does BASF make, in simple terms?
BASF is a chemicals company. It makes basic chemicals, materials, coatings, crop protection products and ingredients used by many other industries, from cars and buildings to food packaging and farming.
What is EBITDA before special items?
EBITDA is profit before interest, taxes, depreciation and amortisation. “Before special items” strips out one off gains or costs, so the figure is meant to show how the underlying business performed. It is a useful comparison tool, but it is not the same as net income or cash flow.
Why did BASF raise its outlook if net income fell?
The outlook BASF raised is for EBITDA before special items, not for net income. Core operating profit improved, and BASF said its core businesses had performed strongly through the year so far. Net income fell because of special items and other charges below the core profit line.
Why does cash flow matter if sales rose?
Sales and profit can rise while cash flow lags, for example when more cash is tied up in inventories because raw materials cost more. BASF reported 507 million euros tied up in inventories in the quarter. Cash flow shows whether profit is turning into money the company can actually use.