By Ludwig Burger and Patricia Weiss
(Reuters) -German chemicals giant BASF on Thursday slashed the dividends it plans to pay out in 2025 and in the following three years to preserve cash as it grapples with weak demand in Europe and eyes splitting off several businesses.
Its proposed annual dividend of at least 2.25 euros ($2.51) is down from the 3.40 euros, or 3 billion euros ($3.35 billion) in total, paid this year in line with the previous two years.
The company previously had a dividend policy to maintain or improve its payout every year.
CEO Markus Kamieth, at the helm since April, has continued his predecessor's push to cut more than 2 billion euros in annual costs in Europe and reduce the group's reliance on subdued markets there.
At the same time, BASF is in the most expensive phase of building a 10-billion-euro chemical complex in China.
To mitigate the dividend decline, BASF is planning share buybacks by 2027 at the latest worth around 4 billion euros in total.
BASF said it is committed to combined distribution to shareholders - dividends and share purchases - of at least 12 billion euros through 2028, which it said was in line with previous years. The company will also lower investment in plants and equipment from 2026 as the new Zhanjiang site in China will largely be completed in 2025.
The company said it was forecasting 2028 earnings before interest, taxes, depreciation and amortisation (EBITDA) before special items of 10 billion to 12 billion euros, but that was contingent on "midcycle" to "upcycle" business conditions.
Analysts on average expect the company to achieve a 2028 EBITDA of about 11 billion euros, LSEG data shows, up from an adjusted 7.7 billion last year.
BASF shares were down 3% at 43.96 euros at 0926 GMT.
"Whilst its 2028 earnings targets are broadly in line with consensus, the reliance on mid/upcycle conditions with limited visibility in conjunction with the extent of the dividend reduction is likely to disappoint," analysts at Jefferies said.
BASF also said it was preparing a divestment process for its decorative paints business in Brazil.
The company confirmed a report by Reuters on Wednesday that it is planning a partial listing of its agricultural chemicals business and that it is considering new ownership options for its coatings unit.
"The company is targeting readiness for a potential IPO. In the midterm, listing of a minority share (in the agriculture unit) is an option," BASF said.
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