German chemicals giant BASF has raised its 2026 profit forecast after higher product prices and stronger demand helped offset rising energy and raw-material costs linked to the Iran war.

On October 28, the company increased its forecast for EBITDA before special items to €7.4 billion–€7.8 billion, compared with its previous range of €6.9 billion–€7.7 billion. The revised outlook follows stronger-than-expected third-quarter results, supported by higher selling prices and increased sales volumes.

Higher Prices Boost Quarterly Performance

BASF reported third-quarter sales of €16.4 billion, up 14% year over year. EBITDA before special items increased 15% to €1.6 billion, with several core businesses contributing to the improvement.

Selling prices rose 12%, while sales volumes increased 2%. The company benefited from stronger demand in chemicals, materials, nutrition and care, and industrial solutions.

However, performance varied across divisions, with weaker sales volumes in Agricultural Solutions and lower earnings in some businesses.

Iran War Disruptions Affect Chemical Markets

The conflict involving Iran has disrupted energy supplies and shipping routes, increasing costs for energy-intensive industries. These pressures have affected the availability and prices of certain chemical feedstocks.

BASF has benefited from higher prices for selected products and supply constraints affecting some competitors. However, prolonged disruptions could further increase production costs and weaken demand if customers struggle to absorb higher prices.

Restructuring Remains a Priority

BASF continues to implement cost-cutting measures to strengthen competitiveness amid high European energy costs and international competition. The company is restructuring operations and reviewing its business portfolio as it adapts to changing market conditions.

Despite stronger operating earnings, net income declined to €155 million from €172 million a year earlier, reflecting restructuring expenses and other special items. Operating cash flow also fell to €1.1 billion as higher raw-material prices increased the funds tied up in inventories.

Outlook for 2026

BASF’s upgraded forecast reflects improved pricing power and stronger demand, but uncertainty remains over geopolitical developments, energy costs and global industrial activity.

The company maintained its free cash flow forecast at €1.5 billion–€2.3 billion. Its performance in the coming months will depend on whether higher prices continue to support earnings without significantly weakening customer demand.

For now, the revised guidance signals a stronger earnings outlook for BASF, even as the global chemicals industry faces continued cost pressures and market uncertainty.

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