Chemical company BASF raises outlook but warns on Iran war risks

By Simon Ferdinand Eibach and Patricia Weiss

July 15 (Reuters) - German chemical giant BASF raised its 2026 earnings outlook on Wednesday after reporting better-than-expected second-quarter results, but warned of uncertainty over the Iran war and the outlook for shipping via the Strait of Hormuz.

The company reported preliminary second-quarter earnings before interest, tax, depreciation, amortisation and special items of €2.4 billion ($2.8 billion), above analyst expectations of €2.1 billion, benefiting from substantial price rises and higher demand.

Net income surged to €4.1 billion from €79 million a year earlier, driven primarily by a €3.9 billion gain from the sale of its industrial coatings business to financial investor Carlyle. Second-quarter sales also rose 16%.

However EBITDA before special items at its Chemicals and Surface Technologies division came in "significantly below the average analyst estimates for the respective segments", it said.

The company changed its EBITDA forecast range for this year to €6.9 billion to €7.7 billion from €6.2 billion to €7.0 billion.

But it warned that the outlook for the global economy and regional chemical markets in the second half remained highly uncertain.

"It depends to a considerable degree on the outcome of the negotiations between the United States and Iran, particularly with regard to the access to and use of the Strait of Hormuz," it said in a statement.

SHARES FALL

BASF shares were down 4% at 1113 GMT, underperforming Germany's blue-chip index DAX, which was down 0.9%.

"Investors may be focusing on the EBITDA miss in the chemicals segment, the recent declines in prices of several commodity chemicals, and the H2 EBITDA run-rate implied by the new guidance," said Berenberg research analyst Sebastian Bray.

"It could be that investors view the pre-release as backward looking, driven by peak chemicals prices that are often no longer present."

For free cash flow, which rising raw material prices caused to slip into negative territory in the second quarter, BASF continues to expect a range of €1.5 billion to €2.3 billion in 2026.

It now anticipates an average oil price of $80 per barrel this year, up from the previously estimated $65.

The chemicals industry remains in crisis due to high energy costs and weak underlying demand. Companies such as BASF, Evonik and Lanxess are making drastic cutbacks and cutting thousands of jobs to remain competitive.

($1 = 0.8757 euros)

(Reporting by Simon Ferdinand Eibach; additional reporting by Kira Britten, editing by Matthias Williams and Jan Harvey)