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BASF says 2.1 billion euros annual cost saving on track

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Company says starting south China plant will be costly

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Agri business picked up in fourth quarter, BASF says

(Adds CEO quote in paragraphs 4 and 5, background on rival in

paragraph 9)

By Ludwig Burger and Patricia Weiss

FRANKFURT, Feb 28 (Reuters) - BASF on Friday

predicted slight growth in adjusted operating income of up to

6.3% this year, as it seeks to slash costs in Europe while

facing slow global demand and start-up expenses at a new

chemical complex in China.

The German chemicals giant predicted 2025 earnings before

interest, taxes, depreciation and amortisation (EBITDA) and

adjusted for one-off items of between 8 billion euros ($8.3

billion) and 8.4 billion euros, up from 7.9 billion last year.

In a statement, the company added it was well on track to

achieve a target of 2.1 billion euros in annual cost savings by

the end of 2026.

CEO Markus Kamieth said the ramp-up at BASF's 10 billion

euro site in south China would come at significant costs.

"Challenges such as high geopolitical and trade policy

uncertainty will weigh on the confidence of companies and

consumers ... Most improvements we aim to achieve will need to

be driven by our own efforts," the CEO said.

Kamieth, at the helm for almost a year, is taking steps

towards breaking up the group, a change from his predecessor's

strategy.

He has been preparing a partial listing of the agricultural

pesticides and seeds business while also separating its battery

chemicals and catalytic converter businesses from the rest of

the organisation so that they can be managed more autonomously.

The Agricultural Solutions unit will be ready for an initial

public offering (IPO) by 2027, the company said in presentation

slides on Friday.

The business returned to earnings growth in the fourth

quarter of last year as volumes perked up, BASF added. That was

similar to strong sales volumes reported by U.S. agrichemicals

rival Corteva ( CTVA ) earlier this month, which posted a

smaller fourth-quarter loss.

BASF reported most of its main 2024 results in an

unscheduled statement last month, flagging a drop in 2024

earnings below estimates, weighed down by impairments at its

battery materials business and by restructuring costs.

The German industrial heavyweight is undergoing a massive

restructuring programme to cut costs, amid a sluggish industrial

outlook for Germany.