BASF Benefits as German Chemical Industry Raises Revenue Forecast

Despite a decline in production, the German chemical and pharmaceutical industry has raised its 2026 revenue growth forecast to 3.5%, up from a previous estimate of 2.5%. This revised outlook, released by the German Chemical Industry Association (VCI), signals a degree of resilience in the sector despite ongoing headwinds. While revenue increased 5.8% year-over-year in the third quarter to €53 billion, driven by higher prices, production fell by 3.5% over the same period, demonstrating a widening gap between top-line growth and operating output.

The upward revision comes amidst a challenging operating environment characterized by weak industrial demand, particularly from the automotive sector, and volatile conditions in the US pharmaceutical market. The VCI cited the fading of positive effects from the second quarter, coupled with the impact of low water levels, as factors weighing on performance. The number of employees in the German chemical industry decreased by 2.5% to approximately 464,000, suggesting cost-cutting measures are underway.

This mixed performance highlights a divergence within the industry; while major players are performing well globally, the situation in Germany remains problematic. Elevated energy and raw material prices are increasing cost pressures, prompting calls for government intervention to address energy costs. The VCI has already lowered its production forecast for the year to a 1.5% decline, a significant adjustment from the stagnation initially anticipated.

The German chemical industry’s struggles reflect broader economic issues, including the ongoing Chinese real estate crisis and unpredictable US trade policies. Companies like BASF and Evonik have already initiated cost-saving programs, including job cuts, to navigate these challenges. The revised revenue forecast, even with declining production, underscores the industry’s ability to leverage pricing power in the short term, but sustained growth will depend on addressing the underlying economic and geopolitical risks.