14. Fixed Assets

Accounting policies

Intangible assets

Goodwill is only written down in the case of an impairment. Impairment testing for goodwill is performed once a year and whenever there is an indication of impairment. Goodwill impairments are not reversed.

Acquired intangible assets (excluding goodwill) with defined useful lives are generally measured at cost less straight-line amortization and impairments. The useful life is determined using the period of the underlying contract or the period of time over which the intangible asset can be expected to be used.

Intangible assets with indefinite useful lives are mainly trade names and trademarks that have been acquired as part of acquisitions. These are measured at cost and tested for impairment annually or when there is an indication that their value has declined.

Internally generated intangible assets primarily comprise internally developed software. Such software and other internally generated intangible assets are measured at cost and amortized over their estimated useful lives. Impairments are recognized if the carrying amount of an asset exceeds the recoverable amount. In addition to those costs directly attributable to the asset, costs of internally generated intangible assets also include an appropriate portion of overhead costs.

The expected useful lives and amortization methods of intangible assets are based on historical values, plans and estimates and are reviewed on each balance sheet date.

Depending on the type of intangible asset, amortization is reported under cost of sales, selling expenses, research and development expenses or other operating expenses.

Property, plant and equipment

Property, plant and equipment are measured at cost less scheduled depreciation over their useful lives and impairment. The revaluation method is not applied. Low-value assets are fully expensed in the year of acquisition.

The cost of self-constructed plants includes direct costs, appropriate allocations of material and production overhead costs, and a share of the general administrative costs of the divisions involved in the construction of the plants.

Expenditures related to the scheduled maintenance of large-scale plants are capitalized separately and depreciated using the straight-line method over the period until the next planned turnaround. Costs for the replacement of components are recognized as assets if an additional future benefit is expected. The carrying amount of the replaced components is derecognized. Costs for maintenance and repair as part of normal business operations are recognized as an expense.

Investment properties held to realize capital gains or rental income are immaterial. They are valued at the lower of fair value or cost less depreciation.

The estimated useful lives and depreciation methods of property, plant and equipment are based on historical values, plans and estimates. The depreciation methods, useful lives and residual values are reviewed at each balance sheet date. Movable and immovable property, plant and equipment are principally depreciated using the straight-line method.

Borrowing costs: If borrowing costs are directly incurred as part of the acquisition, construction or production of a qualifying asset, they are capitalized as part of the acquisition or production cost of that asset. A qualifying asset is an asset for which the process necessary to make it ready for its intended use or sale is longer than one year. Borrowing costs are capitalized up to the date the asset is ready for its intended use. Borrowing costs were calculated based on a rate of 2.25% (previous year: 2.25%). All other borrowing costs are recognized as an expense in the period in which they are incurred.

Government grants: Government grants for the acquisition or construction of property, plant and equipment reduce the acquisition or construction cost of the respective assets (net method). Other government grants or government assistance are recognized immediately as other operating income or treated as deferred income and released over the underlying period.

Impairment tests

Impairment tests are carried out on intangible assets, property, plant and equipment, and goodwill whenever certain triggering events indicate potential impairment. External triggering events include, for example, changes in customer industries or technologies used, economic downturns, or expected impacts from climate change. Internal triggering events for an impairment test include lower product profitability, planned restructuring measures or physical damage to assets. In addition, goodwill and intangible fixed assets with an indefinite useful life are tested for impairment annually.

Impairment tests entail a comparison of the carrying amount and the recoverable amount. The recoverable amount is the higher of fair value less costs to sell and the value in use. As a rule, value in use is determined using the discounted cash flow method. The estimation of cash flows and the assumptions used consider all information available on the respective balance sheet date about the future development of the operating business. Actual future developments may vary. Impairment testing relies upon the cash-generating unit’s long-term earnings forecasts, which are based on macroeconomic trends.

The weighted average cost of capital (WACC) after taxes based on the capital asset pricing model, which is used in calculating the discount for cash flows, plays an important role in impairment testing. It comprises a risk-free interest rate, the market risk premium and an industry-specific spread for the credit risk. Additional important parameters are the detailed planning period and, if applicable, the terminal growth rates used.

An impairment of assets (excluding goodwill) is recognized if the recoverable amount of the asset is lower than the carrying amount. An impairment is recognized for the difference between the carrying amount and the recoverable amount. If the reasons for impairment of an asset (excluding goodwill) no longer exist, the write-downs are reversed up to the value of the asset, had an impairment not been recognized. Impairments and reversals of impairments are reported in other operating income and expenses.

The goodwill impairment test is based on cash-generating units or groups of cash-generating units. At BASF, these correspond to the divisions. If there is a need for impairment, the existing goodwill is, if necessary, completely written off as a first step. Any additional impairment is then allocated to the remaining assets of the cash‑generating unit in proportion to their carrying amounts. Goodwill impairments are reported under other operating expenses.

The respective recoverable amounts were generally determined using the value in use. Plans approved by company management and their respective cash flows for the next five years were used.

A terminal value was calculated for the subsequent period using a forward projection from the last detailed planning year as a perpetual annuity. Planning is based on experience, current performance and management’s best possible estimates on the future development of individual parameters. These include sales revenue (excluding precious metals), contribution margins, fixed costs and investments from which income from operations before depreciation and amortization and, based on this, the EBITDA margin are determined. Market assumptions regarding, for example, natural gas and raw materials prices, exchange rates, economic development, inflation expectations and market growth of the respective customer industries are included based on external macroeconomic and industry-specific sources.

In addition, planning is also based on the strategies of the individual strategic business units and divisions which comprise the respective cash-generating units. The digitalization and sustainability trends identified in the strategies are thus taken into account in the respective impairment tests (for more information on strategy and identified digitalization and sustainability trends, see Our Strategy and Business Models of the Segments in the Combined Management’s Report).

14.1. Explanation of intangible assets

The weighted average amortization periods of intangible assets were as follows:

The following table shows the development of intangible assets.

Additions in 2025 related primarily to internally developed software in the Agricultural Solutions segment and not allocated to a segment, as well as production technologies in the Surface Technologies segment.

Disposals of intangible assets with a gross carrying amount of €729 million primarily concerned fully amortized assets.

The transfers to disposal groups related to the intangible assets of the coatings business as well as the Brazilian decorative paints business.

Currency effects reduced intangible assets by €740 million and resulted primarily from the devaluation of the U.S. dollar against the euro.

In 2025, additions to accumulated amortization contained impairments of €15 million. These related mainly to know-how and production technologies in the Agricultural Solutions segment and not allocated to a segment, as well as internally generated intangible assets not allocated to a segment.

In both years, BASF’s goodwill was allocated to 20 cash‑generating units, which are defined either on the basis of business units or at a higher level.

In the 2025 business year, the goodwill of the Coatings division was assigned to disposal groups. The portion of goodwill attributable to the decorative paints business was derecognized upon closing of the transaction on October 1, 2025. For the remaining portion, an impairment test was performed in the third quarter of 2025 in connection with the announced transaction with Carlyle, prior to the reclassification into the disposal group. This test was based on fair value less costs of disposal (Level 2 fair value measurement).

As of January 1, 2025, the Catalysts division within the Surface Technologies segment was dissolved. It previously comprised the cash‑generating units Battery Materials and Catalysts excluding Battery Materials. The battery materials business has since been operated as a stand‑alone division with its corresponding cash‑generating unit remaining unchanged. The chemical and refinery catalysts business, formerly part of the Catalysts excluding Battery Materials unit, was reassigned to the Performance Chemicals division and its corresponding cash‑generating unit within the Industrial Solutions segment. Upon the transfer of the chemical and refinery catalysts business, the perpetual growth rate applied to the Performance Chemicals division was adjusted from 2.0% in the previous year to 1.0% in 2025. The remaining business of the former cash‑generating unit Catalysts excluding Battery Materials is continued as an independent division named Environmental Catalyst and Metal Solutions (ECMS) within the Surface Technologies segment. The goodwill of the Catalysts excluding Battery Materials unit was allocated to the two receiving units proportionate to their respective fair values.

For the impairment test of the Battery Materials cash‑generating unit, the recoverable amount was determined in 2024 and 2025 based on fair value less costs of disposal. Due to the parameters applied, this represents a Level 3 fair value measurement. This amount exceeded the unit’s value in use. The detailed planning period covered 10 years to adequately reflect expected market developments. Demand for electric vehicles and the related battery materials is expected to be delayed over the coming years; however, medium‑term demand for battery materials is projected to increase.

The ongoing transformation of the automotive industry is expected to have a substantial impact on the emissions catalysts business, which is allocated to the ECMS cash‑generating unit. The transition from combustion engines to electromobility will lead to a continuous medium‑ to long‑term decline in demand. However, as the pace of electrification in Europe and North America has been slower than previously anticipated, a delayed decline is projected compared with the prior year, resulting in adjusted planning assumptions. In this context, the perpetual growth rate has been adjusted from –4.7% in the previous year to –2.4% in 2025. At the same time, due to stricter environmental regulations, demand for catalysts is expected to remain stable over the detailed planning period.

As a result of geopolitical conflicts, increased intra‑year volatility in natural gas and raw material prices is anticipated. Despite this, average prices for natural gas are projected to decline slightly over the detailed planning period. For other raw materials, a modest short-term decrease is anticipated, followed by an increase in prices toward the end of the detailed planning period. These trends, together with broader macroeconomic developments, such as easing inflation in certain industrialized economies, are reflected in future business expectations.

The perpetual growth rate for the cash-generating unit Agricultural Solutions in the corresponding segment was reduced from 2.0% in the previous year to 1.4% in 2025, reflecting adjusted expectations.

The annual impairment tests of the 14 cash-generating units or groups of cash-generating units were performed, with the exception of the units in the Coatings division, as of December 31, 2025. The calculation also takes into account capital structure and the beta factor of the respective peer group as well as the average tax rate of each cash-generating unit. Impairment tests were performed on the units assuming a weighted average cost of capital rate after taxes of between 5.96% and 7.85% (previous year: between 6.30% and 7.57%). This corresponds to a weighted average cost of capital rate before taxes of between 7.26% and 11.68% (previous year: between 7.74% and 10.19%).

After determining the recoverable amounts of the cash‑generating units, an analysis was performed to assess whether possible changes in key assumptions could cause the carrying amount of any unit to exceed its recoverable amount. For all units except the Petrochemicals division, which is part of the Chemicals segment, such changes would not result in carrying amounts exceeding their respective recoverable amounts.

For the annual impairment test of the goodwill of the Petrochemicals division, a post‑tax weighted average cost of capital of 6.23% (prior year: 7.08%) and an EBITDA margin for the final year of the detailed planning period of 11.23% (prior year: 12.19%) were applied to determine the terminal value. The recoverable amount of this unit exceeded its carrying amount by €2,802 million. The recoverable amount would equal the unit’s carrying amount if the EBITDA margin of the final detailed planning year used to determine the terminal value were reduced by 1.41 percentage points.

14.2 Explanation of property, plant and equipment

The weighted average depreciation periods were as follows:

The following table shows the development of property, plant and equipment including right-of-use assets recognized by BASF as lessee (for more information on leases, see Note 15).

Additions to property, plant and equipment arising from investment projects (excluding leases) amounted to €4,085 million in 2025 (previous year: €6,078 million). Material investments included the development of infrastructure and technical equipment at the new Verbund site in Zhanjiang, China, as well as modification and capacity expansion of the MDI plant in Geismar, Louisiana. Further investments included construction of the menthol and linalool plants and modification of the acid chloride and chloroformate plant in Ludwigshafen as well as various modernization and expansion projects at the site in Antwerp, Belgium.

Government grants for funding investment measures reduced asset additions by €78 million (previous year: €73 million).

In 2025, accumulated depreciation included impairments in the amount of €414 million (previous year: €694 million) and reversals of impairments in the amount of €9 million (previous year: €5 million).

A full impairment of €155 million for a plant at a production site in North America was recognized in the Chemicals segment. The impairment was due to a disadvantageous cost position globally as well as reduced product price expectations. The impairment affected all of the fixed asset classes. Further impairments of €33 million were recognized for technical equipment at the production site in Ludwigshafen in connection with plant closures. The impairments affected in particular the segments Chemicals, Materials and Nutrition & Care. Furthermore, impairments were recognized for buildings, machinery and technical equipment as well as miscellaneous equipment and fixtures at two sites in Asia. Due to cessation of the production of certain mobile emissions catalysts, a plant with a carrying amount of €33 million in the Surface Technologies segment was fully written off. A further full impairment of €20 million was recognized in the Industrial Solutions segment in response to increasingly weaker demand.

Impairments to construction in progress in the amount of €34 million related to discontinued investment projects.

Transfers comprised mainly the reclassification of operation-ready assets from construction in progress to other asset categories.

Transfers to disposal groups related to the Brazilian decorative paints business divested as of October 1 and the discontinued coatings business.

Currency effects reduced property, plant and equipment by €1,569 million and resulted primarily from devaluation of the U.S. dollar and the Chinese renminbi against the euro.