Clariant AG

Ladies and gentlemen, good afternoon. My name is Andrea Schwarzweiler, and it's my pleasure to welcome you to this call. Joining me today are Konrad Kaiser, Clarion's CEO, and Oliver Rittgen, Clarion's CFO. Konrad will start today's call by providing an update on the progress we have made on our purpose-led growth strategy and a summary of the full year 2025 financial highlights and savings program, followed by Oliver, who will guide us through the Q4 and business unit results. Konrad will then conclude with the outlook for the full year 2026. There will be a Q&A session following our presentation. At this time, all participants are in listen-only mode. I would like to remind all participants that the presentation includes forward-looking statements which are subject to risks and uncertainties. Listeners and readers are therefore encouraged to refer to the disclaimer on slide two of today's presentation. As a reminder, this conference call is being recorded. A replay and transcript of the call will be made available on the investor relations sections of the Clariant website. Let me now hand over to Konrad to begin the presentation. Thank you, Andreas.

2025 was a year that demonstrated the success of our transformation journey. The progress we've made over recent years is bearing fruit. with our purpose-led growth strategy, proving its strengths through effective execution. Built on four strategic pillars, customer focus, innovative chemistry, leading in sustainability, and people engagement, the strategy reflects our integrated approach to creating value for all stakeholders. On our first pillar, customer focus, the execution of our commercial excellence programs delivered further improvement in customer satisfaction, as indicated by the Net Customer Promoter Score, CNPS. In 2025, this CNPS increased to 50 versus 45 in 2024. with the company receiving outstanding scores for product quality, technical support, and customer service. Overall, this score placed Clariant in the top quartile amongst peers. Our Local for Local strategy has continued to help us to weather geopolitical challenges and tariffs. We serve our customers to a very high degree based on local manufacturing and local raw material sourcing. We successfully accelerated the rollout of Clarity, the cloud-based service platform designed to optimize catalyst management and performance monitoring. It offers 24-7 real-time operations data so that customers can manage their plants more efficiently. By the end of 2025, clarity utilization has almost doubled to over 220 customer plans and over 800 users in 38 countries. And finally, differentiated steering, which ensures that we allocate resources strategically. Each business segment has its own strategic mandate to optimize value creation. The restructuring and capacity expansion actions taken in our Editus segment resulted in successful turnaround with improved sales growth and better margins. In our second pillar, Innovative Chemistry, we demonstrated a strong improvement in innovation sales. reaching 18.8%, marking a significant step up from the 16.9% recorded in 2024. This trajectory reflects the strengths of Clarion's innovation portfolio and execution. We maintain our commitment to research and development with sustained investments at 3% of revenue in 2025. The products from our innovation pipeline are growing faster than the rest of our portfolio. We will continue to intensify supplier partnerships to co-develop innovations meeting the highest environmental standards. This dedication to innovation resulted in over 30 awards and recognitions received throughout the year from customers like L'Oréal, Unilever and Schneider Electric. and various industry associations. 2025 marked another year of great progress in sustainability leadership. Clarion's greenhouse gas emissions reduction targets that were originally announced at our investor day in November 2024 were reviewed and approved by the science-based targets initiative in 2025. By 2030, Clarion is committed to reducing absolute Scope 1 and 2 greenhouse gas emissions by 47%, and absolute Scope 3 greenhouse gas emissions by 28% from the 2019 base year. In 2025, Scope 1 and 2 total greenhouse gas emissions fell to 0.43 million metric tons in 2025, a decline of 11%. The main driver for the greenhouse gas reduction in 2025 was a further switch to green electricity. The share of renewable electricity increased from 69 to 76%. The total indirect greenhouse gas emissions for purchased goods and services, scope 3.1, were 6% lower to 2.4 million metric tons in the last 12 months. As a result of consistent progress over time, credible targets, verified data and clear accountability, we achieved top leadership level scores across all environmental categories of the Carbon Disclosure Project, CDP, the most widely used environmental disclosure platform globally. Ranking in the top 1% of all companies evaluated worldwide, Clariant was awarded A in Climate Change and Forests and A- in Water Security. We are convinced that the transformation toward more sustainable business models will not reverse. Companies that stay on the course will shape the future and gain enduring competitive advantage. And finally, people engagement, where we increased our employee net promoter score, ENPS, to 37 in 2025, up from 34 in the prior year. I'm particularly pleased that participation rates of our employees further increased to 88%. And our employee engagement came in at 87%, which positions us in the top quartile compared to industry peers. Our safety performance also was top quartile of the chemical industry globally. Clarion recorded a days away restricted or transferred rate of 0.13, down from 0.17 in 2024. This reflects our high awareness and continued commitment to safety, training, and accountability. These achievements are thanks to the hard work of over 10,000 Clarion colleagues across the globe who are committed to our purposeless growth strategy and who delivered strong results in 2025. We delivered sales of 3.9 billion Swiss francs, representing a flat performance in a challenging macroeconomic environment. We improved our EBITDA margin before exceptional items by 180 basis points to 17.8%, driven by the successful execution of our performance improvement progress. This is the third year in a row where we have delivered strong EBITDA improvements, both in absolute and in margins. I'm particularly pleased with the 42% cash conversion rate we achieved in 2025. This represents a 10 percentage point improvement compared to 2024, already exceeding our medium-term target of 40%. Our performance in 2025 enables us to propose a stable distribution to shareholders of 0.42 Swiss francs per share. Now, moving on to more details relating to our financial performance for the full year 2025. We delivered sales of 3.9 billion Swiss francs. This represents a flat performance in local currency. with the reported figure impacted by a 6% negative currency translation effect. We maintained pricing discipline across our portfolio in a slightly deflationary raw material environment, with a year-on-year increase in absorbance and additives, and flat pricing in care chemicals and catalysts. Organic volumes decreased by 1% across the business units. The acquisition of Lucas Meyer Cosmetics had a positive scope impact of 1%. Turning to profitability. We had a strong overall performance with 180 basis point improvement in EBITDA margin before exceptional items versus the full year 2024. driven by our performance improvement programs and cost productivity across all business units and the corporate functions. In absolute terms, EBITDA B4 exceptional items increased by 5% to 679 million Swiss francs. As I mentioned earlier, we recorded a free cash flow conversion rate of 42% in 2025. This represents a 10 percentage point increase versus 2024 and delivers on our medium term target of 40% ahead of schedule. We were able to achieve this through effective cost and margin management, which drove an increase in operating cashflow. Higher net working capital and phasing effects were offset by disciplined CapEx management. In absolute terms, free cash flow increased by 31% to 273 million Swiss francs. Now, turning to our Investor Day savings program. As a reminder, we expect full run rate savings of 80 million Swiss francs from business units and corporate actions to be delivered by the end of 2027. In Q4, we achieved savings of 19 million Swiss francs, which brings the total to 50 million Swiss francs for 2025. This represents 63% of the total savings target, with the remainder largely expected in 2026. The key measures include a headcount reduction of approximately 470 full-time equivalents across the business and corporate functions, and the closure of two production lines and two sites as part of our footprint optimization. Procurement added another 22 million Swiss francs savings related to structural changes in qualifying alternative suppliers and implementing best practice contract management. Cost-efficient execution of the programs and phasing led to restructuring charges of 63 million Swiss francs. This was below the 75 million restructuring charges originally expected for the year. With that, I now hand over to Oliver for further details on our business

Thank you, Conrad, and good afternoon, everyone. In the fourth quarter, we delivered sales of 1 billion Swiss francs, representing an increase of 1% in local currency versus the prior year period. Pricing was overall flat as formula-based price adjustment linked to raw material costs in chemicals were offset by a 1% increase in absorbance and additives and flat pricing in catalysts. Volume increased by 1% as growth in catalyst and chemicals offset a decline in absorbance and additives. The reported figure was affected by a 7% currency headwind. Turning to profitability. Our Q4 EBITDA before exceptional items increased by 10%, corresponding to a margin of 17.1%. This represents a 240 basis point improvement versus the fourth quarter of 2024. Key contributions came from continuous strong execution of the performance improvement program in all business units, effective cost management, a positive mix due to strong growth in catalyst, and operating leverage. Let us now dive into the fourth quarter development by business unit, starting with chemicals. Sales increased by 1% in local currency as 2% volume growth recorded in the quarter more than offset the 1% decline in pricing due to formula-based price adjustments linked to raw material costs. The reported figure was negatively affected by a 7% currency headwind. We recorded low double-digit organic growth in mining solutions, driven entirely by volumes, and in oil services, where higher volumes were supported by slightly positive pricing. Sales in personal and home care increased at a low single-digit rate, also driven by volume growth, and including a continued positive contribution from Lukas Meyer Cosmetics. Base chemicals declined slightly despite volume growth in the seasonal aviation business as pricing declined due to formula-based price adjustments. Sales in industrial applications declined due to lower pricing and volumes. Crop solutions declined driven by lower volumes versus the prior year period when a restocking effect led to strong growth. We recorded an EBITDA before exceptional items of 96 million Swiss francs, representing a 7% increase compared to the prior year. This translated into an EBITDA margin of 18.3%, a 220 basis points improvement, driven by increased operating leverage, and a strong contribution from the performance improvement programs. In catalyst, sales increased by 5% in local currency, a result of materially higher volumes in ethylene versus the prior year period. The reported figure was negatively affected by a 7% currency headwind. Sales in ethylene catalyst recorded the strongest growth at a high double-digit percentage rate, with some first-fill business coming on top of the regular refill cycle, followed by syngas and fuels. This more than offset lower sales in specialties and propylene, which both declined at a double percentage rate against a strong comparison base in the prior year. EBITDA before exceptional items increased by 22% to 62 million Swiss francs, representing an EBITDA margin of 23.4% versus 18.8% in the prior year. This was driven by effective price and cost management, and the contribution from our performance improvement program. Moving to absorbance and additives. Sales decreased by 3% in local currency and by 8% in Swiss francs, as slightly higher pricing was more than offset by lower volumes. In the absorbance segments, sales decreased at a low single-digit percentage rate, as stable volumes in APAC and EMEA were more than offset by a decline in the Americas, which were impacted by delayed U.S. renewable fuel regulation. In the additive segment, sales decreased at a mid-single-digit percentage rate as growth in polymer solutions was more than offset by lower volumes in coating and adhesives, mainly attributable to the construction markets. EBITDA before exceptional items decreased by 9% to 30 million Swiss francs, with an EBITDA margin of 12.6% at a similar level to the prior year. The positive contributions from the performance improvement programs partly offset the impact of low volumes. And with this, I close my remarks and hand it back to Conrad. Thank you, Oliver.

Let me conclude with our outlook for 2026. For 2026, we expect macroeconomic challenges, uncertainties and risks to remain. According to the latest assessment of Oxford Economics, the global GDP growth projection for 2026 has increased slightly to 2.8%, driven by AI investments. The chemicals industry forecasts predict a reduction of chemical output growth from 2.9% in 2025 to 1.9% in 2026, driven by slower growth in China from 7.4% to 2.7%, and the US turning negative to minus 0.6% compared to a positive 0.6% in 2025. while Europe expects some improvements to positive 0.5% after negative 0.4% in 2025. Looking at our addressable market, we expect 2026 market growth for Clarion of around 1%, considering our geographic footprint. We remain focused on delivering profitable growth and executing our self-help actions. That said, there are some positive signals in certain end markets. Growth in mining and electric vehicles is expected to continue. We also see continued growth in data centers, a recovery in consumer electronics, supporting our additives business, and an improvement in renewable fuels demand, supporting our adsorbents products. We therefore expect sales in local currency to be around flat as we look to offset a negative top line impact for the group of 1% from portfolio pruning in the prior year. We expect slight growth in care chemicals on an underlying basis and in absorbance and additives while sales in catalysts are expected to be at levels similar to those in 2025. We expect to further improve our EBITDA margin before exceptional items to around 18% in 2026. With the 80 million performance improvement program expected to deliver most of the remaining cost savings during the year. Clarion expects to continue to achieve a free cash flow conversion of around 40% in 2026. We remain committed to delivering our medium term targets, assuming a recovery to normalize trading conditions in 2027. With that, I turn the call back over to Andreas.

Thank you. Thank you, Conrad and Oliver. Ladies and gentlemen, we're now opening the floor for questions. To ensure everyone has a chance to participate, please ask no more than two questions per person. Thank you for your cooperation. And Valentina, please go ahead.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. Anyone who has a question or a comment may press star and one at this time. The first question comes from Thea Badaro from BNP Paribas. Please go ahead. Hi, both.

Thank you for taking my questions. Two from me, please. We are seeing positive data points in both chemical-specific and industrial surveys. So I'm curious to know if that optimism is also being reflected in your conversations with customers. And if so, are there any end markets in particular? And then my second question is on care chemicals. You're guiding for a slight growth for the division in 2026, while many peers are expecting actually a flattish year overall due to tough comps. Can you elaborate on where exactly you're getting more positive?

Okay, sure. Yeah, so your second question was on care chemicals, where you say that many peers are guiding flat growth, is what you say, right? Yeah. Yeah, okay, clear. Yeah, so first on the overall market outlook. So what you actually see overall is less growth in chemical production rates globally than last year. I mentioned them in our speech. where actually markets are expected to slow down, particularly in China, where we had strong growth last year. That really will be significantly slower this year. And in the U.S., where we had positive growth, slightly positive growth this year, markets will turn negative next year, amongst others also due to trade actions. In Europe, we were... slightly negative this year, we may turn slightly positive. But overall, I wouldn't characterize this as an optimistic outlook in chemicals. So if you look, what we have in the industry is operating rates typically between 70 and 80 percent. That's still historically low. And a recovery is typically not expected for this year yet, but more 2027. There are Sorry, it's cold here. So in 27, there is actually a general consensus that there should be a recovery. So if you look at recent years, consumer spending has not been sufficiently on durable goods or semi-durable goods. There was more spending on services and recently on AI. So this switch back to durable goods spending and semi-durable goods spending, that is really expected at some point in time. There's a natural replacement cycle to products. But for this to happen, we first need better consumer confidence levels, which still are generally low. low considering geopolitical and trade tensions. More specifically to care chemicals, what we say here is actually that in the outlook overall around flat, there is underlying growth because last year we had a fair amount of pruning in care chemicals. which had an effect of roughly 2% of revenue in care chemicals. As you are aware, we closed a site in Argentina. We also shut down a plant in Europe for EO derivatives. And with that, when we're giving an outlook of around flat for care chemicals underlying, that means actually that there's growth also in our outlook.

The next question comes from Christian Feitz from Kepler Chivro. Please go ahead.

Yes, thank you. Good afternoon, Konrad, Oliver, and Andreas and team, and congrats on the results. Two questions, please. First of all, if I look at weather conditions both in Europe as well as in North America in Q1 so far, I would figure your de-icing business must have been rather robust. Can you confirm this? And if so, possibly put a number on this? And my second question is, on catalysts. You seem to be a bit less optimistic on your catalyst performance for 26 after a rather robust Q4, particularly on the ethylene side. Why is this the case? Would you see a sequential slowdown again? Thanks very much.

Thank you very much, Christian, for the question. So on care chemicals and de-icing, we had a strong start. You saw that also, I think, in the press, also one of the airports in Europe almost running out of de-icing material. But it is too early to call it. It really also depends on how March will come in. So we can't really give numbers yet. um as far as catalyst and our outlook for this year um yeah we we we basically signal that we are bottoming out i think the recovery in catalyst really requires a recovery in new build so if you look right now at our order book um and also what we what we basically saw last year is still of the orders it's it's by and large, a refill business. So the new build has dropped to roughly 10% of our orders. For us to really see a big recovery in Catalyst, we should see the new build coming back in. That is visible in the order book, not this year, but if you look at 27, 28, 29, we are seeing actually a pickup in new builds, particularly in China. There is a let's say a small wave of new builds coming in there ahead of their peak carbon year in 2030. So we're not seeing a recovery yet this year, Christian, we are bottoming out, but we are actually quite optimistic for the years after that, then we should see a recovery in catalyst.

Okay, thanks. Very helpful. Thank you.

The next question comes from Christian Bell from UBS. Please go ahead.

Yes, hello. Good morning. I've got two questions, please. My first one is, how should we think about the earnings phasing in 2026? Are you sort of expecting a softer first quarter, then a stronger second half as savings and volumes build? If you could provide a loose guide for first quarter 26, that would be really useful. And then the second question, if you could just help me, I'm a little bit confused on your 2026 guidance. So you've you're basically guiding the top line down 3% to 5% on currency, which is similar to the outcome in 2025. But last year, you still expanded EBITDA margins by 180 basis points with $50 million of cost out. With another $30 million planned for 2026 and a similar top line result, what's preventing any margin improvement this time around? What's the difference between from 2026 versus 2025 that stops you repeating that same margin progression? Thank you.

Okay, Christian, I'll take the first question on phasing and Oliver will provide some more granularity on your second question. So as far as the phasing throughout the year, I think we should keep in mind that we had last year actually a strong first quarter. Other than that, if you sort of ignore the year-on-year comp, we are seeing a fairly normal pattern throughout the year. It's not that we see a significant recovery in H2 versus H1. like we sometimes had in other years in the outlook. What is important, maybe some specific comments in care chemicals. We see at the moment nothing unusual. The icing is obviously playing a role there in how Q1 will come in. In catalysts, we are comparing against a strong quarter last year, but normally we always see a weak Q1, as we also saw last year after a strong Q4. So there is that sequential effect. In adsorbents and additives, we are seeing a somewhat weaker start in adsorbents where we still are waiting for the regulation for renewables to kick in. The EPA has set ambitious targets for renewable diesel and soft, but these need to be still endorsed by Congress. And because of the government shutdowns, these increased targets to kick in because RINs prices are going up, but we're not seeing that in our numbers yet. Other than that, I think there's nothing here to comment.

Yeah, Oliver, to you. Hi, Christian. Yeah, let me comment on your second question on margin progression year over year. I mean, first of all, as you have seen, there's a strong progression from 24 to 25 with 180 basis points of improvement, which brought us now to 17.8%. And that was driven by the performance improvement programs, the cost productivity and effective price management, as we said. Of course, we had a flat top line at this. For 26, we are guiding for now a second year of flat top line with the effects that we alluded to before, the pruning that needs to be compensated and the soft market environment. And again, we are executing now on the performance program and delivering further savings in 26. At the same time, of course, in 26, like in 25, we need to compensate for the inflation that is happening in the cost structures that we do have. And we guided for 26 that we have 3% to 4% inflation in the cost structure. We have the savings from the savings programs plus other productivity measures that we're taking. And hence, we got it for around 18%. So, of course, the ambition here is to make further progress also towards our medium-term targets. But as we alluded to for 27, that it requires also a bit of a rebound of growth that we then bring it really in.

OK, it just seemed like a similar setup in 2026 with a similar level of cost out. So you're basically saying that your underlying inflation, your underlying cost inflation this year is much stronger than it was. Well, you're expecting it to be much stronger this year than it was in 2025.

No, I mean, there's another year of inflation. I think, Christian, the point is more, we did 180 basis points last year where we set the organization on a leaner base. And obviously the savings were also a bit higher in 25 versus 26. And that's partially driving that effect.

Okay, thank you.

You're welcome.

The next question comes from Katie Richard from Barclays. Please go ahead.

Hi, yes, good afternoon. I had a question on the use of capital and the balance sheet. You were on Bloomberg TV this morning, Conrad, and mentioned that Clarence would be open to bolt on acquisitions, potentially on the scale of Lucas Meyer. But you're also at the same time targeting CapEx potentially as low as 150 million. So a few questions on this then. With leverage coming down and proceeds also coming from staff, Which end markets would you be interested in exploring further? Could you also remind us how much you're spending annually for maintenance purposes, please? And finally, how are you looking to balance organic growth versus paying a premium to prepare to grow?

Yeah, Katie, maybe first to clarify on comments made this morning on the calls. Yeah, there's nothing new. So we're always open for bold on acquisitions. But we also said this morning that our first priority is always organic growth and margin improvements. If we can complement that with the right bolt-on acquisitions, we're very open to that. And we defined as the right ones acquisitions that really fit to our core segments and that provide real synergy. And then I mentioned Lucas Meyer as a great example of an acquisition that basically fits those criteria in the past. But that's not to say that there is right now a target of that size available. So just to be clear about that. But overall, people do expect with limited gross perspectives right now in the chemical industry. that there should be an increased level of potential consolidation ahead of us. And what I said this morning is it's important that we obviously participate in industry consolidation if and when that happens. As far as CapEx maintenance, that's fairly steady at roughly a level of 100 million a year. You see the big reduction in CapEx for us from the fact that we haven't actually added to our footprint, particularly in China in recent years, and now actually we're very well set up there. So keep in mind in recent years, We invested 80 million in a new catalyst plant that came up on stream. We invested 80 million last year in a new surfactant plant in Daya Bay that came up on stream. We invested last year, we completed actually the investment of two lines for flame retardants. That was another 100 million. So if you look at those items alone, That explains why the CapEx envelope is structurally lower than it was in the past. So we haven't cut any corners on maintenance CapEx. So no worries there. That's at a fairly steady level around roughly 100 million a year.

The next question comes from Michael Schaefer from OdoBHF. Please go ahead.

Yeah, thanks for taking my two questions. On one hand, first one, I want to come back to your catalyst outlook for 26. So, as you said, you guide for flat local currency sales into 26. So, nevertheless, you also reported on some Greenfield projects helping you to record what we haven't seen for quite some time, this kind of EBITDA level in the fourth quarter. And I think also on the full year, the 20.8%. margin was rather unique over the past four or five years, so to say. So I wonder how should we think about mix effect into 26 and how margin is progressing in the catalyst segment? This would be my first question. And the second one is on the cash flow in 26. You build up some working capital quite sizable in 2025, maybe a bit as a surprise here. talking also about phasing effects. So how should we think about the measures you are implementing and what you expect in 26 in terms of working capital? Thanks.

Yeah, I will answer the question on margins and Nick's outlook for Catalyst and also will provide some clarity on working capital. movements. If you look at Catalyst and the performance that we saw, we're very pleased that in these new builds that is out there, that we're getting it. So that is, I think, very positive. So particularly on Ethylene, There is actually a large project in Europe that is starting up actually early next year. And we see actually the first fill order for that coming in. So that's very positive. We also saw, if you look at syngas and ethylene, we saw actually that both of these segments are performing well on refill so we have a full share on new builds and if it's about refill we think that particularly on syngas we've gained some share so if you look at our margins they are reflecting that as well so there is the very positive effects from the cost outs also in catalysts but there's also underlying a structural improvement in mix and and What you see is a catalyst with rising prices for metals. It is not an easy environment. You may have seen the profitability reports of some of our competitors that show EBITDA margins significantly down. So we're actually very pleased with the results in Catalyst with a 21% EBITDA margin for the year. But to further step up the margin in a significant way in the year ahead of us, that still would require a pickup in new builds. And that is not yet what we see for this year. We see that more for 27%.

Hi, Michael. On working capital and cash, let me first start from the broader picture, cash. I mean, we're very satisfied with the cash performance overall that we had in 25, 10 percentage points of cash conversion up versus previous year. 80 million better operational cash flow performance. And then, indeed, we had a bit of a build-up in networking capital that we then also compensated with very disciplined CapEx management. So that build-up in networking capital in the fourth quarter is also a bit related to the phasing process. that we have seen in the fourth quarter. We had a very, very strong December in catalyst, but also in care with the aviation business. And I mean, obviously with the payment terms that you have then on these sales, you have a bit of a buildup of accounts receivables. We also have slowed down on inventory buildup in ANA, which had an impact on accounts payable. So we had a couple of effects at the end of Q4. What we have done independent of that particular quarter is that we initiated a cash program in Clariant where we structurally will look into the different networking capital levels. It's an integrated approach across the business units. It's ingrained in the target setting that we have on a segment level. So it's a clear focus area. You have seen it also with our triangle to say growth margin cash. That's what we focus on. That is what drives our differentiated steering. So there's a focus on networking capital and to drive that down in 26.

The next question comes from Julia Winckelmann from Bank of America. Please go ahead.

Hi, and thanks for taking my question. I was wondering, you finished the year ahead of schedule on your cost savings target and also achieved your cash conversion target already. Given this progress, do you plan to update your midterm targets and perhaps also give an update on how to think about your capital allocation going forward, given the stronger cash generation?

Yeah, Julia, that's a great question. And we are obviously very happy with and pleased with how we finished the year. in terms of our EBITDA margin being up 180 basis points and our cash conversion being up 10 points to slightly over 40% conversion now. So where we are versus the mid-term targets is that indeed for cash conversion, we have achieved these targets already, but it's fair to say that we still have a bridge from 17.8% to the bottom range, which was 19 to 21% EBITDA margin. I will say we look at three years in a row now of improvements, annual improvement in EBITDA margins, as well as absolute EBITDA. We came from 14.6%. We're now at 17.8%. That was certainly in a challenging market environment. For us now to revisit the midterm targets, that's not on the agenda. We're very much focused on delivering them. So we are very much focused to have all the levers in place to bridge towards the 19% to 21% EBITDA margin. And that is the differentiated growth strategy. It's repositioning the businesses to more profitable segments. It is finishing the cost out program as Oliver has alluded to it is maintain pricing discipline and with that we think we have the levers in place in addition to a pickup in markets that we do anticipate for 27 so we have all the levers in place to deliver the 19 to 21 percent but yeah that is those are actually quite ambitious targets in the current environment Thank you

The next question comes from Tristan Lamotte from Deutsche Bank. Please go ahead.

Hi, thanks. Two questions, please. The first is, could you maybe just run through your end markets and the trends and outlook that you see in those, so in agriculture, autos, construction, electronics, et cetera? And then can I ask a general question about your views on the threats to European specialty chemicals companies from China? Do you still think that European chemical companies have sustainable moats in specialty chemicals? And to what extent are you seeing Chinese competition moving into specialties so far? And to what extent do you expect that to accelerate over the next 10 years? Thanks.

Yeah, sure. These are important questions. So first on end markets, what we are seeing. Well, first of all, let me start with care chemicals. We see in general the consumer facing segments with a robust demand. So if you look at personal care, home care, that is basically low demand. to mid-single-digit growth with a bit more growth in personal care in the premium segments, like skin care, hair care, but then really the premium, premium products, the level just under that, there is actually some down-trading, the so-called aspirational buyers. Home care, very, very, very solid and robust. Laundry, things like that. Crop protection. We've had interesting years behind us. Last year, we had a strong year in crop protection, but that was really very much because the year before we had still the destocking. So it was also, let's say, some of the year on year comparisons. I think now we have a much cleaner comparison and we should more trade in line with historic levels where we sort of slightly outperform GDP levels. Oil and gas, it's basically a relatively modest outlook right now, and oil prices, now they're up to 70 because of the geopolitical turmoil in the Middle East, but In reality, there's plenty of supply and more so than demand. So it's not an environment with high oil prices or a lot of investments that we are seeing there. Mining continues to be positive, especially for items like copper and still lithium. Catalysts, yeah, we still globally run 70% to 80% util rates globally. And for us really to see new builds kicking in, we need to go first to higher utilization levels. I did mention China as one where 27, 28, 29, we are seeing new builds coming back in. But for this year, it is really a bottoming out year in Catalyst in our forecast. And finally, additives and absorbents. What we see actually is relatively weak demand if you look at electronics and particularly smartphones. But that was already the case last year. So actually, there's a certain... level of maturity here with very low single-digit rates for growth for smartphones. PC production was actually quite nicely up last year, and we think that will continue to be relatively okay. And finally, if you look at our editors business and markets like furniture, We had expected a big recovery there last year already, as consumers at some point should spend on durable goods again, or semi-durables, but it hasn't happened yet. And for this year, so far, we're not seeing that either. And to finish it all off with absorbance, this is very much for us driven by renewable diesel now, sustainable aviation fuel. In Europe, there are the mandates in place, But in the US, we're still waiting for the endorsements by Congress for the new increased EPA targets. But that should come at some point in the year. So overall, if you summarized it, it's a very modest sort of gross environment overall and with some differences by region. Maybe specifically on your second question on China. And how is this impacting specialty chemicals? I think there is a big difference between commodity and petrol chemicals on the one hand and specialty chemicals on the other side. In China, there is significant capacity being built up in recent years for commodity chemicals, for petrol chemicals. In specialty chemicals, we are not seeing that level of competition in China. I mean, this is based on IP that took decades to develop. And actually, what we see is that for our business, we make good margins in China. But there is a shift where we increasingly supply to local Chinese companies. And I think high level, the other big impact that China has is historically europe was exporting a significant part of its production into china the same with the us that has come down significantly and china has become an exporter for some items but not so much in specialty chemicals again it's much more on the commodity side very helpful thanks thank you the next question comes from ketan udeshi from jp morgan please go ahead

Yeah, hi, thanks for taking my question. I just wanted to follow up, Conrad, on your comment on industry consolidation, and I'm a bit puzzled and also curious that we've not seen much happen already. You know, for Clarion, and you signaled openness to participate in any consolidation, but, you know, you have a very different business structure, you know, in the sense like, you know, you've got catalyst business, you've got care chemicals, which is comprised of industrial plus consumer and then of course you have uh absorbance and additive it just feels like you know the the structure of the business is probably too complicated uh to see uh uh you know clarion as an obvious candidate or uh you know initiator of any consolidation i'm just curious how you think about that was it a question or an opinion that you were forcing titan It's a both. I mean, a bit of both. You know, I think it's not just for Clarion type. I'm just curious, you know, is this a problem for the industry overall that, you know, there is no like pure play company that is easy to buy or easy to sell. And that makes it quite complex for industries to consider it.

Yeah, no, it's an important question that you're raising. So if you look big picture where we came from is we were a hybrid. So Clarion was both active in commodity businesses and in specialty businesses. And if you look at the recent years, we've really repositioned the business to become fully specialty. So if you look at the recent, let's say five years, what we did is in 22, we divested our pigment business and which we clearly saw that was commoditizing. By the way, it has indeed even further commoditized, so I'm glad that we divested that in 2022. Actually, a year later, we divested our North America land oil business, which also was very much a commodity business. And if you look now, what we also did was we divested a part of our chemical business, the commodity surfactants, to Wilmar, and we put it in a joint venture there. So we've done actually quite a bit in recent years to, first of all, get out of our commodity business, but at the same time to strengthen our specialty chemical business. So we did a number of smaller bolt-on acquisitions. We bought the cosmetic ingredients business in Brazil with actives. We bought the green surfactant business in India. We did the purification business from BSF for renewable diesel business. at the pool guide in the United States. And last but not least, the Lucas Meyer business, which really strengthens our position in personal care. So what you see now is that we have leading positions in specialty chemicals in the segments where we compete. At the same token, what you also see, Chetan, is that we have year on year improved the profitability of these businesses. So we rarely get the question asked, are you the right owner for this business? As long as we just continue to improve the profitability of and, in fact, achieve leading profitability, both in terms of growth, in terms of margins, we have very sustainable positions in each of these segments because we are having significant market shares in the individual businesses. So, yeah, that's, I think, sort of the summary from sort of an M&A perspective where we are, and we remain interested to continue to do bolt-on acquisitions in these businesses, but only if they bring real synergy.

Makes sense. Thank you very much. Thank you.

The next question comes from Jaideep Pandya from On Field Research. Please go ahead.

Thank you for allowing me to ask questions. First question is on catalyst, actually. What do you think is the longer-term outlook? Like, when you look at the next sort of three years, considering so many capacity shutdowns that have been announced in Europe and also sort of asset rationalization in China as well. So what do you see as a longer-term outlook in Catalyst? That's my first question. And then the second question sort of is on the legal... I apologize if you have answered this before or if you cannot go in detail, but if you can give us some color at least on the legal situation around the SLE cartel case. What sort of Provision, have you booked already? And any timeline in terms of result that we could hear around this? And then finally, just on the consolidation point, Conrad, I mean, on paper, if I just sort of ask the question differently, what Chetan was, I guess, trying to ask, you know, the obvious candidate for increasing your size would be in-care chemicals. So, you know, if there is a case to be presented, Are you saying you could be aggressive enough to, you know, further pursue divestments of some of the other areas to pursue increasing size in care chemicals? Thank you so much.

Thank you, Jaydeep. First, on your question on catalysts and the long-term outlook, I think what is important to realize is that there has been a shift in production. Europe has actually significantly come down in chemical production. CEFIC issued an interesting recent study that since 2022, a total of 37 million tons of capacity has been taken out of the market in Europe. That's roughly 10% of the overall capacity. Now, at the same token, you have seen a buildup of capacity in China and to a lesser extent in the Middle East. So, yeah, so there is a shift. If you look at the global outlook for catalysts, It is actually a fairly robust business, even regardless of these shifts, these regional shifts. And if you look at the long term outlook, petrochemicals historically, globally has always performed at or above GDP. So that is still intact. The change is actually that there are some regional shifts, and therefore it was for us extremely important to invest in China, in Catalyst, in our footprint, and we're very happy with that footprint now that we also have in China to support the local growth. So in terms of long-term outlooks, the fundamentals are still intact at a global level. But yeah, there have been regional shifts, for sure. In terms of your second question on legal, in terms of ethylene claims, at this stage, we cannot publicly comment any further than what we've already said. Clarion firmly rejects the allegations and will adamantly defend its position in the proceedings. And we do have substantiated economic evidence that the conduct of the parties did not produce any effect on the market. And we are in litigation, so we cannot comment further on that. Other than your question on the provisions, we haven't taken any. And this obviously has been reviewed with our auditor, KPMG, and they're obviously of the same opinion. graded report also explained. Thank you. Thank you.

The last question for today is a follow-up coming from the line of Thea Badaro, BNP Paribas. Please go ahead.

Yeah, thanks. Just a quick follow-up from me. Specifically on the flame retardant business, can you quantify the size of the data center market opportunity for your flame retardant business?

Yeah, this is a very interesting question, and we just made a deep dive, actually, on data centers to make sure that we capture all of the share that is out there when it's about our products. And what we are seeing is indeed that our flame retardants are benefiting from this. This is about the... Yeah, our flame retardants for connectors, for switches, switch gears, cable jackets. That is a part of it. There is also a part of it which sits in fire resistant coatings, actually, that are applied to the infrastructure of these buildings. But finally, and this is also quite important, our catalyst business, we are really targeting data centers here as well. And this is first from a development perspective, but we're very happy that we also commercialize now the first application where we basically have a fuel cell. So we have methane, we have basically gas, we convert it to hydrogen, and then the hydrogen basically gets converted into water and electricity. And this is a climate neutral, if it's biomethane, a climate neutral solution, actually. for decentralized and distributed electricity generation in the right high quantities that are necessary. So there's other solutions. Nuclear is also mentioned. But particularly with the limited grid capacity, the solution will be power plants, small power plants in the United States. And Europe has the same challenge. And with Catalyst, we're talking about a very interesting opportunity here, which already the first what we now commercialize is a few tens of millions already in revenue in the outlook that we have. The size for flame retardants combined right now globally is also in that order of magnitude. So it is not moving the goalposts for the company as a whole, but we are seeing a nice upside from data centers.

Thank you.

Thank you. So thank you very much. This is Andreas speaking. This concludes today's conference call. A transcript of the call will be available on the Clarion website in due course. The investigations team is available for any further questions you may have. Once again, thank you for joining the call today and have a good afternoon.