Clariant AG

Ladies and gentlemen, welcome to the Clariant second quarter first half year results 2026 conference call and live webcast. I am Sandra, the chorus call operator. I would like to remind you that all participants have been listened only mode and the conference has been recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Andreas Schwarzwald, the Head of Investor Relations. Please go ahead, sir.

Thank you, Zandra, and good afternoon, ladies and gentlemen. It's Andreas speaking, and it's my pleasure to welcome you to this conference call. Joining me today are Konrad Kaiser, Clarion's CEO, and Oliver Rittgen, Clarion's CFO. Conrad will start today's call by providing a summary of the second quarter and first half year developments and an update on the Middle East situation, followed by Oliver, who will guide us through the business unit results and the first half year financials. Conrad 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 risk and uncertainties. Listeners and readers are therefore encouraged to refer to the disclaimer on slide two of today's presentation. As a reminder, the conference call is being recorded, and a replay and transcript of the call will be available on the investor section of Clarion's website. Let me now hand over to Conrad to begin the presentation. Thank you, Andreas.

In the second quarter of 2026, Clarion continued to deliver strong results, demonstrating resilience in a volatile and challenging operating environment. On the top line, we delivered sales of 941 million Swiss francs, representing an increase of 0.6% in local currency on a comparable basis. including the impact of our portfolio pruning measures sales decreased by 0.3% in local currency. Our EBITDA margin before exceptional items increased by 80 basis points year-on-year to 18.2%. Strong performance in care chemicals supported by pricing and underlying volume growth more than offset the effects from lower volumes in catalysts due to the Middle East conflict. We increased our free cashflow conversion rates by 15 percentage points on a last 12 month basis to 52% due to effective networking capital management, disciplined capital spending and improved operating cashflow. Our overall expectations for the Group for the full year 2026 remain unchanged, with continued volatility and uncertainty related to the Middle East conflict. We continue to expect sales in local currency to be around flat, with pricing offsetting, lower volumes and increased raw material cost. We expect an EBITDA margin before exceptional items of around 18% in 2026, also supported by value-based pricing, together with increased savings from our performance improvement programs and continued active cost management. We welcome the decision by the Amsterdam District Court to dismiss the ethylene damage claim brought by Shell in its entirety against ourselves and three other defendants, which related to the 2020 competition law infringement. The court's ruling confirms our position that Shell suffered no harm attributable to Clarion's conduct. The judges particularly found no proof that the information exchange amongst buyers caused market harm or altered pricing metrics like the monthly contract price, MCP. While we recognize that this dismissal does not set a legal precedent for the other cases, we see this as encouraging as we feel as we will continue to defend ourselves vigorously in the remaining proceedings in the Netherlands and Germany. In addition, the Amsterdam District Court has also dismissed a claim seeking declaratory judgment of liability of the defendants for the same conduct brought by a claim vehicle stichting ethylene claims. Now, moving to further detail on our sales performance in the second quarter. Pricing increased by 3% and was positive across all three business units, driven by strong value-based pricing actions to offset inflationary raw material prices. This is particularly positive given that formula-based pricing operates with a time lag relative to inflation. volumes decreased by 3.3% impacted by the Middle East conflict and our portfolio pruning measures. Underlying volumes grew by 0.5% in care chemicals and by 2.0% in adsorbents and additives, while catalyst volumes declined by 14.2%. The reported revenue figure was affected by a 2.4% currency headwind. Turning to profitability. EBITDA, before exceptional items, increased by 1.5% to 171.1 million Swiss francs, corresponding to an 18.2% margin. The 80 basis points increase was the result of strong pricing and higher underlying volumes in chemicals. supported by a favorable valuation effect on inventory. This more than offset the impact of the Middle East conflict on catalyst volumes, lower operating leverage, and higher raw material costs. Adsorbent and Additus delivered an almost stable margin. Our performance improvement programs and cost productivity actions supported all business units. Looking at the savings programs in more detail. We have increased the savings target of our performance improvement programs by 20 million Swiss francs. Now targeting the total run rate savings of 100 million Swiss francs by 2027. We now expect 90 million Swiss francs run rate savings already by the end of 2026. In Q2, we achieved savings of 10 million Swiss francs, which brings the total savings achieved to 69 million Swiss francs. The implementation of the additional programs has resulted in restructuring charges of 24 million Swiss francs in the second quarter. The key measures announced in the second quarter include an additional headcount reduction of around 110 positions, increasing the total announced reduction to around 640 positions. We are implementing new targeted cost management initiatives globally across the business units in production, supply chain, engineering and technical support, as well as in corporate functions. Turning now to our updated assessment of the impact of the conflict in the Middle East. All of our 150 employees across our Middle East sites are safe. There has been no damage to any of our facilities and all Clarion sites in Bahrain, Qatar, the UAE and Israel, as well as our joint venture in Saudi Arabia have resumed operations. Globally, access to feedstock remains secured across our production footprint. During the second quarter, we increased our pricing by 3% across all businesses, enabling us to offset the impact of an inflationary raw material environment. We expect raw material inflation to moderate in Q4. with uncertainty against the background of the ongoing developments in the Middle East. On volumes, our catalyst business remains most affected, with the Middle East accounting for around two thirds of the 14.2% year-on-year volume decline due to order delays. We saw limited pre-buying in care chemicals and adsorbents and additives. Variant's catalyst customers outside the region slowly resume operations and we expect improvement in the second half of the year. However, ongoing developments in the Middle East could affect the pace of this trend. The situation remains volatile and supply security remains a primary concern for our customers. We continue to leverage our global production footprint to ensure supply to our customers. As I mentioned earlier, we have also identified an additional 20 million Swiss francs of savings through active targeted cost management to help offset the overall negative effects of the conflict. Together, these actions support our profitability guidance for the year. With that, I now hand over to Oliver for further details on our business performance in the second quarter.