Clariant AG

Ladies and gentlemen, good afternoon. My name is Andreas Schwarzwaelder, and it's my pleasure to welcome you to this Q3 conference call. Joining me today are Conrad Keijzer, Clarion CEO, and Oliver Rittgen, Clarion CFO. Conrad will start the call by providing a summary of the third quarter developments, followed by Oliver, who will guide us through the business unit results. 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 that are subject to risks and uncertainties. Listeners and readers are therefore encouraged to refer to the disclaimer on slide 2 of today's presentation. As a reminder, this conference call is being recorded. A replay and transcript of the call will be available in the investor relations section of the Clarion website. Let me now hand over to Conrad to begin the presentation.

Thank you, Andreas. In the third quarter of 2026, Clarion delivered strong sales growth in local currency. We delivered sales of 968 million Swiss francs, representing an increase of 5.6% in local currency. Excluding portfolio pruning, sales increased by 6.7% in local currency. Strong growths in care chemicals and adsorbents and additives reflected positive pricing and volumes, while catalyst volumes remained impacted by the Middle East conflict. Our EBITDA margin before exceptional items decreased by 230 basis points year-on-year to 15.6%. The improvement in adsorbents and additives was more than offset by the normalization of corporate costs following a prior year one-off benefit and the impact of a less favorable mix and raw material related effects. We increased our free cash flow conversion rate by 9 percentage points on a last 12-month basis to 48% from 39% in the prior year period due to improved operating cash flow, disciplined capital spending and effective networking capital management. Our guidance for the full year 2026 remains unchanged. With continued volatility and uncertainty related to the Middle East conflict. For the final quarter, we have a strong order book, particularly in catalysts, and expect continued strong business momentum in care chemicals and additives. Margins in the fourth quarter will be driven by top-line growth and a positive business mix. This will be supported by our performance improvement programs and continued active cost and pricing management. Now moving to further detail on our sales performance in the third quarter. Pricing increased by 5.7% and was positive across all three business units. Driven by strong value-based pricing actions to largely offset significant inflationary raw material prices. Volumes decreased by 0.1%, impacted by the Middle East conflict and our portfolio pruning measures. Excluding portfolio pruning, group volumes grew by 1%. Volumes grew by 2.1% underlying in chemicals and by 1% in absorbents and additives, while catalyst volumes declined by 1.9%. The reported revenue figure benefited from a 1.3% currency tailwind. Turn into profitability. EBITDA before exceptional items decreased by 6.5% year-on-year to 151.5 million Swiss francs. This corresponds to a margin of 15.6% compared to 17.9% in the prior year. Let me provide some more details on the margin development. The 230 basis point decline reflects two effects of broadly similar magnitude. First, a one-off year-on-year impact of roughly 100 basis points from the phasing of provisions in corporate costs. Second, a roughly 100 basis points effect of volatile raw materials on cost and valuation of inventory in chemicals and catalysts. Our performance improvement programs supported margins across the group, particularly in adsorbents and additives. Pricing largely offset 12% higher raw material, 9% increase in energy, and 24% higher logistics costs across the group in the third quarter versus prior year. Looking at our savings programs in more detail. Our performance improvement programs target total run rate savings of 100 million Swiss francs by 2027. We continue to expect 90 million Swiss francs run rate savings by the end of 2026. In the third quarter, we achieved savings of 10 million Swiss francs, which brings the cumulative run rate savings achieved to 79 million Swiss francs. The implementation of the programs resulted in restructuring charges of 6 million Swiss francs in the third quarter, bringing total program restructuring charges to 99 million Swiss francs. Key measures announced in the third quarter include an additional headcount reduction of around 70 positions, increasing the total announced reduction to around 700 positions. We continue to implement targeted cost management initiatives globally across the business units and corporate functions. With that, I now hand over to Oliver for further details on our business performance in the third quarter.

Thank you, Conrad, and good afternoon, everyone. Let us now look at the third quarter development by business unit. In Care Chemicals, we recorded strong underlying growth driven by the industrial businesses and personal and home care. Sales increased by 8.7% in local currency when excluding our portfolio pruning measures and by 6.6% when including them. Pricing was up 6.5%, reflecting increased formula-based prices, and the continued implementation of value-based pricing in response to clearly inflationary input costs. Volumes increased by 0.1%, including the impact of portfolio pruning, while underlying volumes grew by 2.1%. Sales and stress ranks increased by 8.4%, reflecting a 1.8% currency tailwind. Growth was driven by industrial applications, base chemicals, mining solutions, and personal home care, supported by positive pricing and strong volume growth. Sales and crop solutions were flat with slightly lower volumes. Here, we expect a volume recovery in Q4. Sales and oil services declined due to the portfolio pruning effect behind our exit in Argentina, and the impact of the Middle East conflict. We saw an underlying decline at a low single-digit rate over a particularly strong previous year quarter. We recorded an EBITDA before exceptional items of 93 million Swiss francs, representing a 0.3% decrease compared to the prior year. This translated into an EBITDA margin before exceptional items of 17.5%, A 150 basis points decline, reflecting business mix, as we saw an overproportional contribution from industrial businesses, and the effects of volatile raw materials on costs and valuation of inventory. In catalysts, sales increased by 1.8% in local currency and by 1.3% in Swiss francs. While pricing was up 3.7%, volumes declined by 1.9% versus the prior year period due to the significant impact of the conflict in the Middle East, with high margin orders being delayed. Sales in propylene more than doubled against a very low comparison base, while sales in specialties were flat. Sales in ethylene decreased at a double-digit percentage rate, especially being affected by the shifts of orders. Syngas in fuels decreased at a low single-digit rate, with good growth in fuel sales behind the investments in data centers, offset by softer demand in syngas. EBITDA before exceptional items decreased by 29.4% to 23.1 million Swiss francs, representing a corresponding margin of 13.3% compared to 19.1% in the prior year. Half of that decline was driven by volume impact from the conflict in the Middle East, resulting in lower operating leverage, along with a less favorable business mix. The other half results from a negative inventory valuation effect with lower precious metal prices. Continued delays and orders in the Middle East and other regions remain a factor, as there is still a significant number of forced majeures and shutdowns in the industry. However, we are seeing a normalization in Asia and a reduced number regarding our direct customers. This results in a solid order book and favorable business mix, providing confidence for our expectation to deliver a strong final quarter of the year. Moving to absorbance and additives. We recorded continued strong top-line growth driven by additives. Sales increased by 6.4% in local currency and by 7.9% in Swiss francs, with pricing up In the adsorbent segment, sales increased modestly as growth in renewable fuel applications in the United States more than offset lower demand in industrial segments and editable oil purification in EMEA and APEC. In additives, sales increased at a double-digit percentage rate driven by strong price and volume growth. For polymer solutions, we saw continued strong demand, particularly in flame retardants and waxes, while coatings and adhesives benefited from significant growth in passive fire protection. EBITDA before exceptional items increased by 15.1% to 48.9 million Swiss francs, while the corresponding margin increased to 18.5% versus 17.4% in the prior year. The 110 basis points improvement reflected positive mix effects, active margin management, and contributions from our performance improvement programs. And with this, I close my remarks and head back to Conrad. Thank you, Oliver.