Basf Se S/Adr

Good morning, ladies and gentlemen. On behalf of BISF, I would like to welcome you to our conference call on the first quarter 2025. Today's presentation is being recorded. All participants will be in listen-only mode throughout. The presentation will be followed by a question and answer session. Today's presentation contains forward-looking statements. These statements are based on current estimates and projections of the Board of Executive Directors and currently available information. forward-looking statements are not guarantees of the future developments and results outlined therein. These are dependent on a number of factors. They involve various risks and uncertainties, and they are based on assumptions that may not prove to be accurate. BASF does not assume any obligation to update the forward-looking statements contained in this presentation above and beyond the legal requirements. With me on the call today are CFO Dirk Elbermann and Christian Jutzi, President of BASF's Corporate Finance Division. Please be aware that we have already posted the speech on our website at basf.com slash Q1 2025. Now, I would like to hand over to Dirk.

Yeah, thank you, Steffi, and good morning, everyone. Christian Jutzi and I welcome you to our Q1 conference call for analysts and investors right before our annual shareholders meeting. In the first quarter of 2025, BASF held its position in an increasingly challenging environment. EBITDA before special items was at about the level of the prior year quarter and was in line with average analyst estimates. In a moment, we will provide you with details regarding our business development in the first three months of this year. But let's start by taking a look at BSF's manufacturing footprint and strategy in light of the recent market developments around the US tariff announcements. We have production assets in all key regions worldwide. We produce locally for the local markets. This has always been an advantage for BSF, and especially in these challenging times, it makes us more resilient than others and differentiates us from our competitors. In Europe and in North America, BSF sales share from locally manufactured product amounts to around 90%. In the United States, more than 80% of our sales in 2024 came from products manufactured in the country. This high percentage highlights our commitment to the U.S. economy and workforce and enables us to meet customer needs with locally produced goods. In Asia-Pacific and in the region South America, Africa and the Middle East, the sales share from locally manufactured products was around 80% in 2024. This high proportion of local production is the reason why the direct impact of tariffs on BSF is likely to be limited. However, we must also consider indirect impacts resulting from market uncertainty and changes in demand from our customers in industries such as automotive and consumer goods. it remains difficult to assess the full impact on the current tariffs and counter tariffs on BSF's business at this point in time. In the first quarter of 2025, we observed a considerable volume decline of 9%, both in North America and the United States, compared with the prior year quarter. At the beginning of the year, the freezing temperatures on the Gulf Coast hit our chemical segment more than in Q1 2024, when we were less impacted than competitors. In the surface technologies and agricultural solution segments, volumes were considerably down compared with the prior year quarter. In the surface technology segment, this was primarily driven by lower precious metals trading and the weaker market environment in automotive. In our ag business, this mainly resulted from pre-sales in Q4 2024, particularly in fungicides and field crop seeds. In contrast, we were able to increase sales volumes in Asia Pacific by 2% and in Greater China by a remarkable 7%. And in Europe, volumes rose by 2%, while in Germany, they increased by 6%. In South America, Africa, and the Middle East, volumes grew by 7% in the first quarter of 2025. And now let's move on to the performance of BASF Group in Q1 2025. At 17.4 billion euros, reported sales were nearly at the same level as in the prior year quarter. Volumes decreased by 1% on account of the agricultural solutions, chemicals, and nutrition and care segments. As already mentioned, the agricultural solutions segment experienced some pre-buying in Q4 2024. This in turn lowered sales volumes in the first quarter of 2025. In chemicals, the intermediates division sold lower volumes due to persistently long markets, particularly in the business area, butanediol and derivatives. In nutrition and care, volumes were lower due to the consequences of the fire in the isophytal plant. Prices were slightly lower than in the prior year quarter, while currency and portfolio effects positively influenced sales development. Reflecting this underlying sales development, EBITDA before special items was at about the same level as in Q1 2024. Let's now look at the earnings development by segment. Compared with the first quarter of 2024, EBITDA before special items decreased by 87 million euros to 2.6 billion euros. While surface technologies slightly increased EBITDA before special items, all other segments came in below the prior quarter. Agricultural solutions, chemicals, and nutrition and care recorded considerably lower EBITDA before special items than in the prior year period. In materials and industrial solutions, earning decreased slightly. EBITDA before special items of other improved significantly for a variety of reasons. Among other factors, this was due to lower bonus provisions, higher earnings contributions from BSF's insurance companies, as well as higher foreign currency and hedging results included in miscellaneous income and expenses. Before Christian goes into more details regarding the financial figures, let me present an investment that we are planning at our Ludwigshafen Saarbrunn site. BASF is a global leader in supplying the semiconductor industry with high-purity single-bulk chemicals and specialized chemical formulations. They are essential for the manufacturing of chips used in automotive, mobile communications, and AI applications. As announced earlier this week, we will expand our production capacity for semiconductor-grade sulfuric acid. The new facility in Ludwigshafen will feature cutting-edge purity capabilities to serve the growing demand for advanced semiconductor chip manufacturing across Europe. Operations are expected to start by 2027, coinciding with the capacity expansions of our key customers. The BSF investment will be in a high double-digit million-euro range. With several new chip manufacturing plants being constructed or expanded in Europe, there is an increasingly strong demand for high-quality and high-purity semiconductor-grade chemicals, such as sulfuric acid. This need has been accelerated by a close cooperation partner of BASF, who is currently building a new chip production plant in Europe. BASF is thus investing in the semiconductor chemical value chain based on mutual long-term customer-supplier commitments with its strategic partners. With that, I hand over to you, Christian.

Thank you, Dirk. Good morning, everybody. Let's now have a look at further financial details of BSF Group for the first quarter of 2025. With 2.6 billion euros, EBITDA before special items was nearly at the level of the prior year quarter. The adjusted EBITDA margin before special items also remained almost stable at 6.5%. EBIT before special items reached 1.7 billion euros compared with 1.8 billion euros in the prior year quarter. Special items in EBIT amounted to minus 467 million euros and were mainly caused by the sale of BASF's 49% share in the Nordlicht 1 and 2 wind farms to Vattenfall. This resulted in a non-cash effective disposal loss of 325 million euros in other. By exiting this equity participation, we adhere to our disciplined capital allocation approach and avoid having to make significant investments in the wind farms over the coming years. The collaboration with Vattenfall continues through a secured long-term supply of renewable power for BASF's chemical production in Europe at a time when such additional supply will be needed. Let's move on in the P&A. Compared with the prior year quarter, net income from shareholdings declined significantly. mainly due to lower contributions from Wintersaldea, while the financial result improved. Net income decreased by 560 million euros to 808 million euros. Cash flows from operating activities amounted to minus 982 million euros, and free cash flow was minus 1.8 billion euros. You will see more details on the following slide. In the first quarter of 2025, cash flows from operating activities decreased by 468 million euros. This was mainly due to the build-up of the precious metals trading position after it had been reduced in the prior year quarter. Furthermore, in the first quarter of 2025, the agreed payment of around 300 million euros was made for the settlement of the multi-district litigation proceedings related to AFFF products in the United States. Changes in networking capital led to a cash outflow of 3 billion euros compared with a cash outflow of 3.2 billion euros in the prior year quarter. Payments made for property, plant and equipment and intangible assets decreased by 127 million euros compared with the prior year quarter to 816 million euros. The decline shows that we've passed the peak investment phase for our verbund side in South China. Free cash flow came in at minus 1.8 billion euros compared with minus 1.5 billion euros in Q1 2024. Typically, BASF's free cash flow is negative in Q1 and recovers over the course of the year. This is mainly due to the seasonality of our agricultural solutions business. Let's now turn to our balance sheet at the end of March 2025 compared with the year end 2024. Total assets rose by 1 billion euros and amounted to 81.4 billion euros. This increase is mainly attributable to the seasonality of all businesses, particularly in the agricultural solutions segment. This resulted in higher trade accounts receivable compared with the end 2024. At the end of March 2025, equities stood at 37.4 billion euros, a slight increase compared with the end 2024. With 45.9%, BASF equity ratio remained unchanged and very healthy. Net debt increased by 1.6 billion euros to 20.4 billion euros, mainly on account of higher short-term debt. Related to our strong balance sheet, I would like to add that BASF enjoys good credit ratings, particularly when compared to competitors in the chemical sector. We strive for a single A rating, which ensures unrestricted access to financial markets. Our prudent financial policy with a strong balance sheet and high equity ratio ensures favorable financing conditions. This is especially important in times of high volatility and unpredictability. Just recently, Moody's confirmed BSF Single A credit rating. Standard & Poor's confirmed our rating in December and Fitch in November 2024. With that, back to you, Dirk.

Now I will comment on the outlook for the BSF Group. Already in the course of the first quarter, production momentum in the chemical industry and its customer industries was increasingly influenced by reactions to anticipated additional tariffs by the United States. The business development in the near to midterm will largely depend on the trade policy decisions made by the United States and its trading partners. A reliable quantification of the impact on the global economy is not possible at this time. In light of the volatile situation, the assumptions published in the BSF Report 2024 regarding the global economic environment in 2025 remain unchanged for the time being. The BSF Group's forecast for the 2025 business year also remains unchanged. The trends we are currently observing are outlined on the outlook slide under our macroeconomic assumptions for the year 2025. The indirect impacts I mentioned at the beginning are reflected here. The impacts on GDP, industrial production and chemical production are likely to be negative. The stronger Euro also has a potentially negative impact on our earnings, while the lower oil price would be supportive in terms of lower raw material costs. In this dynamic environment, we focus on what we can influence, including our ongoing cost-saving programs and cash improvement measures. We are also staying on course with our strategic initiatives. Furthermore, we will carefully monitor how U.S. tariffs and potential counter-tariffs evolve, and will take additional measures if they become necessary. And now, Christian and I are glad to take your questions.

Ladies and gentlemen, I would now like to open the call for your questions. If you wish to ask a question, please press star and then enter 11 on your telephone. For the best sound quality, we kindly ask you to be sure to unmute your phone and use your headset when asking your questions. Please limit your questions to only two at a time so that everybody has a chance to ask their questions. We will now first have Tom Rigglesworth, then Matthew Yates, and then Georgina Fraser. But now, Tom Rigglesworth, Morgan Stanley, please go ahead.

Thanks very much, Steffi. Good morning, gentlemen. Thanks for the opportunity to ask questions. First question, if I may, kind of just on the near-term trading dynamics, obviously you sort of sit in a lot of end markets. Are you seeing any changes and fallout, you know, in terms of this indirect consequence from the tariff uncertainty either in China or in the U.S., or are you seeing, you know, more imports into Europe impacting potentially prices? That's my first question. And my second question is, just following up on this, on the outlook, you've highlighted – Effectively, the FX is negative, the chemical trends are negative, the GDP is negative, and the oil is the one kind of silver lining. But are you confident that you can see the cyclical pickup through 2Q and 3Q to maintain your full-year guidance? Or is the guidance unchanged, pending, but actually it's not a reiteration of guidance, it's a waiting for guidance to change? Do you see what I mean? Thank you.

Tom, Vistek speaking. Thanks for your questions. I start with the indirect effects. As I've already tried to mention in my speech, it is too early to really tell. What we see is a very limited direct impact from the terrorist situation. On top of that, we know that nothing is certain at that time. So the direct effect I would currently not be too concerned about. For the indirect effect we see already right now more cautiousness on the side of the customers throughout. We see that customer sentiment currently also not getting better. So, the beginning of the second quarter, what we see so far in terms of top lines is a little bit softer than what we saw in our expectations early on. You find businesses where demand will certainly pick up, like in the agricultural solutions business. You also will see on the back of China sentiment some better results for instance in performance materials. So we have these parts in our portfolios which see better results going forward but overall I would say the sentiment is softer right now and we have to see into the second quarter how this is developing. In terms of the outlook as I said we are maintaining our outlook because the assumptions that we have taken can't be replaced by better assumptions. We currently see more risk to our forecast and outlook than we saw probably three months before, but the situation is very volatile, can change, and we certainly need the second quarter in order to be able to come to a decision whether we need to change our outlook or not. For now, it's the best outlook we have at hand, but certainly it is a little bit more risky than it has been before. The assumptions you rightfully mentioned, we have some positives, oil price, we have some negatives, FX, for instance, net-net, it is currently slightly negative, so we will have to look into This as well, when we are through with the second quarter, currently also here a little bit more risk than before.

Thank you very much. Very clear. Very helpful. Thank you.

Okay. We move on to Matthew Yates, Bank of America. Please go ahead.

Hey, good morning, everyone. Thanks, Steffi. A couple of questions, please. Can you just explain to me how the company lost 300 million euros on a wind farm investment? I would imagine there was a PPA agreed up front on the offtake. But did something happen in terms of construction costs that impacts the equity value or something else changed? And then more broadly, I'd like to talk a little bit about the balance sheet, because I'm not sure I entirely share your view that it's strong. Net debt is now over 20 billion. I appreciate you can, in theory, bring leverage down quite significantly there. if you execute on some of your disposal plans over the coming years. But I'm struggling to understand how much capacity there actually is for doing the 12 billion of buybacks you previously promised. If I think forward with the sort of strategic reviews of some businesses, it's plausible that DSF becomes a smaller company, possibly a more volatile company. So do you have in mind a specific absolute debt target that will help us understand how much headroom you really have for additional shareholder returns. Thank you.

Hi, Matthew. I take the wind farm question and then Christian takes the question related to the balance sheet. Yeah, for the wind farm, as you know, we took a second look into how much green energy we will need, particularly in Europe in the years forward. We came to the conclusion that we are well procured with the Holandse Christusud wind farm that we already are partnered in, plus the long-term PPAs that we have secured. So came to the conclusion that the second wind farm would not be needed anymore. And this brought us to an agreement with Vattenfall to terminate this and convert our partnership into a PPA. So we have secured a PPA for additional green energy, which is only becoming effective at a time when we need it. And this is probably rather in the 2030s than any time earlier. So you cannot fully account for this right now. And this led then to the accounting effect, which you mentioned. It is a negative accounting effect. It's now cash neutral. and it avoids that we have in the next couple of years invest more into a wind farm that we are not needing at this time. And later on, when we need the green energy, then we will take it for sure via the PPA, which is not fully accounted for.

Yes, and Matthew, regarding your question on the balance sheet, I think we showed that we have a 46% equity share that is actually pretty much on the same level as it was last year. And it's in the range that we typically had in the past, which was always, let's say, around the 45%. So I think there we are in a good spot. We have a single A credit rating that we strive for, and it's being, let's say, agreed on by the different rating agencies again and again. If you remember in September we announced in our new corporate strategy that we want to generate operating cash flow of 30 billion over the next years until 2028 with a capex of 17 billion. That would then also free up about 12 billion for further distributions. And therefore, you remember that we also said we left the peak of our investment phase in Shenzhen last year. And you can already see this now in the first quarter. Our capex has come down by nearly 200 million. And therefore, you can expect that our free cash flow over the next years is going to significantly increase. And therefore, bring back what, let's say, we all are used to a cash machine of BASF.

Okay, thank you both.

The next speaker is Georgina Fraser. We will then have Chita Nodeshi and then Peter Clarke, but now it's Georgina Fraser, Goldman Sachs. Your turn.

Thank you, Stephanie, and good morning, Derek, and good morning, Christian. Thanks for taking my questions. I've got two. The first is the evolution of the BASF portfolio apart from the investment in China. We're looking at some disposal activity that you had guided shareholders Can you talk about whether the global economic conditions are having any impact on the timing of those potential disposals that you're seeing so far? And then second question, again related to the macro uncertainty. We've been through several years of pressure in the chemicals industry and I'm wondering what levers you still have left to further reduce spending if that's needed. Thank you very much.

Hi Georgina, thanks for your questions. First on the portfolio, let me say that first we are happy that the first piece we have already concluded in the first quarter was the sale of the Brazilian deco paints business to Shervin Williams, which is now in the regulatory clearance phase. In terms of the divestment of or strategic partnership or joint venture of coatings. We intend to follow our process exactly as we have planned. We are intending to approach the market in the second quarter, and then we'll see how the market sounding goes. We are confident that also in this challenging environment, we can go through with this transaction. In terms of the agricultural solutions preparation for the IPO, also here the project is set up and is in motion. This is apparently the early phase, but also here we currently see no changes to our timeline as anticipated. And then on the macro uncertainty, I mean, you're fully right. Since a couple of years, we are always somewhat in a headwind situation. And this is also why we said early on, on top of all the strategic things we want to do, we need to constantly focus on capital discipline, on cash and on cost. On the cost side, I can tell you that we have even accelerated our cost-saving efforts and can now say that by the end of the year we will have another 100 million of savings already achieved to our altogether 2.1 billion euro savings program. So we are accelerating here. Are we currently setting up new cost saving programs? No, but we rather steer the businesses with increased productivity and see that we are gaining with that also competitive advantages. We see that already in Europe, where we have certainly gained market share over the last couple of quarters. So this is currently the way to go. If the situation were to exacerbate, we certainly also have the possibility to pull more triggers.

Thank you very much. Okay, so now it's Chetan Udeshi, JP Morgan. Please go ahead.

Yeah, hi, Monique. My first question was, if I just look at your volume by regions, and thanks again for sharing that information, China was strong at 7%. I guess all of us have a concern that some of that China's strength is pulled forward of demand. You know, just ahead of tariff, and we've actually seen the PMIs come down in April in China. I'm just curious what you actually see now in China. Is that momentum that you saw in China actually continuing or you are actually seeing that momentum weaken as we think about second quarter. The second question I had was just on your nutrition and care business. Clearly a number of moving parts, but can you help us understand how these different moving parts in terms of the production resumption at your vitamin plant combined with the other dynamics that you're calling out, I think you mentioned oversupply of UV filters, but care camps doing okay. How will that influence the numbers through second quarter and second half, you know, in terms of different moving parts? Thank you.

Sure. Hi, Chetan. I start with China and Christian takes nutrition care. So for China, indeed, we saw very good development in the first quarter, volume-wise particularly. We see that currently flat continuing into the second quarter. So no further improvement, but also no deterioration. We noticed that China is now pulling the strings in order to stimulate the economy and with that somewhat counteract to the US tariffs. So currently it is developing in a flat sidewards direction.

Okay, Chetan, and regarding your question on nutrition and care. First, maybe on nutrition and health. Evidently, we are still being impacted by the isophytal incident. Last year, we had a double-digit million euro impact. This year, it will be a triple-digit million euro impact, mostly in the first half of this year. You know, we already announced that in the, let's say, really beginning of the year, we started with some of the aroma ingredients production. Then by April, we now started for vitamin A, the vitamin A complex. Vitamin E will then follow suit in mid-May, actually that's six weeks earlier than we originally thought. And then also the remaining aroma ingredients will come in, as well as the carotenoids, which will come early July. So we're really here ramping up. over the course of the second quarter, and then shall see positive results then over the second half of the year. Evidently, this is impacting, on the one hand, vitamins, then also a bit aroma. In terms of pharma, we've seen some good volume growth in Q1. So overall, I think we are, let's say, really confident that this division will then deliver again in the near future. Care chemicals, you're right, some, let's say, competition in the UV filters, but also we saw overall, we saw volume growth in the different businesses, whether it be personal care outside of UV filters, home care, INI. So in the different business, we saw volume growth, also some price growth in the oleosurfactants and fatty acids overall. It all depends now how the customers are going to react to the tariff situation, whether there's going to be, let's say, hesitation to buy overall. Thank you very much.

We will now have Peter Clark and then Sebastian Brey, followed by Geoff Herr. Now, Peter Clark, Bernstein, please go ahead.

Yes, good morning, everyone. It's just a quick one on the China bonsai. I'm just assuming everything's all on track for the start up the end of the year, effectively. And in terms of the projections here, obviously, you're not changing anything about 2030, but I think you're already expecting a slower start than you envisage a few years ago. Obviously, things are getting tougher there in terms of just your expectation into 26 and 27 for this operation. I know it's very uncertain. And then finally, just the ramp-up costs, which was, I think, 100 million per quarter for this year, just to confirm that's all on track. Thank you.

Morning, Peter. I take these questions on the Verbundsheil project. Let's start with the construction phase. This is a knock on wood still and will, to the end, be very much on track. It is in line with the timeline. It is even below the budget. Nothing to report here. Most of the construction work is now in the meantime finished. There is some remaining construction work, but it's also already commissioning phase, pre-marketing phase already running. First, the plants are about to get up. And as we promised, the Verbund site will be then final and ready for production by the end of the year. So from this angle, everything good. In terms of the operations, we are very confident that we will be able to very quickly fill the plants also to reach a high level of utilization. And we are also securing, as we speak, the contracts with the customers and partners, which dominantly are sitting nearby. It's, as we said, local for local investment that we are doing. In terms of margins, you're fully right. This is the big uncertain, the big unknown. We do not know yet. As you know, margins are under pressure and will be under pressure also for our operations. The good thing is... that we are coming mostly with plants that are highly cost competitive. That was one of the main design principles also to build plants there which are highly cost competitive. So we should fare well in the market. But of course, the margins level, this will be the big question for us. Ramp-up cost, the 400 million that we indicated, 100 million per quarter, this stands. So you will see it is a little bit lower impact in the first quarter and will probably be a little bit higher in the coming quarters. But overall, the 400 million ramp-up costs that are mainly burdening the chemical segment, this also is confirmed. Thanks for the color.

So now we move on to Sebastian Brey, Berenberg.

Hello, good morning, and thank you for taking my questions. One is on agriculture, one is on the surface technology segment. If I start with agriculture, what has the, how has the second quarter started, and is it consistent with the comments about a potential pickup, having demand pulled forward from Q4 into Q1. In other words, are you comfortable with the market dynamic? The reason that I ask is that it looks as if pricing is starting to slip, even as soft commodity prices have held up quite nicely in Q1, and I wonder how Q2 is performing. The second question is on battery materials within surface technologies. This segment appears to have undergrown the end market by about 15% to 20% in Q1 in volume terms, and prices collapsed by more than 10%. The goal set out at the Capital Markets Day was to improve utilization in this segment, but it doesn't seem like that's happening. Why not just shut the plants? Thank you.

Sebastian, I take your question on ag, and Christian will talk about surface technologies. So for ag, I can confirm that after a weaker Q1 2025, we will now see um compared to previous year quarter a stronger start in the stronger second quarter we had for the egg business already a decent start into the second quarter this is becoming already clear now and overall in terms of volumes and prices we see which we should see over the year an improvement for the egg business so had a challenging start due to the pre-ponements we talked about, but now should be coming better and probably the usual proportion of very strong first half and then a little bit weaker second half will be a little bit more tilted towards the second half. And I expect also in the fourth quarter, then probably Again, a very strong finish for the egg solutions so far, as we can say that already now.

Okay. And the question on battery materials. Yes, prices came down. That is, let's say, in the overall market like that. Cobalt, nickel, lithium hydroxide all came down in the first quarter versus prior year. You also saw a slight volume reduction of 2 percent nevertheless. This is actually related also to the development of the base metal prices. The actual volume of cum production was actually up by 5%. So that is related to the base metals and not to the underlying business. We have very cost-competitive assets in battery materials, 190 kT in Europe, China, as well as Japan. Yes, the market has not developed as we had planned it originally. You saw basically no growth last year in the Western world. Nevertheless, as you also probably heard, this is a bit changing now in Q1. Actually, this year, the BEV penetration will increase from 13% to 16.5%. And therefore, this is a growing market in which we intend to participate. Yes, we announced also here to look into partnership options, but we are committed to this business and believe that once we can grow into the volumes, we also have a profitable business. We did, of course, take all the cost-cutting measures that are necessary over the last few months as a result of our, let's say, exit in Indonesia. POS in Spain. So all those now are coming into fruition and we take it from there and we move forward.

Thank you. Now we have Geoff Herr and then we will have Laurent Favre followed by Christian Seitz. But now Geoff Herr, UBS.

Good morning. Sorry. Good morning, everybody. Thanks. I just wanted to follow up on Peter's question about the China plant. I think that you mentioned at the Q4 call that there would still be ramp-up costs, though they'll be lower than this year in 2026. Are you concerned that if the Chinese economy isn't growing as fast as maybe you think at the moment because of tariffs, those ramp-up costs could be significantly higher than you expect for 2026?

Yeah, short question, short answer from my side. No, we are currently not concerned about it because for the ramp up, we have everything in China now. I think that we need to have in China predominantly. So we are currently not planning a downside scenario or something with regard to higher ramp up costs. They should stay as planned. This is our realistic estimate. Okay, thank you.

Okay, now Laurent Favre, BNP Paribas Examen.

Yes, good morning. Two short questions, please. The first one is on the harbor energy state. I think now the market value is more than a billion below the book value that you're running, and I'm wondering I guess, what could be a catalyst for an impairment test if you haven't done that already? And the second question is regarding the German, I guess, situation between what's happening maybe on electricity prices and stimulus. How do you think that could impact BASF directly, let's say, for the next 18 months? Thank you.

On the harbour energy, Laurent, the harbour share price in the range of the 150 pence per share currently certainly by far not reflecting the fundamental value. I'm also very optimistic that over time share price will go up again. This is currently depressed due to oil price development, certainly macroeconomic uncertainty. but also the energy profit levy that was introduced and was causing some concerns of investors in the U.K., particularly fundamentally the underlying value of harbor energy is way higher. So I'm very optimistic that this is going up again, and this is also what has to be and is taken into consideration with regard to impairment testing. We do our impairment tests as you should do regularly and upon trigger events. Currently, the situation is that we are expecting the share prices going up and there is no need for us to do an impairment on this participation. With regard to the stimulus question and the energy, I mean, the good thing is that now everybody is aware that Europe is at a turning point here, has to become much more proactive again in Germany, much more proactive again in order to revamp its infrastructure. BASF is delivering, supplying its products into all sorts of industries, including those which will be responsible for infrastructure buildup. So there will be a beneficial impact also on our results for sure. Is this a short-term 2025 effect? No, but we would expect some upsides in 2026 going forward. And with regard to energy prices, you know the extent of effect it has on our various businesses. So if we are getting more focus on industry competitive energy prices, this will also certainly not harm us.

In what division do you think we are the most likely to see the impact from the German stimulus in the next two years, let's say? Or what segments?

Too early to become very specific here. As I said, we are delivering Laurent to all industries, basically, including construction industry, et cetera, electronics industry. So I think we will see a couple of positive effects here across the board.

Thank you.

And now it's Christian Feitz. And we have two more analysts in the queue. It's Oliver Schwarz and Alex Stewart that will follow them. But now Christian Feitz, Kepler-Chevreux.

Yes, thanks. And good morning, everyone. We talk a lot about your new China for Binzeit and Shanyang. Yet this decade, you are also investing some $5 billion into your existing Nanjing site. Where are we on this in terms of investment cycles? And then the second question would be on agricultural solution. How long will we see a track like 15 million euros in Q1 to prepare the ERP systems for the separation? Thanks very much.

Good morning. I start with the joint venture in Nanjing, the so-called BYC. And now this year entering into a big turnaround. So that's a big exercise that has to be done. There will also be additions to the asset park. We are doing this together with our partner Sinopec. Basically the joint venture is running very successfully. The tar that is coming this year is a planned turnaround, not something that comes out of the extraordinary. And after the tar site will be ramped up again and additions will be made. Everything according to plan and everything according to our capital allocation framework. Nothing that I would say extraordinary.

And regarding the ERP system, you know that we announced to put both the coatings and then also the agricultural solutions business on its own footing. For coatings, the last step has been done recently with the third wave. And now, of course, we are in the middle of preparing for also ag to be put into own legal entities and into an own system. This will continue also through the course of 2026. and then we finalized at the beginning of 2017.

Thanks very much, both, and I wish you as always a short AGM.

Thank you, Christian. Now we move on to Oliver Schwarz, Warburg Research.

Good morning, gentlemen. Thank you for taking my two questions. First one is once again about the write-down on Nordlicht. If I'm not mistaken, The Nordlicht contract with Vattenfall was one of the last contracts signed by Mr. Budermüller before he stepped down as CEO of BASF. So that was back in 2024, not that long ago. What has changed in regards to your assumptions regarding future power or electricity usage by BASF that led to basically that huge write-down in these contracts due to the change of the nature of the contracts. What pressed you to do that now and not wait for, take a more wait-and-see approach? That would be my first question. Second question is regarding the closure of your blue fosunate production in Germany. In the light of the tariffs on Chinese producers, I guess a lot of those glufosinate that was earmarked to be sourced from producers elsewhere, e.g. China, was targeted to supply the U.S. market. And that has now become, when it comes to Chinese producers, two and a half times more costly. Might there be a delay in the closure of the German glufosinate operations? That would be my two questions. Thank you.

Yeah, thank you very much. I will take both of them, starting with the Glucosinate Ammonium question. So with the second one you rightfully mentioned, we are closing the Glucosinate Ammonium and replace it by board so-called LGA. This LGA is exempt, so it's not hidden by U.S. tariffs. We have this from China. We also could have this from a second source elsewhere in Asia. So the decision to shut down the glyphosate ammonium own production stands, and the business case with the replacement, namely with the air glyphosate ammonium, works for us. So there is no reason to change that approach. For Nordlicht, you asked the question, why not wait and see whether you're not needing more green electricity? Well, this would have been a costly wait and see because when we stayed into the partnership, we would also have to put in more capital, more investment. And as with our new strategy, we clearly came to the conclusion that in Europe, we will not need as much energy as we anticipated beforehand and accordingly not so much green energy. We rather put the project right now in order to avoid further outflow in terms of an investment and hence stick to our very disciplined capital allocation approach. And at the same time, we do see the demand for more green energy in the next decade. And this is why we were very eager to secure with our partner that we then have a PPA that is directly linked to Nordlicht, so to the wind farms in the North Sea. So I think it makes a lot of sense, even though it is a painful one-time hit now in the first quarter of 2025. Thank you very much.

So now we have the final question from Alex Stewart-Barclays. Please go ahead.

Hello. Good morning. Can you hear me? Yes, we can hear you. Hi there. A straightforward question, I hope. I wonder if you could give us some indication of which markets... specific industries are seeing activities slow down um i know you talked about autos you talked about um the pressure metal refining but particularly within north america in the u.s um is that localized is it is it broad uh any indication on that would be really interesting thank you

Yeah, thank you very much. I take this question as well. So which markets? So there's one evident market, which is the auto market, which is declining elsewhere except for China, as you've seen. So Chinese auto market going up elsewhere. It is going down. You probably have seen the new global units numbers for the year by Standard & Poor's. So it's another roundabout 2 million down. So this is certainly a market that is currently declining and in consolidation mode. We talked already about the Ag space. In Ag, you see that The buying power of the farmers, which is eventually the decisive element, is also not that strong currently, and there's a lot of uncertainty. So the ag market also rather a little bit on the negative side. In the nutrition and care chemicals segment for us, you see more a sidewards trend. You see some uncertainty in the higher price products like UV filters in care chemicals, but overall okay. And then in the industrials, it's really a mixed picture. Quite some stable dispersion businesses, quite some more cautious and negative resonance business. Still ongoing strong electronics business. You are You're recalling what I just said in the presentation about the new capacity that we are building in Ludwigshafen. We are building this for good and for a clear demand of customers for electronics materials, particularly also in Europe. And well, and then for the upstream, it is really a mixed bag. You see some more positive trends in consumer goods, but you see also a very shaky situation in terms of the upstream big chemical machines. And the latter one is also reflected in the shutdowns you currently see or hear the announcements, particularly in Europe for crackers, but also other upstream plants where we observe that there will be less supply capacity in Europe for the European market while we are sticking to what we have here. So a mixed bag and currently a little bit more tilted to the risk side than to the opportunities. Thank you.

Ladies and gentlemen, we are now at the end of today's conference call. We will present our second quarter and half-year results on July 30. Should you have any further questions, please do not hesitate to contact a member of the BASF IR team. BASF's annual shareholders meeting will be held virtually today, and it will start at 10 a.m. German time. Thank you for joining us today, and goodbye for now.