Brenntag Se

Ladies and gentlemen, thank you for standing by. Welcome to the Brentag SEHY 2025 results call and live webcast. Please note that the call will be recorded. During today's call, webcast participants will be in a listen-only mode while we conduct the question and answer session. If you wish to ask a question, we ask that you please use the raise hand function at the bottom of your Zoom screen. Instructions will also follow at the time of Q&A. I would now like to turn the call over to Thomas Altmann, Senior Vice President, Corporate Investor Relations. Please go ahead.

Thank you, Alice. Good afternoon, ladies and gentlemen, and welcome to the earnings call for the second quarter of 2025. On the call with me today are our CEO, Dr. Christian Kohlbeindner, and our CFO, Thomas Rysen. They will walk you through today's presentation, which is followed by a Q&A session. this morning on our website in the investor relations sections, where the replay of today's call will be available. Allow me also to point you to our safe harbour statement, which you find at the end of the slide deck. With that, I will now hand over to our CEO, Christian, over to you.

Yes, thank you, Thomas, and good afternoon, ladies and gentlemen. I will start with the highlights of the second quarter 2025. and Thomas Reisten will then walk you through the details of our financial performance. Our second quarter was characterized by a high degree of economic uncertainty in light of ongoing geopolitical tensions and unresolved global tariff discussions. This led to a noticeable slowdown in demand and increased pricing pressure across different end markets which we expect to continue throughout the second half of 2025. The slowdown in demand impacted both divisions, whereas the pricing pressure had a stronger effect in our essentials business. At the same time, the further depreciation of the US dollar against the Euro since the beginning of the second quarter had a negative effect on our earnings development. Sales for the second quarter amounted to 3.9 billion euros, which is 4% below the prior year period. Operating gross profit decreased by 2% and stood at 974 million euros. Our operating EBIT-A amounted to 246 million euros, which is 14% below the prior year period. we generated a free cash flow of 153 million euros. Earnings per share stood at 30 cents compared to 1 euro and 3 cents last year. The decline is largely driven by special items and impairments on goodwill and other intangible assets in our essential business, particularly in Latin America. Our cost containment measures supported our underlying cost development in the second quarter with 30 million euros of savings. Let me say a few words on the outlook for 2025. As a result of the aforementioned economic and geopolitical circumstances, as well as the impact from unfavorable changes, operating EBITDA guidance for the full year 2025 and now expect our operating EBITDA to be in the range of 950 million euros to 1 billion and 50 million euros as already communicated on July 11th. Let us take a look at the overall market environment in more detail. Those divisions were impacted by muted customer sentiment, leading to an overall slowdown in demand across different end markets. Ongoing geopolitical tensions and further escalations in the Middle East, as well as unresolved global tariff discussions, created a high degree of economic uncertainty. Although the direct impact of tariffs on our business is rather limited, since the vast majority of our products are stores and sold within the same region, we must acknowledge that we are not immune to secondary or tertiary effects. These effects are significantly larger and the impacts are already evident. In this challenging environment, both plant activations continue to focus on leveraging business opportunities, realizing cost savings and executing their strategic initiatives. Vantax Specialties continues to focus on improving its performance through a combination of short-term and long-term levers. The division saw significant cross-profit per unit improvement compared to the prior year period due to ongoing price and margin management initiatives. At the same time, Vantax Specialties is on track to deliver the cost-out plan for 2025. In Brandeis Essentials, we are executing our triple strategy, focusing particularly on improving efficiencies, processes and infrastructure in our last-mile service operations and our regional and global sourcing activities. In addition to our divisional strategies, we continued our M&A activities in the second quarter 2025. We acquired MCE Pharma in the Czech Republic, setting the foundation for entering the rapidly growing biopharma market in EMEA. Furthermore, we signed and closed the acquisition of GSZ Kaiserslautern, acquiring a state-of-the-art facility for hazardous substance storage in Germany. The site's solid and liquid mixing and blending capabilities significantly expand and complement our Brandtag Essentials service offerings in Central Europe. Let me briefly address our progress on our sustainability efforts, which is recognized and regularly rewarded by external ratings. For example, Brandtag was recently awarded the gold rating in the comprehensive 2025 Ecovades Sustainability Assessment and was placed among the top 3% of all rated companies worldwide. In the latest CDP climate change rating, Brandtag was ranked among the top rated companies globally. achieving a leadership A- rating for the first time. The CDP assessment underlines our progress made in recent years, including the validation of our scope 1, 2, and 3 emission reduction targets by the science-based target initiatives SBTI. Let me now hand over to Thomas Reisten, who will explain our financial results in more detail. Thomas.

Thank you, Christian, and good afternoon also from my side. We start with the key figures from our income statement in the second quarter of 2025. As a reminder, when talking about growth rates, we generally talk about adjusted rates. Sales amounted to 3.9 billion Euro, which is 4% below the prior year period. Operating gross profit decreased by 2% and stood at 974 million Euro. Gross profit as percentage of sales stood at 25.2% and increased slightly compared to last year, which indicates that we managed gross profit to our advantage despite increased pricing pressure from industrial chemicals. To provide more details on our OPEX development, we show a bridge in the top right corner of the slide. Additional costs from newly acquired entities led to an increase of around 15 million Euro. The translational foreign exchange effect in the second quarter 2025 decreased our costs by 20 million Euro. Underlying OPEX increased by around 35 million Euro, particularly driven by wage inflation. At the same time, we continued to reduce our absolute headcount number. The cost containment program contributed around 30 million Euro of savings in the second quarter. Therefore, on an organic basis, our operating expenses remained almost stable. As a result, operating expenses for the group stood at 640 million Euro in the second quarter of 2025. Our top-line performance in combination with our OPEX development translated into an operating EBIT DA of €334 million, a decline of 10% year-over-year. Our operating EBIT A amounted to €1246 million, which is 14% below the prior year period respectively. Let me briefly comment on the developments In the second quarter, special items had a negative impact of €38 million. This includes costs for our strategic projects in the amount of €8 million, which are mainly related to severance and advisory expenses, and which will help to achieve the desired cost reduction targets and drive the targets of disentanglement of our two divisions. Furthermore, we incurred expenses for legal risks, mainly arising from the sale of talc and similar products in North America in the amount of €10 million. Another €10 million of costs were booked in connection with the sale of Rajpetro specialties in India, which we initiated already in 2024. And lastly, €9 million are associated to impairment losses related to the optimization of our site network. In addition to the special items, I would like to highlight another one-time non-operating effect, which impacted our net profit negatively. We had to book impairments on goodwill and other intangible assets of the RENTAG Essentials Latin America segment in the amount of €83 million. The impairment losses are related to lower earnings expectations in combination with a reduction in the long-term growth rate for this region. last year. Let us take a closer look at the EBIT-A development on page 5. In the second quarter of last year, we reported an operating EBIT-A of €297 million. The translational foreign exchange effect in the second quarter of 2025 had a negative impact of €11 million. Acquisitions contributed €6 million to the operating EBIT-A development. In the second quarter of 2025, we reported an operating EBITDA of €246 million for the group, which is 14% below the prior year figure. Organically, the operating EBITDA declined by €46 million compared to the second quarter of 2024. The EBITDA conversion ratio for the group came in at 25.3%. Our results were overall environment and increased economic uncertainty, which led to a slowdown in demand across different end markets, leading to lower volumes and increased pricing pressure. On the next slide, we will discuss our divisional performance in more detail. Bentac Essentials reported an operating gross profit of €696 million, which is 1% below and North America. The gross profit margin in relation to sales stood at 26.3%, which is slightly higher compared to the prior year period, reflecting our ability to manage margins in a challenging business environment. Venture essentials achieved a positive volume development in EMEA, Latin America and APEC, whereas North America was challenging. Unfortunately, this volume development was not able to offset a lower gross profit per unit, which was impacted by increased pricing pressure in the second quarter of 2025, leading to a decline in absolute gross profit of around 1% for the division. Operating expenses On an organic basis, expenses remained more or less stable. Inflationary cost increases were mitigated by our cost containment measures. Operating EBIT A of Brentac Essentials to the 177 million euro was 13% below the second quarter of last year. The EBIT A conversion ratio for the division came in at 25.4%. Let us now look at Brentax specialties. Brentax specialties reported an operating gross profit of €278 million, which is 3% below the second quarter of 2024. Although we achieved a significant improvement in gross profit per unit compared to the prior year quarter, the increase was not sufficient to compensate for the overall slowdown in demand, which Christian already commented on. The gross profit margin in relation to sales stood at 22.8%, which is slightly higher compared to last year. Operating expenses for Brentax specialties also increased slightly year over year, which is partly driven by acquisitions. On an organic basis, higher personnel costs, general inflation-related cost increases and costs from strategic investments could not be fully offset by our cost containment measures. Overall, operating EBIT A declined by 11% and reached €99 million. Segment Life Science reported a year-on-year operating EBIT A decline of 8%, whereas the operating EBIT A in Material Science declined by 17%. The everyday conversion ratio for Brentax Specialties was 35.5%. We briefly comment on the gross profit development of our business units within the segments. In our life science segment, only the business unit Pharma was able to deliver a positive performance compared to the prior year period. In nutrition, we saw a continuation of the positive performance in EMEA, with a strong gross profit per unit development. However, America has continued to be under pressure, mainly driven by lower demand for base ingredients in our North American business. Beauty and care saw a slight decline in operating gross profit. Performance was mainly driven by market challenges and intense competition in while EMEA achieved a positive performance compared to last year. In pharma, our operating gross profit increased compared with the second quarter of 2024 driven by solid business development in EMEA and Americas. The operating gross profit in material science is lower compared to the prior year period and continues to be impacted by the higher interest rate environment which keeps housing construction and public investments at lower levels. In addition, demand was negatively affected by global tariff discussions. Let's now have a look at the free cash flow development. In the second quarter of 2025, we generated a free cash flow of 153 million Euro, compared to 158 million Euro in the same period last year. The decline in earnings was partly compensated by slightly lower capex and lower cash-out flow for working capital compared to the prior year period. Our working capital turnover in the second quarter stood at 7.4 times compared to 7.8 in the second quarter of 2024. The leverage ratio that led to operating EBITDA stood at 2.1 times. Let me close with the outlook for the remainder of the year. As already communicated on July 11th, we adjusted our operating EBIT A guidance for the full year 2025 and now expect our operating EBIT A to be in the range of €950 million to €1,050,000,000. The adjustment is to a large degree driven by unfavorable developments of EURUSD exchange to continue throughout the second half. Adjusted Guidance assumes an average EURUSD FX rate of €1.13 for 2025, which assumes a second half run rate of €1.16. This compares to an average EURUSD FX rate of €1.05. has been characterized by a high degree of economic uncertainty in light of ongoing geopolitical tensions and unresolved global terror discussions. This led to a noticeable slowdown in demand and increased pricing pressure across different end markets, which we also expect to continue in the second half of this year. With this, I would like to close the presentation and hand back to Christian.

Yes, thank you, Thomas, and ladies and gentlemen, and dear valued shareholders and analysts. As this will be my last earnings call as CEO of Brandtag, I would like to sincerely thank you for the valuable exchanges we have had over the last six years and for your interest and trust on the strategic path we have taken. I am firmly convinced that Brandtag is exceptionally well positioned to continue to shape the future of our industry. On this note, I wish the incoming CEO Jens Bergersen and his team, as well as all of you, the very best for the future. Thank you for participating in today's call and we now look forward to your questions. Thank you.

Ladies and gentlemen, we will now begin our Q&A session. If you have a question, we ask that you please use the raise hand function at the bottom of your Zoom screen. Once your name has been announced, please unmute and ask your question. If you want to withdraw your question, please lower your hand using the raise hand function. If you experience technical difficulties while asking your question, our operator will contact you via private chat. Thank you and a moment for the first question, please. Our first question comes from Suhasini Varanasi at Goldman Sachs. Please unmute your line and ask your question.

Hi, good afternoon. Thank you for taking my questions. I have a couple of please. Can you please discuss how trends were in July and did you see any improvement versus what you saw in June and if there was any differences by region or by verticals? And just to clarify the new guidance, the second question is on the guidance for the full year. Very helpful to hear the FX comments, but can you maybe discuss what have you factored in on the underlying performance of the business? And therefore, how should we think about quarterly performance on EBIT A going into second half of the year? Thank you.

Thank you so much for the questions. I take the first one and Thomas will talk about the guidance. On the trends of July versus June, I think we had a rather decent and good start into the third quarter. But again, we have seen this kind of pattern before that we actually start well into the quarter and then You know the decisive months are actually the last months of a quarter like this time September once the holiday season is over. But overall we had a good start into Q3 with July showing substantially better performance than June.

Sure, so on the guidance, overall I mean to first talk about FX rates and to really be clear on that one. So the average FX rate that we've assumed is 1.13. This obviously assumes the whole movements in the first half and in the second half this then implies an FX rate of 1.16 for the second half. So that then again comes to the average of 1.13 across the whole year. In terms of overall underlying performance, we expect a continuation of current market environment, so meaning actually the current economic uncertainty. the still unresolved elements of the global tariff discussions to continue in that context and this leading to actually a continuation of the weakness of demand and the pricing pressure at similar levels that we have seen most recently in the S.I. If you think about this then in terms of potential upside factors, obviously The volume growth, i.e. the demand is increasing, this would have actually a positive impact onto our results. And the other element is actually related then if pricing would actually come back to higher levels, albeit we haven't seen the recovery in the chemical cycle actually gaining traction at this point in time. The downside factors on the adjusted guidance would be the opposite, i.e. actually we see even more pricing pressure coming into markets, in particular on the BES side. So if that would increase further compared to what we are seeing actually today, that could actually have a negative impact onto our overall guidance. And then the same is obviously if you look at the volume growth, if there is further that would as well be a negative impact. And then, quite logically, if X-ray is 1.16, we've seen that fluctuating most recently around that 1.16, so I think we are okay on that, but if this actually increases in the wrong direction, then there could be some weakness anticipated from that.

Thank you very much, and wish you all the very best, Christian.

Thank you.

Our next question comes from Annelies Vermeulen at Morgan Stanley. Please unmute your line and ask your question.

Hi, good afternoon. I have two questions, please. So firstly, on the impairments, could you talk a little bit about what changed in LATAM in terms of what these lowered growth assumptions look like? How much lower are they relative to your previous assessments? assumptions and whether you have conducted this exercise for all your regions, i.e. should we expect any further impairments as a result of lowering growth and cash expectations? And then secondly, you mentioned some intense competition in beauty and care, and we've heard from other players in the industry regarding increased competition from Chinese distributors. Are you seeing this in your business, and if so, in which geographies? Thank you.

I think Thomas will talk about the impairment, and then I can add a few words on the beauty and care competition landscape. Thomas.

Yeah, so on the impairment point, so what has changed in Latin, you were asking actually what has triggered that. Well, the headroom in the past has been actually limited in many cases, so it's a region in which we overall business development and ultimately this has now triggered in the regular reviews that we do every half year in terms of impairment reviews across all regions, across all cash generating units. The LATAM region was obviously not, we couldn't actually hold the goodwill on the LATAM region and had to overall write down that goodwill which is the main factor of the What we are seeing as well is that this overall is the general business sentiment that we are seeing in Latam, plus actually growth projections into the future. So it's current economic climate that is affecting that, the sluggishness in demand. that is affecting as well the particular LATAM, you can expect a terrible environment for the LATAM region to affect this significantly in the current environment and then, as I said, forward-looking growth projections actually have been reduced then as well. And that's the reason why we had to take that technical step of writing down the good weather of the LATAM region. We continue to do as well for the second part of your question, to review all areas across the business, so all so-called cash generating units, and make sure that we are up to date on potential impairments that would happen. Obviously, we haven't taken a step on that. There's no need to write down further cash generating units at this point in time. This cannot exclude that in the future, if the business environment worsens, there might be some aspects. But as I mentioned to the previous question, in terms of guidance, all of this has been factored in and we've significantly de-risked the bottom end of the guidance.

And on the beauty and care, yes, indeed, we saw the strongest competition pattern in the Americas and in APEC. Different reasons. I would not clearly say that these are distributors out of China which are causing APEC. The competition, I think, is just the general fight for volumes at this moment because, again, we talk about strongly underutilized assets everywhere. Asia, it's not only in China, it's also in Europe and North America, so I don't see that necessarily in the same way. But it is currently overall, I would say, highly competitive in beauty and care, and we only had also a slight decline in the operating gross product, to be fair. EMEA was actually performing quite well, we have to say, but that was skewed by the underperformance different reasons.

Very clear, thank you. Anna, Christian, wish you all the best for the future.

Our next question comes from Tristan Lamott at Deutsche Bank. Please unmute your line and ask your question.

Hi, thanks for taking my questions. The first one is kind of related. I'm just wondering, taking a step back, it feels a bit like chemicals has felt the second-order impact of tariffs more than other industries. I'm wondering if you think there's been some destocking which has increased the impact, and do you think that that kind of weak Q2 for chemicals is kind of a temporary blip, or are there some shifts in global trade flows that are, could be the sort of structural trends that are concerning?

Yeah, Justin, thanks for the question. I think the second order, as I said, are something which we actually create with the higher impact I think it was clear that it was the end of the quarter, everybody being in supply or being in customers have managed their inventories very carefully. Everything was around cash preservation given the uncertainties which are there. So there could be an element of destocking in the numbers where maybe also a fresh start into July could be a further indicator to that. that we actually saw good development while we entered into Q3. So that could be, you know, temporary in its nature. So I'm still far away from saying this is, you know, structural. The shift in the global trade flows, of course, I mean, they are emerging and picking up as we speak. I mean, this is sometimes a little bit of a surprise to hear when people say, well, we don't see anything, we don't see anything. Well, just late. At some point of time, you know, this trade flows will adjust to the tariff scenarios in one way or another. And what we need is now parity, and the parity is lacking. The postponement of China-US trade agreement for another 90 days, again, is not helpful for anybody. So I think let's wait and see. We do see, of course, a particular European overcapacity. based on that also the strong competition out of China, which comes because that volumes produced in China will seek a market and that market for the time being appears to be predominantly Asia-Pacific and Europe. And so let's wait and see how that plays out over the next months and quarters. But it is a very delicate and fragile situation at this moment.

That's helpful. Thanks. And then second question is on pricing pressure. I'm just wondering, obviously, there has been pressure in essentials, but I'm wondering to what extent there has been pressure in specialties and if there are particular product lines or geographies where there's been more pressure in the specialty side or if it's mainly just essentials.

I would say the majority of the effect is essential. This is where we include clearly. Also, by the way, seasonality plays into it here because we sell typically lower margin and lower priced products during the pool seasons, Q2 and Q3. So this is not unusual that you actually see a slight decline from Q1 into Q2 on the sales price. But it's clear that the selling prices, the average selling prices, for instance, for the products which we sell across all value chains, across all products, continue to decline in particular in essentials and here in particular in Europe. This is very clear reflection of the pressure coming out of Asia, out of China into the European markets presumed or being it real but that's the way it is at this moment. This has been significantly less pronounced in specialties. Here we talk about more stable average selling prices. still slightly eroding, but by far not to the extent like our industrial chemist's business, which you would expect in such a situation. So from a pattern, I would say everything appears to be intact, given the competitive environment we're operating in at this moment.

Very helpful. Thanks very much.

Our next question comes from Karl Rainsford at Berenberg. Please unmute your line and ask your question.

Good afternoon, everyone. Three questions from me, please. I'm tempted to take these one by one. I think I'll do that. But the first, what degree of spare capacity have you currently got in the cost space despite these cost-saving measures? Because clearly Q2 suffered from operating deleverage as we expected. So I'm just intrigued by if you'd expect a significantly higher drop through an incremental volume improvement whenever that may come versus what you're used to in the past.

Paul, you were a little bit difficult to understand. So I don't know if Thomas has got the cost containment topic and cost out problem.

So if we've understood your question correctly, you were asking actually about spare capacity And I mean, overall, I mean, this is obviously a question in terms of what we do in all of our locations. Do we have actually spare warehousing capacity that we could actually use? Do we have actually spare transport capacity as well? And could we scale up in terms of actually our delivery to our customers? And I think it's really fair to assume that we can, actually, so that we do have that potential to benefit very well from a situation in which At the same time we will continue our cost out initiatives not affecting our ability to deliver to our customers or for our suppliers. So cost containment program continues to deliver actually the expected results. We have delivered 30 million in the second quarter. You will remember that we had actually 30 million in the first quarter as well. So we are well on track to deliver what we've committed for this year to double actually our cost containment effect and generate another 50 million run rate savings, adding up to about 100 million this year. Overall, I will emphasize as well on what I've emphasized last time, because of the economic situation and the way that actually we are facing demand pressure, we will continue to intensify our cost efforts in both scale and scope and speed actually as well. But having said that, this is not going to affect our ability to scale up

when exit demand will come back oh you've answered my uh second question as well so thank you um i'll move on just to the final question that's okay but it's sort of open-ended and i guess it's probably directed at you christian given our sort of conversations over the years but um you talk about oversupply in latin america and apac um and utilization for manufacturers you know continues to go lower in europe So how far off are we, in your opinion, from some of these manufacturing facilities being sort of decommissioned, whether temporary or permanent? Because presumably at some stage, lower supply in the current environment should be useful for Brentag in a recovery cycle, as we saw in the past.

I think it comes back to capacity utilization. I think in previous earnings call, it was very explicit about that we were on a good trajectory to see basically a recovery in the chemical cycle, in particular Q4 and Q1. where we could see a pickup in utilization rates across the globe almost, but in most value chains, particularly petrochemical value chains as well. And that was stopped or muted or paused by Liberation Day, which was April 1st. Then all of a sudden, you know, this total uncertainty impacted the whole industry and that led to stagnation or actually to a drop in utilization rates. is leaving a gap before you reach a certain level where the capacity utilization rate would be in a region that produces also then milling to actually increase prices. And so this logic first comes utilization rate goes up and then pricing a couple of quarters later kicks in. That has been paused and broken by the Liberation Day events and everything what we have seen over the last couple of months. And that leaves, I would say, a gap of several percentage points of utilization rates where the industry is away from actually running at decent levels. You can argue, is it 70% versus 80%? I would say the current operating levels is around 70%. you need to go, well, in the reach of 80, 82, 85% to have, you know, decently filled capacities. So we have still some way to go. But let's be also clear once clarity is there, once consumer sentiment is improving again, and once also everybody has digested the new framework under which we have to operate, I believe the cyclical recovery of the industry cycle will kick in again and that can offer quite good pricing opportunities for the industry going forward. We don't expect this in 2025, to be honest. I think we need to be patient until that cyclical recovery really materializes as it would have materialized this year already in the absence of that debate we have around tariffs.

That's very helpful. Thank you. And Christian, all the best in the future. And thank you for the exchange over the last few years. You know, it's always been very valuable.

Thanks, Colin. Appreciate it.

If you would like to ask a question, please use the raise hand feature. When your name is announced, please unmute and ask your question. Our last question comes from Chetan Udeshi at J.P. Morgan. Please unmute your line and ask your question.

Hi, thanks for taking my questions. The first question I had was just to clarify, I read somewhere in the report that you had some change in the accounting for DIDEX costs. So I'm just curious, has there been any change in terms of moving some of these costs now to below the line or below the adjusted numbers? Just to clarify that. The second question was, you know, Christian, you talked about recovery in July or at least a good July. Maybe can you talk about where is that, you know, improvement versus what you might have seen in Q2 coming from? Is it America's? Maybe not so bad. Is it any particular end market that you saw, you know, looks better? Because in general, it feels like the environment from at least what I see in terms of pricing, demand, still look quite depressing overall, especially in Europe. Thank you.

So, thank you for all these questions.

So, Thomas will take the first question and I will talk about the second one.

So, have we changed, actually, the way that we are accounting for the DIADx costs to below the line or any changes actually in that, no is the answer. So we will still obviously account for that in the same way that we have been doing that in the past. So overall cost savings contribute to our 300 million cost saving target in that context and whatever investments we have in the context of DITEX and the spend comes into our operating results.

And on the July momentum, as I said, we have decent starting into Q3 with July showing better performance than June. Again, it's too early for me to call out that this will be a positive Q3. I think we all know that September will be decisive for the quarter as usual. Also, we could have seen the restocking to some extent out of a really, really strong inventory management towards the end of the second quarter, which could have an impact. But what we saw, which is encouraging for me at this moment, is especially a recovery on the essential side and also a recovery on the essentials, cross-profit per unit, which we can see sequential. Let's wait and see. That's a little bit too early to call, but at least July was an encouraging month to start the third quarter.

That's clear. Thank you, and all the best, Christian, and thanks for all the help as well.

Thanks, Chetan. Appreciate it. All the best.

Our last question comes from Carl Rainsford at Berenberg. Please unmute yourself and go ahead.

So I thought I'd jump in with one more, if that's OK. I think we've got a bit of time. But it's a very quick follow-up on the LATAM impairment. If that's OK, Thomas. Could you maybe explain just exactly where that... the sort of lower growth projections are coming from, please? I mean, is it commodities or specialties, namely, and if there are any end markets in particular? I don't know if this just goes back to sort of China oversupply and if that's a structural change or if we should be thinking about it slightly differently.

I mean, it's not really a structural change. It's the business environment having an impact onto the so-called cash generating unit of essentials in Latin. So it's the essentials business, to be very, very precise on that one, that we actually or write down the goodwill and key and letter.

So I guess that answers your question or? Yeah, that's all right. That's great. Thanks so much. Thank you.

This concludes the Q&A session. I will now hand back to Thomas Altman for closing remarks.

Thank you, Alice. This brings us to the end of the Ladies and gentlemen, thank you very much for joining us today. Have a good day and goodbye.

This concludes today's call. Thank you everyone for joining. You may now disconnect.