Evonik Inds Ag Unsp/Adr

Ladies and gentlemen, welcome to the Evonik Industries AG Q2 2025 earnings conference call. I am Konstantinos, the course call operator. I would like to remind you that all participants will be in listening mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star then 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christian Kuhlmann, CEO. Please go ahead.

Thanks a lot and welcome to our Q2 earnings call, ladies and gentlemen. Last time we met in May. We had a quite solid April in our books and we're expecting similar months ahead of us. Today, we all know that the last month of the second quarter got pretty tough across most industries. Still, we could deliver a decent second quarter and to stick to our full year guidance. Admittingly, that's the low end of the range. Having said so, a no. Your main question for today will be, is it still a doable target? Let us give you a first answer by taking a simplified look at the first half of the year before then turning to the month ahead. Our Group MTA decline the first half of the year is more or less exclusively explained by two factors. First, the weakness in our C4 business and second, the US dollar exchange rate combined. they do stand for an EBITDA decline of more than €100 million. Farther further, this means a large part of our core chemicals portfolio could withstand the pressure in the first half of this year and showed quite some resilience. Our two chemical segments jointly even posted slighter higher earnings. Custom solutions remain stable thanks to our resilient editors' business and the expected recovery in healthcare. Advanced technologies were supported by strong volumes in our animal nutrition business. For the second half of the year, we do expect several factors to give us support. So the lower end of the guidance is achievable, however, for sure not guaranteed. Michael will guide you through the main points.

Thank you, Christian, and good morning from my side as well. So what needs to materialize in the second half of the year to reach the low end of our guidance range? First, self-help measures from our optimization programs are fully in our hands and should support H2. Looking at our number of employees, we see them falling by more than 500 since end of last year, and there is more to come. For example, Silica will deliver additional savings from site closures with full effect in the second half of the year. Second, some Evonik-specific business tailwinds should play in our favor. The methionine market will stay healthy until the start of Q4 at least. PA-12 and crosslinkers will have better plant availability without the shutdowns seen in Q2. Higher volumes should also be visible for catalysts thanks to the ramp up of our new alkoxides plant in Singapore. In healthcare, the operational improvements in the last quarters will bear fruits in the second half as well. And our already contracted sales will show the typical year end recognition. But to be very clear, May and June were quite weak months for us, impacted by low consumer confidence and customer cautiousness. So for the next month ahead, and in order to reach the low end of our guidance, an improved macro environment is a premise. Coming to the free cash flow guidance, we have good confidence to again deliver our 40% cash conversion rate. This will be supported by both capex and networking capital in H2. First, we have cut our capex by 100 million for the full year. This means around 60 million lower capex year on year in second half. Second, We will see a strong cash inflow from networking capital in H2 quite similar to the year 2023. We have intentionally finished the last year with a higher networking capital level. We will reduce this level in the course of the year. However, we have not yet been able to do that as intended. This was due to the slowdown in demand, especially during Q2. And it was further enhanced by the maintenance shutdowns during Q2, where we had built inventories before shutdowns based on more optimistic demand assumptions. So, networking capital to sales were still above 19% end of June. We will manage that much stricter in the second half, and we have proven in 2023 that we know how to do it. Our long-term average is around 16% at year-end, so that means that there is significant cash potential towards year-end. Back to Christian for some final words.