Indorama Vntrs Unsp/Adr

Good afternoon, everyone. Welcome. And thank you for taking time to join us here for Indorama Ventures first quarter 24 results briefing. My name is Vikas Jalan, Vice President, Investor Relations and Planning. Joining me today, we have Mr. D.K. Agarwal, Deputy Group CEO and Group CFO. Alastair M. Pote, Executive President for newly formed segment Indovina. And Diego Bori, Executive President for our Fibers segment. A quick disclaimer that this meeting is being recorded and a replay of this session will be available on our website after the meeting. We have made a few assumptions and estimates on future trends of industry and businesses, which are based on our analysis of available information at this point in time. So with that, now I invite Mr. Agarwal to share the business and financial highlights for first quarter before opening up the floor for Q&A. Over to you, Mr. Agarwal.

Good afternoon, and thanks for coming in person, a few of our analysts. During the first quarter, this is the first slide we talked to you about the macro indicators, what is happening around the world, macroeconomic. During the first quarter, we have seen signs of economic recoveries, improving U.S. with better PMI. You know, U.S. is really strong with all the data which is coming in. China still remains lackluster and Europe is still lagging behind. So the big worry is the Europe. The second graph shows that destocking has come to an end, positively impacting our volume. So we see this in our different businesses. Geopolitical disruptions continue in various forms like Red Sea crisis. has impacted the supply chain and you can see in the slide there that how the ocean freights are increasing and remain high as seen in the Shanghai container freight and DAX, which is an indicator. While interest rates remain elevated, high inflation in the West has dampened the purchasing power. However, early signs of stability and some decline in core CPI was seen in first quarter 24th. On the other hand, high crude oil price led to inventory gains and supported domestic prices in the net import market like in the West. Lower energy prices improved our conversion cost. You see that energy prices have been low in United States and Europe. That has improved our conversion cost and strengthened our shale gas advantage in United States. On this macroeconomic landscape, which is very dynamic, and very volatile, IOL remains agile and continue to serve our customers and other stakeholders through proved interest management. Now, let me now take you through the highlights for first quarter 24, what the results we have delivered. Just wanted to guide here that we are now going to report adjusted EBITDA. Basically reflect underlying business performance. There are always questions about hedging losses, inventory gain losses. So this will, underlying business performance, that if these events would not happen, then this has the real business performance. So this adjusts for inventory gain loss, any contract lag impacts, spatial items, hedging gain loss, etc. So this is basically replace a core EBITDA. And historical quarters, information are shown on adjusted basis for apple-to-apple comparison. Indorama Ventures posted first quarter adjusted EBITDA of $366 million, an increase of 32% quarter-on-quarter, and a decrease of 2% year-on-year. Remember that last year, same quarter, the PET margins were very strong. After one time special expense of $11 million and an inventory gain of $12 million, first quarter 24 posted a reported EBITDA of $367 million. And if you want to see the reconciliation, full details of reported versus adjusted items are given in the appendix and also in our MDNA, which details out all the adjustments. Sales volume, which is the most important, grew to 3.55 million ton, showing clear recovery of the volume, an increase of 3% quarter-on-quarter and 2% year-on-year. As I said, supported by destocking, easing. Volume growth would have been actually even higher, but were restricted due to winter event freeze in the United States. This is typical what is happening in United States every year, winter freeze. Resulting in a volume loss of approximately 60 KT, basically in intermediate chemicals and endovenia, and resulted into an EBITDA loss of nearly $24 million because of this. We have not adjusted here, so this is not normalized here. This is just an event, so wanted to highlight that. Now, the positive sentiments for our business can be summarized as follows. Volumes have stabilized significantly. and marginally improved, signaling an easing of destocking. Utility costs have lowered in the West, improving our unit contribution margin. Red Sea crisis, which is still hanging on, has improved import parity prices in European EMEA and South America, thereby our margins, particularly in integrated PETA. The gas prices have been low in the United States, so improved shale economics in the US have resulted in improved integrated EOEG and MTB profitability. However, persistent inflation and high interest cost is leading to muted demand and depressed benchmark petrochemical spreads continue to impact profitability in the polyester value chain in both integrated PET and lifestyle fibres. We are very closely monitoring, as presented in the Capital Market Day, our capital allocation and optimizing growth and maintenance capex. Working capital increased quarter on quarter marginally due to increase in volume and prices. In second quarter 24, we are continuing to witness, as you and I may, to witness the positive impact of factors in first quarter 24, as well as better volume as the northern summer approaches. with increased demand for gasoline to support our MTB and beverage consumption which drives our PET business globally. Industry benchmark spreads are expected to remain depressed as overcapacity in China persists, especially for integrated PETs. Margins are expected to improve for Indovenia, and Alastair will address the questions if there are any, as we launch new products and demand improves for our HVA offerings. We are focusing on driving positive free cash flow from operation and strategic action. We also have enhanced our governance structure to deliver our IVL 2.0 evolved strategy by 2026, what we mentioned in Capital Market Day. MSCI recently upgraded our ESG rating to AA from A for 2024. Over the last five years, we have made steady progress on this index, reflecting our efforts to improve our performance in pursuit of our sustainability ambition. Starting from first quarter 24, as you might have noticed in the MD&A, we have renamed our IOD downstream business as Indovenia. which now represents our integrated downstream surfactant business as a separate segment, preparing for IPO. The IOD's intermediate chemical assets consisting of integrated MEG, MTB, and merchant purified ethylene oxide businesses are now under the combined CPET business. So you will see the separate results even in CPET for both CPET and new intermediate chemicals. Now, it is very important to give you a little bit update about the strategic pillars driving our transformation journey to 2026. As we said that we are not relying on improvement on the margins. Management actions are key. Our focus will be on generating healthy free cash flows and reducing net debt EBITDA to three times and below. The first section, as we said in the Capital Market Day, optimizing our assets. Under IVL 2.0, we are process that will optimize seven sites to right sizing, mothballing and other management actions. As you are aware, in fourth quarter 23, we partially impaired one of these sites, the Corpus Christi joint venture in United States to reflect fair market value after all three partners decided to halt the construction. On the remaining six assets, where we are targeting about $190 million of fixed cost savings, Indorama Ventures mottled the PTA sites in Portugal in third quarter 23. And we are now in consultation with the work council regarding the integrated PET PTA site in Rotterdam in the Netherlands. In Europe, there is normally a consultation process with the work councils and the union. And other remaining four assets are at various stage of assessment. The second pillar was Olympus 2.0. We are deploying new digital tools to empower our managers to drive operation excellence through real-time data-laid insights, allowing them to react with greater agility to market changes and inform better decisions in this present volatile situation. We recently actually completed our implementation of SAP S4 HANA enterprise platform, which covers significant, nearly 75% of the revenue. And on this Olympus 2.0, in first quarter 24, these initiatives drove efficiency gain of $27 million, which cuts across procurement, sales and excellence. So we continue our journey on this transformation 2.0 or Olympus 2.0. The third, we had talked about strategic action to unlock value. So as you can see from our first quarter results presentation, we have started preparation for the IPOs of our Indovenia and packaging business, including putting in place governance structure and project management teams. We have also begun preparation for divestiture of two known core businesses, which we mentioned in capital market day. So there is a complete focus on these actions. We continue to focus on maintaining our leadership positions by delivering exceptional service and value to our customers and doubling down on bringing innovative and sustainable solutions to the market. Our hygiene business has started a medical lamination light in the United States as part of our program to bring more high value added products in medical field to our customers. And at Indovina, we are pleased to announce the launch of our latest product line of rheology modifier. These products enable us, our customers, to develop ultra concentrated products, leveraging our stock commitment to the sustainability. So the innovation journey continues. Now, this slide, let's look at the sales volume. Our first quarter 24 sales volume grew to 3.55 million ton, reflecting 3% growth quarter on quarter and 2% year on year. As I mentioned earlier, volume growth was negatively impacted by the winter freeze event in the United States, reducing volume nearly by 60 KT in intermediate chemicals and endovenia business and also a minor plant maintenance in POMTB site. So that impacted that. You can see that we saw signs of volume recovery after experiencing losses from an extended period of destocking since fourth quarter 22. So that also gives a sign that destocking is coming has come to an end. As you can see from the second quarter estimated volume going forward, we anticipate an improvement in volume. As. The volume has de-stocking had eased with no impact from winter freezes. So you can see we are talking about 3.83 million tons from 3.55 million tons in second quarter. And this is across Asia's, America's and EMEA and also in CPAT, Indovenia and fibers. So that because there will be no winter freeze event. So this gives you some indication about the volumes which you are targeting the second quarter. Now, let us look at Indorama Ventures first quarter results in more detail. As I mentioned, we posted first quarter adjusted EBITDA of $366 million, an increase of 32% quarter on quarter and a decrease of 2% year on year. As we noted earlier, the quarter EBITDA was impacted nearly by $24 million due to the winter freeze in United States. An improvement in adjusted EBITDA was primarily driven by volume growth in CPET and fibres, along with a favourable impact from supply chain disruption and reduced energy cost, which we talked about. If you look at segment, in our CPET segment, Asian benchmark spreads remain still very low, below cash cost and Chinese are losing money on that. Supply chain disruption and a consequent spike in global ocean freight supported high prices and margin, especially in Europe and South American market. Western markets also benefited due to lower energy cost. In the intermediate chemicals portfolio, MTB spreads for higher quarter on quarter, but lower year on year, supported by a tight gasoline market, low feedstock prices and resetting of methanol contract at a favorable terms, which begin from the beginning of the year. As the northern hemisphere summer approaches, we expect increased demand for gasoline also to support MTB in second quarter 24. Despite some improvement in the integrated MEG spread, they remain under pressure due to significant global overcapacity in MEG. So you will see in MEG improved results, but still not because of the, to that level due to significant overcapacity. Indo-Venia volumes dropped 2% quarter-on-quarter due to the winter freeze and a mini turnaround, which impacted adjusted EBITDAs nearly by circa $5 million. We expect volume growth in second quarter following a period of significant destocking throughout 2023, which is reflected in the last three quarters results. In the fiber segment, volumes and margins improved as demand grew across all three business verticals. Now looking at performance on a regional level, which is very important and how reasonably we are doing, there has been a variety of factors at play this quarter. You see that EMEA has performed significantly better. So despite high feedstock prices, EMEA operations performed significantly better quarter on quarter, benefiting from supply chain disruptions, lower energy prices and also the anti-dumping duties on PET imports from China. The improvement in performance was seen in both CPAT and Fibers, particularly in the mobility. The American market remains intact, as you can see the results, $257 million in Americas, by strong MTB profitability and improved MEG performance, while integrated PET margins softened from annual contract reset results. You know, the new contracts for PET in America, particularly Mexico and the United States, has started kicking in from January, so it has some negative impact. Integrated intermediates and Indovina experienced volume and EBITDA loss of $24 million from the U.S. winter freeze, as I mentioned. Otherwise, the U.S. results would have been even better. In CPAT business, North American margins were lower due to contract resets. However, South America saw an increase in margins on supply chain disruption and trade barriers. Recently, Mexico has actually increased duties on PET from 25 to 35 percent from China. This is the most of the countries are trying to protect their markets from dumping from China, which will help our domestic Mexican business. As you can see, Asia remains stable, supported by improved volume, which was partially negated by China. continuously compressed benchmark spreads. So this gives you some idea on reasonably how we are operating. Now coming to CPAT, posted and adjusted EBITDA of $187 million, an increase of 32% quarter-on-quarter, and a decrease of 6% year-on-year. Integrated PET posted adjusted EBITDA of $125 million. an increase of 5% quarter-on-quarter and a decrease of 23% year-on-year because integrated PET spreads were quite low in first quarter, continue to remain low. Driven by improved performance in EMEA due to supply chain disruptions, anti-dumping duties on PET imports into the EU from China, higher volumes and lower energy prices. This was, as I mentioned earlier, partially offset by the resetting of contracts in North America. Continued pressure of benchmark margin Asia and high MXPX feedstock prices in the Western market compared to Asia. The challenge of high paraxialin price continues in the Western market due to the gasoline blend value. As per our strategy, we continue to invest in circular and bio-based material, including expanding our mechanical recycling capacity in major emerging markets such as India and Africa, We recently did the groundbreaking ceremony for our first recycling plant in India with a JV partner, Varun Beverages, and we anticipate commercial production to start in the second half of 2025. So we are steadfast in our commitment to the Ellen MacArthur Foundation and giving solutions to the customers. The packaging business posted a stable adjusted EBITDA of $21 million in first quarter 24, a modest decrease of 4% quarter-on-quarter and increase of 1% year-on-year. Specialty chemicals, the section which was moved from IOD, posted adjusted EBITDA of $40 million and improvement from the, sorry, this is specialty chemicals, not intermediate chemicals. So this is covering NDC and IPA. and specialty polymers. So this posted an adjusted EBITDA of $40 million, an improvement from the negative performance in the last quarter. The improvement in profitability was mainly due to higher volume, and I would like to guide here that this is a one-time annual gain from campaign production of NDC. So normally we do a campaign production of NDC, and there were quarterly balanced deliveries to the customer. That's why this extraordinary profit has come in. and an improved performance in the high-value-added PET. Higher aromatic feedstock costs in the West continue to negatively impact this vertical, especially PIA. A dedicated vertical management team, as we hired a new gentleman, who is shaping an EBITDA improvement plan to optimize costs and maintain profitability as the volumes pick up with enhanced economic activity. So this gives you combined PETs. Now, this graph will always show you how the benchmark spreads, what premiums are. As you can see in this chart, despite compressed, the dark blue line, you can see that how compressed are the Asian reference spreads. We continue to maintain a strong market premium in first quarter 24. And that's what differentiates IVL. The North American region was strong. In spite, this premium has come, which was negatively impacted by resetting of the U.S. contracts, but has a positive impact from EMEA and South American contracts. As a result, we have been able to maintain our spread premium at a similar level to 2023. So Europe, you had improvement. South America, you had improvement. In Japan market, we had improvement. But there was, because of the resetting of the contract, there was a negative impact from America, United States and Mexico. So we remain a preferred supplier to our customer based on our global footprint, multiple manufacturing sites, proximity to customers, capability to offer recycled PET together with virgin, high-value PET resin for specialty application, and advantage shell gas to PET integration in the United States. These are the key strengths of our PET business. And this reflects in our premium over benchmark spreads. These are spreads. These are not prices. So this straightway translates into profitability. Ocean Freight's trade and non-trade barriers and Indorama Ventures' differentiated position compared to peers globally has helped us to expand our premium in recent times, where benchmark spreads in Asia have been compressed by new supply in China. Overall, we expect a sequential improvement in earning for the CPAT segment, with approaching, as I mentioned, seasonal demand in the United States, which normally uplifts the demand for beverages and cost improvement plans by different management teams. Now, this is the intermediate chemicals, which is moved from IOD. What does intermediate chemicals consist of? It consists of cracker, the ethylene in lake shawls, the clarified ethylene oxide, and integrated glycol and MTB business. This vertical, which basically, as you can see, is MTB, integrated MEG and verified EO, posted and adjusted a bit of $62 million in first quarter 24, an increase of 38% quarter-on-quarter and 48% year-on-year, despite loss of volume due to winter freeze, which was nearly $19 million. Newly formed vertical management team is working in collaboration with specialists from Indovenia to improve MEG plant reliability. Now the plants are running at higher capacities, all the MEG. So you will see the improved MEG production coming out because in United States, because of lower gas prices and ethane prices, the MEG margins are better. And we have also taken the operations from third party who was managing the assets of IWOG. As you know, MEG serves as an integrated component in our CPET segment, mainly to fulfill our captive needs. And we also export from there. Integrated MEG spreads, as I mentioned, because of lower gas prices. From $355 per ton improved quarter on quarter to $435, $80 improvement due to higher MEG prices and lower cost of ethane. MTB and MX trading prices are highly correlated and both, as we mentioned, are used as gasoline plants, which provide us a hedge between two chemicals. And our purchase for MX for PX and PI production and sales of MTB. So it acts as a perfect hedge. And that's why we are now reporting this into the CPET as we prepare Indovina for listing. MTB spread in the United States improved from $512 in fourth quarter 23 to $544 in first quarter 24. Again, because of the tightness in the gasoline market. This is an octane booster, as you know. Now I'll head over to Alistair to talk about Indovina and then Diogo will take over the fibre and then come back.

Thank you, DK, and good afternoon, everybody. So I'm pleased to share with you the first quarter results of our new Indovina segment. The adjusted EBITDA was $70 million despite the winter freeze and the mini turnaround, as DK mentioned, at the POPG unit, which contributed to a 2% decrease in volumes quarter and quarter. and impacted EBITDA by $5 million during the quarter. The home and personal care volumes grew 6% quarter-on-quarter as customers resumed purchasing after typical destocking in quarter four. The 9% drop in volumes year-on-year is primarily driven by consumer down-tiering influenced by tightening consumer spending in the US. Crop solutions volumes marginally lower quarter and quarter with farmers delaying purchasing until the new seasons amid high pricing and high interest rates. Energy and resource volumes improved 3% quarter and quarter and should remain buoyant with higher crude prices. Coatings and construction volumes were impacted by the US winter freeze and the turnaround affecting our POPG production. The solvents and coatings business showed signs of improvement due to improved exports to Europe, the US and also Asia. So Indovina consists of a strong HVA portfolio comprising of 80% of our volumes and operating with EBITDA margins in the high teens. Plus an essentials business consisting of lower margin co-products such as oleochemical byproducts. In our essentials business, we're creating a roadmap for improving our margins. In Indivinia's HVA business, this operates in multiple markets. Our HVA portfolio achieved an EBITDA margin of 15% in the first quarter of 24, lower quarter on quarter due to the freeze impact and the mini turnaround on the POPG product line. This HVA portfolio is driven by product launches, and maintaining our customer intimacy by providing them superior product solutions. This portfolio continues to deliver the high Teens EBITDA margins throughout 2024. As DK mentioned, our innovation programs continue and our latest products are well received by our customers. For example, this launch of the latest product line of rheology modifiers, which enable our customers to develop this ultra concentrated product, leverages our strong commitment to both sustainability and price. After the mini turnaround for POPG, we expect volumes and revenue to improve in coatings and construction, together with an overall sequential improvements in volumes and EBITDA in endovinium. We expect high single-digit quarter-and-quarter growth in the volume in second quarter of 24, mainly in crop solutions, proteins, and energy and resources, which also means better sales mix and higher unit contribution margins, as well as the customer approvals with our new pharma products being launched.

Good afternoon. Fibers achieved adjusted EBITDA of $39 million in first quarter 24, a 73% increase quarter-over-quarter, and 2% year-on-year due to a recovering demand as the stocking eased across all the three of our verticals. This was reflected in an 8% quarter-on-quarter increase in sales volume and an 18% lift volume year-on-year. Our lifestyle vertical delivered adjusted EBITDA of $6 million, a turnaround from negative EBITDA of $3 million last quarter. Volume improved 5% quarter-on-quarter as demand recovered in all markets except India, which is though catching up in the second quarter, 24. Margin only slightly improving. Mobility vertical posted adjusted EBITDA of $16 million, a decrease of 22% quarter-on-quarter and 3% year-on-year. However, adjusted EBITDA of fourth quarter, this is important, was positively impacted by a one-time insurance claim of almost $16 million, 15.8, related to business interruption. Normalizing this insurance claim, adjusted EBITDA increased 247% quarter-on-quarter. Volume increased 15% quarter-on-quarter and 4% year-on-year, driven by 3% expansion in the replacement tire market, while OEM grew only at a modest 1%. Our China business is particularly strong in mobility, driven by a 6% domestic growth rate of replacement tires. Our IG in vertical reported adjusted EBITDA of $17 million, a remarkable increase of 229% quarter-on-quarter and 23% year-on-year. This was driven by improved volumes and our capability to offer unique pricing solutions to customers, especially in the Americas. Volume grew 18% quarter-on-quarter and 24% year-on-year. We are on track with the construction of a new state-of-the-art nonwoven facility in Moxville, U.S., which will start production by end of 2024. And we have also expanded our portfolio of high-value offerings with the introduction of laminates for the medical market, which is a new market segment for us. China continues to be a very competitive market. However, our platforms outside China have seen increasing volumes as China faces trade and non-trade barriers in the fiber business in countries like Indonesia with ongoing anti-dumping efforts in Brazil and USA. Back to you, Dike.

Thank you, Diago. I think let's look at the financials, debt and everything. So at the end of first quarter 24, we marginally reduced net debt from $6.84 billion to $6.76. Our leverage ratio like net debt equity is at 1.3 times and DSCR at 1.3 times. Our effective finance cost increased, which is to 5.45%, which is 14 basis points. reduced from 2023 due to an increase in the benchmark interest rates. However, our refinancing program is being achieved at a better spread than before. So we are achieving a better spread on the refinancing. Of our total debt, 43% is floating while 57% is fixed. By the end of the year, together with the refinancing, what we have done, we expect the fixed percentage of our debt will come down to just above 50%. So right now our strategy is floating, borrowing, in lack of reduction in the interest rates. On the refinancing, we have progressed quite well, including the issuance of a ninja loan of totalling $255 million, bilateral long-term loan of $100 million, and a syndicated long-term loan of $500 million, which was subscribed by 18 banks. and an oversubscribed Thai bar debenture issuance of Thai bar 10 billion. These were achieved at lower than average spreads compared to previous issuance and shows the confidence in the company. This leads to a post refinancing debt repayment of only 400 million for 2024. And you see on the right hand side that that's the repayment and 900 million for 2025. We still have more ongoing refinancing in progress, which will further improve our repayment profile. So we have been very aggressive on refinancing. Our aim to maintain strong liquidity remains unchanged. At first quarter 24, we have liquidity of $2.5 billion in form of cash and cash under management, plus unutilized committed credit lines from banks. Our global manufacturing footprints gives us, as you mentioned always, hedge on forex. Our debt and net assets are directionally in the same currency, which gives a natural hedge. However, at this time, we have increased Thai baht debts due to lower interest rate as they are for long-term investments. You can see some mismatch in Thai baht side. The sustainable financial portion of total debt in first quarter was 32%, showing our dedication to prompting sustainability in our operation and also in capital markets. So, The summary is, if we summarize all the position after first quarter, what are the key takeaways? As you saw, we saw an increase in our sales volume in first quarter 24 on the back of easing of destocking and signs of demand recovery across all the business segments, even with a negative impact from winter fridge. We expect volume to be higher in second quarter with no winter fridge disruptions and upcoming seasonality. As now we talk, the plants are operating at high capacities. Despite the challenge of low industry benchmark spreads and integrated PET, we have managed to uphold a strong premium over the market because of our strategically diversified geographical footprint, supported by protection from trade and non-trade barriers. As a result, we stand ahead of the industry in a present very low margin environment. The ongoing Red Sea crisis is diverting ships from sewage canal to the longer routes, Cape of Good Hop. As a result, tanker and container freight are expected to remain elevated, with a tight market expected to last longer. This disruption continues to benefit IVL as a domestic producer against expensive imports. Furthermore, the continued softening of gas and power prices have provided an additional tailwind, to our cash conversion costs in western markets and expands our shale gas advantage in United States. We are reaffirming our commitment to maintain high liquidity and generate positive free cash flow while pursuing growth through operational excellence and strategic initiatives. As we committed in CMD, we are steadfast in our commitment to execute our IOL 2.0 plan. As you saw, strong governance is in place. We are in active discussion with many parties. which enables effective oversight and coordination, allowing us to navigate challenges and drive our transformation journey with confidence. Along with empowering our management to enhance operation excellence, we are well positioned to achieve our IVL 2.0 goal by 2026. For more details, of course, IVL 2.0, you can look at the CMD presentation. And we will keep you updated every quarter on these different management actions which are being taken. So thank you very much for your listening. And now we can take your question answers online on the floor. Thank you.

Thank you. So audience, you can raise your hand online if you have any question. And we can also take question from the floor here. So you can raise your hand and ask your question now.

Okay. Yeah.

uh thank you dk for the uh thorough presentation i got a few questions first one is on mtbe uh usually there is more room for mtbe to to improve uh given the upcoming u.s driving season and uh i was curious what was the quarterly peak mtbe mark if it down margin or if it die in absolute term that we've seen in the past so the first one second one is the uh Will U.S. PET margin be squeezed by higher PX price in the U.S.? Again, with the upcoming U.S. driving business or because of the contract renewal, there will be no impact on the spread. And the last one, do you see there will be more room for MAG to improve further now that U.S. Henry Hub price is very, very low and could go any low further? Thank you.

Thank you. Can we bring the MTB slide? So margins for US MTB normally go up in second quarter because of the driving season. We're just trying to bring that slide up for you. And in the winter, there is also Blanding of butane becomes higher. So the second quarter is normally always better. Fourth quarter is weak. The driving season will certainly benefit. You asked about the quarterly EBITDA margin on MTB business, right? Do you have that number? We can share with you. I want to give you the correct number. The other question was on the US reset of the contract and with xylene prices going up or paraxylene going up. So 90% of the contract which we have are basically raw material linked. So when the PX goes up, we pass on to the customer. So basically it doesn't affect. 10% is the spot market. This is the US and Mexico I'm talking about. So normally... That will depend on how the import parity is going. And now the Red Sea crisis, the freights have gone up. So pretty good. Brazil, again, because of the Red Sea crisis, the freights have gone up. So the import parity of Brazil is showing improved results. Energy prices, you're right. The gas prices are $2 a million BQ. Forward curve is showing some increases. We continue to hedge our policy. You know, we hedge by end of the year 50 percent. Every month we hedge 4 percent. So actually this first quarter we lost $8 million, which is adjusted because of the hedge. So certainly the continued situation of the energy in U.S. and Europe will continue to help in the market. It's a tailwind. And so this brings the MTB graph you can see. that driving season third quarter 23 on the right-hand side, it was $892 per ton last year. So normally in the driving season, you see such peaks coming in. Too early to say right now because right now it is $534 per ton. In the first quarter, you see it's $545 as compared to first quarter of 6-24. But yes, driving seasons will change. cause octane demand stronger and we may see better numbers. But predominantly it is July, August, June, July, August. Do you have a bit of margin?

Yes. Yes.

Meanwhile, we'll give you a bit of margin if you can take other questions. This is Athleen. This is just MEG. If somebody is interested, as you can see the Utilization rates still remain quite low. But the middle graph shows the Asia MEG spreads have started improving. You can see the lower, because they were unsustainable, blue line. And the green line, which shows the integrated, this MEG spread on gas advantage. So you can see the benefit coming in. And of course, ethane remains the cheapest. So MEG margin, you saw that it turned into a positive EBITDA, MEG and EO. So that benefits that.

Thank you. There is one question on from McQuarrie online is asking that there's a one of big gain for specialty chemicals in PETs. How much is the volume? And if you remove the volume, what would be the impact on CPET? So there's a question about specialty chemical.

So can you bring the NDC slide? This is because of the campaign production, as I mentioned. Normally we produce NDC in campaigns. And in first quarter, we produced. And also there was a contractual pending delivery to the customer. So it has a positive impact of $26 million. So if you remove that, and that's where it is in $40 million counted here. But normal deliveries will come in Q2, Q3, Q4. So you can see an exceptional gain of circa $25, $26 million here. If that helps you.

Thank you. I don't see any question at this time online. If there are any question from Brazil, you can ask them now.

Sorry, I forgot to ask Alistair. What should be a signpost that we should be looking for in the vineyard outlook or volume to improve? Is that crop season in Brazil or anything like that? Thank you.

Thanks for the question, yeah. So volumes in India. So I think there's many signals you can look at at the same time, which is obviously what we do as well. I think DK opened up with some of the economic factors. So in the U.S., we're starting to see production levels reaching a 22-month high. Purchasing manager indexes are all up, which is good to see. In India, we're seeing some good improvements in volumes as the economy continues to grow. And in Latin America, we're seeing some improvement in the manufacturing industry in March and April in LATAM with a stronger purchasing manager index. So that's a sort of global sort of view of our markets. As we think about... the next level down indices. I think if we look at home and personal care, there will be a return to higher volumes, we think, in the home and personal care. One is because of our innovation rates. One is the volume of spend or the share of the wallet of spend on health and hygiene products continues to rise globally. And the surfactants industry is therefore rising with it. If I think about the crop market, that's a much more complex market because obviously there's different growing seasons in different parts of the world. I think what we're seeing is because of interest rates, because of crop prices are lower, because of, I guess, the chemical and additive sides of the markets, prices are reducing. All farmers are waiting to the last minute that they need the chemicals to buy. And the inventories that we've seen in 23 that were built up in 22, as you all know, they're starting to come down. So I think what you'll see is a few gradual signals, and I think we're starting to see that now, gradually improving supply chains. Then you might see a bit of a jump, because normally people start buying six months before the growing season, which means in the U.S. they're buying now. In South America, they're buying from June. I think what you might see is a start to rise in Q2 and then a rapid rise in Q3 and Q4 because people will need these chemicals without a doubt. And then when you move to the energy and resources, very economically driven, but a large demand because of the price of oil, a lot of chemicals going into oil field recovery and a lot of chemicals going into natural gas. and therefore that's going to continue to be stable, but probably grow from our point of view because we've got some good new chemicals coming onto the market. And then finally with the coatings and the construction markets, obviously affected by interest rates globally, affected by reinvestments in economies, affected by new house bills and existing house sales, you know, whether you paint or new construction. Those are quite complex because what we're seeing, certainly in the U.S., is people don't tend to want to move house because they're all locked in low interest rates during the low interest rate environment. And therefore, you're seeing house price rises without the inventory moving of existing homes. And therefore, the switch is now going to the new homes. And I think when you see that really kick in, that's what drives the whole economy for the materials and chemicals industry on the construction side. So I think you'll start seeing some improvements there. So what's the early signs? Crop season's you'll start seeing some improvement there. Surfactants and home and personal care, I think that will be a slow return and exacerbated by new innovations that we're bringing to the market that we mentioned. The energy and resources, I think it'll be a nice slow improvement as we expect. And then the coatings and construction. Could see some rebound. I think we're waiting to see. But I think it could be quite rapid when it happens, because when construction happens, it will have to happen pretty quickly, as we saw in in 22 and only 23. So those are the signals I would watch for. And.

Thank you.

Thank you. I hope that explained and certainly we see second quarter better in Romania.

Thank you. I have a question, a more general question. So it looks like your core EBITDA margin improved and you are not losing money anymore. But on a broader side, so what is still missing if you compare to two years ago where you were making more money or you were making money in the first place? So what is missing right now? Is it... The volume still low as well as I can see. Utilization rate is low, I think. What else is missing and how do you see things develop over the remainder of the year? Thank you.

Yeah.

So you see, you have to look at like 21, 22. There was a lot of supply chain disruptions. which certainly resulted into a lot of freight rises. Demand was very strong post-COVID and the supply in China was also disrupted. As a result, we made, of course, volumes as well as margins were very strong in integrated P&T. Same in our IOD business because of the imports were more expansive, demand for the glyphosate and all those products were very strong. Now, 23, we saw a period of destocking. So, that is a period of restocking and destocking what you saw. Now, destocking is accelerated due to many reasons. As you can see, earlier the interest cost was so low. So everybody was keeping high inventories because they don't want to run out of the stock. As soon as interest started moving up, you immediately see the destocking happening across the value chain. And don't think this as a consumer. It's the entire value chain. Retailers, intermediaries, everybody wanted to cut the inventory. This was the mill demand reduced and the operating rates went down, the volumes, which compressed the market. At the same time, China built a lot of capacity. In PET particularly. So, in 2023, we saw that trough of the earning and destocking was continuing. As you can see, all the chemical companies. Now, as we come in the first quarter 2024, still the volumes have started improving. You can see we saw that the total volume are continuously improving. However, margins in integrated PET still remain lackluster because of the overhang of the China capacity. Because China built a lot, still the demand in China hasn't come up so much. So that is putting the pressure on integrated PET. Our strategy in PET has been, because of geographical limitations, footprint which we have. A lot of trade barriers are there. You saw Mexico increasing 25 to 30%. Europe put anti-dumping duty. India is going to put BIS. There's anti-absorption duty action going in India because they have anti-dumping duty, but one guy has a smaller duty. So every country is trying to protect that market. So our focus is on the premium which we saw. So volume, you can see here that we are talking of 3.83 million, which is really Coming back, the margins will gradually, we'll look at how the margins improve. Gas prices are lower, which is certainly a benefit. The other is the Western feedstock prices, which were very high. In 22 also they were high, but we could pass on because of the supply chain disruption. In 23, those remain high because nobody is building refineries in the Western world because oil demand has picked up. So, nobody wants to build new refineries. This means the refinery margins are very high in Western world, particularly Europe and United States. So, our raw material which is mixed xylene or which is converted into paraxylene is a gasoline blend. So, basically the price disparity between Asia and America as well as here in Europe widened significantly. So, our feedstock price was high. The freight rates came down. So, as a result the margins got compressed. Now what we see, Red Sea crisis happened, so that started marginally going. So what you see that volumes are coming back, as Alastair was also explaining, and the different we are seeing fibres improving, PET improving, but margins are gradually improving. So that helps you to understand what happened in 21, 22, 23 and 24. So that's how the volume. So our focus is Management actions, we are not depending on margins to improve. So what we have said that, okay, we take certain actions on high cost sites, reduce our fixed costs, improve our operating rate of the remaining assets, and that is $190 million of fixed cost reduction, and we'll keep you briefed as the situation develops, and focus on the quality of earning. Of course, if margin improves, then that's a better thing to do. Hope that explained you. what cycles we have gone through. Yeah, sorry.

How do you see things unfolding at the end of the year and next year?

I won't say it's a V-type recovery. It's a gradual recovery. Interest costs are still holding on. As you saw the latest data, there may be one or two cuts. But as the interest costs come, the construction demand comes in, all your chemicals demand comes back, the margins improve. The Chinese situation, domestic Chinese demand has also started now improving in the first quarter we saw in PET. So how does this balance out between demand? So we see a gradual improvement. Quarter on quarter, that's what I could say today. Thank you. May I? Yeah, please add a question. Yes, please. Please, Kun.

I have the first question. I'd like to know what you see about the potential impacts from the, say, the export of the fish stock, say, propane or ethane or some other fish stock that the U.S. exports to China. And China currently actually becomes a big... factor that make the down cycle for the entire global petrochemical industry because I'm not sure that how that interacts with the so-called like outflows of the export for the ethane and the propane because I saw it hit the record high last year for the export. and also maybe you can update what would be the so-called like an interaction between the very low henry hub again the export along with the ethane because i remember that they produce ethane about 2.6 million barrel per day but export only about 0.5 million that's mean internally they use so so much so so how how does play out for your intermediate as well a second question about the the the what's that what do you call indovia indovina yeah yeah sorry sorry that i am not good about science agree okay um What you think that, say, what factor that you believe that would be the more important to drive margin direction, say, demand or supply side? And how you think that what could make the margin of your downstream IOD better? go back to, say, in 21 or 22, I can't remember, the year that have a very high level. I just wonder what exactly the factor. And the last one, the last question, I'd like to know that particularly in terms of the polyester chain, because now we saw the very poor margin for the olefin, for the aromatic for the past four, five years. Would that be applied to polyester? Say, margin could be at a very low level for the next two or three years. If not, what difference? Thank you.

So I'll take the first and third question and Alistair will address the second question. Very good questions. So let's understand what has happened in the world. I think it is not only imports of ethane. Of course, there is a lot of imports of ethane, which has come from the United States because the ethane was very cheap. Number of crackers were running based on imported ethane. The polypropylene, when you say propane, the PDH units in China were running high. So polypropylene also became long. But basically, if you see what has happened in the world, this slide will explain you a little bit better. That in 21 to 23, 31 million tons of capacities was added globally. A lot in China. Very integrated crude to chemicals. Plants like Rongsheng, Hengli, which they built along with the refinery. While the demand growth was 11 million tons. Now this is global. At the same time, North America was building a lot of crackers, 6 million tons, and the demand growth was 2 million tons, which was also 2%, particularly 23% wasn't great. So the global operating rate of ethylene dropped to 80% and 79%, which resulted into what you just mentioned, a very depressed olefin margins, means naphtha-based crackers, The U.S.-based crackers were still making money because of the Henry Hub, but not at the reinvestment level. Because if you see the just slide in the middle, that at least the spreads were very, very low. There are spot and NTP adder. Basically, we should see spot adder. In 21, it went up because of the disruption in the supply because of the polar fridge. But look at 22, 23 and the reinvestment economics is about six hundred dollars per ton. So in the United States now, no more capacity addition is there. If you see in 24, 26, no cracker is coming in because no board will approve a cracker based on these economics and the demand growth will expect to continue. So the operating rate in North America will go up 79 to 84 percent and globally 80 to 82 percent. Now, what it means for IVL? The question is that today we have one cracker in Indovenia, 250,000 tons, another cracker, 400,000 tons. So 650,000 tons of ethylene we make. As this spot headers improve, you can see now 193 to 42 percent. This is a still below reinvestment. Any cracker which needs to be built will take six years to build in the United States. So naturally, this gas availability, ethane availability is there. So you will see a gradual increase in this adder as the capacity utilization in U.S., North America improves. However, global capacity addition, if you see, is still 16 million tons. So, olefins still remain quite under pressure, and that's where the olefin margins remain under pressure. So, the shell gas advantage, you can see on the left-hand side, is $490, which will remain because ethane is in ample supply, and if crackers don't come more, but only ethane export is happening, where people are arbitraging between imported ethane but it is expensive to move ethane as you know and take that as a feedstock. Other important play has been also Russian crude oil. I think we shouldn't forget here that China has been getting cheaper Russian crude oil as compared to the other crude oil. So that also helped China. So China COTC this crude to chemicals impacted actually our polyester chain also because there are integrated players if you can go to that slide There are people who are integrated with paraxialin and right up to oil to PET. Those people were making money while the PTA PET folks were not making money. Now, your question second is, will the polyester value chain remain like this? In near term, we see that the There is an overhang of the capacity in PET and fiber both in China, which will keep the margin compressed. But they are not sustainable margins. You can see here that Asia integrated PET spreads are much lower than historical and exports from China are also limited. because China can't export anywhere. So the capacity utilization in China is remaining quite low, 77%. So China benchmark spreads, we don't see a big improvement happening in near term, but long term it should happen because if you see the industry structure, can you bring the industry structure slide? So This UOTC has also impacted the polyester value chain. Our focus will be to keep our cost structure low. Our focus will be to the market in those protected markets, leverage on a recycling and take action on the, you know, this particular slide shows you. that 80% of our market is protected, basically, because of anti-dumping duties and other non-trade barriers. On the right-hand side, you see United States, India, Japan, everywhere. Everybody wants to protect their markets. So our focus will be on these markets, give unique solutions to the customers like recycle content, and keep our premium. But yes, these margins are not sustainable for even Chinese customers. You've got that slide of the industry structure. So, polyester will remain under, still remain under pressure because of the overhang of the capacity, but mid-term it should come back, improve. Do you want to take Indovina?

Sure, yes. Yeah, I'll break it down into a few different parts of the answer. I think the first part is margins. If you look at The average margin is 21 to 23 for Indivinia. In the HVA, the margins are actually higher in Indivinia today than they have been on the average of those three years. So it's not particularly a margin issue within HVA. There is a volume, obviously one because of the freeze, but two – There are structural volumes. I mentioned a couple of them, one with HPC in North America and one with Crop in South America. I think the other one to think about is the essentials business, and I mentioned the essentials business. It's 22% of our volume, but it's only 10% of our coma. It certainly dropped there because that's the more commoditized part of the business and where high volume companies around the world can certainly compete with us. So what are we doing about that? Well, I think the main issue I would suggest is more on the South American side for the commoditized side. There's a lot of imports going on in South America at the moment. The recent survey is the Brazilian chemical industry is down to 64% utilization because of imports. And that's the lowest for 20 years. And that's not sustainable either, quite frankly. I think I was reading that almost 50% of the quarter one volumes in Brazil were imported. That's just not sustainable. So what's happening about that is, you know, the Brazilian government recognize that. You know, just as DK mentioned, there's probably import duties going to be considered. They need to protect their own industry. And there's certainly meetings during Q2 and half two that hopefully will help that industry recover. Yeah. That said, you know, we can't, as DK mentioned, can't avoid our own responsibilities. So the way I would look at it is local production in the industries that we're in is very, very important. You know, a lot of our products don't travel globally. They're locally manufactured products. And therefore, maintaining the market share, the penetrate new customers, new tiers of customers, procurement price and excellence, transformation process, the innovation processes. Those are all things in our control, which will continue. I think that the crop I've mentioned, I think that will come back. Crop cycles will continue. People still need to eat and they definitely need the chemicals we produce to use that. I would have said the one beyond the commodity chemicals that we're more exposed to would be the one we talked about before, which is around glyphosate. And glyphosate is going to be it's about 16 percent of our crop business globally. It's it's not destroyed by any means. You know, we still provide glyphosate. But I think it's a good example that you mentioned that China's improved, you know, produced a lot of capacity globally. for these type of products. And there's nowhere for it to go, so they ship it out and affect other people's markets. But there are some nuances to this. I mean, China's now approving the cultivation of glyphosate-resistant crops. And when you approve the glyphosate-resistant crops, you need the glyphosate to kill everything around it. And therefore, that Chinese capacity is going to be used in China as those crops over the next few seasons start coming through. And that's going to be about 120,000 tons of glyphosate. So that story is going to sort of self-fix. just because China needs production for China eventually, which was why it was originally produced in the first place. The other thing about local supply is we have local farmers, local supply chains, big companies, as you know, that operate into these agricultural fields. And they see the value of the local production of this type of material, and therefore they're offering incentives to farmers to buy local and not import it. That said, within Indobinia, only part of our production is even involved with glyphosate. A lot of our products go into enabling glyphosate, so whether it's imported or made locally, it only affects a small part of our portfolio. So I guess to answer your question, Self-help, economy changes, our margins are still pretty good and better than they've been for the last average, for the last 21 to 23, so that's good. So now it's a case of building up that volume portfolio, bringing new innovations, adding on to that margin story and making sure we work out and control fixed costs. That's our key to success.

I hope that answered it.

Mayank, can you ask your question? Vikash, can you hear me well? Yeah, we can hear you.

So my questions are more related to cost. If you can just help us understand on the cost side, if I look at this quarter as well, we have not really seen any significant reduction in costs. I was hoping that you could see some of this impact coming in from cheaper gas across US and Europe, considering how quickly gas prices came off. So especially I think on the overall portfolio and if especially on the fiber side as well, if you can kind of highlight of what's going there on the cost structure, especially now, I think on the lifestyle side, utilization rates are still low, 60 odd percent. So if you can just start with that and then we'll follow up with other questions.

So, Mank, the cost, I don't know, you are referring to maybe the pertinent cost or absolute cost. So, naturally, our first quarter operating rate was getting affected, as you see, because of the loss of production. Yes, gas, there has been a benefit, naturally. But I think the major benefit will come from the actions which we are taking now. on the fixed cost reduction when we rationalize some of the sites which we are working on it, and also the management actions which we are taking in improving the operating rate. So you will see certainly some improvement in second quarter as the operating rate goes up. The energy part, you're right, we had gain. That was about total gain is about $191 million based on the forward curve. But $45 million is actually a hedge loss, which is at today's market. I mean, it will depend on how the market shapes up when the delivery will happen. So this will be net benefit will be $146. But I think the major benefit of the cost will come from this fixed cost actions, which we are taking seriously. higher operating rate, because higher operating rate will eventually lead into pattern costs becoming lower, because incremental production costs will be lower. So, this we will see in sequential quarters. Now, fiber, do you want to address, Diago?

Yeah, on the fixed cost side, fiber is engaged in a significant fixed cost reduction program that is basically built around fixed cost productivity. We're starting this action as we speak. And we're going to also follow it up in the later part of the year with the organizational blueprint, which will simplify the way we operate, which will yield a significant cost reduction also in coming and going in 2025. So fixed cost for us is very important. The question was also building around lifestyle volumes. Lifestyle, I think, is a mixed bag right now. We have places like Indonesia where we're market leader, where our operating rates are very good. Our problem in lifestyle at the moment is India, and we are seeing some improvement coming in in the second quarter. But I think that is an area where we're expecting operating rate improvement.

Got it. I think it's clear. So on the operating cost side, just both fixed and the OPEC side, how much and when can you expect these numbers to filter through completely in the earnings? Like will it be third or fourth quarter this year or it will be more a 2025 event?

So you will see something trickling around in fourth quarter and 25 substantial part of it as we take the sequential actions on different fixed costs. So, you know, we are still on our track for $190 million, what we committed in year 26. But fourth quarter onwards, you will see.

Got it. And the second question was more related to, I think, on the inventory side. I think you have been highlighting of how you have been trying to control the inventory days. If you can just give us for the first quarter compared to the last quarter, have you seen any improvements there as well?

So there has been an improvement of two days in the inventory. So overall, our gross working capital days, which we counted as including receivables, everything, has improved by six days from 92 to 86. But yes, there is a lot of work to be done still on this. You know, some of this Red Sea crisis also increases the transit feedstock, which we take PTA. So it's sort of a double whammy. But there is a continuous focus on the working capital.

So, DK, from a year-end perspective, do you think this comes down another six or seven days by the year-end? Is that something that we can expect?

That's what we are targeting because five to six days. It is coming from also some rationalization of sites which will help. So, it will also reduce working capital at some of the double stock holding, you know, because when you operate some sites in higher capacity. So, that's exactly what we are targeting the working capital reductions. Got it.

And I think the last question was on Indovenia. Like if you can just help us understand on the HVA portfolio, there has been almost a 20% decline versus last year in terms of the EBITDA from that portfolio, though it's HVA. So what's causing that pain apart from the dumping from China, et cetera, that is reasonably clear, but is there any specific product within HVA that's causing that problem?

Yeah, so I'll go through it. So I think the first one is obviously the POPG where we lost 25 days of volume in Q1, partly because of planned mini-tar and partly because of the freeze. So we fitted those two things together and we did the tar during the freeze event. But it was a planned event. That's behind us now, and the plan is to run that plant hard. So that was the bulk of the volume that was lost, so about 15,000 tons from Indovina in Q1 because of the freeze and the mini tar. So those are one-off events. If you're comparing it year on year, I think those are the areas to look at would be the – Deformulating in HPC in the U.S., counteracted by an increase in sales in South America and APAC. I think if you look at the crop solutions, that's a well-known destocking issue. As you might remember, 22, everybody panicked, built a huge amount of stock in the market, so going into 23. We had basically 60% of the volume for 23 already in 22, and that became the destocking event. When you look at year on year, South America had already reduced in quarter one. So you're seeing some reduction in NAFI stocking in the U.S. and the rest of the world. That will start to rebound as stock levels are becoming very low. Energy and resources, I think we don't see an issue that will keep building. And I think that's been a good performance. And then coatings and construction partly is the solvents and the essentials part with a lot of competition and inflation and a lack of construction. And the other part of the coatings and construction is the POPG, which will rebound. So I think you're seeing a mixed story. I think forecasting out, we're starting to see those volumes come back. We saw some increase quarter and quarter and probably six months on six months. Certainly at the start of the year, a little bit of a slow start in some areas and a big start in others. I think as we're entering Q2, we're starting to see a volume build in our supply chains, and that's good to see. So hopefully we're starting to see that trough coming out the trough. We're starting to see the end of the destocking, and we're going to start seeing those volumes build during the course of 24 and into 25.

Very clear. Thank you for that. Sorry, and this is the last thing on tax rate. I think you had a very high tax rate for the quarter. Anything specific or full year guidance you can give us on tax rate?

So, Meg, that's a good question. Actually, our tax rate is high ETR this year, this quarter, because, you know, we have intercompany loans where, you know, there is exchange gain which goes to OCI, which doesn't flow through the P&L. But the tax impact of that has come. If that would not have come, then the ETR would have been much lower, about 20%. It's 17%. 17%. 17%. So our guidance is because of this extraordinary event and we are actually talking to the auditors that how can this go into OCI because earning is going into OCI and this is because of Bhat weakness versus other currency. Otherwise, we are expecting about 15% to 17% as ATR for the whole year.

Thank you. Thank you, Mank. So there's a follow-up question from McQuarrie on fibers. So he's asking that first quarter and first quarter this year and last year, the EBITDA levels are similar, but the volumes are higher materially. So what needs to happen for margins for fiber to improve from here?

Yeah, so the margin... An opportunity we have is really in the lifestyle business, which is significant as half of our business. As you heard from DK, the spread are still compressed. We are seeing some improvement in economic activity. We have seen improvement in the stocking. We have seen less export of Chinese material, of raw materials, and increased activity in textile business in China. That is the piece where we are expecting improvement in the year. For the other two segments, mobility and hygiene, I think we have it very well framed and is on plan and pretty much locked in large contracts. I think if you're asking about the margin, for us it's lifestyle, and it's lifestyle in particular in certain countries of Asia, like India. That is the picture for us.

I think just to add, so I think what Diago mentioned, the major volumes comes from lifestyle. And lifestyle, as we just discussed, the polyester fiber margins are quite compressed, which are unsustainable. So once they come back, then you see the improvement and learning with the volumes. Yeah.

Thank you. There's no question online, but if there's any question from the floor, we can take them. There's one question from Asia Plus Securities is asking about the other six assets that we have. Do we expect any impairments on them and potentially when?

So as we mentioned in the Capital Market Day, we are looking at seven assets, which is, of course, one you saw the Corpus Christi is already impaired. This consultation with Rotterdam is going on with the Work Council. It's a process which you have to go through with the Work Council where you talk about different alternatives about the site. So the impairment, anything which will come up, will come up in the second quarter or third quarter, depending on the, you know, how the discussion processes and how, what decisions are implemented. But this will be predominantly non-cash. The cash impact will be much lower.

Thank you. I don't see any other raised hands on the floor and there's no other questions pending online. Do we have one here? Okay, sorry, we have one more.

Can you share furthermore about the impairment? I understand that you have impaired US asset already. And for the other side, five side, it is the size of the impairment, it is large or just small size or anything that impact effect to the financial statement or anything else?

So, this seven, six sites, it won't be small because these are, you know, you were talking of a fixed cost reduction of nearly $190 million across the sites. The financial statement impact, of course, will be on the, not on the debt or EBITDA, but it may impact a little bit debt equity. and the earning per share, but mostly as I mentioned, it will be non-cash, you know, and cash part will be smaller depending on the severances. Now, this all depends on how the negotiations goes with our unions and timing of the actions of different assets.

Okay. Okay. So there are no more questions. So we thank you very much for joining us here in person. And we look forward to stay in touch with you if you have any questions.

I think just to add that the focus of the management in the capital market day, as we said, is improve the quality of earning. This means improve the operating rate, reduce the fixed cost, don't depend on the margin, and bring debt over EBITDA below 3. And that is what the management is focusing on. And we'll keep you informed as the situation develops. Thank you. Thank you very much. Thanks for coming. Appreciate it.