Lanxess Ag Ord

Warm welcome to everybody to our Q3 24 conference call from my end as well. As always, we begin by asking you to take notice of our safe harbor statements. And with me today is our CEO, Matthias Sachert, and our CFO, Oliver Stratmann. Matthias will start with a short presentation, and then we will open the floor for your questions. With that, I'm happy to hand over to Matthias. Please go ahead.

Thank you, Andre, and welcome everybody to our Q3 results call. I start immediately with a presentation on page four, where we give an overview on the overall financial KPIs for the Linksys Group. As you can see from the sales numbers, we stayed all in all flat vis-a-vis previous year numbers. Noteworthy is the 5% volume uptake that we have seen Notably in the segments, additives, predominantly intermediates. Also nice to see that nine out of 10 businesses reported growth. Only one business sharply fell. I will come to that definitely later on in the call. As far as EBITDA is concerned, we had a steep improvement versus a relatively low base last year that we alluded to that 2023 was an extraordinarily abnormal year. But the improvement stems from self-help measures, i.e., tight cost initiatives and cost control, and secondly, from a higher utilization base, which is now roundabout 70% versus the 60% we reported last year. As far as net financial debt is concerned, we kept relatively stable compared to last year, despite the fact that we have year to date an increase in the working capital of roundabout 150 million euros. On the free cash flow side, please take note of the fact that in September, we very much focused internally on preparing for the U.S. harvest strike. I will come to a second to our U.S. asset base and sales base. We took precautionary measures to get prepared for a strike starting beginning of October, which fortunately was not executed in October. But of course, we are waiting for further developments here to come. I think the parties that are negotiating are coming and finding together, but we still have to see if final agreements can be reached. So I think you can see here that we prepare for whatever we can prepare at this point in time. However, this was impacting inventories and will be reduced going forward. Let's move to page five. to comment on the key events and achievements in third quarter 24 as far as business is concerned. Definitely the two business segments that were hard hit in 23 are coming back strongly with a low comparable base. Extremely good volume momentum on the intermediate side was seen in the third quarter that led to a visible improvement in margins compared to previous year. Also in profitability, an increase of more than 100% as far as EBITDA indicator is concerned. And the same holds true for additives, however, not with the same kind of profitability increase. Consumer protection is the low light, stemming from one business solely, that's Saltego. If you look at the financial results of the segments, basically this business unit dropped by around about 25% year, sorry, 25 million Euro year on year. That shows you that agro in the second half for us is still harshly hit. The rebound that we assumed beginning of the year for the agro segments is definitely not there. As a matter of fact, the agro industry rather softened compared to the first half. And therefore, we take note of the fact that some of our customers are reporting slight positive trading visibility, but it will surely take one to potentially two quarters to see this ending up in a higher ordering. So if you would adjust for the Saltigo fall in profitability, you would clearly see that the other two business units are strongly performing and rebounding nicely. A lot of the profitability improvements is driven by the forward measures that have been swiftly implemented. I think we were ahead of the curve here and therefore benefits over proportionally in 2020. for the VISA V23, and this is basically visible in most of our divisions. On the portfolio transformation, I can clearly say in the last five, six years, we've executed on leaving the polymer businesses behind. The divestment of urethane systems was the final piece in the puzzle. We've signed the contracts. It's a very nice, very profitable growing business. We liked it and we are happy to hand it over to a professional company with a strong footprint in these kinds of businesses. And therefore it's a good transaction for the business. It's a good transaction for Uwe, but also for ourselves. And therefore we have taken account for the business in assets held for sale, closing at first half 25. Liquidity, two elements that I would like to make clear in this regard, Oliver and his team worked nicely on prolonging our revolving credit facility also with a sustainability linked element. So this was extremely well executed, very professional with good financial terms, no setback compared to the last credit facility and therefore congratulations to the entire finance organization and I think We are therefore positioned extremely well for the next few years. Now let's come to page six. As we conclude the major portfolio changes, you can see what we have done over the last eight years. Sometimes this gives more clarity than just quarterly numbers. In 2015-16, we started the journey on changing our portfolio, leaving behind polymers and volumes, and focusing on chemicals, building in each respective businesses where we bought, building leadership positions, and as you can see from the regional footprints, our strategic direction was clearly enlarging the footprint in the United States. This becomes visible when you look at the geographical sales splits on a somewhat like-for-like portfolio basis, In 2016, we were at around about 15 percentage points sales in the United States, moving now to 28 percentage points in the United States. So this is now the biggest market for us, America, United States. And I think it's a significant change in importance. which is also organizationally reflected through one board member of the management board being located in the United States. So we changed the organization respectively. And noteworthy that by now we do not only have roughly 30% of sales in the U.S. markets, but also round about 30% of our production asset base, which also more than doubled over the last So I think with whatever political change will come, this is definitely a positive as we consider the United States to definitely focus on developing U.S. asset footprint going forward with respective support on growth rates, but also potentially tax schemes. Ladies and gentlemen, let me now come to page seven and address the guidance for full year 24. Despite macroeconomic uncertainties, which definitely intensified for the second half 24, I think you see that being commented on by all respective peers, but also by other end industry, which are our customers. Despite macroeconomic softening, we are in a position to reiterate our EBITDA guidance that we have given out beginning of this year, including, of course, the urethane business, like in the past. And the basic driver behind that are our self-help measures, notably the Forward Program, but also the better utilization we have compared to 2023. And therefore, Please take this into considering. We allude to the fact that Q4 has always been a softer quarter driven by seasonality and holiday season, notably in December, so this is not going to change. And with this, ladies and gentlemen, we finish the presentation and we open the call for all your curious questions. Thank you.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We will now go to your first question. One moment, please. And your first question comes from the line of Martin Rudiger from Kepler Shover. Please go ahead.