Lanxess Ag Ord

warm welcome to everybody to our Q1 conference call from my end as well. As always, we begin by asking you to take notice of our safe harbor statement. And with me today is our CEO, Matthias Sarrath, 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, André, and welcome to everybody on the Q1 conference call. Today I will start the presentation on page 4 and all in all I would like to say and state that Q1 has been a straightforward quarter. No surprises vis-à-vis our expectation that we have communicated to you guys in March. Only one comment on the segments. All segment divisions improved. but we had a quite sharp increase in consumer protection. This is largely driven by the fact that Q1 2024 was simply a deplorable comparable base. That was the quarter where we had the severest impact on the destocking in agro, which continued in the following quarters in 2024, but more or less came to an end with Q4 2020. And now in Q1, we see that agro comes back to normal ordering, while the entire industry is not back to happy times yet. So with this, I move into the group key performance indicators. EBITDA is up by roundabout 32 percentage points, which is a big step according to our communication but of course still at low levels, but fortunately better than Q1 24. Working capital in Q1 increased lower than Q1 24, but this is the normal seasonal increase driven especially by sales pickups and thus receivables are making up the majority of the increase versus Q4. which is the normal seasonal development thus also net debt versus q4 moved up on the back of an increase in working capital and as we have communicated beginning of april we closed the divestiture of the urethanes business to the japanese group called uber this was clearly faster than we originally anticipated all institutional clearance came in extremely well on time and therefore instead of closing at the end of Q2 we were able to close beginning of April and we will use the proceeds to strengthen the balance sheets already. Let's move now to page number five. A few more comments on tariffs which now have been communicated 2nd of April. And here we would like to comment on the direct implications that we are, of course, continuously assessing. We have a task force that is globally operational, provides feedback to us on a weekly basis. And I think this is needed due to the volatility in the decision-making process, which sometimes changes on a daily basis. So from what we are assessing as of today, we can make the following statement on the direct impacts. And here let's look into the US position first of all. We have seen that with the announcement on tariffs, there are country by country duties tariffs being imposed. However, there exists also annex with exemptions the so-called annex to lists with thousands of products that are being exempted we've seen and analyzed this business unit by business units numerous product categories are exempted but by and large for those products that are not exempted of course we clearly see a a relative price advantage versus Chinese competitors. And our direction is very clearly to make use of that through volume gains and price increases. What we have seen, however, in March, when we analyzed import-export duties from the data that was being issued in April and the recent weeks, We saw that quite a lot of goods were heavily imported in March in our end industry from our clients. So we see that storage inventories have been built. Our assumption is this will take around about four to eight weeks to get deployed. And our assumption is that by June, our customer base is then starting to order locally due to the massive tariffs that have been communicated, notably versus Chinese imports. So that is the approach we are going to take. We are well prepared and we'll take action as soon as we see that volume is locally starting to increase. On the European position, we see that from April onwards, more and more Chinese goods are surfacing here in Europe, also in Latin America. Therefore, if we look at the direct impact all in all, we consider that this is neutral. Perhaps slightly positive, but that's what we see from the direct tariff implications. As a lot of macroeconomic institutions have conveyed, the tariffs will leave a mark on the global economy and global growth. So the indirect tariff impact, of course, is difficult to assess. We will have to wait and see what our end industries are going to do, but our concern is more on the indirect side and not on the direct side going forward. Now a few words on our guidance. All in all, macroeconomic uncertainty has clearly increased and what we have noticed from our client base that after the communication of the terrorists 2nd of April, uncertainty is not only high but also on client base is reacting rather ordering with two three months certainty this has rather reduced to a one to two week order pattern so the customers take a wait-and-see approach because there's no point in making long-term orders when suddenly tariffs are being adjusted next day that would be unwise and therefore we do see that volume momentum is ongoing, so there is no sudden shortfall. like we have seen in Lehman times or Corona times. So momentum is ongoing, but the order book is filled only on a weekly, bi-weekly basis and no longer on a two to three months basis. So this is the momentum we see in the order book and from customers. And based on this, our communication on the guidance is reiterated 600 to 650. On Q2, we see a sequential improvement versus Q1. And of course, Q1, we had some shortfall due to the pre-buying in December that we flagged. So that will, of course, stop in Q2. So we see a sequential improvement. But please take note of the fact the urethane contribution, which we still had in Q1, will stop in Q2. And this is operational EBITDA of roundabouts $11-12 million that is falling away and the remnant costs that we have highlighted with the communication of the Uber transactions will now come through. So all in all, the lack of urethanes will be a $15-15 million reduction on second quarter. We do see some trading uncertainty that will fill the gap, and that is something you should take into consideration. So that's all what we would highlight on Q1 by and large, and now we would love to take all of your plenty questions. Thank you so much.

Thank you. To ask a question, please 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 take our first question from the line of Tom Brigglesworth from Morgan Stanley. Please ask your question, Tom.