Wacker Chemie Ag Ord

Welcome to the Orca Chemie AG conference call on our second quarter 2096 results. Christian Hartel, our CEO, and Tobias Ohler, our CFO, will take you through the presentation. The press release, our IR presentation, and the detailed financial tables are available on our website under Investor Relations. Management comments during this call include forward-looking statements involving risks and uncertainties. Please review the Safe Harbor Statement in today's presentation and the 2025 annual report for information on the relevant risk factors.

Chris? Good afternoon, everyone. Thank you for joining us today. The market environment remained challenging in the second quarter. Demand was still subdued in many end markets, while geopolitical tensions added volatility to energy, raw materials and logistics costs. Against this backdrop, our focus was clear. Strength and competitiveness improve operating performance and maintain financial discipline. That focus delivered results. Group sales increased to 1.52 billion, up from 1.41 billion a year ago. EBTA, before the pension accounting effect, rose by 53% to 175 million, compared with the 114 million in last year's results. Our project on cost was the main driver of this improvement, supported by pricing, higher volumes, and better operating performance in the chemical sector. This was not the result of a broad market recovery. It was the result of actions within our control. Despite the uneven demand, volatile input costs, and currency headwinds, we protected margins by driving cost savings, and we adjusted prices when necessary to pass on higher cost. Reported EBTA was 211 million and includes a 37 million non-cash effect from introduction of a capital option in existing pension plans. So EBTA before specials amounted to 175 million. Included in the net income figure of 350 million Euro are significant non-operating siltronic-related effects totaling some 243 million. Now, looking at our operating performance in the second quarter and first half of this year, PACE remains central to our progress. We reduced expenditure through tighter budgets, procurement efficiencies, lower technical spending, and structural measures. We also reached an important agreement with the Workers Council on the reduction of 1,600 positions in Germany. The related personal savings will become visible mainly from 2027 onwards and we remain committed to achieve savings of more than 300 million by 2028. Savings in the first half amounted to 85 million with a 45 million contribution from PACE in the second quarter. At the same time, we are streamlining our structures and processes and sharpening our business model. In our chemical divisions, we focus on specialty products, in the polysilicon division on the semiconductor market, and in our life science division biosolutions on innovative biotech applications. This will enable us to form the basis for future growth. Progress is visible across the businesses and we are improving today's performance while focusing the portfolio on profitable growth. In chemicals, pace-related savings, disciplined pricing and an improved mix strengthen the profitability. In bio-solutions, our priority is to convert the project pipeline, fill our capacities and improve cost performance. In polysilicon, semiconductor grade volumes continue to grow while solar remain weak. We are managing debt contrast with strict cost, inventory, and capital discipline. We had expected greater clarity on US trade policies for polysilicon by now, but the process is taking longer than anticipated. This continued uncertainty is affecting customer purchasing decisions and is holding back volumes. It also limits our ability to take long-term strategic decisions. Before turning to the outlook, Let me briefly mention some important customer recognition of our sustainability work. WACKER received the Royal Energy Award in the raw materials category. By reducing the CO2 emissions from silicon metal production in Norway through renewable energy, biogenic carbon, and potentially also carbon capture in the future, WACKER reduces financial risks and creates opportunities to grow with strategic customers. It also strengthens our value proposition for customers seeking differentiated lower carbon solutions. The award shows how sustainability and innovation go hand in hand. Now turning to the guidance. We updated our full year EBDA range now to 625 to 750 million. This improvement is driven by the good operation performance in the second quarter and the special effect from pensions. Our confidence is supported by visible operating improvements. PACE is delivering. Chemicals is performing well and semiconductor-grade polysilicon continues to grow. These are meaningful strengths as we enter the second half of this year. Nevertheless, we are realistic about the external environment. GDP and relevant end-market dynamics still don't show a true recovery. Competition remains intense, demand visibility is short, and U.S. trade proceedings concerning polysilicon remain unresolved. We will therefore continue to focus on cost control and self-help. Overall, our strategy is gaining traction. We are improving profitability, strengthening cash generation, and positioning Bakker for sustainable, profitable growth. On September 17th, we will hold a Capital Markets Day in London. Since our last Capital Market Day, the environment has changed, and WACKER has changed with it. We have reviewed the roles of our businesses, the way we allocate capital, and the financial framework against which we manage the group. In London, we will introduce new group-level targets. We have made substantial progress in strengthening our competitiveness, improving performance, and sharpening our strategic priorities. It's therefore the right time to explain where WACKER is heading and how we intend to create value. With that, let me hand over to Tobias.

Thank you, Chris. Good afternoon, everyone. Second quarter sales increased 7% year-over-year to 1.52 billion euros, driven by higher prices and volume. EBITDA before special pension effect rose 53% to 175 million euros. The strong improvement reflects both savings achieved in our PACE program and higher volumes. PACE contributed about 45 million euros in the second quarter. Importantly, the quality of our earnings improved significantly. Cost of goods sold remained flat year over year despite higher volumes. as G&A expenses declined, demonstrating strong cost management across the organization. Reported EBITDA was 211 million euros, including a 37 million euro positive pension accounting effect recorded in the other segment. This is due to a newly introduced capital option as payout mode, which lowers our required pension obligation. As a result, Others reported an EBITDA of just minus 1 million euros. For the full year, we now expect the others EBITDA to be minus 15 million euros. This is an improvement from our previous guidance of minus 50 million euros. After depreciation of 115 million euros EBIT reached 96 million. Below EBIT, the sale of Zertronix shares and the revaluation of our remaining stake following Zertronix capital increase contributed 243 million euros to the financial result. We have a slide on this in the appendix, and if you'd like a deep dive, please speak to investor relations. All told, net income reached 350 million euros, equivalent to earnings per share of 6 euros and 86 cents. The second quarter demonstrates that we are structurally strengthening the resilience of the business, creating a stronger foundation for sustainable value creation. Our balance sheet remains very strong. At the end of June, shareholders' equity stood at 4.18 billion euros, while liquidity remained robust at 1.57 billion euros. Working capital increased by 166 million euros. versus year end primarily reflecting the seasonal build up in trade receivables. At the same time, inventories decreased by 26 million despite higher raw material costs underscoring our continued discipline in inventory management. Pension provisions declined by 58 million year to date to 569 million euros. This reduction was driven by the new capital payout option and higher discount rates. Overall, our financial position remains solid with 48% equity ratio and a strong liquidity base. Now let's turn to the operating segments. At Silicon, second quarter sales reached 757 million euros, an increase of 6% year over year. Stronger volumes and higher pricing more than offset currency effects. EBITDA increased to 123 million euros. The strong performance was driven by pace as well as higher volumes, mixed effects, and better pricing. The conflict in the Middle East prompted some customers to pull forward orders into the first quarter. This resulted in a significant moderation of order entry starting into the second quarter and yet May and June came in above prior year. While orders remain very volatile, the order book is higher than a year ago. This supports our expectations for the second half of the year. Supported by ongoing pay savings and strong operational performance in the first half, we are increasing our outlook for silicones. For 2026, we now expect mid single digit percentage sales growth and an EBITDA margin above the prior year level. At the same time, we remain measured in our assessment of market environment. End markets continue to face headwinds, and we have not yet seen a broad-based improvement in underlying demand conditions. At polymers, second quarter sales reached approximately €406 million in entries of 12% year over year. The growth was primarily driven by prices, while volumes grew slightly and the regional mix improved. EBITDA increased to 69 million euros. The improvement was supported by PACE and a positive inventory effect. Polymer's performance demonstrates the execution strength of our teams. Faced with a rapid increase in raw material costs, they successfully applied our proven playbook enabling us to recover cost inflation quickly and effectively. This disciplined approach protected margins and allowed us to service our customers. As with silicones, the conflict in the Middle East prompted customers, particularly in Asia, to push orders forward into the first quarter. As a result, order intake declined sequentially in the second quarter. However, our order book continues to be higher than a year ago but it is short term in nature. At the same time, market conditions remain volatile. Raw material prices in Asia had largely retreated from the highs reached earlier this year and we had begun to adjust accordingly. Against this backdrop, we have updated our outlook for polymers. The situation in the Middle East is again more uncertain and energy and raws move up again For the full year, we now expect polymer sales to increase by a mid-single-digit percentage. EBITDA margin is expected to be above the prior year level due to PACE-related savings and the strong operational performance during the first half of this year. With that, we remain cautious on demand. Construction markets continue to be weak, particularly in Europe and China, and customer order patterns remain short-term in nature. At BioSolutions, second quarter sales reached 99 million euros, an increase of 13% year-over-year. Growth was driven by pricing measures to offset raw material inflation, as well as higher biopharma project-related business. EBDA came in at 7 million euros, supported by disciplined cost management. Our four-year outlook remains unchanged. continue to expect high single digit percentage sales growth and an EBITDA of around 30 million euros. While market conditions remain competitive, we relentlessly work on converting the opportunity management pipeline into revenue, increasing utilization of available capacity, and further improving our cost base. At PolySilicon, Second quarter sales were approximately €226 million, up 3% year-over-year. Growth was driven by higher semiconductor grade sales volumes, which offset lower solar grade polysilicon prices. EBITDA came in at €11 million. Strong semiconductor demand and cost savings supported the results, but profitability remained impacted by lower solar pricing, higher energy costs, and solar inventory destocking. The solar market remains challenging, characterized by weak demand and low capacity utilization across the value chain. In addition, ongoing regulatory uncertainty continues to limit visibility. Against this backdrop, we have updated our outlook for polysilicon. For 2026, we now expect sales to increase by a high single-digit percentage year-over-year, with an EBITDA close to the prior year level. Earnings will be clearly supported by a double-digit percentage volume growth in CEMI and PACE-related savings. Both help to offset the substantially higher energy costs this year. Now let me turn to the net financial debt and cash flow. In the first half, gross cash flow increased to 193 million euros, reflecting the significant improvement in earnings. Working capital reduced gross cash flow by 88 million euros, primarily due to the seasonal increase in trade receivables. At the same time, lower inventory levels released 47 million euros in cash, despite higher raw material costs. This highlights our continued focus on inventory management. Cash flow from investing activities before securities amounted to 19 million euros. Proceeds from the sale of siltronic shares contributed 185 million of cash, offsetting capital expenditures of 172 million during the period. Looking ahead, we continue to expect capital expenditures of approximately €300 million for the full year 2026. With our major expansion projects now completed, our focus has shifted to filling capacities and operational efficiency. This allows us to run capex clearly below depreciation. At the end of June, net financial debt stood at €722 million, supported by earnings Disciplined capital spending and continued cash generation in the second half of the year, we expect net financial debt to decline to around 500 million euro by year end. Before we begin with the Q&A, let me close with a few key messages. Our priorities remain clear. Achieve PACE-related cost savings, improve capital efficiency, and only allocate resources to differentiated businesses where WACA can create sustainable value and profitable growth. The improvement in earnings this year has been driven by our execution as well as the pension effect. As we move into the second half of this year, we have the confidence in our ability to execute but remain cautious on geopolitical developments. Pays, pricing action, and stronger operational performance have delivered tangible results. Reflecting on this progress, usual year-end seasonality and the special effect from the pensions, we raised our full-year EBITDA guidance to a range of 625 to 750 million euros. That concludes my part. We look forward to your questions. Operator, we're now ready to give you names.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and then 2. Participants are requested to only use handsets while asking a question. Anyone who has a question may press star 1 at this time. Our first question is from Christian Fates. Please go ahead.

Yes, thanks very much.

Good afternoon, Christian, Tobias, Joerg and team. I understand you are doing a great job controlling the controllables, yet there are quite a few non-controllable factors in the world these days. Hence my two questions, please. First, your forecast of high double-digit percentage growth for polysilicon for fiscal 2026 What kind of growth levels do you have to make this happen with a run rate growth of minus 2.6% at H1 and at least Q4-25 having a relatively high base? The same would, by the way, be true for your APTA forecast for this division. What will make the segment significantly more profitable in H2 versus H1? And then my second more broader question, what kind of demand trends are you currently seeing in your key customer industries, i.e. construction and electronics? aside from Ohler.

Christian, Tobias here. I would start with a second question, then maybe start also with answering the first question. Demand trends in construction remain weak. If you look at our silicones division and if you look for the stronger parts, it's definitely around the electronics that we see. Growing Strongly, it's healthcare, it's energy, it's coatings, but in general construction, industrial applications, consumer applications are still muted, so no big momentum from there. I think it's mirrored in the polymers performance, where construction is sort of okay in Europe, but we have seen still a very big market in China, for example. So there's no turnaround from our perspective on the construction side. And I think that for the chemicals, and I start with polysilicon, the bridge into the second half. I mean, obviously we have lowered our guidance given that there is still so much uncertainty around solar. I mean, there's no tiny impulse to improvement, and that's why we get more cautious on that. And we have been doing everything now to work now on our inventory, running at low utilization, and that is definitely a drag to profitability. But I'm happy that our inventory is now 20% lower than it was a year ago, despite that very weak What is growing nicely is our semiconductor business. We had seen roughly, I mean, a 10% increase in the first half of this year. And given our contract structures, we also see a sequential improvement into the second half, and that will support us also coming to that growth for the overall segment. We would need some solar sales. I mean, to be frank and clear on this, also in the fourth quarter, we would need to have some impact from 232. But as we are just working down our inventory, we wouldn't turn up the production run rate for any solar change unless there is a fundamental change in demand. I think the majority of profitability and drive comes from our semiconductor business and the cost savings. And that's why we get a bit more cautious on the full year, given that the first half had not seen any positive impact on the solar side.

All right. Very helpful. Thanks, Tobias.

The next question comes from Shetan Udashi, GP Morgan. Please go ahead.

Yeah, hi, thanks for taking my questions. The first one was on polymers. You mentioned in your presentation some inventory effect, which I suppose is the inventory evaluation of the existing stock. I mean, how are you thinking about, firstly, can you quantify that? And second, can that become a possible headwind into Q3 that you don't see that repeating in terms of contribution? The second question, is on silicones. Just looking into Q3, if you probably can just help us how you see sequentially trends in terms of sales EBITDA by division because we've seen quite a sharp pullback in silicone prices in China, for instance, in the last one, one and a half months. So do you think silicones can see stable profitability or should we model something lower? Just general... comment around how you see the third quarter dynamics.

Well, Christian, let me start with your last question. I mean, you don't give specific guidance on the segments for the quarter, but as Tobias pointed out, we have this peak in order entry in March for both chemical divisions, and since then, it's lowering down. and yet for silicones, it's still above last year. But what you have to take into account is there's a typical kind of summer seasonality, especially in Europe, which might drag a little bit on the sales. So that will be definitely an effect for the third quarter. And you comment on the pricing in China, correct? But keep in mind, this is only for standard products. So the DMC prices are falling. Standard products, majority of our portfolios today is very much in the special case, which is not one-to-one affected by these effects.

And to the inventory question for Paul-Mathieu, spotted absolutely correctly from the raw material increase, there's a revaluation. that has taken place in the second quarter. And I don't see that repeating. So I would take it out definitely and not triangulate now based on the second quarter for the rest of the year. And it will all depend on how raw materials develop further through the remainder of the year. But given that strong volatility, I mean, something like that can happen and the magnitude is low double digit. So it is a portion that is sizable. It takes two to three percentage points of the margin that come from the inventory valuation.

Thank you and if I can squeeze one more which is a hypothetical question but something that you have alluded Chris previously which is if the section 232 is not favorable you may End of with a solar plant, which is probably one more than what you need. So in other words, you may have to shut some of your solar capacity. And I'm just curious from memory, at least, except in the US, but both of your German plants for solar polysilicon are integrated with silicone production in the same site. Does that limit your ability to... Well, Chetan

Very valid question, and it shows the complexity that we have to take into consideration. It's a very far-reaching decision to be taken. But of course, it all depends on what comes out of that regular discussion in the US. There could be different scenarios. And my former statement, which you correctly repeated, was if there is no option for solar for us anymore, we would have kind of one plant too many. But it would depend on how the distinct ruling of this policy would be on 232 to make a final decision. And yes, in principle, what you say is correct. There is what we call the Verbundstruktur, which we have on the German side, which you don't have so much on the US side. But again, we need all the facts on the table to take a decisive decision. because it's far-reaching, this decision. And so far, we don't have all the necessary information. But also, I would like to say there's no pre-decision at this moment in time.

Got it. Thank you.

The next question comes from Anil Shenoy, Barclays. Please go ahead.

Hi. Good afternoon, everyone, and thank you so much for taking my questions. Just the two, please. Just following up on the question before, the first question is if you, I mean, in a pessimistic scenario that the Section 232 outcome does not go your way and you have to shut down one of your plants, then if you could give us some color on what kind of cost savings could you make because of that? So that's the first question. and the second question is on semi-grade polysilicon. So with AI CAPEX expected to increase by like 25% or 30%, that's the kind of number we hear and your direct customers, the wafer manufacturers are saying that they're seeing increased demand for 300 millimeter wafers for which Wacker is a supplier of semi-grade polysilicon. So I'm just trying to understand, could we expect that 25 to 30% kind of a growth number for semi-grade polysilicon somewhere in the future, maybe in 2027 or perhaps 2028. And if not, what stops the segment from growing that much? So, thank you.

Okay, maybe starting on your last question. I mean, yes, I mean, AI is obviously driving Thank you very much. Second part, AI is of course only one part of AI and the data centers are just one part of the semiconductor growth. It's probably at the moment the highest, but there are still segments which are growing not as strong. I think recently the mobile phone sector was not growing strongly. but in essence, yes, we see growth in data centers. We see that the amount of polysilicon which you need for data centers is also increasing. We did some analysis on this and some numbers indicate that from a data center today to a new data center in 10 years ago, the amount of polysilicon might be four times of that and so we see a significant growth opportunity and that's why we focus on semiconductor strategy are going forward. But it's still, I mean, cannot be, you know, tell you by quarter when the volumes will come because it depends on our customers and the customers of our customers. So what the first question was on 232.

I think the first question was on 232. I step indefinitely Tobias here. I think you were trying to figure out what measures we would take and how much would that impact and lift profitability in case of a negative scenario and actions on our asset structure. I think it's too early. We don't have a decision on the outcome of that proceeding on the table and we don't have A customer reaction to that that also needs to be seen and for that reason we cannot give you a number on that today.

Sure, thank you for your answers.

The next question comes from Sebastian Bray, Bernberg. Please go ahead.

Hello, good afternoon, and thank you for taking my questions. I have two, please. The first is on the silicone segment. As far as I'm aware, Dow has started the final shutdown of the Barry production in the UK. This is quite a big plant. I think over 200 people were working there. Is there any uplift or benefit that was visible in that in Q2? I'm a bit surprised that the mix was positive in silicones. But is there anything happening or to get excited about in European market in terms of the impact of capacity exits and WACKER being one of the last men standing in the siloxane industry in Europe? And my second question was on polymers. I haven't quite understood why this segment did so well in Q2. I don't think that there were huge issues with competitive raw material supply, maybe to a certain extent. But can you give some color on whether this was just take some cost out and people weren't anticipating it, or if there was a genuine expansion in price-cost spreads in the segment? Thank you.

It's about time to be asked here for your first question. As Christian already mentioned, upstream standard silicones is not core of our business. We are focusing on specialty products, and that's why that closure has no, I mean, from what we see, no significant impact on the business. I mean, yes, we also sell some standard products. Prices have been moving up, and I could also say that into Q3, they are slightly moving up, but no really big change and definitely not to our strategy and not to our overall profitability. It also needs to be added that in China, for example, standard product prices have been on the decline again and that also will, as regions are communicating, this will also have some impact on Europe and the US most likely. On polymers, as I mentioned to Cheetan, the performance was supported by an inventory valuation effect that is low double digit. If you take that out, it's still a solid performance in the second quarter, but it's closer to the performance of the first quarter. Yes, I would say it's a result of great teamwork. We have been very fast in reacting to the raw material hikes, taking our playbook of increasing our own prices in the various regions with different mechanisms, and that worked out successfully. So we kept and protected Our business, despite the Romaji inflation. And then, in addition, we are successful in the paid cost savings, and that gives that improved performance against prior year, despite still very slow end markets overall. As we discussed, construction is not yet strong in most regions.

That's helpful. Thank you.

The next question comes from Tristan Lamotte, Deutsche Bank. Please go ahead.

Hi. Yeah, first question is, in this scenario, I understand that you said that there could be a bit of a delay, but say the semiconductor polycyclic market tightens. I think most of your contracts are on relatively fixed pricing or some kind of pricing contract. But how much ability do you have to sell at spot if that opportunity arises? And then secondly, I know you've kind of alluded to this, but I'm just wondering kind of high level how you would think about over-earning risks in polymers and silicones and what proportion of the growth that you've seen is kind of structural versus a little bit of temporary fly up due to things like the Middle East conflict. So on the end of the Middle East conflict, How much do you think could stay in there? And why shouldn't these businesses be down in 2027? Thank you.

I'll start with your first question on the semiconductor. As you know, we typically have long-term contracts and there's quite an interest in continued long-term contracts for our semiconductor polysilicon. We do have, of course, for some customers, which Don't want to have so much long-term contracts, availability of spot material. But typically, when you look at our market share, most of these volumes are in long-term contracts fixed. And also, typically, the experience we have with our customers is it's not like a spot business compared to other commodity type of chemicals. So there is a longer supply chain also for the semiconductor customers. So from that perspective, I would say I don't see the risk that we kind of miss opportunities because of a stronger demand in the market. Maybe that was what you implied with your question.

And Tobias here, for the chemical segment and the performance of the first half versus the full year and potential fly-ups through the situation of the Middle East. I would love to remind what I said in the first quarter conference call that from the Middle East situation we might have had a tailwind of some 20 million euros in EBITDA. Is there still a tailwind in the second quarter or has it, I mean, we had seen the order volatility. I would say it's more or less operational performance. with the one-off effects with the valuation in polymers and in silicones, it's rather the result of hard work, pay savings, and good operational performance with volumes and price-cost spread. Nevertheless, for the second half of the year, we definitely face the summer season, as Christian said, and typically... These are a bit slower in August. And then we have year end seasonality. So I would pinpoint to our guidance for the two segments and repeat. We see mid-single digit sales growth for both silicones and polymers. And we see that margins are above prior year. Before we said they are slightly above prior year, but now we say they're above prior year. And as you had seen in the first half, we had performance at both segments of roughly 16% EBITDA margin. Both segments had a prior year margin of roughly 12%. So if we would end at around 15 or two to three percentage points higher than the 12% of last year, You see that the second half is a bit weaker for the seasonality, for raw materials, and so forth, but we would still perform in the second half above prior year. And going forward, as you were trying to pick what's in those segments for next year, I think it's far too early, but structurally, we save cost, pace is effective, and we would also talk at the CMD in September about what we are focusing on with priorities on market segments where we really can differentiate and steer the business also for growth, for value creation and growth. But it's too early to talk about any number for 2027. Obviously.

Very helpful. Thanks a lot.

The next question comes from David Simmons, PNB Paribas. Please go ahead.

Hi, thank you. A couple for me, please. Firstly, just to come back on the polysilicon. I'm still struggling to understand a little bit the guidance and the Q2 results. So sales were 3% higher, but EBITDA fell materially, which either tells me that the semi And then the second one I thought the pricing component in the sales bridge would be higher It looks like it was actually more of a volume-driven quarter from a sales perspective. You obviously still talk about demand being weak. I'm just wondering if there was any offset to some of the early price announcements that you made quite publicly, whether they reversed quite quickly or whether there were other parts of the portfolio that dragged on the Polymer's price benefit. So maybe just some comment on how pricing evolved through the quarter would be helpful to you. Thank you very much.

David, on your two questions, second quarter performance of definitely disappointing. And as I mentioned, we had a significant drawdown in inventories. And in the second quarter, our mix for semi-grade was not that strong as in first quarter. But it doesn't mean that for the First half of the year, we haven't grown 10%. So we have a very strong performance overall on semiconductor. And we see that to continue and also sequentially to improve into the second half of the year. And as I said before, solar remains uncertain. So that's why we lowered our guidance for the second half coming close to the prior year number. For polymers, I think you are about to understand the price announcement and how effective they are. I think it's a bit of a roller coaster that we see in the polymers raw materials. This is the division that is linked to the olefin chain we had seen A spike in ethylene and van prices in May, and they now retreated in June, July. And our pricing is as responsive as possible in each respective region. So we had weekly daily pricing in China, but as raw material costs now go lower, also we need to adjust prices again. and the same mechanism is different or the mechanism is different in Europe where we work with surcharges but they then also depend on the raw material inflation and that's why we also lowered our guidance for the full year because we need to pass on less raw material inflation than we anticipated in May when we had seen the peaks.

But I think to add to this, I think the secret really is in that sort of business to be flexible, to have flexible teams on the ground, on the sales side. As Tobias pointed out, you know, the volatility in the raws, which we see on the conflict in Iran, which changes kind of biweekly, speed is everything that counts. And certainly our Polymers teams proved to be very, very good on this. And also what Tobias mentioned, Different dynamics in different regions, much faster movements on the pricing sides in Asia and in China versus the US or Europe where it's much slower.

Thanks very much. If I could squeeze one more in on Polysilicon and the energy stuff. Obviously, the 232 outcome is very unknown. Could you talk about how you're hedged for 2Q, sorry, 2H energy consumption, whether you've

We are hedged now with large portions for the remainder of the year obviously and with roughly 75% for next year and the headwind that we are seeing in energy costs this year is mainly from the lower CO2 compensation I think we have discussed that Yeah, in one of the first calls, it's 90 million headwind from lower CO2 compensation compared to prior year.

Understood. Okay. Thank you.

The next question comes from Jaideep Pandia on field research. Please go ahead.

Thank you. And apologies for asking the 232 topic again. But I'm just trying to conceptually understand this. If 232 goes in sort of your favor and US basically becomes a protected market, that to me at least conceptually opens door for new investments potentially from your large Chinese competitors, which eventually means more competition in the US. And if it doesn't go in your favor, then anyway, it doesn't go in your favor. I'm struggling to see what's the logic of hanging on beyond maybe what is, if I may use the language, short-term benefit, maybe for a year or so. Just trying to understand the thinking behind, because I guess strategic clarity on this topic would really help a lot of your investors in this regard. That's my first question. My second question is around the inventories that you have currently in Polysilicon on the solar side linked to some of the longer term contracts you have on the solar side. So when do you expect both these elements to sort of go hand in hand so that we actually see the real performance of your semi-business? So how much inventories have you already reduced this year in the first half? When do you expect the full benefit of that to happen? And then the last question really is around your polymer slash silicon, but more importantly, your silicon business. Again, this is a very oversupplied market upstream. So, you know, in the context of the PACE program, do you expect that you know, we could think of Wacker becoming really asset light and actually, you know, getting out of the upstream silo because there is just so much available and focusing really on the, you know, customized value added stuff. Thanks a lot.

Okay, John. Maybe to start on the last one on the upstream silicones, if I understand correctly. You said there is enough capacity available. We want to go acid-light. Yes, we want to go acid-light, but going acid-light doesn't mean idling existing capacities with a good cost position. And please also keep in mind that on the xyloxane production, it's not only xyloxane which comes out of that chemical process, but many different xylanes, which are integral parts of silicon specialties. and I think having an integrated verbund on the silicones upstream is definitely an asset. You have to work on it to get the cost out to be really competitive. That's what we are doing and what we will continue doing. What we won't do, and I think we have been quite explicit on this as well, we will not invest in further upstream on the silicones side. But I think having Having world-class sites in Europe is definitely an advantage. On your first question on the US regulation, well, obviously there are different scenarios which you can think of. I don't believe that there will be a scenario where large Chinese companies will invest in the US. because it's all about this competition with China and therefore I don't see that really as a real option and from that perspective I think there could be outcomes which are favorable for us where we can load our plants with both semi and solar and there might be scenarios where solar might be not as attractive and then again we come into the situation to discuss how to have a future competitive footprint on the semi side.

Did we cover all? Just a question on the inventories in solar, in poly. When do you expect the full sort of drawdown of your inventory?

I mean, as I said, we have reduced it by 20%, which is significant given the slow demand environment. And we are running, I mean... Sub-efficient utilization at all three plants. So it depends on the demand environment. We can sell it quickly. It's not huge numbers in stock. And if there's any uptick, I mean, we had seen historically much higher volumes going quickly in a quarter.

Thank you. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Joerg Hoffmann for any closing remarks.

Thank you, operator. Thank you for attending and showing interest in Wacker Chemie. The next conference call for Q3 2026 is also scheduled for October 29th, 2026. An invitation to our upcoming CMD on September 17th will be sent out soon. As always, please contact the Investor Relations team if you have any further questions. Thank you.