Ladies and gentlemen, welcome to the Clariant fourth quarter full year results 2021 conference call and live webcast. I am Sandra, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions anytime by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Andreas Schwarzwälder, the Head of Investor Relations. Please go ahead, sir. Thank you, Sandra. Ladies and gentlemen, good afternoon. This is Andreas speaking, and it's my pleasure to finally welcome you to Clariant's fourth quarter full year 2021 results conference call and live webcast. After having to postpone our Q4 results presentation in February and having concluded the independent investigation in April, today we can present the audited full year 2021 figures. Please note that all information provided today references the restated full year 2020 and corrected Q4 2020 results. For details regarding the restatements, please refer to the comprehensive fourth quarter full year 2021 analyst presentation and the financial review full year 2021, available for download on our website, along with the Q4 2021 media release. Joining me today are Conrad Keijzer, our CEO, and Stephan Lynen, CFO of Clariant. Conrad will start the review, followed by Stephan, who will guide you through the financials of the group and will provide brief business area comments. Conrad will then conclude with the comments on Clariant's full year 2022 outlook, excuse me. There will be a Q&A session following our presentation. At this time, all participants are in listen only mode. I would like to remind all participants that the presentation includes forward-looking statements which are subject to risk and uncertainty. Listeners and readers are therefore encouraged to refer to the disclaimer on slide two of today's presentations. As a reminder, the conference call is being recorded and a replay of the call will be made available on the Clariant website. As a final housekeeping comment, please note that all figures discussed today refer to continuing operations unless specifically noted otherwise. Let me now hand over to Conrad to begin the presentation. Thank you, Andreas. Good afternoon, everyone. Welcome to our fourth quarter 2021 results conference call. As you can see on slide number four, Clariant delivered strong sales growth in the fourth quarter of 2021, with an increase of 23% in local currency, of which 19% organic growth and 4% growth from the consolidation of our new joint venture with Indian Glycols and our Natural Ingredients acquisition in Brazil. Our volumes increased by 9%, and we are pleased with the further sequential improvements in our selling prices with 14% pricing achieved in the fourth quarter. This follows higher year-on-year pricing of 2% in the first quarter, 5% in the second quarter, and 9% in the third quarter. Pricing reflects our ability to effectively recover higher raw materials, logistics and energy costs. I would like to recognize that this has been achieved thanks to the great efforts by our commercial teams who are leveraging the strengths of our two specialty chemicals portfolio, which delivers unique value to our customers. Clariant saw a further broad demand recovery across most of our businesses and across all key regions. The group benefited from strong demand in both the industrial and consumer segments and a return to growth in our Oil Services business. Our Care Chemicals sales increased by a strong 39% in local currency in the fourth quarter, supported by a strong recovery in aviation, crop protection and consumer care. Natural Resources sales also increased by a notable 25% in local currency. This expansion is attributable to growth in all three business units, with particularly strong demand in additives and a recovery in Oil Services. Our Catalysis sales remained unchanged in local currency. Growth in syngas, specialty catalysts and zeolite catalysts were more than offset by lower petrochemical sales. Our reported EBITDA in the fourth quarter increased by 23% to CHF 203 million, almost matching the pre-COVID level in the fourth quarter of 2019. The corresponding EBITDA margin rose by 20 basis points to 16.3% versus 16.1% in the fourth quarter of 2020. Positively influenced by the strong pricing, operating leverage from strong volumes and the continued successful execution of Clariant's efficiency improvement programs. We are pleased with our progress of our pricing actions and our overall price increase of 14% has partly compensated for the unprecedented year-over-year raw material cost increase of 21% when normalized for the force majeure effects related to the lacking availability of yellow phosphorus. We are planning further price increases, and it remains our objective to fully recover the continued increases in raw material and energy costs. All performance improvement programs, including the right sizing program, remain well on track. The successful execution of Clariant's efficiency programs generated additional cost savings of CHF 13 million in the fourth quarter. On slide six, we highlight our progress against our strategic priorities. We celebrated the groundbreaking of our new plants for flame retardants at our Daya Bay site in southern China. This investment of CHF 60 million will further expand our footprint in the region and support our Made in China for China approach. It will improve our ability to support fast-growing demand for flame retardants for electric vehicles, 5G equipment and consumer electronics. We expect this plant to ramp up local production by the first half of 2023. During the fourth quarter, we signed definitive agreements to acquire BSS US Ethylene Glycol business assets. This acquisition will strengthen Clariant's leading technology position in the purification of renewable fuels, while concurrently extending Functional Materials footprint in North America. Closing of this transaction is expected to take place in the late summer of 2022. Clariant has concluded its announced divestment program, and we have transformed the group into a truly specialty chemical company. The sale of our pigments business was completed on the 3rd of January 2022, and resulted in an initial cash inflow of CHF 615 million, which will be invested into growth in our core business areas and into further debt reduction. On March 4th, we announced the suspension of our business in Russia in response to the Russian state's intolerable acts of violence in Ukraine with immediate effect. Our Russian sales represented roughly 2% of our annual revenue in 2021. Clariant remains committed to rewarding its shareholders. Our board of directors therefore recommends a regular distribution of CHF 0.40 per share to the Annual General Meeting of Shareholders on the 24th of June, 2022. In terms of the outlook, for the full year 2022, we expect Clariant to achieve strong local currency sales growth based on an expected strong first half, 2022. We aim to improve the year-on-year EBITDA margin despite the continued inflationary and volatile environment. Ladies and gentlemen, the fourth quarter and full year, 2021 performance delivered by the entire Clariant team provides tangible proof of the hard work by our highly committed colleagues and of the attractiveness and resilience of our high specialty value portfolio. With that, I would now like to hand over to our CFO, Stephan Lynen, who will provide a further overview of our financial performance. Thank you, Conrad. Ladies and gentlemen, good afternoon, and welcome to today's call also from my side. Following the independent investigation, the 2020 full year and quarterly results have been restated and the 2021 quarterly results have been corrected accordingly. The restatements of the 2020 Annual Financial Statement resulted in an EBITDA increase of CHF 90 million, 50 basis points in margin and CHF 14 million in the net result from continuing operations. While there was no effect on cash flow from operations and cash. As Andreas stated, additional details are disclosed in the analyst presentation and the financial review. As mentioned by Conrad, in the fourth quarter, 2021, the group delivered 23% local currency growth and an EBITDA margin of 16.3%. Let me break this strong fourth quarter development down by business area, starting with Care Chemicals on slide eight. Our Care Chemicals sales increased by 39% in local currency, supported by double-digit organic sales expansion in industrial applications, including a strong year-on-year recovery in the aviation business and Consumer Care with strong growth in personal care, home care, and crop. The sales contribution from our joint venture with India Glycols, CISC, and the Beraca acquisition also exceeded expectations. The Care Chemicals absolute EBITDA increased by a significant 34% and the margin decreased by 50 basis points to 20.8% from 21.3% in the fourth quarter of 2020. This development was attributable to raw material cost headwinds, supply chain constraints, as well as energy costs, logistics, and other cost increases, which were not fully offset by price adjustments. While the CISC integration had a small dilutive impact on the margin, the revaluation driven by the full acquisition of the Beraca shareholding slightly overcompensated this effect. Continuing with Catalysis on slide nine, as expected, Catalysis sales remained unchanged in local currency in the fourth quarter as the weaker petrochemical sales were compensated by expansion in syngas, specialty catalysts, and also our zeolite catalyst for emission control for transportation in Europe and India. The weaker petrochemical performance was driven by the ethylene and styrene value chains, where less new build of capacity took place in the U.S. and the refill cycles were unfavorable. The demand for CATOFIN solution in the polypropylene value chain was strong, and the new production capacity from our plant in China is expected to accelerate the product availability to serve the growing demand. The Catalysis EBITDA margin declined to 16.6% from 21% as a result of increased inflationary pressure, continued logistics challenges, the less favorable product mix with stronger syngas and emission control catalyst, reclassified Scientific Design income, as well as project costs related to the new CATOFIN production site in China and the sunliquid production plant in Romania. The comparison basis is also challenging because the fourth quarter of 2020 included a large, highly profitable refill order. The Catalysis business is characterized by long order execution lead times, which in the case of the fourth quarter of 2021 had a particular negative impact on profitability due to the significant raw material cost inflation. This is addressed via our pricing actions and will become visible in the coming months. Please keep in mind that due to the project nature of the Catalysis business, we sometimes see normal, significant profitability fluctuations. It is therefore important to note that the fundamentals of this business remain positive, the order backlog in particular. Finally, on slide 10, the business area Natural Resources sales increased by a notable 25% in local currency in the fourth quarter due to growth in all three business units, with particularly strong demand in additives in all regions and in all main end markets. In particular, the halogen-free flame retardant business benefited from high demand in electronics and e-mobility, which resulted in fully utilized capacity while also successfully managing the raw material shortage. Oil & Mining Services reported a year-on-year mid-20s% improvement attributable to a demand recovery in oil services from a much lower comparison basis and a strong performance in refinery and mining. Sales expanded in Functional Minerals in the mid-teen range, supported by all business lines. This was attributable to market share gains in the foundry business, with sales exceeding the 2019 sales levels, as well as strong performance in the purification business, in the growing renewable fuels market, and also in the purification of edible oils. In the fourth quarter of 2021, the absolute EBITDA increased by a substantial 40%, and the margins rose to 17.1% from 15.2%, reflecting a 190 basis point improvement. The strong top-line growth via volume increase and pricing measures successfully diminished the negative impact from the constrained supply chain environment, logistic challenges, and curtailed raw material availability. To some extent, price increases are still catching up to higher raw material costs and rising natural gas prices, a situation which resulted in continuing headwinds in Natural Resources. Let's now move on to discuss some key full year financials on slide eleven. The full year 2021 absolute EBITDA from continuing operations increased by 19% to CHF 708 million, driven by the operating leverage from a strong growth and the savings of CHF 43 million from the performance programs, which overcompensated inflationary effects. The corresponding EBITDA margin of 16.2% marks a record high for Clariant since 1999. The full year 2021 net results from continuing operations increased to CHF 292 million due to the strong operating performance. Based on the Brazilian Federal Supreme Court decision, a CHF 33 million net VAT related credit was recognized in 2021. This positive one-time effect was offset by exceptional costs related to the performance improvement programs in particular. The ROIC increased by 250 basis points to 9.9% due to an over proportionally increased operating profit divided by a slightly higher average net invested capital. At CHF 363 million, the operating cash flow was at similar level as in the full year 2020. The increase in cash flow before changes in working capital and before taxes of CHF 226 million was offset by CHF 221 million higher net working capital, which resulted from the market sales rebound versus a low 2020. The restructuring cash payment of CHF 38 million for the previously provisioned efficiency programs also impacted the cash flow development. Growth investments in new plants, sunliquid and CATOFIN in particular, resulted in higher expenditure in property, plant, and equipment, which totaled CHF 357 million in 2021. Net debt for the total group increased to CHF 1.535 billion due to the growth-driven increase in working capital, higher CapEx, as well as the bolt-on acquisitions. Slide 12 reflects the distribution proposal, which is based on our strong performance as we uphold our commitment to sustainably sharing client success with our shareholders based on our improved financial performance with an attractive payout ratio. The Board of Directors decided, based on consultation with the executive committee, to propose a regular distribution of CHF 0.40 per share to the annual general meeting on June 24th. The distribution represents an attractive payout ratio of 49% of the reported earnings per share from continuing operations. The distribution is proposed to be made through capital reduction by way of par value reduction. The board of directors also recommends to the AGM to reelect Günter von Au as Chairman of the Board and to elect the following three new members, Ahmed Mohamed Al Umar, Roberto César Gualdoni, and Naveena Shastri. Abdullah Mohammed Al-Issa, Nader Ibrahim Alwehibi, and Calum MacLean will not stand for re-election. Assuming the approval of the election of the new members and the re-election of the current board members by the AGM, the proportion of female board members will increase to 36%, which will be compliant with proxy advisor guidelines and best practice governance. With this, I close my remarks and hand back to you, Conrad. Thank you, Stephan. The fiscal year 2022 has begun well for Clariant. We see continued strong customer demand, which should result in attractive growth in the first half of the year, while the second half of the year is expected to reflect continued growth based on higher prices, but weaker volumes, in part due to the higher comparison base and the risks to global economic growth. We are planning continued pricing activities due to the lagging effects to close the gap from 2021, and also to address the continued high inflationary environment heading into 2022. Based on this, we expect strong local currency sales growth in Q1 2022 compared to Q1 2021, and expect to sustain the Q1 2021 corrected EBITDA margin level year-on-year in the first quarter of 2022. 2022, we expect to generate strong local currency sales growth on a year-on-year comparison, driven by strong first half of 2022. We aim to improve our year-on-year EBITDA margin level through operating leverage from growth, pricing actions to mitigate raw material inflation and continued cost savings and cost discipline. We expect the high inflationary environment with regard to raw material, energy, and logistics costs, as well as supply chain challenges to persist into the second half of 2022. The current high level of uncertainty as a result of the geopolitical suspension of business in Russia and the resurgence of COVID-19 in China is expected to continue to impact global economic growth and consumer demand in the second half of the year. We are progressing well with our growth investments. The startup of the CATOFIN plant in China. The ramp up of our sunliquid Second- Generation bioethanol plants in Romania are both on track in the first half of 2022. We will continue to successfully execute our performance programs, which will deliver meaningful savings in 2022 and beyond. We will also continue to benefit from our innovation-driven specialty portfolio and from the contributions of our bolt-on acquisitions. In summary, we see Clariant as being well-positioned to outpace the market and continue to grow profitably, and we are committed to taking the next steps to meet our 2025 targets which we introduced last November. Meanwhile, we are focused on delivering our full year 2022 operational performance. With that, I turn the call back over to Andreas. Thank you, Conrad, and thank you, Stephan. Ladies and gentlemen, before we begin the Q&A session, we will kindly ask that you please limit the number of questions to two, thus providing more participants the opportunity to ask questions. Thank you for your understanding. We will now open the line for the questions. Sandra, please go ahead. The first question comes from Christian Faitz from Kepler Cheuvreux. Please go ahead. Yes, thank you very much. Good afternoon, Conrad, Stephan, and Andreas. Two questions, please. First, can you walk us through your thinking pertaining to free cash flow evolution for 2022, in terms of working capital moves, etc.? Second, your outlook statements suggest that you are significantly more cautious about both costs as well as demand for the second half. I can by and large see the point on the cost side with contracts on the energy side and higher logistics rates kicking in. Yet, what makes you worry about demand for core parts of your, I would believe, rather robust portfolio? Or do you already have concrete order visibility into H2, which would surprise me actually. Thank you. Yeah. Thank you, Christian. Maybe, Stephan, you can first take the question on the free cash flow, and I'll make some comments on the outlook. I mean, in the context of the outlook, where we speak about, of course, solid, strong growth and the aim to improve EBITDA margins, we will have, of course, an inflation effect of net working capital that's to be expected. It's not the same return or rebound effect which we've seen in 2020 COVID into 2021, which I explained just before. We will also see a certain normalization of CapEx. We've been guiding for around CHF 320 million CapEx for 2022, so that will normalize. We still have some, you know, completion CapEx of the big investment projects. Of course, the big investments of sunliquid and also PDH Catalyst in China were both majorly affecting 2021. It's a bit early to speak about free cash flow and in a more precise manner, Christian. You know that. Of course, we have ended last year because of the significant effects of rebound net working capital and restructuring, even ended slightly positive. We were guiding a little bit before for even probably below break even. 2022 will definitely show a substantial improvement in free cash flow and another step to our target of 40% free cash flow conversion, which we are absolutely committed to and have already shown. If you look at the special effect of 2021, that we are on a good course in that direction. Okay. Thank you. Yeah, Christian, maybe a few comments on the outlook. First, our outlook, just to reconfirm that it is actually for strong local currency sales growth for the group for the year, and we're aiming to improve our year-on-year group EBITDA margin levels in a very challenging environment. How did we get to this outlook? Well, first of all, if you look at the first quarter, we've made some comments on that already. We did see a strong start of the year 2022. Basically we see a continued momentum, strong momentum on revenue, both in terms of volumes, in terms of pricing. If anything, we see a stronger momentum on the top line in the first quarter than we saw in the fourth quarter of last year. That is all, very positive. However, at the same time, we also see on raw materials where, last year, we finished the year with a full year increase in raw materials of 21%. We see further sequential increases in our raw materials on top of energy, price increases as well as logistics in the first quarter. We even see higher year-on-year inflation in the first quarter than we saw in the fourth quarter, and last year. Where that leads us for the full year and the second half is that in terms of revenue, we expect strong revenues for the year, in total, but it is very much based on a very strong Q1, and we also actually saw a strong start, in the second quarter. The second half, in terms of volumes, they need to slow down, first of all, from a comparison perspective. Just as a reminder, last year in the second half, we saw some restocking effects. We had this pent-up demand from consumers. We saw some unusual effects on volumes which are not recurring in the second half. We also actually see some slowdown right now, already visible in the second quarter in China, in Europe, in particular, Germany. Volumes for the second half will be weaker. In terms of your question on visibility on the order book, we do have that visibility on the catalyst business, which typically we have lead times of six to nine months for orders. For the other businesses, it's a bit shorter, but this is basically the feedback that we're getting from clients and out of the market. Okay, very helpful. Thank you, Stephan and Conrad. The next question comes from Nicola Tang from BNP Paribas. Please go ahead. Hi, everyone, and thanks for taking the questions. Actually, the first one was a bit of a follow-up on some of your last remarks you just made there, Conrad, in terms of, you know, what you saw or seen in Q1 and the order books into Q2. If I look back historically, you've given some divisional sort of guidance for the quarter ahead, so I was wondering if you could give some color, I guess, you know, for Q1 and into Q2. Then the second question relates to the comments around raw material pressure or input inflation in general. I was wondering if you could talk a little bit about in which divisions you're seeing the most raw material pressure. When we look at your guidance for the, you know, flat year-on-year margins in Q1 and the improvement year-on-year for the full year, do those comments apply to all three of the key divisions? Thanks. Sure, Nicola. Thanks for the question. Yeah, just as a reminder, we are today not disclosing or discussing in detail the figures for the first quarter. That is gonna happen on the 15th of June. Maybe some high-level comments on your question around sort of divisional performance, what we're seeing, as well as sort of a breakdown of raw materials by division. In the first quarter, we do see sort of a continuation of the trends from the fourth quarter. There is definitely some weakness in our Catalyst business, as you saw in Q4 last year. And continued strength actually in the ICS business, the additive business, and a good strong recovery in OMS. Basically a continuation of those trends. More specific to your question on raw material pressure, as mentioned, overall higher inflation in the first quarter than in the fourth quarter. What is maybe important to note, and this is already visible also in the catalyst figures in Q4, the EBITDA margins, is actually that the raw material pressure is actually changing a little bit by business, where in last year, earlier in the year, we saw significant increases in ethylene and propylene prices, hitting very much the ICS business, the OMS business, and the Additive business. Towards the end of the year, we actually did see increases in metals. As you probably are aware, that has continued even more severely in the first quarter. That actually is indeed impacting our Catalyst business, in particular as we have order lead times of six to nine months. In Catalyst, it does take us some time to pass these through to our clients, but we're very much committed to do so. The next question comes from Markus Mayer from Baader- Helvea. Please go ahead. Good afternoon, gentlemen. Two questions as well from my side. Again, on this catalyst weakness of the fourth quarter. How long do you expect this petrochem catalyst weakness to last? Or how long is this unfavorable refinery cycles there? Also in this regard, this negative product mix effect, when should we expect to change then? The second question is on your now relatively strong balance sheet. After the cash in from the Pigments divestment, are share buybacks an option for you? Thank you. Sure, Markus. Yeah, second question, I would like to ask Stephan to answer that one. I'll briefly comment on catalyst. Yes, there is clearly weakness in the fourth quarter in catalyst. If you look at it by segment, we actually do see solid good business for basically syngas, for our zeolite catalyst for emission control. But let's say the more profitable range in petrochemicals is lagging. This is very much related also to new builds in styrene, in ethylene, which is down. Interesting enough, styrene, ethylene, we actually have sufficient capacity available. Whereas in CATOFIN, where we actually see strong demand, we're frankly waiting for the startup of the new CATOFIN plant in China. That looks actually good, but the effects of that are only gonna be visible basically in the second quarter and moving forward of this year. Stephan, if you could comment on the balance sheet. Maybe just add two more items also to catalyst. We have also, as I mentioned in the speech, we have in 2021, we've hardly seen any income from licenses in biofuel because everybody start waiting now to see the ramp-up of the plant, which is, as Conrad explained, processing very well. So that is an effect which you have to consider also the year-on-year comparison. We have some project costs related to Twin and sunliquid. We have also yeah, the Scientific Design which we have sold and closed in January, that income has also made an effect in the year-on-year comparison in Q4 2021 and the prior year, just to add to those components as well. Now coming to the balance sheet, yes, we are of course in a big transformation that is now the successful transformation of the portfolio. We're selling mature businesses like Healthcare Packaging, Masterbatch, and Pigments. We've concluded this. We have shared that success of the transformation also with the shareholders with the extraordinary dividend. Now, we have also transforming the company, as Conrad always likes to name it, and I think it's a spot on remark, to bring the businesses to the full potential that requires also organic investments, bolt-on acquisitions and restructuring. This is some expenses which we have to finance. Therefore, this income which we're generating is also used for that. However, we're still paying a dividend, which is definitely very noteworthy also to peer comparisons with a 49% payout ratio. Finally, if you look at the balance sheet metrics, it is not that we have here a super strong fundamental change with CHF 1.5 billion net debt. You include pensions and leases and so on. You're still looking at a debt- leverage in the dimension of 2-3. For a strong investment grade rating, which we're also seeking, we need to also improve our funds from operations, which is another proxy to free cash flow in the relation to net- debt. You have to optimize both parameters, and that's what we are doing. We of course want to have also the flexibility to continue our journey of good investments, which we're seeking and which we've evidently shown with things like India Glycols, which is already taking a very accretive stance on growth and also more and more in margins from since the day we integrated it. Leverage here doesn't give us, you know, an ample room for doing something in addition to the transformation into the dividend program, which we have explained. Okay. Thank you so much. The next question comes from Matthew Yates from Bank of America. Please go ahead. Hi, it's Matthew. Thanks for taking the question. I'm gonna go back to Catalyst profitability, I'm afraid, recurring topic today. You've acknowledged that Q4 wasn't the greatest quarter, and I appreciate this is an inherently lumpy business. Can you talk about a bit more specifically the margining trajectory here? It sounded like, I think when you were answering Nicola's question, that if anything, some of the cost headwinds seem to be getting worse rather than better. I know you've guided for the group for margins to be up in 2022. Does that comment also apply to the Catalyst business? I guess more importantly, given the baseline we're coming off, can you talk about the roadmap for getting back to the kind of low- to mid-20s% margins that this business traditionally made? Thank you. Yeah, sure, Matthew, an important question. Yeah, first, as a reminder, we're not giving margin guidance by group, but I can make some comments obviously on it. If you look, first of all, what happened in the fourth quarter of 2021, it's the combination of a number of factors. We already mentioned the unfavorable product mix with basically stronger syngas sales, emission control catalyst sales, and actually lower petrochemical sales. In particular, lower, let's say, ethylene styrene catalyst sales. That sort of explains an unfavorable product mix. On top of that, there has actually been noticeable inflation for Catalysis and maybe to give you a bit more granularity there, what happened last year is over the year, we actually saw in Catalysis, let's say on a full year basis, high single digit inflation, which is primarily coming from metals. However, if you look at the fourth quarter, that actually turned into double digit inflation. Unfortunately, that's a trend that we see even further accelerating on the raw material side. In the first quarter, you've all seen what happens to some of the key metals like alumina, nickel, et cetera, also more recently as a consequence of the war in Ukraine. Actually, now what's the planning for us to recover this? We are obviously in a position to raise prices for Catalyst. We are definitely offering unique value to our clients. The challenge that we run into here is that there is a six to nine months lead time typically on orders. We're now still working ourselves through orders that were basically accepted six to nine months ago. I will admit that it came to our business a bit as a surprise, the recent increases in metals as well as precious metals pricing. Very few people actually had predicted this. That actually, the answer, the longer answer to your question is, we're working ourselves through the quarters now. We should see recovery in Catalysis in the second half of this year. Finally, as Stephan alluded to, there were some one-time startup costs visible in the numbers in the fourth quarter. You will see some in the first quarter related to the startup of the CATOFIN plant in China as well as the new biofuel plant in Romania. There's a few million OpEx additional from that, which is also a one-time expense, which should disappear in the second half of the year. Thanks, Conrad. That's very helpful. Just to clarify something, as a policy, you don't hedge your metals exposure in the short term, if I understand correctly. If that is the case, would you review that? Secondly, just to clarify on the ethylene styrene exposure, is that biased to a particular geography, i.e., there's a lack of new capacity in a particular region that you're suffering with, or you've got a fairly global business there? Matthew, to the second point, that is basically a phenomenon that we see right now, globally, with the exception of Asia, where there's still quite some new plants coming on stream. If you look at your more specific question on one, on hedging, we are hedging some of our energy procurements. We don't do that for metals, but we are actually stocking up, that is even maybe visible in some of the working capital numbers, for example, on nickel. The last thing we want to do is to be short on raw materials for catalyst, as we are having uniquely specified products many times for clients. Actually, the higher inventory level is actually a sort of a hedge for some of the most recent significant increases that we saw, particularly on nickel. That's great stuff. Thank you very much. The next question comes from Alex Stewart from Barclays. Please go ahead. Hello. Good afternoon. Two, hopefully quick questions. Could you tell or remind us, after the changes in your board composition, how many of the, I think, 11 Board Members will have been proposed by SABIC? It was previously, I believe, four out of 11, but interested to know about changes. Secondly, and sorry to come back on this, but it's probably getting a bit boring, but if I look at your Catalysis margin long term over the last 10 years or so, it's been in really structural decline since 2017. This isn't an issue that's isolated to inflation. There is something bigger going on in your Catalyst business, which is causing profitability to go down, despite Clariant as a company, having talked about projections moving towards 30%, it's gone below 20%. I appreciate those targets weren't set by the current management team. What is the bigger issue here in this division? Why are we not seeing not only an improvement, but a degradation in margins? I'd be very interested to hear your view on that. Thanks. Yeah, sure. In terms of. Yeah, maybe I should first comment quickly, by the way, on the board members, the question on the board members. We currently have 11 Board Members, that is after Hariolf Kottmann stepped out of the Board, that position was not filled. Obviously, Günter von Au took over the Chairman role. At that moment in time, we reduced from 12 to 11 Board Members overall. Out of the 11 Board Members overall, there's actually four Board Members that are nominated by SABIC. As to your second question on Catalysis, we continue to believe in the strong fundamentals of this business, particularly actually with unique technologies that we see moving forward in the whole, let's say, green hydrogen economy, and the increased push for sustainability. If you look at what catalysts are doing, they're basically facilitating chemical reactions at typically lower temperatures, and provide better yields. Overall, the trend for our Catalysis business is actually a positive. I would add to that, actually, the biofuels, which is another part of the improvement that we are targeting moving forward for our Catalysis business. I would say this is even a sort of a broader sort of trend right now, which is very positive for Clariant, the increased focus on sustainability. I would also say, considering the recent, geopolitical, developments, the increased focus on a energy transition, that is actually, a very favorable trend for the Clariant portfolio. If I could just push you, if you don't mind on that, because I appreciate that you see the next couple of years being good and improving because of your sunliquid coming on. Is there anything you can give us to explain the last five years and why that margin has been pretty consistently coming down? I know your India emission catalyst business is a part of it, and that's fine, but there seems to be something else going on here, and it's very hard for us on the outside to understand what it is. Yeah. Okay. Well, perhaps, Stephan, you can make a few comments on the history. I don't want to dwell too long on the history, but maybe you could provide from the inside. No, no. no. Maybe just to restate, in 2019, we still had a very strong, high- or low- to mid-20% margin result with catalyst. So it's not like we have a consistent drop in margin. What Conrad just said before, I would just reemphasize this. If you look at the one-time cost from biofuel, because Catalysis is the combination of catalyst and biofuel, and biofuel is a ramp-up, start-up venture with a huge value contribution in a very successful process where we stand today, but with a dilution and with ramp-up cost, and I said before, also no license income in 2021 as opposed to 2020. Secondly, we have a huge backlog and order pipeline for all those new catalyst spheres which Conrad mentioned, specifically PDH Catalysts with a high accretion, which also, you know, we're just completing the capacity in China, right? The demand is extremely strong. You need to keep that in consideration, and that doesn't give you a fundamental trend, which is the fundament of your question. Thank you. Welcome. The next question comes from Tang Kenny from JP Morgan. Please go ahead. Thank you for the opportunity to ask a question. I just wanna follow up a bit on the FCF question earlier. I noted that you have a midterm goal of free cash flow conversion of 40%, which I think needs some progress from what it is today. I just want to understand a roadmap to get there. Is it more a matter of CapEx decreasing because of the project finishing or like a substantial improvement on the working capital? The second question, just a very quick check, that you mentioned, the second half 2022, you expect maybe a little bit weakness in volume. Do you see that in your order book as of now, you know, so far this year? Thank you. Sorry, Kenny, could you repeat the second half of your question because it wasn't clear to hear what you said about the second half. Yeah, just noting your comment earlier saying you might expect a bit like slowdown in the volume in second half of this year. I just wanna see if you already see the evidence of that in your order book. Just any comment on that. Okay, thank you. Perhaps, Stephan, you can first talk about cash conversion. Sure. I'll make some comments on the second question. Yeah, Kenny. I think one thing is we have already proven the ability of Clariant to do so, because if you look at 2020 and you take out the one-off, we were already north of the 40% free cash flow conversion. It's not a question of capability, right? Second is in 2021, we always said we actually said that the free cash flow will be max breakeven because this is a strong transformation year with a rebound factor from net working capital after the Corona -driven drought in 2020. Much higher CapEx amount, if I take the intangible in, we're talking CHF 360 million, and restructuring cash out, which are all one-time items, right? That's why 2021 is—we said that before, said the CMD is not the year where we will demonstrate free cash flow conversion. No, it's a year where we will demonstrate and did demonstrate strong rebound into growth and, you know, a strong improvement or an expansion of absolute EBITDA. This was 2021. Now going forward, we already will see a significant step in 2022, as I said, before to Christian's question. The journey to 40% is driven by a few factors, continued growth and absolute EBITDA expansion. Yes, improvement on net working capital, and I can give you an example also. 2021 was still affected by a full year inclusion of pigments, and pigments is very dilutive in net working capital performance, because it has extremely long supply chain. It's another reason why we divested it besides the maturity of the business. It's a fantastic business, but at better ownership now, and it will accrete, the departure will accrete to our net working capital performance. Finally, CapEx will normalize. I said already we are maxing at CHF 320 million for 2022 and we will normalize in the range of CHF 280 million-CHF 320 million. That's what you need, including a significant amount of growth CapEx. Then you will get to 40% free cash flow conversion and beyond. Okay. Yeah, Kenny, a brief comment from our side on the second half and sort of the demand outlook. First of all, this is actually what the macros are telling us. If you look at the forecasts for global growth, IMF is taking their numbers down. The various providers of these data are basically taking down their growth outlook for the second half. More specifically, looking at our own business, we are seeing right now, if you talk about the order book for the second quarter, we are seeing business coming down in China. As a reminder, 150 million people in lockdown or in partial lockdowns. This is actually having an effect on the business there. Our own factories are still up and running in the Shanghai area, but this is actually in a containment scenario where people literally work and sleep in the factory. That's ultimately obviously having an effect on our capacity and we are having some challenges with raw materials coming in and clients as well lowering their demand. Europe is definitely also in terms of the order intake showing some signs of a slowdown already towards the end of the second quarter. Finally into the second half, again, as a reminder, the comparison basis is a much more challenging one with a lot of positive one-offs in the second half of last year where we had this V-shaped recovery from Corona much faster than we all expected, as a comparison basis. That ultimately will be much more challenging to deliver growth, particularly on volumes in the second half versus the first half. Okay, thank you for your insight. The next question comes from Georgina Fraser from Goldman Sachs. Please go ahead. Yeah, thank you. Hi, Conrad. Hi, Stephan. I've just got one question left. We've kind of touched on points of it already. It's about free cash generation. I was just wondering if you could help, like, given your comments on building inventory and metals for the catalyst division, how, you know, sequentially fourth quarter into first and second, like, how would we think about your cash conversion? Just because you seem to have managed quite well the net working capital increase in the fourth quarter, and I just kind of wanted to understand if we're talking about similar trends into the first half of this year or another step up in net working capital. Thanks. Yeah, Georgina. I mean, not just for the Catalyst business, but in principle, you will see there is a normal pattern still. I mean, it's changing of course with the portfolio, but that the net working capital build up is always stronger pronounced in the first quarter and the second quarter. You will definitely see that. You will see it even more so because we're still looking at very constrained or questionable supply chains, you know, starting from Corona back in the days now to a war not far from where we're sitting here to our supply. This is something which drives our seasonality plus the environment where you see stronger net working capital, let's call it inventory build up, not just for catalyst in the first and second quarter. Even more so for Catalyst, that's true, but as Conrad already said, the third and the fourth quarter we have a very strong order pipeline for the business, and you need to prepare that with the long lead times which we explained. Yes, you will see then a stronger cash flow contribution in Q3 and particularly Q4. That pattern you will see. Okay, that was really helpful. Thanks, Stephan. Welcome. The next question comes from Jaideep Pandya from On Field Investment Research. Please go ahead. Thank you. First question really is on sunliquid. Could you just tell us, like, in terms of the 50 KT that is gonna come up for production, do you have any fixed price contracts on the bioethanol, or is it really market prices? You know, what sort of ramp up do you expect in 2022 and then into 2023 on this? As sort of a follow-up, the five licenses that you have sold, you know, do you have any insight into the development for plans for those five licenses and, you know, when will they come on stream and, you know, what sort of any, if any, earnings or licensing contribution, if you can give us any words on that? That's my first question. The second question is just around the development that happened a couple of days ago around SABIC and the whole governance thing being dissolved. Just wanna understand, was this a mutual decision of Clariant and SABIC, or was this really just on SABIC to do this? And then the third question really is around, you know, Catalyst. I mean, we've discussed a lot about this today, but just wanna understand, especially with regards to PDH, because the margins are relatively weak in China right now. So on the other hand, there's a very strong pipeline of plants coming. So do you think that, you know, the current margin environment will not hamper startups, and you're very confident because you've pre-sold all of this volume? Or is there a need to worry because of the current propylene to propane spreads? Thanks a lot. Sure. That's at least three questions, Jaideep. Yeah, so very quickly, on your last question first, that's actually a very easy one. No, we are very actually confident about our margins for the PDH Catalysts. This propane to propylene route is a very attractive route, and as you may be aware, we have a unique technology position here. Quite frankly, we're basically waiting for the ramp up of the new factory in China, but that business is sold out at very positive margins for the second half of this year. That is, that's I think a very positive story. Likewise, I would say, sunliquid. I thought you had a few questions, first of all, about the design capacity and the. The actual capacity and volumes this year. This plant has a designed capacity of 50,000 tons. That's not typical that you run flat out in the first half of the startup of a brand-new plant. But we actually are confident about what is happening there right now. We have been able to confirm the yields when you talk about biochemistry. So the enzymes are doing their job in converting the cellulosic material into the sugars, and then subsequently the sugars into the ethanol through fermentation. So that basically is giving us very positive results. Yeah, we are basically expecting, in the second half, a decent volume out of our new plant in Romania. Your question on the pricing, and is it fixed pricing and is there contract pricing in place, what I first like to comment on is that we actually see a very strong demand right now for second-generation bioethanol. We're dealing with record-setting. Yeah, if you look at our sort of commercial terms, we're not typically disclosing them, but as you can imagine, we are benefiting from higher bioethanol prices, although there are sort of some periods of delay both on the upside as well as on the downside, for bioethanol. As far as licensees, we see yeah, an increased interest for renewables. As I mentioned before, the whole energy transition is clearly becoming a larger priority, not just to fight climate change, but also for geopolitical reasons, to become less dependent on fossil fuel, particularly in Europe, the gas from Russia. We are seeing an increased interest and we do actually anticipate in the second half to make some further comments on new licensees. Yeah, your third question regarding the governance agreement with SABIC. Yeah, I like to very much refer to basically what is out there already in the public domain. You could see on our website a press release that we issued back in 2018, in September. Basically what we stated there was that there was a mutual commitment for Clariant to continue as an independent listed company headquartered in Switzerland under Swiss corporate governance. Technically, the Swiss corporate governance means that there is a threshold, which is basically 33.3%. If an individual shareholder goes beyond the one-third of the total shares in terms of its shareholding, it's mandatory to make a public offering, which should actually be higher than the last 60 days trading on a volume basis. Another element that was out there in the press release is actually that SABIC has the right to appoint four Board Members out of the 12 Board Members that Clariant has, a maximum of 12 Board Members. As we published earlier this week, this governance agreement has transpired. Just for clarity, that does not mean that both companies are no longer committed to each other. There are very well-developed relationships between our two companies. SABIC has been very supportive of our growth strategy, our purpose-led growth strategy. I'd like to refer here to the quotes earlier this week made by our chairman, and also actually, the quote made by the CEO of SABIC, Mr. Yousef Al-Benyan, who last week also reconfirmed his commitment to Clariant as our partnership. Thanks a lot, Conrad, for this clarity. You're welcome. The last question for today's call comes from Andrew Stott from UBS. Please go ahead. Oh, good afternoon. Thanks for taking the question. It was really around your guidance. Obviously in an inflationary environment, it gets increasingly tougher to grow margins mathematically, obviously, even if you're protecting your absolute gross profit and EBITDA. I'm wondering why you communicate on margin. I just sort of sense that we're in this transitional period now whereby companies may have to just go to absolute targets. How do you think about that? Yeah, sure, Andrew. Well, basically, what we have communicated on margins is an ambition to improve our margins on a year-on-year basis. That is very much also consistent with our path towards our 2025 midterm targets, which we also reconfirm. I'm not saying that this is not without risk, and we clearly have also disclosed that there is a high inflationary environment, that there are obviously risks also coming from the war right now in Ukraine. It is a very volatile environment. Actually, if you look at the start of the year, we did see a strong Q1. We see actually that momentum to continue in the second quarter, and that overall makes us make our. Basically confirm our ambition that we will basically improve our margins this year. That is at least our ambition. Okay. Do I take it that the message is that so far from what you see in the first half, you're gonna be doing that in the first four or five months, that you're growing your margins in that period at least, even if things change in the second half? Is that the message? Well, certainly I think for the first quarter, that is the message, yes. As highlighted, we see a continuation in the second quarter. I think it's fair to say that the second half for all of us in the chemical industry has more challenges than the first half. Yeah. Thanks, Conrad. You're welcome. Ladies and gentlemen, thank you very much. This is Andreas speaking. This concludes today's conference call. Obviously, the Investor Relations team will remain available for any further questions you might have, and we look forward to continuing the dialogue on the upcoming conferences we are participating, and lastly with the disclosure of the first quarter results on June 15th. Once again, thank you for joining the call today, and goodbye.