Ladies and gentlemen, welcome to the Clariant Fourth Quarter Full Year Results 2022 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 at any time by pressing star one on your telephone. For operator assistance, please press star zero. The conference must not be recorded for publication or broadcast. At this time, it's my plea sure to hand over to Andreas Schwarzwälder, well the Head of Investor Relations. Please go ahead, sir. Thank you, Sandra. Ladies and gentlemen, good afternoon. My name is Andreas Schwarzwälder, and it's my pleasure to welcome you to Clariant's Fourth Quarter Full Year 2022 Results Conference Call and live webcast. Joining me today are Conrad Keijzer, our Clariant CEO, and Bill Collins, Clariant's CFO. Conrad will start today's calls by providing a summary of the fourth quarter developments, followed by Bill, who will guide us through the group's financial and provide some brief business area comments. Conrad will then conclude with a few comments on Clariant's sustainability transformation commitment and the outlook for 2023. 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 risks and uncertainties. Listeners and readers are therefore encouraged to refer to the disclaimer on slide 2 of today's presentation. As a reminder, this conference call is being recorded. A replay and a transcript of this call will be available on Clariant's website. As the 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, and welcome to our Fourth Quarter Full Year 2022 Results Analyst Conference Call. As we see on slide 4, in the fourth quarter of 2022, Clariant delivered continued strong sales growth of 12% in local currency compared to the fourth quarter of 2021. This was driven by a 13% price increase versus the fourth quarter of 2021. We saw strong pricing contributions in Care Chemicals and in all Natural Resources business units, especially Functional Minerals and Oil & Mining Services. The consistently higher prices over the last 8 quarters reflect our now well-established ability to more than offset higher raw material, logistics, and energy costs. In the quarter, sales volumes decreased by 1%. Volume declines in Care Chemicals and the Additives business in Natural Resources were partially offset by growth in Catalysis and Functional Minerals. Despite the challenging microenvironment, Clariant achieved 12% local currency growth, continuing to outgrow its markets. Care Chemicals sales were up by 4% in local currency in the fourth quarter because of a 17% increase in pricing, despite an expected decline in volumes of 13%. Consumer care sales were up by a mid-teen percentage rate, especially in crop solutions and personal care. Our Catalysis sales grew 18% in local currency, primarily due to higher volumes in petrochemicals and syngas. Natural Resources sales rose 16% in local currency, mainly due to strong pricing across all three business units, especially in Oil & Mining Services. As we can see on slide number 5, in the fourth quarter, our reported EBITDA decreased by 24% to CHF 154 million, with an EBITDA margin of 11.6%. As guided in our third quarter analyst call, our fourth quarter results were impacted by restructuring expenses of CHF 40 million relating to the implementation of our new operating model. Excluding this one-time charge, EBITDA margin was 14.7%, although still below the 16.3% reported in the fourth quarter of 2021 due to a CHF 20 million EBITDA impact from certain liquids and expected lower volumes in Care Chemicals and Additives. I am particularly proud that we increased the full net operating cash flow by 38% to CHF 502 million due to strong underlying earnings and effective net working capital management. Free cash flow increased to CHF 293 million in 2022 from CHF 6 million in 2021. The free cash flow conversion rate therefore rose to 36% in 2022 from 1% previously. We are making good progress towards our 40% target for 2025 due to strong operating cash flow and disciplined capital expenditures. We continued to execute our strategic priorities as reflected on slide number 6, by making several key growth investments, further optimizing our portfolio, concluding the Pigments divestment, and generating significant cost savings with our performance programs. In addition to our second expansion in the flame retardants plant in China, we recently announced a CHF 80 million investment at our Daya Bay production plant to increase capacity for both existing and new Care Chemicals products. This plant will also increase production capacity for ethylene oxide derivatives, which are used in personal, home care, and industrial applications. In the fourth quarter of 2022, we completed the acquisition of BASF's U.S.-based Attapulgite business assets. The resulting increased Attapulgite supply strengthens Clariant's leading technology position in growing markets for the purification of edible Oils and renewable fuels. It extends also Clariant's North American footprint. As previously announced in our third quarter results, we agreed to divest our North American Land Oil business to Dorf Ketal. This divestment is a further step in the structural improvement of Clariant's portfolio and sustainability profile. As a result of this transaction, which is expected to close in the first quarter of 2023, we booked a non-cash impairment of CHF 233 million. In addition, as announced in December 2022, an additional impairment of CHF 220 million was booked for the sunliquid® bioethanol plant based on the delayed ramp-up and current financial performance. On the 1st of December, Clariant and SK Capital Heubach agreed a further CHF 55 million payment to Clariant, due no later than 2029. This represents a discounted value of CHF 38 million, and is a settlement of the final purchase price for the Pigments business. This agreement resulted in an increased gain on disposal tax in 2022 of CHF 210 million. Our performance programs are well on track to deliver the targeted savings of CHF 110 million, with CHF 85 million in savings already achieved in 2022. The implementation of our simplified organizational and leadership structure is largely complete. As a next step, we have identified additional cost savings of CHF 50 million, as Bill will touch upon later. Our board of directors will propose an increased distribution of CHF 0.42 per share to the annual general meeting on April 4, reflecting our strong operational performance in 2022. This distribution would be made through capital reduction by way of par value reduction. For 2023, we expect to achieve sales of around CHF 5 billion, and aim to slightly improve our reported EBITDA margin versus 2022. I will come back on this topic in more detail in the outlook section. Now we'll hand over to Bill for further details on our financial performance. Thank you, Conrad. Good afternoon, everyone. On slide 8, in the fourth quarter of 2022, we increased sales to CHF 1.323 billion, representing 12% growth in local currency. Sales grew solidly in all geographic regions, including China, where sales rose by 14% despite an environment burdened by COVID restrictions through much of the quarter. There was a -5% currency impact on sales across the group. Slide 9 shows our fourth quarter development by business area, starting with Care Chemicals. Care Chemicals sales increased by 4% in local currency, supported by pricing efforts. Sales rose in consumer care and declined slightly in industrial applications. Customer destocking and significantly lower demand resulted in a decline of 13% in volumes. Sales increase in Asia, North America, and Latin America, while Europe remained stable. The Middle East and Africa reported a single-digit decline. Consumer Care sales rose by around a mid-teen percentage, with particularly strong growth in crop solutions and personal care. Industrial application sales declined by around a mid-single-digit percentage due to weaker demand. The Aviation business contributed positively to the industrial applications result due to supportive weather and increased air traffic activities compared to the previous year. Care Chemicals absolute EBITDA decreased by 8%, while margin declined by 160 basis points to 19.2% from 20.8% in 2021. Continued active price management reinforced profitability, while raw material prices remained elevated despite easing from peak levels in Q2. Volumes came under pressure with declining industrial demand and customer destocking, which negatively impacted plant utilization and operating leverage. On slide 10, Catalysis sales rose by 18% in local currency versus the fourth quarter of 2021. Sales growth in petrochemicals and syngas largely offset a relatively weak quarter for specialty catalysts. In petrochemicals, our new CATOFIN plant came online in the first half of 2022 and continued running at high capacity levels. Sales grew in our largest market, Asia, with North America, Europe, and Latin America also increasing. The Middle East and Africa was weaker due to the project nature of the catalyst business. Catalysis EBITDA decreased by 22%, with EBITDA margin falling to 11.6% as a result of ongoing project costs and higher operational cost for sunliquid®. This impact on EBITDA was in total CHF 20 million in the fourth quarter. Excluding this effect, an 18.1% EBITDA margin demonstrates the continued recovery of the broader catalyst business. On slide 11, Natural Resources sales increased by 16% in local currency in the fourth quarter due to growth in all regions and in all three business units. Oil and Mining Services sales rose by around a double-digit percentage in the quarter. Oil service sales improved year-on-year due to strong market demand, while Mining solution sales increased significantly, supported by successful pricing measures. Refinery sales, which are seasonal in nature, also increased meaningfully. Functional Minerals sales grew by around a high teen percentage, with growth in all business lines, especially purification and cargo and device protection. The acquisition of BASF's U.S. Attapulgite business assets added 3% to Functional Minerals sales growth. Foundry sales increased by around a mid-teen percentage. Additives maintained its growth trend, particularly in key end markets such as automotive and electronic applications, although at a slower pace than in previous quarters. Pricing remained strong, while volumes declined due to destocking and softer market demand. EBITDA decreased by 2 percentage points and fell to 15.2% from 17.1%. Pricing measures did not fully offset softer demand and significant customer destocking, which resulted in lower production utilization. On slide 12, full year 2022 sales increased by 24% in local currency to CHF 5.198 billion. Continuing operations EBITDA increased by 14% despite strong headwinds from the rising cost of raw materials, energy, and logistics. The corresponding EBITDA margin was 15.6%. Adjusting for the restructuring expenses of CHF 40 million booked in Q4 2022, our EBITDA margin reached 16.4%, exceeding the previous year level of 16.2% as guided with our Q3 results in October 2022. Our increased EBITDA performance was underpinned by pricing measures that more than fully offset raw material costs, which were up 25% year-on-year, energy costs up 35%, and logistics costs up 6%. The group's ongoing cost discipline and the profitability improvements in both Care Chemicals and Natural Resources more than offset the relative weakness in Catalysis, which included a CHF 43 million impact from sunliquid® in 2022. The 2022 net result from continuing operations was a negative CHF 101 million due to non-cash impairments totaling CHF 462 million, which were booked for the North American Land Oil business, the sunliquid®® plant in Romania, and the asset impairment in Ukraine. The ROIC decreased by 840 basis points to 1.5% due to the impairments. Excluding these, ROIC increased from 9.9% in 2021 to 10.6% in 2022. At CHF 502 million, operating cash flow was significantly higher than the previous year's level of CHF 363 million due to stronger operating profitability and networking capital optimization. CapEx were considerably lower in 2022 at CHF 209 million, due primarily to the significant 2021 investments in sunliquid®, as well as phasing of current growth projects and disciplined capital allocation. Our net debt decreased significantly to CHF 750 million due to divestment proceeds received. Turning to slide 13, we show our increased cost savings target of CHF 160 million by 2025. We've been making good progress towards our original CHF 110 million cost savings target, which was announced at the capital markets day in November 2021. Savings of CHF 85 million have already been realized from efficiency and right-sizing measures as well as initial savings from the new operating model. We expect simplified leadership structures and organizational processes to contribute additional savings of CHF 50 million by 2025. Restructuring provisions of CHF 40 million relating to the new operating model were booked in the fourth quarter of 2022, with a further CHF 15 million-CHF 25 million anticipated in 2023. The restructuring cash impact is primarily expected to occur in 2023 and 2024. On slide 14, Clariant's high free cash flow conversion rate of 36% in 2022 was supported by strong operating cash flow, more disciplined capital allocation, and lower spending on large projects. Due to project phasing, CapEx is expected to be approximately CHF 280 million in 2023. With this, I close my remarks and hand back to Conrad. Thank you, Bill. On slide number 16, I'm proud to provide an update on the impressive progress Clariant has made in improving the Scope 1, 2, and 3 greenhouse gas emissions in 2022. In the full year of 2022, the group's Scope 1 and 2 total greenhouse gas emissions declined by 13% to 0.62 metric tons from 0.71 metric tons in 2021, despite volume growth of 7%. Examples of the measures which Clariant has taken to generate this reduction include long-term power purchase agreements, which have been implemented in Indonesia and the U.S., as well as solar panels, which we have installed at various locations. The total indirect greenhouse gas emissions from purchased goods and Services, Scope 3, also decreased by 4% to 2.58 metric tons from 2.7 metric tons in 2021. We are well on track to reaching our 2030 target. Implementing reduction opportunities will remain a high strategic focus across the organization. The success of our cradle-to-gate approach to emission reduction and transparency can be seen on slide number 17. The improvements Clariant generated in 2022 were the result of increased energy efficiency measures at operating sites, an accelerated transition to renewables in our operations, as well as a higher share of green electricity purchased. For example, in Bonthapally, India, the replacement of coal with biomass derived from agricultural waste enables annual savings of 10,000 tons of CO2 emissions. Clariant has been able to decouple its emissions from its increasing sales and demonstrate significant progress towards the group's emissions reduction targets. Clariant marked a milestone in its continuous efforts to increase transparency for customers on greenhouse gas emissions associated with the product throughout its life cycle. Clariant launched its product carbon footprint tool, CliMate, offering customers selective product carbon footprint calculations across its portfolio in line with ISO standards. Let me conclude my review with our outlook on slide number 19. Our current expectations are based on a soft recessionary environment in the first half of the year, followed by a recovery in the second half. For full year 2023, we expect sales of around CHF 5 billion. We expect a top-line impact of around CHF 130 million from the disposal of the Quats business expected to close in the first half of 2023, and the North American Land Oil business, which should close in the first quarter of 2023. This reduction will be partly offset by the completed acquisition of BASF U.S. Attapulgite business. We aim to slightly improve the reported group EBITDA margin in the full year 2023 versus the 15.6% generated in 2022 due to a continued recovery in Catalysts, which is expected to offset lower sales volumes in the other business units. We anticipate an increased annualized sunliquid®® impact, counterbalanced by lower restructuring charges given the current economic outlook. Raw material cost is expected to decline by around a mid-single digit%, while energy cost is anticipated to be up by around a high single digit%. In my view, with our new operating model, innovation strengths, and sustainability leadership, Clariant is well positioned to continue to outpace the market and to deliver on the 2023 guidance we have provided today. Our new team is fully committed to meeting our 2025 targets. With that, I turn the call back over to Andreas. Thank you, Conrad, and thank you, Bill. Ladies and gentlemen, I'd like to remind you that starting from the first quarter 2023, Clariant will begin reporting according to our new operating model in the business units, Care Chemicals, Catalysts, and Adsorbents & Additives. We have provided you with a pro forma quarterly 2022 sales and EBITDA results for each of these business units in the backup section of the analyst presentation for comparison purposes. Also, before we begin the Q&A session, we would kindly ask that you please limit the number of questions to 2, thus providing more participants the opportunity to ask question. Thank you for your understanding. We'll now open the line for questions. Sandra, please go ahead. We will now begin the question and answer session. Anyone who wishes to ask a question or make a comment may press star one on the 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 two. Participants are requested to use only handsets when asking a question. In the interest of time, please limit yourself to two questions only. Anyone who has a question may press star one at this time. The first question comes from Christian Faitz from Kepler Cheuvreux. Please go ahead. Yes, thank you very much. Good afternoon, everybody. Two questions, please. First of all, Sunliquid was an operational drag in Q4, which is obviously not surprising and should have been expected. I know that you and us as the financial community, had a long discussion on Sunliquid back in December. Yet, would you mind sharing your expectations how long Sunliquid is going to be a drag on results from here on? When would you not only do a book impairment, but also operationally say goodbye to Dirty Straw? The second question is, we hereby and total evidence that the initial expectation of a significant rise in demand in China post-COVID are more muted now, with demand momentum having gone softer in the recent weeks. Would you share this view? Thank you very much. Yes. Thank you, Christian, for these two questions. First on sunliquid® and the drag in Q4. Yeah, the CHF 20 million negative cash contribution from sunliquid® in Q4 was actually a more significant drag than we had anticipated. In Q3, there was a drag of CHF 15 million. And for the full year, we have now disclosed a negative EBITDA contribution of CHF 43 million from sunliquid®. If you look at our expectation for this year, please keep in mind that we started off this new plant in June of last year. This year, we will actually see a run rate of 12 months versus half a year run rate that was negative indeed last year. We are fully committed to bringing down the negative contributions from sunliquid® and to actually deliver a profitable business here in the end. If you look at the current performance, though, in Q1, we are still anticipating a negative run rate in line with what we saw in Q4. After that, we expect a sequential improvement in the quarters ahead. As far as your second question on COVID and China and the recovery in China. If you first look at the general sentiment in China, last year, you saw a GDP in China of around 3%, the outlook now by most people is for this to increase to around 5% or even better. If you look at our own business. I'd like to mention here that last year we saw an increase year-on-year in China of 23% in the full year. In Q4, despite the severe COVID lockdowns in China, we still saw in Clariant an increase of 14% year-over-year in our business in China. We're clearly significantly outgrowing the overall markets in China. This is very much due to our new plant coming on stream, the CATOFIN plant. Looking forward for this year, we again expect very strong growth in China. This is not only because of the full year run rate we will see in China from the new CATOFIN plant, but we also will start up a new flame retardant plant in China halfway in the year. Again, this will be very significant strong growth in China for Clariant. Maybe as a final comment on sort of the broader recovery that people talk about for China, some people even were forecasting a V-shaped recovery. I think we should remind ourselves that China is still very much an export-led economy. I don't think that it was ever our view that there will be this V-shaped recovery in China when the global markets are actually quite slow right now, as you know. Okay. Thank you very much. Very helpful. Thanks, Conrad. Thank you, Christian. The next question comes from Markus Mayer from Baader Helvea. Please go ahead. Good afternoon, gentlemen. My two questions. First one is on the guidance. Do you also plan or have restructuring charges in year 2023 guidance included? If so, by how much are they included? Also on the guidance, I'm a little surprised that you do not have more kind of gross margin tailwinds in your guidance included. Last year, the nickel price spike has hurt your margins at Catalysts. At the same time also, aluminum oxide prices have rated in the first half margins, and there's no both nickel prices, but also aluminum oxide came back. I'm just wondering why your margin guidance is not more bullish for the full year. That's all. Okay, Markus. I will first answer the question on our gross margin guidance, and then Bill, I think, can add to that with our guide on restructuring charges in the year ahead. Yeah, if you look at the guidance for the year in terms of EBITDA margins, what we said was we expect a slight improvement from prior year's actual reported numbers. That means a few decimal points. This is built up as follows. First of all, we guide for lower revenue from roughly 5.2 billion around a 5 billion figure. Most of that is actually explained by the divestments versus the acquisitions, which on balance is a net reduction of CHF 130 million. Clearly, you see some lower revenue here. If you look at it, basically we see 1 percentage point decline in our organic growth, and this is largely volume based. If you go down and look at EBITDA margins, what you see is that we are seeing, to your point, a slight easing of raw materials. You correctly point out that there should be better EBITDA margins in Catalyst. That is what we're also modeling for. Be aware that we will also see some margin pressure, which you also saw in the fourth quarter in our Chemicals business, as well as our Additives business. Finally, if you look at EBITDA margins, specifically for Catalyst, last year we had a full year impact of CHF 43 million negative from biofuels. This year, unfortunately, that figure will be a bit higher than that because we have a 12-month run rate versus the 6-month run rate that we saw last year. Bill, why don't you give us some insights on this? Can I steal another question here? This divestment you did on the Land Oil business, I thought this would be also highly margin dilutive. There should also from this divestment be a positive product mix effect in the margin as well. That should at least buffer to some extent the negative effect from the sunliquid® cost you have then in this year. I'm still struggling to get to this only slight reported EBITDA margin improvement. Yeah, sure, Markus. I will add to what you just were asking. In terms of the divestment, there were two pieces of business that we did divest. First of all, our Esterquats business, the so-called quaternary ammonium salts. These are commodity surfactants that we divested to our Wilmar joint venture. Secondly, we divested the North American Land Oil business to Dorf Ketal. In terms of the impact on margins, you are correct. These actually were dilutive. If you look at the Esterquats business, it was low double-digit margin, EBITDA levels on this business. If you look at the Oil Services business, it was actually low single-digit margins. What I was pointing at is the 1%, and it's a bit more than that, actually, decline in our organic growth and therefore lower operating leverage. That is basically what I was alluding to with the lower contribution from sales. Maybe, Bill, you can take the restructuring charges question. Absolutely. Hi, Marcus, thanks for the question. Right. We mentioned that we had CHF 40 million of restructuring charges in Q4 2022 related to the new operating model. We will have some ongoing restructuring in 2023 as we continue to dig into a number of businesses to find areas of further profitability improvement. Tied to the new operating model itself, we're expecting another CHF 15 million-CHF 25 million in 2023 and 2024. Let's not forget the overall savings. You know, we are increasing the savings target from CHF 110 million- CHF 160 million as a result of the program, which we do really believe sets us up very well for having the right structure in place to deliver on the 2025 targets. Okay. Thank you. The next question comes from Chaudhry Mubasher from Citi. Please go ahead. Hi. Thank you for taking my questions. Just coming back to sunliquid®®. I think you've commented that the next contribution will be more than 2022. Is there any way of quantifying that? Just taking a little step back and kind of trying to understand what your internal kind of hurdles or stage gates are before you decide to step away from sunliquid®® in totality. I'm just trying to understand what needs to happen there or what are you waiting for before you get a confirmation that this is not gonna work and you want to step away from it. Some thoughts around that would be helpful. Just a comment or question on the reorganization. Can you just kind of talk about the decision to put together Oil Services and Mining with personal and home care, and then, and kind of as a one division? I think you talk about it from a segmental analysis perspective. I'm just trying to understand the synergies or even kind of the market drivers within those two subdivisions. That would be very helpful. Thank you. Yeah. Thank you, Chaudhry. First on sunliquid®®, a very important question. Clearly we will not tolerate an ongoing negative cash drain by this business to the extent that we are currently experiencing it. What I will say is that we have now clarity on what all the various issues are that we need to tackle. As long as we are confident that we actually can tackle these issues, we're obviously not giving up on this. Maybe good to give a bit more insights there. There is a certain level of variation in the feedstock. The ethanol plant in Romania is based on Romanian straw. Our pilot plant that we were running already in Straubing is based on German straw, and there are actually differences in terms of sugar content, and therefore differences in terms of yield, which can be addressed by actually having different enzymes that will convert the sugar into the ethanol. We are working on that. We are actually making progress on that. Secondly, there are some bottlenecks in the plant, and that is more typical also for a chemical plant, where with a startup you can run into certain bottlenecks in the plant that do not allow you to run at full capacity or at design capacity yet. We have clarity on what these bottlenecks are, and we're actually addressing that with projects. We do believe in this technology. There is actually a bigger demand than there ever was for second-generation bioethanol. It used to be obviously a big pool in our fight for climate change. Now, actually, there is the additional necessity for Europe for a energy transition away from gas away from fossil-based fuel. There is an enormous demand and interest in this technology. Like I said, we're not giving up on it yet, but we also have a clear path that we need to address in terms of the various issues that are causing the situation that we currently are experiencing. Your second question on Oil Services and Mining versus Care Chemicals. It is an interesting situation where actually these used to be separate business units, but Oil Services and Mining always was a commercial segment within the company. It was a business unit in by itself, but it got supplied with products from our Care Chemicals business, and sometimes there were unproductive discussions on transfer pricing and all these kind of things. That's behind us now. There clearly is a synergy from an operating point of view, but we do run it, to your point, clearly as a separate segment. It is not the commercial people that are selling into personal care that are now gonna sell in the Oil and Mining segments. This is actually the change that we are implementing. Our business units will no longer be organized around products. They will be organized around customer-facing segments, just as our customers see us. The history where in the past you sometimes could have, two or even three sales managers visiting a customer on behalf of Clariant offering two or three different products, that's no longer gonna happen. Very helpful. Thank you. Thank you. The next question comes from Nicola Tang from BNP Paribas. Please go ahead. Hi, everyone. Thanks for taking the questions. First wanted to ask about pricing. You had a strong 17% last year. I was wondering how confident you are in holding on to that pricing this year, you know, given your assumptions around raw materials easing? Just to kind of follow that up, were there any areas where you were implementing surcharges perhaps related to logistics or energy again, which might fade this year? The second question was on free cash flow. I was wondering if you could talk about some of the moving parts on free cash flow into 2023. You know, after the strong performance in 2022, I was wondering whether this 40% midterm target could be actually in reach for 2023 well ahead of time? Do you see the working capital relief and the sort of temporary or the CapEx dip as temporary factors? Thank you. Bill, why don't you start with the question on free cash flow, and I'll add with some comments on pricing. Absolutely. Thanks, Nicola. Yes, we had a really great year in terms of our free cash flow. I think, what I can do is walk you through the thinking of where we'll go into 2023 based on how we ended 2022. Clearly, one of the key benefits in 2022 was our level of CapEx spend. As I just mentioned in my comments, we will spend more in CapEx in 2023 as a result of certain key projects that were approved that will have significant spend in 2023. That will obviously have an impact on the free cash flow figure. I will also say that our very strong operating cash flow of CHF 502 million was based on not only strong underlying EBITDA, which we could expect to also have strong underlying EBITDA in 2023, but also from really good work in 2022 with regard to working capital management and capital allocation. I believe our teams did a really outstanding job at the end of last year on managing inventory levels, on cash collections, and then also on managing our global portfolio of payables. I expect the improvements that we made in those processes in 2022 to continue into 2023. While we will see some decline in the overall free cash flow as a result of the CapEx and also as a result of some of the cash out related to the restructuring activities, I do really expect the operating cash flow to remain strong. Comment on pricing? Thank you, Bill. Thank you, Bill. On pricing, what we saw is, as you see in the numbers on the 24% gross last year, 17% pricing, 7% volumes. With that, we in the fourth quarter, concluded 8 quarters of sequential price increases, and we're very pleased with that, because those price increases enabled us to actually fully offset the rising cost of raw materials, energy, as well as freight and logistics. To your point, Nicola, about easing of raw material increases, we are indeed seeing that. If you look at the fourth quarter, we saw our raw materials down half a percentage point, so slightly easing. Actually, we saw our energy cost down in the fourth quarter by 9%. For us, moving forward, it is very much about holding prices, and then hopefully we'll see some margin expansion from the easing of the further easing of raw materials. You had a specific question on surcharges. We typically try to avoid those because they are not sustainable. We very much are working with our commercial teams to have price increases implemented that stick. No surcharges, because typically, if and when freight costs, for example, go down, you lose those surcharges. Whereas if you implement pricing increases, you don't. If you look at the outlook for this year, we are expecting by and large to hold prices. There's one exception, which is in the parts of the businesses that are formula-based. This is the case in our Chemicals business and in our Oil and Mining Chemicals business. About one-third of these contracts are formula-based. Here we will have to come down with our pricing. In the other segments, we actually should see some margin expansion when raw materials start to ease sequentially in the year. Thanks so much. Thank you. The next question comes from JB Rolland from Credit Suisse, please go ahead. Good afternoon, thank you for taking my questions. I have two, please. Just coming back for with regards to the drag from sunliquid®®. I just wanted to check whether in terms of the quantum, I heard your comment about the restructuring between CHF 15 million and CHF 25 million for 2023 and 2024. Did you quantify any or gave any quantitative hint about whether we should essentially, for sunliquid®®, double the drag that you had this year for 2023, since you talked about 6 months instead of 6? My second question is related to the product on sunliquid®®. Beside the operational difficulties, my understanding is that there is some also a finite life to the biofuel product, since a lot of your output, if I understand correctly, was meant to go into internal combustion engines for blends. These vehicles are gonna be basically banned in Europe by 2035. Beside the technical problems and ramp-up problems, are you also looking to reposition the product, or is that something that you are not looking into at that stage? Thank you. Yes. Jean-Baptiste, thank you for these two questions. Again, I'll have Bill comment later on the restructuring charges into next year. I'll take the questions on sunliquid®. First, your question on the drag, where if I heard you correctly, you were asking, is this gonna double from what you saw last year? Well, last year we saw a drag of CHF 43 million negative EBITDA from sunliquid®. This certainly is not gonna double because we are very much committed to lower this negative run rate by quarter. While in the first quarter we are not seeing an improvement yet from Q4. In the subsequent quarters, you definitely will see an improvement in the run rate. Your second question on biofuels was more long term, where, if I understood you correctly, you were questioning the demand, the ongoing demand for biofuels, as a coal blend, in gasoline for combustion engines. This is correct. This is indeed transitionary. There is no change in the outlook for that. Where we are very bullish is on biofuel as a building block for chemicals. As you, as you can imagine, if you look at our sales, for example, where we make ethoxylated products for our surfactants, these are based on fossil-based ethylene. We can command a significant price premium if rather than fossil-based ethylene, we formulate these chemicals based on bioethylene. The same is the case for other chemicals, and for bioplastics, for example. Another very promising segment where we are way short of capacity right now in terms of a bio-based solution is for sustainable aviation fuel, SAF. Here again, there is an enormous demand for the bio-based kerosene, so to speak. Here again, second generation is what airlines have publicly announced is their preferred route because they don't wanna apply first generation bioethanol as it competes with food prices. Bill, could you once again add some detail on restructuring expected restructuring charges for next year? Absolutely. Thanks, JB. With regard to the number that you mentioned for the restructuring at CHF 15 million-CHF 25 million, that is specifically associated with the new operating model, and it's tied to the specific savings that we're looking for, or that we will achieve as part of our new cost program target of CHF 160 million. That is to be thought of kind of in one bucket. With regard to sunliquid® specifically, we're in the process of evaluating those needs for potential restructuring or additional investment based on the results of the deep dives that we're doing on site in Podari right now. As Conrad mentioned, we've gone through a number of recent trial runs. There are some good data that we're getting from that. We do think that we're reaching a point where we have a good understanding of what the bottlenecks really are, and we'll continue to work through those. Thank you. Thank you very much. The next question comes from Chetan Udeshi from JP Morgan. Please go ahead. Yeah. Hi. Thanks. I had a few questions. First is, I don't know if this was addressed earlier in the call, but did you give any color on how you think about Q1 in terms of either top line or EBITDA? Especially I'm looking at EBITDA before exceptional items, just given the movements we see on the restructuring costs, et cetera. How do you see the Q1 EBITDA playing out, especially compared to, say, Q4? The second question was just going back to the Catalysis discussion on sunliquid®®. Is it fair to assume that there were already some costs for sunliquid®® even in Q4 2021? What I'm trying to get to is even if I strip out all the CHF 20 million impact from sunliquid® from Q4, Catalysis, EBITDA, you know, it comes to about CHF 55 million, which is still a fair bit below what you guys used to do pre-COVID in the Catalysis business, which used to be CHF 60 million-CHF 90 million in Q4. I'm just curious, why is the absolute EBITDA still not going back to the historic levels, even ex sunliquid®? What is the underlying problem in this business or has been in the last two years? Thank you. Sure. Chetan, thank you for these questions. First on Q1 and what we're seeing in terms of trading, and margins versus the fourth quarter. We very much see a continuation of the trends that we saw in the fourth quarter. As a reminder, in the fourth quarter, we did see a slowdown of our business, but very much focused on Europe. Looking at the fourth quarter in Europe, we did see a 10% volume decline. All the other regions actually still were positive. In the first quarter, in terms of the business performance, we see a continuation of some weakness in Care Chemicals. This very much is destocking to a high degree. This destocking, we expect to continue in the first quarter, but this should be finished by the end of the first quarter. You should even see some inventory restocking in the second quarter. We also see the same on additives, still some destocking, some weakness. We see continued strength and recovery in Catalysts, but we remember that the first quarter is always a rather weak quarter for Catalysts, and that's how it turns out every year considering the project nature of this business. What I will say is if you look at the order book for Catalysts, it's actually strong. It's up 15% from prior year. In terms of margins, we should keep in mind that there were these two items when you look at EBITDA margin in Q4, which were of a significant impact. First of all, the restructuring charge and secondly, the negative contribution from biofuels. This time in Q4, you will not see that negative CHF 40 million restructuring charge, but like I guided earlier on, you will see a negative contribution still from biofuels. Your second question was on sunliquid®, and if there were already costs from the plant in the fourth quarter of 2021. I will say until the startup of this plant, we actually capitalized a lot of these costs. I would say that it is negligible what you saw in the fourth quarter of 2021 in terms of sunliquid® costs. Finally, on Catalyst, in the fourth quarter, if you take out the negative contributions from sunliquid®, we were above 18% in EBITDA margin. To your point, that is not yet at the historic levels, but we are confident that with further improvements in product mix, which is very much, the growth that we see, in petrochemicals, for Catalysts, that margin is going to sequentially further improve throughout the year. Thank you. Can I confirm? Do you think Q1 EBITDA can be better than Q4? Yeah, we're not guiding for EBITDA by quarter. This is before except some items. Yeah, sorry, we're not guiding for EBITDA by quarter. It's already a very challenging thing right now to come up with a guidance for the year in this very volatile environment. Yeah, we haven't guided for an EBITDA number for Q1. Okay, understood. Thank you. The next question comes from Andreas Heine from Stifel. Please go ahead. Yeah, 2 question I'd like to ask. Most were answered already. I would like to get some more flavor on the trends in the Oil and Mining business. Oil price came off a little bit, and I'm not sure whether the appetite of investing of your customers has slowed down as well. Can you shed some light how the sequential trend Q3 to Q4 is and what you see in Q1? Looking on what you have provided as restated numbers and taking out your onshore business, I would get to roughly CHF 700 million in sales and CHF 100 million in EBITDA, bringing the margin to 14%. You have certainly improved that business a lot over the last 12 to 18 months, but still the 14% margin doesn't look that compelling. Is there upside? These are the, let's say two questions on Oil & Mining Services. Sorry for that. Again, one question on sunliquid®. You said there are some debottlenecking, you have found out, and that might lead to additional CapEx. Just, kind of housekeeping question. When you do this additional CapEx, and you have written off already, most of the assets you have spent, is then the CapEx you have to do, is that expensed immediately, or can you still capitalize this? To understand what we might see then as EBITDA losses going forward from this business. Thank you. Thank you, Andreas. Thank you, Andreas. Your first question on Oil and Mining and what we're seeing there, it is actually a very positive story. You came up with some pretty good estimates as far as revenue and margins. In terms of revenue in Q4, this was actually a double digit growth for our Mining business. An even also double digit, but an even stronger growth for our Oil Services business. This is really a very strong recovery, which we see in our Oil Services business, not just on revenue, but also to your point on EBITDA margins. We are seeing a continuation of that actually in the first quarter. We are actually very pleased with the recovery that we see in this business right now. Your second question on sunliquid®- Sorry if I may, clarify on these Oil and Mining Services. These double digit growth in Mining and in Oil Services, was that meant, sequentially from Q3 to Q4 or year-over-year? I just want to understand whether the curve of this momentum is slowing down, or whether you still see a sequential improvement? Sure. No, that was meant to be a year-over-year improvement. Yeah. We did see. How is it sequentially? Yeah. Sequentially, we see, we see it basically slightly up as well. The double digits that I mentioned is actually year-on-year. Okay. Your second question on sunliquid®. Yeah, as Bill also mentioned, what we are extremely pleased with is that we have a good visibility now on what the issues are, both in terms of variations in feedstock, both in terms of what the requirements are for adaptations of our enzymes. And finally, to your point on CapEx, that we also indeed have identified some bottlenecks in the plant. If you look at CapEx, no worries. These are not significant figures. They are not impacting our guidance on CapEx for the year. No worries there. Yes, these would be capitalized. They would not be expensed. Yeah, it is all part of the improvement actions that we are targeting to basically deliver a profitable business. Bill, if you wanna add some further guidance on CapEx maybe. Yeah. Thanks, Conrad. Thanks, Andreas. I would say, we will obviously keep a close eye on the overall book value that we have in the plant at Podari. Obviously, we don't wanna get into another situation where we have a need for an impairment. However, any investments that we would do at this point would be specifically tied to improving the output and the yield in the facility, and either one of those would then improve the overall business case and the projections going forward. To be clear, and your point is certainly well taken. It's something that we will watch very carefully as we move forward. The next question comes from Jaideep Pandya from On Field Investment Research. Please go ahead. Thanks. Firstly, on Catalysts, actually. I know it's going to be difficult, could you give us some sense of how big it was Catalysts or PDH Catalyst in 2022, and what is the expectation for 2023, and whether the margins in this business is significantly better than the underlying margins in Catalysts? The second question is actually on your anchor shareholder, SABIC. Just curious, what is the latest shareholding they have in the company, and what are your current dialogues with them? I mean, they've been a shareholder now for 5 years. The share price is roughly the same where, you know, they invested or probably even bit below. How much pressure are you under to sort of execute a strategy? Because at the end of the day, they are at least, you know, to my perception, a financial shareholder. Any, any update on that would be great. Thanks. Thank you, Jaideep. First, on Catalyst. Yeah. Your question on margins for Catalysts. Yeah, we need to be careful because this is also obviously some sort of information that our competitors will be interested in. I don't think it's a secret that this is very accretive to our Catalyst margins. Secondly, a breakout or a breakdown of how much Catalysts sales we have is certainly not something that I'm able to give for competitive reasons, but I could give you maybe some indications just to sort of allow you to model. Mm-hmm. This. When I was talking about China growth, and when I was mentioning the figure that in China we saw a 23% year-on-year improvement last year. A significant part of that incremental growth in China actually came from the ramp up of the Catalysts plant, and that was only representing six months of sales. Whereas, in the year ahead, we will have 12 months of sales included there for CATOFIN. That plant is sold out. This has been, by the way, a very successful ramp-up. Our people have done, I think, a phenomenal job locally in China to basically start up this new plant amidst COVID lockdowns. This is really a success story that the entire company is very proud of. You want to talk about SABIC? Sorry. The second question on SABIC. You were asking for the position of shares that SABIC is holding and any changes here. No news here, no changes. SABIC is holding right now roughly 31.5% of our shares. No change there. Also, no change in board representation. SABIC has 4 out of the 11 board members, sorry, are actually SABIC representatives. The only change perhaps which is worthwhile mentioning is that SABIC has been extremely pleased with our performance right now, and especially the enormous operating cash flow that we generated, more than an increase of almost 40% from the prior year, more than CHF 500 million of operational cash flow. As you can imagine, as an anchor shareholder, you're quite pleased to see these numbers being achieved. All right. Thank you. The next question comes from Matthew Yates from Bank of America. Please go ahead. Hey, good afternoon, gentlemen. A couple of questions. Maybe the first one to Bill. I just want to make sure I'm understanding all of the messages that you've been giving on this call, particularly around the implications of the divisional reporting change. Maybe if we use slide 21, can you perhaps be a bit more explicit what you're implying for each of the division in terms of margins or even better absolute profit in 2023? Because I think you said in response to Marcus's question, you're expecting margins in Care Chems and Additives to be down. I just wanna understand exactly why. Is that the lag in formula pricing coming through, or was that volume-driven? My second question is maybe more directed at Conrad, and it's a follow-up on what Mubasher asked earlier about this divisional restatement. When you weigh up the internal merits of moving revenue around the company in terms of the way the business is being run, perhaps better, are you sure that more than offsets the punitive perception from investors that they're gonna struggle to understand the divisions, and we lose the accountability of monitoring track record and performance? Yeah. Why don't I start quickly with your second question? That gives Bill a bit more time to also reflect on your first question. We do not take it lightly to change reporting structures. The reality of it is that we did do a significant simplification of our operating model. We reduced the number of management layers, but we also reduced the number of business units. We actually no longer have more than 6 layers of management between myself and some of our frontline operators. That's one thing, but the other thing is we reduced the number of business units from 5 to 3. There is obviously clear savings with this associated. Bill mentioned this before. There is a CHF 50 million saving associated with this new operating model. Yeah, we can also not ignore those benefits for the company. I see your point. We, and we don't take it lightly to change reporting structures. Maybe, Bill, you could add then more on the first question. Yeah. Happy to. Thanks, Conrad, and thank you, Matt. If I go to slide 21, as you first mentioned. Well, all we're trying to do here is show you for 2022 what the old reporting format looks like and what the new reporting format looks like. We're not giving any guidance here by specific business. The easiest way to think of this is that we're effectively moving Oil & Mining Services out of Natural Resources and moving it up into Care Chemicals. The Catalysis business area still stays roughly the same. We're basically combining Functional Minerals and Additives into new Adsorbents & Additives organization. That's all we're trying to do here, is just trying to give you a pre-reorganization view versus a post-reorganization view, and not necessarily trying to give you any kind of indication with regard to 2023. I will say building on a few of the things that Conrad mentioned, part of the change in the new operating model really gives us much more visibility and much greater accountability at the segment level. We've seen this in other environments where when we can have a discussion with the individual businesses around what's happening in a segment globally with key customers, what are the manufacturing challenges? What are the competitive challenges? That actually gives us much greater insight into what's happening there, and it allows us to push much greater accountability onto those business leaders. When we combine that focus with the EBITDA margin by segment, it really gives us the tools to be able to drive improved profitability in the organization as we drive toward the 2025 targets that we have. I can appreciate that the change might be somewhat confusing, but I think it is absolutely essential as we kind of reformat the operating structure of the company for growth going forward. Thanks. Bill, sorry, I apologize if this is me. It's been a lot of results today. When you say Care Chemicals margins likely down next year, is that relative to the 22% as reported or the pro forma 19.5%? What's the starting point for that statement? The starting point. point. Sorry, I have mice in the background. The starting point for the statement, I believe, is that we do expect a, you know, a marginal volume decline in Care Chemicals next year. We should see some benefit come through from the slight decline in raw materials. You know, Conrad had already mentioned that earlier. As we really fight to hold our pricing stable, we should see some benefit, but it really is on the pro forma base. Okay, thank you for the clarification. The next question comes from Alex Stewart from Barclays. Please go ahead. Hi there. I'll be really quick 'cause I know there's been a lot of questions already. You talked about de-stocking being a major feature of Q4 and Q1. Every other chemical company has said the same thing. When you sit at in your office or the board room, how do you differentiate between de-stocking and real demand? I'm interested if you could just give us 20 seconds maybe on how you know that it's really de-stocking. That'd be very interesting. Thank you. Thank you for this important question. First of all, this is obviously not an exact science, but this is very much based on customer feedback. That's what very much is leading us to this. Maybe a bit more color to your question. So if you look at what happened in the fourth quarter last year, the slowdown in volumes, and particularly I mentioned the 30% slowdown in Care Chemicals volume, roughly half of that is based on de-stocking. This is based on feedback from large home care companies, large personal care companies. What they're basically telling us is the following. They are seeing also at their end, the beginning of deflation in raw materials, which actually leads them to the strategy that they didn't wanna finish the year sitting on high inventories. That is still actually a level of de-stocking that they're doing in the first quarter. Secondly, there were only a year ago serious shortages, and that affected actually also particularly Care Chemicals customers, but in our case also our Additives business with flame retardants where we were short on yellow phosphorus. The second reason why customers are de-stocking is that there were serious supply constraints only a year ago, and they were sitting on unusual high inventory levels, which also reflected levels of safety stock, which are no longer needed. These constraints, supply chain constraints are removed. There is plenty of supply of raw materials right now. Finally, regarding de-stocking, and this is more a topic for industrial markets, there is a noticeable slowdown in Europe. There is a level of slowdown in the U.S. and certainly on the industrial side of the business with our customers having more negative sales outlooks themselves. They also are adjusting inventory levels down accordingly. Now, de-stocking was a serious element in the fourth quarter. It is still a serious element in the first quarter, but as I said before, the inventory levels are coming down. We also see it by the way with our own inventory levels, and there will be a certain level of de-stocking, actually. Sorry, restocking, I should say, starting in the second quarter, we should see a sequential improvement here. Thank you very much. Thank you, Alex. The last question for today's call comes from Georgina Fraser from GS. Please go ahead. Hi. Thank you. Also a quick question. Thank you for taking it so late. Your 2025 targets that you've reconfirmed, obviously not that far away. Just wanted to understand what you think the major driver to lifting EBITDA margins to 19%-21% will be. Do you still have a lot of internal work to do, or is it more there's just a particularly strained external environment at the moment that could reverse quite quickly? Thanks. Georgina, thank you for this very important question about our 2025 targets. We are confident that we will deliver our 2025 targets. Maybe a bit more specific, starting with revenue. We guided for a 4%-6% CAGR. With the revenue projection of this year around CHF 5 billion, we are actually well ahead of the targets that we communicated in November 2021. An important comment to make here is that if you look at our gross last year, it wasn't only based on pricing. Out of the 24% gross last year, 7% was actually volume gross, and this is clearly outgrowing our end markets. That was exactly the target that we were setting back in 2021 in November. We want to outgrow our underlying markets. If you then look at our second target of EBITDA margins, the lift, the improvement to a range of 19%-21%. Let's remind ourselves, we had our capital markets day before the war in Ukraine. This was before several rounds of inflation, and this was before a serious slowdown in the major economies and in particularly in Europe. I will say that we have adjusted our plans accordingly to achieve the targets. At the time, we said, the increase in EBITDA margins, two-thirds will come from gross, one third will come from cost. As you have seen, we are stepping up the actions on cost. With the new operating model, we deliver an additional saving of CHF 50 million, which will help us actually to build the bridge towards the 2025 EBITDA margin targets. I think what is also good is M&A, where you actually have seen the addition of the Attapulgite business from BASF. Again, that will be margin accretive, and it will also actually help with revenues. Finally, on cash conversion, we had a target of 40% cash conversion, free cash flow from our EBITDA. Here, with our achievement of 36% last year, I think we're well on track to also see here us delivering the 40% cash conversion that we committed to be achieved by 2025. Conrad, if you don't mind, I can jump in on a just a couple additional points. Hi, Georgina. Not to be the salesperson for the new operating model, but I do believe that this is one of the fundamental measures that will help us get where we need to be in 2025. It's not just a cost game. You know, we take layers out of the organization, we strategically prune our functional costs across the organization. What we're really looking at too through the implementation of the segmentation in each of the business units is to really drive in and understand what does our cost to serve look like in key markets? What is our profitability by customer? You know, what are those levers that we have? We're already starting to see some, you know, really interesting discussions evolve around the granularity of how we make money in some of these specific businesses. Which is a level of transparency and visibility we didn't necessarily have before the implementation of the new operating model. I will say again, not to, you know, beat the drum even more, but I do think this is one of the fundamental levers because it gives us all that transparency and the accountability within the organization to make sure we hit those targets. Thank you. Great. Thank you both. Thank you. Thank you, Georgina. Thank you. This is Andreas speaking again. Ladies and gentlemen, this concludes today's conference call. The investor relations team obviously is available for any further question you might have. Once again, thank you for joining our call today, goodbye. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect the lines. Goodbye.