Ladies and gentlemen, welcome to the Sika Nine Months 2021 Results Conference Call and live webcast. I am Moira, the conference 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 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 Mr. Dominik Slappnig, Head of Communication and Investor Relations of Sika. Please go ahead, sir. Thank you, Moira. Good afternoon, and welcome to our Nine Months Results Conference Call. Present on the call with me today is Thomas Hasler, CEO, Adrian Widmer, CFO, and Christine Kukan, Senior IR Manager. We published our nine-month paper this morning at 5:00 A.M. Thomas and Adrian will provide further details on the results and the outlook. We will be ready to take your questions. I hand over to Thomas to start with the highlights of the first nine months. Thank you, Dominik, welcome to all. It's my pleasure to present to you in brief the results of our nine-month period. Please go to slide two, which shows an overview of the achievements during these nine months. It's a continuation of what we have presented in July. We have a continuous strong growth on the top line of 18.1%, reaching a total of CHF 6.8 billion. Also, our over proportional EBIT evolution continued in these nine months with 32.2% increase to above CHF 1 billion in total. Our EBIT margin has stayed at 15.4%, just at the level as it was at the six months mark. We also announced today an important change in the group management, in which we have reflected our enabling and sustainability focus by giving more attention and reinforcing our innovation and sustainability drive by separating this from the operational efficiency and the improvement on the quality and EHS side, giving these two areas separate leadership, and having, with Patricia Heidtman, a new Chief Innovation and Sustainability Officer. Thirdly, I think it is also for Sika relevant to say we are not immune of the key challenges on the rise in raw material prices and the supply chain impacts. It remains difficult to predict how this will evolve. We have a cautious approach to this, but we see every day, everywhere, some new elements coming in. So far, we have managed quite well, but we will see that later on when Adrian goes into more details. Please go to slide three. Here, we have seen our acquisition results mid of the year by adding now two more acquisition, the one in Mexico, Bexel, and the one in China, Waterproofing Landun. Two great additions, which reinforce our footprint locally very much. At the same time, we are also close to complete the transaction with Hamatite in Japan. We expect closing in November. Next slide, please. With that, I hand over to Adrian to give a bit more insight into the regional evolution as well as the financials. Very good. Thank you, Thomas, and good afternoon and good morning to all of you. Following Thomas' business summary and highlights, I will now give you further insights into the results. Starting with the top line, Sika has continued, as you have seen, to deliver solid growth in all geographical regions with a local currency growth of 18.1% for the first nine months of the year. Organic growth was 16.8%, while acquisitions added 1.3 percentage points of additional growth, primarily representing the initial impact of the consummated acquisitions this year. As Thomas has shown, this is particularly DriTac, Kreps, BR Massa, American Hydrotech, and Bexel in Mexico. Currency effects have turned slightly positive for the first time in several years, with foreign exchange impact contributing a 0.1% positive addition to our growth, which brings total Swiss franc growth to 18.2% for the year-to-date period. Organic sales growth versus 2019 also remains at double-digit level for the period on the review. Going into the regions, starting with EMEA. EMEA, as you can see, grew 17.6% at constant currencies. Organic growth was 16%, driven by growth in distribution and the renovation business. Growth was particularly dynamic in Eastern Europe, the U.K., as well as the African continent. Residual acquisition impact from Adeplast and Modern Waterproofing, as well as the newly acquired Kreps in Russia, contributed 1.6% of growth. Foreign exchange effects also here in the EMEA region were slightly positive at 0.9% of contribution. Region Americas recorded a strong growth in local currencies of 19.3% for the first nine months, pretty much in line with growth in the first half year. Despite the challenging supply chain situation, the region delivered double-digit growth, driven by strong growth in Mexico, Colombia, Brazil, Peru, and Chile. The U.S. also grew double digits with large-scale maintenance projects and new build projects such as logistics and data centers driving growth. Acquisition contribution increased in Q3, driven by the newly acquired American Hydrotech and Bexel, and contributed 2.3% in the first nine months of the year. Although to a lesser extent than in the first half year, foreign exchange effects continued to weigh negatively in the Americas with a negative foreign exchange effect of -2.1% in the first nine months. Sales in Asia Pacific grew by 20.7%, driven by China with a continued strong growth momentum and double-digit growth rate due to infrastructure projects and strong sales in the distribution business. India as well contributed to this dynamic performance in Asia Pacific, while Southeast Asian countries, and here particularly Vietnam, Malaysia, and Thailand, are suffering from renewed COVID lockdown. The situation in Japan also remains quite challenging. Foreign exchange impact in Asia Pacific turned markedly positive in recent months and contributed 1.3 percentage points of growth in the first nine months. Finally, in the global business segment, Sika achieved the growth of 9.9% in the first nine months but declined sharply in Q3 as expectations of a strong car build rate recovery from previous year faltered due to the limited availability of semiconductor components. Given these circumstances, the automotive industry is now expecting flat build rates compared to 2020. We anticipate sustained growth stimuli from an accelerated transition to electro-mobility and lightweight construction once bottlenecks in the supply chain are easing. Foreign exchange, in this segment, remained slightly negative. Moving down the P&L and going to the next slide. If we look at the gross result, material margin contracted by 200 basis points to 52.6% of net sales, primarily driven by a continued strong increase in raw material costs as a result of global supply chain disruptions, energy shortages, and solid demand. Through pricing actions, we were able to mitigate a large portion of this increase. Pricing component in the first nine months was 3.5% of sales year to date, with a higher run rate, of course. Formulation efficiency initiatives, structural procurement savings also contributed positively. Acquisition-related dilution effects in the first nine months were 30 basis points. On the cost side, operating costs, which both include personnel costs as well as other operating expenses, continued to increase under proportionally at 8.7% for the first nine months, and this compares to a sales growth of 18.2%. Due to a strong operating leverage, disciplined execution of the many operational efficiency projects, as well as a continued good synergy capture related to Parex and other acquisitions. Consequently, we were able to increase EBITDA by 23.9%, with EBITDA margin up by 80 basis points to 19.3% for the period on the review. As a result of reduced CapEx in 2020 and the limited acquisition impact, depreciation, and amortization expense remained flat in the first nine months, providing further leverage. As a result, EBIT increased strongly by 32.2% to CHF 1,054 million and an EBIT ratio of 15.4% of net sales. Below EBIT, net interest expenses decreased by 16.5% compared to the same period of last year to CHF 32 million on lower debt and higher interest income. Other financial expenses decreased sharply in the first nine months, primarily due to a lower hedging cost and foreign exchange valuation impact. Overall net financial expenses reduced by almost CHF 15 million or close to 30%. Group tax rate during the first 9 months remained almost flat at 24.6%. This is 20 basis points up compared to the previous year on a slightly negative country mix. Also here as a result, net profit increased over proportionally by 36.3% to a record level of CHF 765.1 million, or 11.1% of net sales, which is up from 9.7% of net sales in the same period of last year. With this, I pause and hand over back to Thomas Hasler for the outlook. Thank you, Adrian, and please go to slide number six. Our outlook for 2021 is the same as by the mid-year outlook. We see sales growth in local currencies between 13% and 17%, an over proportional EBIT increase, and an EBIT margin, which will reach 15% for the first time despite the challenging situation still ongoing on the supply chain and on the material price development. In addition, once more, we can confirm our 2023 strategic targets for a sustainable and profitable growth. With that, I guess we open up for the Q&A session. We will now begin the question and answer session. Anyone who wishes to ask a question or make a comment may press star and one on their touch-tone telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Anyone who has a question or a comment may press star and one at this time. The first question is from Yves Bromehead from Exane BNP Paribas. Please go ahead. Good afternoon, gentlemen. Thank you for taking my questions. I have two. My first one is just on volumes and specifically looking at your local currency growth, and with what you expect for Q4 pricing. It sort of means that there's a wide range of outcome here. Can you maybe help us to understand, if we look at what happened in Q3 with some of the headwinds, including the summer cool off and supply chain disruption, I guess some of that is easing into Q4. How should we think about the Q4 volume outlook, given that, again, your outlook implies either a decline YoY or an increase of about 4% at the top end. If you could help us here, that would be really helpful. My second question is on gross margins. In Q4, given that you have more pricing, should we expect Q4 to be higher than Q3? How soon do you think you could get back towards the more normalized range of 54/ 55? I guess, have you seen any normalization in raw mats here? Thank you, Yves. On the material margin, clearly we see quite a strong adverse input cost dynamics and there was clearly, let's say at the beginning and in mid-year, sort of an outlook of possibly a normalization in the fourth quarter. I think there is probably a higher level of uncertainty whether this is going to happen. We will continue to increase prices also in November, December, and clearly also into next year. Here, clearly, in terms of exact material margin development, the situation is such that it's relatively difficult to pinpoint. I think we have our reaction here set up and in place, where we would obviously continue to act accordingly in order to protect profitability. In terms of volume outlook, there is also here a certain element of, let's say, supply chain difficulties, which obviously we have to encounter. I think we have managed relatively well, particularly if you look at, let's say the growth in the third quarter, let's say except on the global business, on the automotive side, where there's a clear impact on build rate. Actually also here with a much increased pricing component volume growth, which we have been able to deliver in spite of some of the supply chain difficulties. All in all, we continue to be confident on our overall growth outlook for the year. We'll be in that range also in the fourth quarter. Thank you very much. The next question is from Markus Mayer from Baader Helvea. Please go ahead. Yeah, good afternoon, Thomas, Adrian, Dominik and Christine. Three questions from my side. When I look at the sequential local currency growth, organic growth in continental, Western Continental Europe, as far as I can see it and out of the comments you have elaborated in your speech before, then it looks like that the growth slowed down in the third quarter. Can you quantify if this is correct and also what have been the reasons for this? That would be my first question. The second question would be on your global business. Normally, the fourth quarter is, from a seasonality, the strongest quarter in the global business. You also expect this to happen this year, or at least do you expect a sequential demand improvement or the chip shortage issue basically still completely overshadowing this seasonality? The last question would be on Asia Pacific, or not only Asia Pacific, more basically your kind of retail customers which are in the U.S. and in Asia Pacific. Do you see there already a negative demand effect due to the inflationary effect? That would be my last question. Thank you. Thank you. Markus, I'll take the first one here on EMEA. If you just look at the Q3, yes, it is right that volume development was not as strong as before this. I would say it is owed to sort of two elements primarily. On the one hand, it's sort of the comps, particularly in the Southern European part of EMEA during the last year, where we have seen a COVID catch-up effect in a sense that particularly during the summer holidays, actually, they were shortened and construction activities was maintained in order to catch up. This is an effect we have not seen this year. Secondly, also in EMEA, we have seen certain supply chain impacts which have, to some extent, limited growth. We have clearly also pushed on the pricing side, not only in Europe, but across the board. Okay, may I answer your second question on the automotive business, the seasonality? Here, clearly, the semiconductor shortage is putting everything more or less upside down. The industry was quite confident in mid-year that the Q3, especially September, would be a strong recovery after the summer break. It became clear towards the end of August that this is not going to happen, and actually, the acceleration of the impact of the shortage is piling up. Where we had in the first quarter, 1.4 million units lost due to this, it was 2.6 million units in Q2, and it is now at 3.4 million units alone in Q3 that were lost due to this shortage. The Q4 so far outlook is 1.4 million, but rising with every update of IHS. Here we see many unexpected plant shutdowns or partial work weeks across Europe, especially China. In Europe, we saw a 33% decline in September alone on the build rates compared to last year, and last year wasn't the greatest year either. Here, clearly the industry is really out of sync and has more problems to get back into the gears. We expect for Q4 a continuation of that trend, and as Adrian mentioned, it will probably be at 75 million units for the whole year, which is the same low level as 2020. The expectation into 2022 are still a bit open, but it could also still last well into 2022, that this chip shortage will continue to hassle the car production. Okay. The other question was- Asia Pacific. On the inflationary effects on in particular in Asia Pacific or the retail customers. Yeah. If you look at growth in Asia Pacific was actually quite strong and solid with sort of the differences across the region. Particularly in China, we continue to see very solid growth, and this is across the board, but particularly also on the BFM side, on the retail side. In that sense, we have not seen any, let's say, inflationary impact on demand here in China, nor in other countries. Where we see more impact, this is really again related to COVID-related measures, particularly in Southeast Asia, where we also have a good distribution and retail business relating to lockdowns or in Japan also here, being restricted on the business side. On the inflationary side, we haven't seen any impact to the business as of now. Okay, perfect. Thank you so much. The next question is from Arnaud Lehmann from Bank of America. Please go ahead. Thank you very much. Good afternoon, gentlemen. I guess I have three questions, hopefully quite brief. On the pricing, I think last time you reported you were talking about hoping to get to, I think 4% price effect for the average of 2021. Is that still the case or are you revising this guidance higher now that you're hoping to increase prices further in Q4? I guess related to that, are you confident that your customers who have taken a lot of price increases this year are going to be happy or at least will tolerate more price increases, especially now that demand is normalizing? That's my first question. My second question is on the Americas region, actually a very strong performance in the third quarter. I remember in Q2 you had some disruption on U.S. chemicals and you lost a bit of volumes. Have you sorted these issues now? I think you had to import some of the chemicals from China into the U.S. Is it still the case? Lastly, just the seven acquisitions that you mentioned, could we have an indication of overall sales contribution on a full-year basis? Thank you very much. Maybe on the pricing side, quickly to sort of also here repeat, we have 3.5 percentage point pricing impact year to date, from about 2% in the first six months. Here we're on a good trajectory in terms of impact vis-á-vis our guidance. From today's perspective, I would see 4% impact for the full year as the minimum. It's probably only going to be more as we continue to increase prices. In terms of receptiveness, I think it is very clear, if you look around and obviously our customers are faced with this in other areas as well. I guess to call them that they're happy is probably a bit an exaggeration. Clearly this is something which is very sort of visible not only in building materials, but really across the board. To that extent, we continue to be successful in being able to increase prices. In the U.S., here on the volume side or the Americas, yes, we had quite a good development in Q3. A large part is also Latin America, where we see good growth and continued growth across the board. We mentioned a few countries where we have seen specific strong developments, but also the volumes in the U.S. are quite solid. This being said, we're still faced with, let's say, daily challenges, obviously, to secure all the raw materials in the right form at the right time. Here the, let's say, negative impact or the challenges are not over. I think clearly managing relatively well, if you compare to others. The question is about acquisition sales contribution. Yeah. On the overall impact on an annual basis, we will not see all obviously being materializing here. Hamatite will only come in November, but the full- year impact is around CHF 340 million of all these seven. Very clear. Thank you very much. The next question is from Yassine Touahri from On Field Investment Research. Please go ahead. Yes, good afternoon. I would have two questions. My first question would be on the appointment of Patricia Heidtman as a new Chief Innovation & Sustainability Officer. Could you tell us a little bit more about her background? What was the decision process to change the group management, and what will be her target over the next few years? My second question is on cost inflation. What are you monitoring when we look at 2022? Could we see a normalization in freight rate? Could we see the supply coming back? Could we see the demand from some material normalizing? What are you monitoring to assess whether prices could continue to go up or might normalize? Okay, let me elaborate on your first question about the change in the group management. For many years, we had a strong focus on CTO, on the R&D, on the innovation pipeline, which is the backbone of our strategy for many, many years. Recently, we added the operational efficiency, still under the same leadership. The operations as such, being managed through the technology hat. Adding to that, over the recent years also, the sustainability topic, which became much more relevant, has been managed via this single function on group level. We are clearly seeing all these pillars are very vital and contributing nicely to our overall performance, but it is too much and may risk that we lose some focus here, and therefore we decided that the forward-looking concerns like innovation and sustainability are reinforced under one leadership. With Patricia, we have a strong, well-known individual. Also driven by sustainability that will have this focus area. Frank, our CTO up to now, which has presented excellent results on the operations side, is focusing more on the operational side and leveraging our operational footprint. At the same time, also focusing on improvements on other ESG-relevant aspects as quality, safety, and so on. This is a reinforcement of the organization, giving clear leadership to future concerns as well as to current concerns as in operations. Maybe Adrian on the. Let's say that the picture and the trend for next year, what the raw materials are concerned. To some extent, obviously, it is a bit of crystal ball reading in terms of the exact impact and the exact development going forward. I think from today's perspective, it is quite clear that the raw material cost inflation will also be prevalent in 2022. Certainly, in the first half year, I think as always, it will be a combination of different factors. Obviously, we're monitoring here feedstock price development, but also any other factor that could impact, obviously, the production of our raw materials. Here, I think we're, well, as close as we can be given that this is very much forward-looking. Obviously, also the energy side is something which has or can have an impact, particularly when it is used for production of raw materials. We believe we're, let's say, relatively close in monitoring the situation, but also we don't have a clear visibility now to what extent and how long this will continue in terms of inflationary development. What we particularly focus on is obviously our actions and countermeasures in order to mitigate this situation. Here, pricing is clearly one important element. Also having alternatives for certain applications and making sure we can satisfy demand. Yeah. Thank you very much. The next question is from Bernd Pomrehn from Vontobel. Please go ahead. Yes, good afternoon. In your presentation published today, you mentioned that sustainability initiatives are positively impacting operational costs. Could you please elaborate on this? What major opportunities do sustainability initiatives provide in terms of cost savings? The second question, just can you provide, please, an update on the targeted CapEx for the current year? Thank you. Start with the CapEx. Here we will continue to be below sort of the 2.5%-3% on the CapEx spend for the full- year. I would clearly say this is going to be at or below CHF 200 million. We will not exceed that mark this year. On the sustainability and operational efficiency, I think we showed an example at the Capital Markets Day. The need for lower footprint products is requiring that we are revisiting main product lines and upgrade them. This is an opportunity to really bring in smarter raw materials. I think we had the presentation of the China mortar initiative, where we are bringing in mortar solutions or let's say cement solution with 30% lower CO2, while providing us the opportunity through smart formulation to also bring the overall costs down. It is a cost improvement as well as a performance improvement, as well as a significant CO2 reduction. This drive for sustainability is also touching all products that we currently have in the pipeline, and is an opportunity to upgrade not only the CO2 footprint, but also to look with a fresh pair of eyes into the whole setup and optimize the formulation. This is a significant opportunity that we showed at the CMD as one example. Okay. Pretty impressive. Okay, thanks a lot, Thomas. The next question is from John Fraser-Andrews from HSBC. Please go ahead. Thank you, good afternoon. My two questions, please. The first one on the operational leverage, the non-material cost growth that was flagged in the presentation at half the sales growth. Could you just elaborate on that, please? Just what's behind that? I'm aware that last year you cut a lot of costs out temporarily, have you become more efficient on that as you've grown sales this year? That's the first question. The second question is in the end markets, in construction that you're serving. You've called out residential as the key driver of the growth in the first nine months. Perhaps you could comment on the non-residential sector, whether that's been a drag or static, and whether you're seeing any benefit in infrastructure yet, obviously, it was a feature of the Capital Markets Day, whether you're seeing that in the numbers we see today. Thank you. Okay. Let me start with the first question on leverage and operational efficiencies. These are really the two elements here driving the good cost leverage. On the operational efficiency projects, and this is really an ongoing program where we have many different initiatives on local, on regional, and on global level to, let's say, drive efficiency across the value chain. A lot is centered around, let's say, production, logistics, footprint, and these are really ongoing elements and initiatives and dedicated programs in the various areas. I've also reported on this during several occasions, but also on the Capital Markets Day. This is one of the drivers here of cost leverage and profitability improvement. Basically contributing 50 base points of improved profitability on an annual basis. Let's say the pure, I would call it, operating leverage is really driven by the fact that obviously the various sales initiatives, be it cross-selling or otherwise, have a positive effect in a sense that we don't have to add additional cost at the same pace as we add basically resources. Also fixed assets contributing here, as you can see, in sort of a flat depreciation and amortization development this year. These are really the two elements which we basically drive on an ongoing basis. Maybe I answer the second question on the construction markets. Yes, it's correct. The residential market has a slightly higher growth pace than the non-residential. This is mainly also driven by incentive programs that are starting to kick in to upgrade for energy reason, facade especially. Applications are high in demand in countries where the subsidies are already in place. This doesn't mean that the non-residential business is not growing. It's growing at a lower pace. Especially when we look at the commercial area, and here data centers and distribution centers are high in demand and providing a lot of healthy growth for us. Yes, it's true on the infrastructure side, I would say so far it's business as usual. We don't see yet the big announcement turning into an increased level of activity. We expect this to then show further, probably, movements going into 2022. Also there nothing, let's say, negative, but it's just not yet showing additional impulse from the government programs that are in discussion or announced. Thank you. The next question is from Patrick Rafaisz from UBS. Please go ahead. Thank you. I have two follow-up questions, please. The first one is on Americas, and you talked already a little bit about the solid volumes in the U.S. and recovery you're seeing in Latin America. Looking specifically at LATAM and South America, how far would you say have we come in terms of recovering to pre-COVID levels here? What I'm trying to get at is there further recovery potential ahead in 2022, or will that be pretty much done this year? The second question is a follow-up on pricing gross margins and raw mats. There were a couple of questions on that already, but given the lag effect of price increases that you see coming in Q4, and of course, pricing is currently running at probably 6%, judging by your numbers. Do you think the gross profit margin will sequentially improve again in Q4 from what you're seeing today? How long do you think will it take for you to fully compensate raw mats? You mentioned input cost inflation could last until H1 2022. Will it take that long as well for you with prices to catch up entirely? Could that already be achieved a bit earlier? Will you be back at your usual gross profit margin level, 54%-55% for 2022, or is that too early to say? Thank you, Patrick. Let me answer the first question on LATAM recovery. It is difficult to say how much of our exceptional growth rate in LATAM still is left in regards to the recovery. I would clearly see that the LATAM is outperforming because of the, let us say, latest investments over the past three years in building and creating there a stronger footprint, the acquisitions that we have done, but also the new leadership that we have in place across the whole region. It is not LATAM alone. We have a lot of very positive influence by having the Americas regions using the operational and the logistic excellence from North America now also across Latin America. This is driving a lot of the results. It is clear we are gaining market share in Mexico, in Brazil, in Chile, in Argentina, and this is clearly above what the recovery is. Let's say, to put this in numbers, it's difficult, but I'm convinced the results that we see are the results of the organic evolution of the organization and the leverage that we have across the whole region America. Maybe secondly on pricing and material margin. Maybe two elements here. On the one hand, let's say at least the sort of long-term seasonally Q4 is not necessarily the strongest material margin quarter. This is something we have to consider on the one hand. I think more importantly, obviously the input cost evolution is still very dynamic. It is very difficult to pinpoint now what exactly the material margin will be. Particularly on the pricing side, as you pointed out, the trajectory is actually quite good. We will continue to also here add additional sort of pricing in Q4 and also going forward. Looking into 2022, clearly we see here a continued need also to further increase prices. The development will particularly in the first half year be that we will continue to increase prices. We have to see how the input cost side is developing. In that sense, it is too premature to tell where we will end up in terms of material margin from today's perspective. Obviously, the 54%-55% looks quite ambitious given the input cost dynamics and also the fact that just mathematically, if you have a substantial price increase component, even when it's fully mitigating the cost increase on the material side in absolute terms, you will still have a relative impact on the material margin. With this type of price increase, you can actually see that. Okay. Thank you very much, both. The next question is from Daniel Jelovcan from Mirabaud. Please go ahead. Yes. Hello. I just have two questions. The first of all, I was quite positively surprised when I looked at your personnel costs. Only up 8%, so substantially below the top line. When I look at the left and right in the world, the whole world talks about wage inflation and Carlisle yesterday said that it was tough to get enough qualified people, and they have to pay much more and so on. I wonder why you are so much under control for the personnel cost or is that with a lag effect, maybe that you will feel that maybe especially next year? The second question is, yeah, Carlisle yesterday, they said they had 23% organic growth in the third quarter in the construction material, and they were talking a lot about roofing and re-roofing, especially in the U.S. Is that an area where you're not that strong? Are you in different areas? Just to understand the big difference between them and you in terms of growth. Thanks. Yeah, maybe I'll take the first one here on the personnel cost side. Across the board, I think, yes, on the one hand, I think we managed it quite well in terms, and I was referring to operational leverage and not having to add, let's say, as much resources or as many resources as growth are increasing. That's one element. If you specifically look at the wage inflation, there is a certain element of it. If you compare it to, let's say, previous years, there is a bit of a higher inflation on the personnel cost side, but it's relatively limited. It is also not in all the countries the same way. There is countries, and here I would point out that the U.S., where it is more prevalent, but we also work a lot on optimizing and making our processes more efficient in order to be able to mitigate this. I think, let's say, the impact is more than on the customer side to actually find qualified labor to actually do projects. We have some of it in our factories, but overall, have been able to manage quite well so far. Okay. Maybe on the second question on Carlisle, I cannot give you details on the 23% on Carlisle. Certainly, our roofing business is doing very well. We are in the commercial, in the large projects, less in the residential, which may be part of the answer why maybe in the summer season, and considering especially also last year's COVID situation, there may be some other elements that are playing a more important or pronounced role for Carlisle. Our roofing business is doing strong. We had in roofing some issues with raw materials availability. That certainly is not a secret. This is one of the areas in the U.S. that has been more impacted. Still so, we were able to deliver the required volume, sometimes with some extra efforts, bringing in stuff from Europe or from Asia. Our roofing business has a solid growth, and it may not be comparable one-to-one with the Carlisle business model being more diverse. We are also more in the new builds than in the renovation and more in the large projects than in the small residential activities. Okay. That's very helpful. Many thanks. The next question is from Manish Beria from Societe Generale. Please go ahead. Yes. Good evening. My first question is on Europe. I know it has been asked before, but I will ask it again. If you see the volume growth in Q3 in Europe, that was flat versus Q3 2019 level, the volumes. Yeah. It was up 9% in first half 2021. There is a huge difference from 9% to flattest kind of thing in Europe versus 2019. Really, what explains that? I'm still not able to reconcile. I understand there has been some supply chain issue, maybe 2% is off from that, but still there's a lot of gap to fill up. Please, if you can explain that. Thanks, Manish. On Europe, if you look at volume growth, you're right. It's more or less flat. I was giving the two reasons. I think particularly on the availability side, here we have seen some areas where we have been more limited than in the first half year. That's really one of the reasons. If you look at also the geographical composition, here I was alluding to Southern Europe, the impact there. There is also the Middle East, where we have seen a slower growth in Q3, which basically is explaining here the difference. It's obviously also not always quite linear if you look throughout the year. Really not many more specific reasons here why in Q3 here the growth was more limited than before other than the elements I've been alluding to. Okay. Okay. Good here. The second question is basically on this raw material and pricing again. I understand you want to go back to 54%-55%, but not clear when that will happen. My question really is here, like, okay, there is some inflation that continues, but let's say, this inflation doesn't see an acceleration from here. The raw material remains at a very high level and you are doing this pricing. The next year pricing will be such that gives you gross margin expansion or really the gross margin expansion really depends on the raw material cooling off from here. Of course you explained, the price cost can be neutral, but you can still have a negative impact on the margin. My question here is, the raw match stays here, will you get to a pricing that gives you some margin expansion but not only covering the price cost? Mm-hmm. Yeah. If you look across a longer period of time in an environment where there is, let's say, stable input cost, we typically have a 50/ 75 basis points of net price effect. Obviously this is something which we will continue to drive This is different across the countries, depending on the circumstances and many different factors. Yes, in an environment where we have stable prices or slightly declining, we can clearly expand our margins. It is, however, very difficult to sort of pinpoint when this inflection point will be given all the, let's say, elements out there. Secondly, that's the other element which is really ongoing, and it goes into this operational efficiency improvement initiatives. There is also many initiatives basically touching material margin in terms of improving formulation. For example, as we also have talked about examples here, also specific procurement initiatives, structurally looking at our procurement, also structurally looking at certain recipes from a procurement point of view, very closely working with R&D. This is also an ongoing element. Last but not least, it's the innovation side, where obviously new systems typically come at the higher margin than the ones that are being replaced. Also here, this is a continuous gradual effort to maintain and improve our material margins. This obviously, in spite of the situation now, is very much continuing. Mm-hmm. Also the last one may be, I read your press release today. You say 50 basis point expansion through operational efficiency, but you also add there formulation efficiency and things like that. The question is really, this 50 basis point is just on the OpEx line, or it also include your formulation and procurement efficiency? Yeah. Good question. It's only the OpEx line, the 50 basis points, where we specifically have a target out. Yes. Sure. Thank you. Thanks, Manish. The next question is from Remo Rosenau, from Helvetische Bank. Please go ahead. Yes, thank you. In Q3 alone, the automotive business was down 18% organically. This must have had pretty strong negative operating leverage in the third quarter alone. In H1 you had 11% EBIT margin. Is it fair to assume that in the global business in the third quarter, the profitability was going down to a very low single digit EBIT margin? Yes, it is fair to assume obviously that this has an impact on profitability. This relatively pronounced volume impact in terms of having a negative operating leverage. Yes, profitability in Q3 in global business was single digit. Yes. Okay. It was still profitable? It was still profitable, yes. Okay. Did I get you right in one of your previous answers, that looking forward on the whole automotive situation, your best guess is that the Q4 will not be much changed in terms of the whole supply situation, and in the first half of 2022 probably as well, so that we might end up with global car production. This is all guesstimating, it's clear. We might end up with volumes in 2021 being the same as in 2020, and in 2022 probably as well. That would be a very negative outlook at the moment. CHF 75 million for 2020, probably the same this year. The best guess is it's around CHF 80 million-CHF 81 million. It requires, of course, that some of these limitations will really recover, and it won't happen so fast. In the first half, probably still we'll see some issues there, but it can and will not last forever. I think to assume a CHF 75 million for next year, that would be very conservative, and it would also be. I would say, quite catastrophic to the industry and its suppliers, at least for those that are fully dependent on that industry. For us, we can mitigate that. We are working on the future, on the electrification. We have higher contents. Of course, we can also not overcome, let's say, the volume effect. As you asked the prior question, of course, we also see that we cannot offset things like the build rates completely, but we remain at least profitable and we can work on the future challenges that the industry still is facing in addition to these short-term issues. Okay. My last question. Apparently, one hears left and right that the chip producers basically select which car manufacturer receives how many chips, also a bit depending on how they've behaved in the past. You have met many customers in that field. You have some insight. Could you probably tell us who is faring better in that sense? Who receives a bit more chips than others? Okay. I try to phrase it this way, and this is maybe a German expression, but as you shout into the forest that it comes back to you. That means more or less, yes, there are clear differences between the different producers, the car manufacturers. Some have a very strategic long-term relationship with its suppliers, and I would call the premium manufacturers into this category. I would also call the Japanese traditionally into these categories. Then you have others that are much more opportunistic, that try to force by sheer force and volume suppliers into, let's say, conditions that are not so favorable. The chip suppliers certainly at the moment are at the longer side of the stick, and they are not going back to provide those customers with the same, let's say, attention as the others or the alternative consumer of these high-quality chips. Okay. Very interesting. Thank you very much. You're welcome. Thank you, Ro- Thank you, Remo for this last question. This brings us to the end of the call. We take this opportunity to highlight the date of our next publication. We will publish our sales figures for 2021 on January 11th. With this, we thank you for listening in and for your interest in Sika. We wish you all the best. Bye-bye. Thank you, and bye-bye. Bye. 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 your lines. Goodbye.