Ladies and gentlemen, welcome to the Sika nine months 2022 results conference call and live webcast. I am George, 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 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 Corporate Communications and Investor Relations. Please go ahead, sir. Thank you, George, and good afternoon, and welcome to our nine months results conference call. Present on the call with me today is Thomas Hasler, our CEO, Adrian Widmer, our CFO, and Christian Kukan, our Senior IR Manager. We published our nine months figures this morning at 5:00 A.M. The presentation to the results is as well published on our website. As this is a call only, we will not be presenting the slides. They are mainly a basis for our discussion. With this, I hand over to Thomas to start with the highlights of the nine months. Thank you, Dominik, and good afternoon to everybody. It's a great pleasure for me to update you on the nine-month performance of the company. It has been a quarter very much in line with the first two quarters. We have a very diverse picture overall, but in combination, a strong growth, organic growth, has been achieved with over 15%, in all the regions, double-digit organic growth. The underlying markets are very different and remain very different, where we still have in three of the four regions a good, healthy volume growth, underlining the overall growth we have still in, especially in Europe, Central Europe South and North, and negative volume trend that continues also in the foreseeable future, whereas the other regions and main countries still have a solid underlying volume growth. The overall picture is diverse, as I mentioned, but the universal aspect and the universal performance of our company is that independent of the market situation, we outperform the market. In declining volume markets like we see in the distribution, for instance, in Europe, we outperform the market trends clearly. In growing areas like Global Business, where the car production is picking up, again, we are outperforming the underlying market growth significantly. This is a universal Sika DNA to adapt and compensate market trends by offsetting that through our resilient strategies, through our strong portfolio of activities, but also through the segments that we are active in which are more resilient to the general trends of the market. Also, our bottom-line evolution is in line with our expectation, which is overall an over proportional EBIT growth. The first nine months have delivered in this regard an over proportional growth, and this is also our expectation that for the Q4, we will continue on that path and deliver the results as we have outlined in previous statements. I would also like to provide an update on the MBCC acquisition, where we are confident to close the transaction as targeted in the first half of next year. We went into the details at the Capital Markets Day in regards where we stand, and here, since then, we are moving in the right direction, and we are confident to close the transaction as outlined. We are also confident for the remainder of the year that the trends will be, in a certain way, unstable, but our stability will offset, and we'll deliver the results as we have outlined also at the Capital Markets Day, which will be clearly above 15% growth in local currency and also an over proportional EBIT growth, in line with our strategic targets outlined in our 2023 strategy. With this, I would hand over to Adrian, who is going into more of the details on how our performance is built up and also giving you some flavors on margins evolution and expectations. Thank you, Thomas, for the highlights and the introduction, and good afternoon, good morning to all of you. I will now give you further color on the financial results. Starting with the top line, we have continued to deliver a solid sales growth also in Q3, which resulted in double-digit growth in all regions in the first nine months of the year and a local currency growth of 18.5%. Organic growth was 15.1%, whereas in Q3, organically, the growth was actually slightly higher than in Q2. Acquisitions overall in the first nine months added 3.4% of growth. This represents the net impact of the bolt-on acquisitions we have consummated in 2021 as well as in early 2022, and also the divestment of the corrosion protection business in Germany at the end of Q1. Currency effects year to date are -1.9 percentage points negative. FX headwinds have increased in Q3, and this negative currency development is primarily related to the weak euro and the British pound, while the US dollar strengthened over the course of the year. Sales growth in Swiss franc as a result was a solid 16.6% in the first nine months. Moving to the regions. Region EMEA grew 10.5% at constant currencies. Organic growth was slightly higher, 11.3%, while the divestment of the corrosion protection business had a negative scope impact of 0.8%. After a strong growth of the distribution business in 2021, which includes sales via home improvement stores, builders merchants, but also online platforms, the last two quarters saw a clear volume decline in Europe, while the project business, driven by economic support programs and new investments in energy infrastructure, was more robust and saw only a small volume decline. By contrast, growth in Africa and the Middle East was dynamic at double-digit rates. Foreign exchange effects also in this region were quite negative with -6.5% year to date. Region Americas recorded a very strong growth of 31.9%. Key revenue generators were infrastructure projects, and high demand also came from investments in commercial construction, such as stadiums, warehouses, and data centers, as well as nearshoring activities. In Latin America, growth was particularly pronounced in Colombia and Mexico. Acquisition growth, driven by several bolt-on acquisition in the last 18 months, contributed a further 6.8% of growth. Foreign exchange effects here were positive with a positive impact of +4.9%. Sales in Asia-Pacific increased by 17.6%. In China, it was particularly the distribution business which saw ongoing strong growth momentum, recording double-digit growth rates while the project business was impacted by additional COVID-19 lockdowns. Nevertheless, in totality, Sika continues to record double-digit growth in China. Business in India also grew dynamically, whereas growth in Southeast Asia picked up notably in Q3 and marked a double-digit growth in the first nine months. Acquisition contributed 7.1% of growth, while foreign exchange impacts were virtually flat, slightly negative at 0.3%. Finally, growth in Global Business accelerated further in Q3 and posted in the first nine months a growth of 22%, supported by solid demand for new vehicles and a normalization of the supply chain. Once again, Sika's growth was clearly above car build rate growth. Acquisitions also contributed here with 5.9% of growth, while foreign exchange impact remained negative at 1.8%. On growth result level, material margins contracted by 330 basis points to 49.3%. This is down from the previous year of 52.6%, but with a reduced gap of 210 basis points in Q3. Q3 material margin in isolation with 49.1% was slightly higher than in Q2, where we recorded 48.9%. Pricing impact in the first nine months was about 15% and is now clearly overcompensating absolute year-to-date raw material cost increases, while relative material margin in percent still decreased year to date due to the base effect related to the strong pricing component. Dilution from acquisitions accounted for 30 basis points on material level, while ongoing formulation and other efficiency initiatives contributed positively. Operating costs, which include both personnel costs as well as other operating expenses, developed strongly under proportionally. On the personnel cost side, an increase of 7.1% compared to a top-line growth of 16.6% was under proportional due to a solid operating leverage and contained personnel cost increases. Other operating expenses increased by 5%, supported by a gain resulting from the divestment of the corrosion protection business, but was negatively affected by expenses in connection with the acquisition of MBCC Group, with a positive net impact of CHF 129 million. This effect in the first half year was a positive CHF 140 million. Contribution of the many operational efficiency project continues to be in line with the target of 50 basis points of profit improvement, while logistics and travel costs, particularly as well as initial impact from the recently consummated bolt-on acquisitions weighed negatively. Overall, EBITDA growth in the first nine months was 14.6% and an EBITDA ratio of 19% compares to 19.3% in the first nine months of the previous year period. With CapEx modestly above depreciation rate and the higher intangible amortization due to acquisitions, depreciation and amortization expenses increased by about CHF 60 million in absolute terms to CHF 290 million, but disproportionately to sales growth, providing further leverage. As a result, EBIT increased slightly over proportionally by 16.8% to CHF 1,231.5 million, and an EBIT ratio of 15.4% of net sales. If we look at EBIT development on a like-for-like basis, EBIT in percent of net sales is 80 basis points below previous year in the first nine months, but this gap reduced notably in Q3, where it came down to 30 basis points only. In looking below the EBIT line, net interest expense increased by 8.5% compared to the same period of last year. The increase is related to the bridge facility for the MBCC acquisition. Other financial expenses increased by about CHF 14 million to roughly CHF 20 million in the first nine months of 2022, primarily due to higher hedging costs and hyperinflation accounting impacts. Group tax rate in the first nine months of 2022 remained flat versus previous year at 24.6%. On net profit level, the increase was 15.8% to CHF 885.9 million, or 11.1% of net sales, also at par with the previous year ratio. In addition, cash generation in Q3 stepped up significantly due to focused net working capital management with Q3 operating free cash flow CHF 90 million above previous year and the year-to-date operating free cash flow totaling CHF 422 million. This, reducing reported net debt to EBITDA ratio to about 1.2 times on a 12-month rolling basis. With this, I conclude my remarks and hand back to Thomas for the outlook. Thank you, Adrian, and maybe I already provided the outlook in my introduction, so I repeat myself. We see a strong finish to the year in line with what we have communicated at the Capital Markets Day, providing growth level of above 15% in local currency for the full year and an over proportional EBIT result for the full year in line with our strategic targets of the Strategy '23. In addition, as also mentioned before, we are confident to achieve the targeted closing of the MBCC transaction in the first half of 2023, and we will report more on that once we have the clarifications from the authorities. Very good. I think we are now ready to take your questions. We are opening the line, please. Ladies and gentlemen, we will now begin the Q&A session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question, you may press star and two. Anyone who has a question may press star and one at this time. The first question comes from Paul Roger from BNP Paribas. Please go ahead, sir. Yeah. Good afternoon, team. It's actually Paul Roger from Exane. Thanks for taking the question. I'll start with two, if I may. Of course. The first question's on pricing. I mean, I appreciate the old adage that prices never go down in the industry, but I guess we've never really seen them go up 15% in one year before either. My question is how confident are you that you can keep any tailwind from lower raw materials costs next year and that pricing will still be sticky, even in places like EMEA, if demand gets a bit weaker? My second question is, Adrian, you mentioned a strong working capital performance in Q3. I wonder to what extent there was some de-stocking that could have affected your gross margin, if you were pulling through any expensive inventory. If that is the case, do you expect a similar dynamic again in Q4? Thank you. Okay. I'm going to answer your first question on the pricing. The 15%, as you mentioned, this is clearly quite remarkable and hasn't been, let's say, a topic in the last 10 or 20 years, but it has been mandatory by the evolution of the input costs. It's correct, some of the input costs may see some relaxation in the future, but at the same time, we have still a lot of uncertainty in the markets, which are also quite valuable to our customers. I mean, the supply chain disruptions, the safe sourcing that we provide, our global footprint that is leveraging, let's say, challenges in the market are valuable topics, which makes us confident that in the pricing discipline, we can stay strong and avoid that there is a linearity between certain input costs and the overall pricing that we apply. Here it's clearly visible that there is no normalization overall. We have inflationary components, we have energy, labor inflation costs. There will be multiple elements and at the same time, our customers value our products, not just for the product itself, but also for the robustness of our supply chain innovation and also the possibility to leverage our position in the market. Paul, here on the second question on working capital. There is a very sort of limited negative impact here on, let's say, the P&L through these measures. On the one hand, it's really maintaining here the discipline and obviously in an environment with, let's say, increasing input cost and also strong top line, there is obviously an absolute, you know, buildup of working capital. We're very much focused on containing and reducing this. On the inventory side, it's really sort of, you know, regaining your efficiency, which has been impacted by, let's say, the supply chain disruptions, you know, during the last 12 months, leading to longer lead times, a bit more safety stock and also sometimes, you know, having not the right material on stock. This is being worked through and being focused on specifically, and with a positive impact here on net working capital development, but less so and probably to the contrary on the P&L side. Okay. That's very clear. Thank you very much. The next question comes from Elodie Rall from J.P. Morgan. Please go ahead. Yeah. Hi, good afternoon. Thanks for taking my question. My two question will be first of all on gross margin, if I may ask. We've seen an improvement indeed in Q3 at 49.1% versus Q2 at 48.9%. I think expectations are for gross margin to reach around 52% in Q4. Do you think that's achievable or where do you think you could land in Q4 gross margin, please? On my second question is a follow-up on margin as well, with regard this time to the trading margin at 14.2% in Q3. What would you expect for Q4? And when should we expect to get back to the 15%, lower end of the target range? Thanks very much. Yeah. Thanks, Elodie for the questions. Clearly I think what is important is you know having sort of reached this inflection point in terms of material margin trend. I think what I you know believe we're actually here on quite a good track now on the pricing side and with let's say input cost just about you know having plateaued you know towards the end here of the quarter. I mean we must not forget that with let's say a 15% pricing the mathematical impact on the material margin would be around 750 basis points if we were just you know passing on input cost increases in absolute terms. Here we have made quite some good progress, and the expectation is that we will now continue to improve material margin sequentially. Will we be reaching 52% in Q4? I don't think so. The target is clearly to you know get above previous year and further and further up. Also when you look at let's say the EBIT margin you have mentioned the 14.2%. I mean, on EBIT level we have you know clearly here reduced you know the gap to previous year quarter on quarter. Also, in terms of like-for-like comparison, as I have mentioned before, and here the target and here we feel quite confident that in Q4, you know, the isolated EBIT margin will be above the 14.2% we achieved last year, or 14.1%, it was actually. Okay. Okay, thanks. The next question comes from Matthias Pfeifenberger from Deutsche Bank. Please go ahead. Yeah, thanks again for taking my questions. Maybe on the volumes, could you shed some light on European volumes in the Q3, is it like down 3%-5%? And can you remind us of the pricing base in Q3 and Q4? Did you already raise prices in Q3 and Q4 last year? And then also on 2023, can you confirm the margin flow at 15%? And will you strip out the integration costs of something like CHF 80 million next year, or will that be digested in the operating figures? Thanks. Yeah. On pricing, year-to-date, the 15% in the first half year was around 14%, so we have increased that further against here clearly an increasing, you know, pricing trend in the previous year. So as I mentioned, made very good progress here on that front, and we also continue to increase prices in, you know, some of the areas, particularly where we continue to see increasing raw material cost. I mean, there is clearly some areas where this where we see this. On European volumes, and here we have to make on EMEA volumes, we have to make distinction here clearly in the Middle East and Africa, continued strong growth. In Europe itself, we have particularly a volume decline in the distribution channel, whereas, as mentioned, the direct sales, the project business is much less affected. In Europe itself, you know, volume declines in Q3 have been, you know, high single digit. Here the situation has not been very different to, let's say, the majority of Q2. Okay, thanks. Just a follow-up on the guidance. You said basically you're better than 14.1 in Q4 last year in the Q4. That obviously a bit contradicts a bit with your guidance of disproportionate EBIT growth. What do you regard as over proportional EBIT growth? Is it 16% when top line is 15%? I mean, in our fall buckets, over proportional means maybe, I don't know, more than +5% in terms of growth outperformance versus the top line. Well, in our read, clearly over proportional means over proportional. Last year we had a 15.0% EBIT. Anything above that, and I think it is a bit speculation at this point, you know, by how much this is going to be. This is and remains our guidance, and we remain also confident that we will achieve this. Okay, thanks. The next question comes from Priyal Woolf from Jefferies. Please go ahead. Morning. Thanks for taking my questions. I've just got two. The first one is, with regards to the distribution channel. Obviously you've been increasing your exposure to this, since you acquired Parex in 2019. Do you get the sense that, within that channel, there is a build-up of inventory at all, and therefore do you see any risk of, destocking impacting your volumes going forward in any particular regions or products? The second question is just a quick follow-up on the gross margin. If there aren't any huge surprises to raw materials going forward, and you put through the price increases you plan on putting through, when do you think it's reasonable to get back into that usual 54%-55% range? Thank you. Well, thanks, Priyal for these question. On the distribution channel. I mean, there is no let's say significant you know destocking typically, just you know given also the let's say the sheer volumes. Also, when you look at, let's say, distribution in itself and with the various sub-channels, there is quite different developments. I mean, we have here the volume topic clearly in Europe, whereas in other areas it is the opposite or a lot less pronounced. It is clear that particularly due to, you know, COVID, there has been a very strong growth of, let's say, products typically going to these channels or applications where, obviously now there is sort of a partial normalization taking place. Here the destocking effects on our business, on our volumes, if anything is very small or temporary. Now, obviously the question regarding, let's say long-term, or let's say midterm relative growth margins, also here, that is, you know, a difficult question to answer. It will certainly not happen next year. Due to this mathematical effect now having basically lifted the base quite strongly, obviously there can be sort of a longer time until we move back, depending on also how, let's say, overall prices and input costs move. I think it is clearly more important, that's how we, you know, steer the business to basically continue to increase again material margin and particularly then on the bottom line, you know, drive over proportionally EBIT growth. Thank you. The next question comes from Harry Dow from Société Générale. Please go ahead. Yes, good afternoon here. My question is like, what is the outlook, I mean, on the volume for next year? Could Sika be very resilient, like, having, like, flat sort of volume? Or you see, I mean, sort of a decline like low single digit, mid-single digit? Thank you for the question. This is, of course, a bit speculative. We don't expect that next year will be back to normal. We have many elements that will drag on into next year. That's very clear. At the same time, there are, let's say, upside and downside potentials everywhere. I think China, for instance, is a very important market. I would be slightly positive that after this the difficult COVID times, that there will be a relaxation and also some recovery of that market. The Americas has a strong momentum. We don't see any good reason why that would stop abruptly, but it could soften eventually. You know. There are elements in Europe with the war that is unpredictable, how it will further move. Here there are many elements that may play a role in how it goes. I would say refraining from providing any specific guidance. The guidance that I would clearly make is, you know, whatever the conditions are, our aspiration and our performance shall be measured against the local environment and the local mode of operation. If there's a negative volume, we wanna be better than that. Equalizing, flattening that. We have a resilient strategy. We have a strong portfolio. We have all these countries that are doing extremely well, and we have companies that have challenges or countries that have challenges, so to say. It is too early to provide a guidance, but whatever comes, our aspiration is to outperform and stay within our long-term performance goals that the Strategy 2023 is outlining. I have a follow-up also here. The second question. If you look at the other OpEx line, you know, just removing the personnel, just the other OpEx line that you report, I mean. If you look at it, I mean, Q3 level, also the first half, you know, if you exclude all the exceptionals, it was growing like double-digit, I mean. Just trying to understand, like, because you have a strategy of, I mean, some synergies plus also, I mean, under-proportional growth, you know, like getting 30 basis points expansion each year by cost cutting or operational synergies and things like that. That's not working out here in the exact sense, I mean. It's a double-digit, I mean 10%. What's the reason for that? Also, what is the outlook like next year? Also could be a good inflation year for this other OpEx line. On the other OpEx line, after this double digit, it is, you know, clearly below top line. It is also clear that, you know, some of the inflationary areas, when you think about, let's say, logistics cost, and when you also think about the energy cost, although this is a relatively small item, in our case, but also, let's say, travel cost, you know, having come back to normal levels, you know, this is an element of, let's say, you know, cost inflation there, which, at least partially will be on, let's say, the right basis again, at year-end. This is also an area where we, you know, put some, you know, pricing elements in form of surcharges out. This has also to be seen in that context. Clearly going forward, you know, there will be a continuation of this improvement, particularly, you know, driven, you know, through these operational efficiency, you know, projects which will, you know, continue to keep other OpEx development below the top line development. Mm-hmm. Okay. The last one, like, the gross margins in Q4 will be flat YOY or not? You mean Q4 compared to Gross. To previous year. Yes. Yeah. Yeah. now compared to Q3? Previous year. To previous year. Here, you know, clearly the ambition is to, you know, move that above, you know, previous year level. Okay. Mm-hmm. Perfect. Thank you. The next question comes from Martin Flückiger from Kepler Cheuvreux. Please go ahead. Yes. Afternoon, gentlemen. Thanks for taking my questions. First one is coming back to the EMEA volume issue as you've named it. My understanding from your elaborations, can't remember now whether it was Adrian or Thomas, to be honest, but was that, you know, project business was also slightly down. Was that a misunderstanding on my part, or was that the case? Particularly, you know, I'm wondering about changes in momentum versus Q2 on the project business side, leaving distribution aside for a minute. What are we seeing there? Are we seeing, you know, further slowdown, stable growth, project business? What's happening there? That's my first question. I'll come back to the second one in a minute. Yeah. On the project business, yes, there was a slight volume decline. Obviously, there is very, you know, different markets here within Europe. For example, one being affected is the UK. In terms of, let's say, sequential development, there is on the project side probably a small, you know, negative development compared to Q2, but not in a major way. What does your project pipeline look like for EMEA over the next six to nine months? What does that tell you? Is it a further slowdown or what's on the cards here? Well, the pipeline actually looks quite solid. We also have to see that obviously many of, let's say, the sort of stimuli measures, particularly also related to sustainability aspects, have not really taken, you know, a strong foothold yet. On the, let's say, for infrastructure side, there is many, you know, good projects coming. The pipeline doesn't look worrying. Okay. Thanks. Just on the pricing, the way I understood it is that you had about 14% at H1, about 15%, for the nine-month period. Now we've got an increasingly challenging comparison base, right, in Q4, if I remember correctly from last year. Do you expect that number, that 15% number for the nine-month period, to be lower in Q4? Or it's, you know, numerically, are we gonna see further acceleration? Yeah. I don't think we will see an acceleration. You're right, particularly, you know, Q4, you know, last year, there was, you know, clearly also more pricing impact than in the part before that of last year. While the overall prices will, you know, continue to go up, at least slightly, on a year-over-year basis, there's more of a flattening or possibly even a small negative effect. There is clearly, well, unrealistically going to be an acceleration on the. Right. on the pricing side. Okay. When you say negative effect, you mean slightly lower than Q3? Well, just let's say for the full year, as obviously the Right. The curve was much steeper last year in Q4. Right. Okay, thanks. It's helpful. Just my final one, please. The tax rate is a bit volatile as we go into Q4, at least historically. It's actually been the case in 2020 and 2021. I was just wondering what we need to, you know, what we should pencil in in terms of tax rate assumption for Q4 and for the full year. Yeah. I mean, you're of course right that, you know, tax rate per se and particularly Q4, there is a certain volatility typically. I would say the full year tax rate, you know, should be, let's say, at a similar level to the previous year, obviously, you know, give or take, you know, some basis points. I don't foresee sort of, you know, a meaningfully different development. Right. 21.5 is the what- That was the last year's rate. Yes, around there. Okay. Thanks so much. The next question comes from Cedar Ekblom from Morgan Stanley. Please go ahead. Morning. It's Cedar Ekblom. Thanks very much for taking my call, guys. Just one question on the Global Business. That business has seen a lot of margin compression over the last couple of years, and it was clearly a strong improver- Mm. in the Q3. Can you talk about how we see the margin in that business developing over the next 18 months or so, and if there's any reason why we shouldn't be able to get back up to the, you know, sort of 16%-17% EBIT margins that we saw in that business a couple of years ago? Thank you. Yeah, I take that question, and I would say the automotive business, which is largely the global business, is a business that has many long-term contracts. Therefore, you know, the margin pressure that we have seen based on volume, of course, which is leverage or missing leverage, but also on the input cost transfer, which are taking more time than in our other businesses, will mean that also the recovery of the overall margins will take more time than the other business. It's clear that our expectation mid- to long-term with the normalization of volume will also bring back the profit level as you have outlined to the level before the crisis started in 2019. That's clearly the goal. It takes more time than in the other businesses. We are making good progress in this direction. It won't be as quick as in the other business. Great. Thank you so much. The next question comes from Remo Rosenau, from Helvetische Bank. Please go ahead. Yes, thank you. You mentioned before that your ambition is clearly to get the gross margin in the Q4 2022 higher than in the Q4 of 2021. Now, so far this year, you were able to recuperate quite some of the margin of around 50% of the margin loss on the gross profit down to the EBIT margin. Let's say, the adjusted EBIT margin, excluding all the extraordinaries. Could we take the assumption that if you reach a slightly, well, let's say a flat gross margin in the Q4 versus the previous year fourth quarter, that we should still see an improvement on the EBIT margin? Yes. I think, you know, directionally this is right. Again, if you look at sort of the development of, let's say both the gap compared to previous year material margin, but also what I refer to as sort of a, you know, like for like development without dilution from acquisitions and the one-offs, I mean this is clearly being the case. At that level, we, you know, should indeed, you know, reach then a higher EBIT margin in Q4 compared to the previous year. Okay, great. My other question, you had around 50% organic growth the first nine months, which basically equals the price increases, as you said. You said three out of four world regions still see volume growth, so the negative impact on the volumes is mainly Europe, if I understand you correctly. Could we take the conclusion that the downturn in European volumes is overcompensated by the volume growth in the other world regions and by the Global Business, but not to a great extent? I mean, moderately overcompensated. Yeah, that is also correct. Okay. We talk about low single-digit overcompensation in balance then. Yes. Yeah. Okay. Great. Thank you. Thank you very much. Next question comes from Markus Mayer, from Baader Helvea. Please go ahead. I have three remaining questions. The first one is again on the demand, the second one is the pricing, and the third one then on your portfolio. Firstly, on the demand, you said that you see a strong finish into the year. Does it also mean that the momentum you have seen in the third quarter does not differ much from the momentum you see in the Q4? Because you said not only for Europe but also for parts of the US, that in certain business parts, the growth is going down. That would be my first question. On the demand side, I mean, we have, if we have, I mean, if you compare Q3 to Q2, I mean organically, and, you know, overall, we have, and this is including price, and there is a, you know, certain, you know, positive, you know, pricing element to it. We have actually been a little bit higher. I would say demand development or volume development overall is probably slightly, you know, negative, but here in that sense, overcompensated by price. For Q4, we're not expecting sort of materially, you know, different development. I mean, Europe will continue to be challenging, but in the other markets, I'd say the trend development should also not, you know, be significantly different. In Global Business where we had a very strong volume quarter in Q3, particularly also at least partially related to quite a weak comp. Here the volume growth versus previous year is probably a bit lower than in Q3. Okay. Think I understood. Second question on the prices. From your contract, I understood that there was a kind of a delaying effect until you could then increase your prices and then the prices became effective. I guess that the momentum of the prices is still slightly accelerating in the Q4. Is this a correct assumption that it might accelerate over the Q3 or should be maybe basically the full-price level of the Q3 flat into the Q4? Yeah. I think it will not be accelerating as discussed before. We will see some incremental price increases. You know, given the fact that price increases last year quarter-on-quarter was quite dynamic in Q4 as we sort of started to you know catch up. You know, you cannot talk about you know an acceleration of the pricing impact. It will rather be you know flat to let's say quarter or year-on-year rather be slightly negative given the strong development of last year. In terms of obviously contribution you know we can expect a certain additional impact. Okay. Understood. Then my last question would be, if you would assume next year or the next two years a financial crisis-like situation, where in the financial crisis your volumes went down, but earnings went down only a single digit. If you compare your portfolio currently versus the portfolio you had in 2008-09, what would you flag has changed and makes this your portfolio more defensive or are there areas which you would see are more cyclical? In general, I would say there is rather sort of an increased level of resilience, you know, give or take. On the one hand, it's really sort of the geographical spread, and that's, I would say, always the case, but particularly in, let's say, a crisis that there is clearly not a uniform development, you know, country by country, region by region. You know, typically the refurbishment and repair activity is much more resilient than new build. I think here we have rather sort of increased that share. Also, obviously, there's many factors, but usually also, you know, going through distribution has in most cases a rather stabilizing effect. I would say, certainly not less resilient, probably rather a bit more, comparing 10-12 years ago. Okay. Thank you very much. The next question comes from Alessandro Foletti from Octavian. Please go ahead. Yes, good afternoon, everybody. Thank you for taking my questions. Can I please ask you two, one on personnel cost and one on China maybe? It should be very quick, I believe. Your personnel cost in the nine months are now down to 16.4%. This is really a good leverage. Can you maybe explain a little bit more what kind of measures you took here to reduce the costs so much and or not allow them to grow so much and give a bit of an outlook? What do you expect in the next quarters? Mm-hmm. Yeah. Well, thanks for this question, Alessandro. Yes. I think on the personnel cost, it is, I would say, let's say the inflationary element or the cost increases overall is quite contained. Obviously here we continue to work, you know, through sort of, you know, efficiency improvements in processes overall, and obviously with sort of limitation on, let's say, headcount increase. Obviously, yeah, the leverage, you know, does help with a strong top line, but that's really managed in this view. We have indeed, let's say if you look at sort of the personnel cost increases on a like for like basis, here, cost increase has not gone up significantly compared to, let's say, a more normal environment. I mean, we're typically being active in all across the globe also in, let's say, high inflation environments where we're typically sort of around 3% sort of wage inflation across the board. This is sort of around 4%, now. I would expect going forward, for next year, this to rather increase, given some, let's say, backlog in terms of wage development in certain countries. Also not, let's say, dramatically overall. Okay, thank you very much. The other question is more regarding China. I mean, I understand what you say about your distribution business, which is basically, if I understand correctly, growing because you're grabbing market share, entering in all possible selling, distribution points. Maybe can you confirm that, first thing? Second, I'm still a little bit puzzled when I hear people like Schindler mentioning the big builders in China who've been talking about, you know, stoppage of projects to the tune of 40%-60%. Can you just simply confirm that it doesn't bother you? It doesn't touch you. China is an interesting economy, and certainly a challenged one. The housing market and the evolutions are, let's say, certainly very different than they used to be, and they have an impact on our business as well. But the first part of your question, why are we growing double digits in China? Yes, it has very much to do with our distribution expansion strategy, which is a continuation of the prior year's expansion. We are covering new territories. We are increasing our points of sales. We had last year around 140,000 points of sales. This is increasing to 170,000 point of sales across the whole nation. This is fueling our market share gain, as you correctly outlined. It is against probably a negative overall housing market where, especially on the residential side, we see that the big cities where we started our expansion strategy, that we are also impacted. Overall, in sum, it is very healthy double-digit growth that we achieve on a continuous basis. We also expect that going forward. The base that you mentioned with the Schindler business or with other businesses, of course, our direct business is very much also linked to infrastructure construction. Of course there you don't need so many elevators and therefore, yes, it is challenged at the moment, and Adrian mentioned it. It's more the shutdown of these big production sites that are worrying us. Yes, it's clear that eventually there will be also other factors, but certainly not in a significant way. I'm rather a bit positive that China, after now the party meeting took place, will provide more clarity about the future direction. Clearly the interest is to stabilize the construction business as a main contributor to the overall GDP. We are slightly positive that also there we see a more normalization, but our business is fueled by the expansion in distribution, and that's a great balance that we have in China. Okay, thank you very much. Thomas, since you have been leading the Global Business for a long time, can you give a quick view on how that is developing in China? Is it really? Do you think it will grow? Yes, it is. It is growing in China. It is actually one of the faster-growing regions. They had last year also stronger impacts because of shortages. That was the first time where this automotive industry was heavily impacted, but they are recovering quickly, faster than Europe. Europe is still negative, and China is growing. In China, I guess you're also aware that the electrification is a key feature that they take as a competitive advantage to also expand. Before it was a more domestic-oriented car market, and we will see soon, or it's already starting now, that the expansion with the e-mobility drive across the world will further fuel the car production in China. Since we have the solutions for battery systems and that we have access to the local players as well as to the JVs, this will help us also to benefit from this trend. Okay. Thank you very much. You're welcome. The next question comes from Adrien Tamagnone from Berenberg. Please go ahead. Hello. Good afternoon. I have two questions, please. The first one is on pricing. Can you just remind us for the surcharges where these are implemented across the portfolio in terms of, products and geographies? Secondly, are we going to see further one-off expenses associated with the MBCC acquisition in Q4? Thank you. Maybe firstly here on the MBCC-related cost, yes, I would expect sort of a similar type of run rate as we have, you know, had here in the first nine months. So it was roughly CHF 40 million in the first nine months. Developing Most likely at sort of a similar run rate. In terms of the question regarding pricing and, you know, clearly, I'd say that the surcharge mechanism or surcharges is one of the elements that can be used. It's very different from market to market. Also sometimes it's, you know, short term, it's a surcharge, and then it's being converted into a price increase, or it depends also on, let's say, the customer base. We typically, you know, leave this, you know, clearly to the local organization to, let's say, use the best tool, you know, be it sort of more permanent price increases or surcharges, also depending where, let's say, the cost inflation comes from. What is very important is that there is, you know, a strong transparency where this is happening and how it is happening and whether there's any, let's say, additional need. But the tool itself or the mechanism is very much, you know, a local element. Thank you. The next question comes from John Fraser-Andrews from the HSBC. Please go ahead. Thank you and good afternoon, gents. I'll have three please. The first one is on the Q4 2022 margin. Adrian, you've referenced it, you're expecting it higher than 14.1%, so higher year-on-year. I'm just trying if I can narrow you a little bit further, given the inputs into this with typically in the Q4, you have less leverage. But are some of the operating expenses, perhaps the logistics costs coming down, shipping, et cetera, that could see you sort of not have quite the leverage reduction that you normally see Q4 versus Q3, feeding through into that margin and perhaps lower acquisition costs? That's the first one. The second is in the EMEA decline in volume that you referenced, Adrian. It's high single digits. How widespread is this? Looking at the organic sales it looks like that certainly the decline you've had in the Q3, that's probably around the decline you've got versus 2019. So, this is either a level that the glass is half empty or half full. It's now at the low level; can it go much lower than where it is in terms of thinking about where it is next year. Then finally, in the US, are you also seeing a decline in distribution in that geography? Thank you. Yeah. Well, thanks, John, for your questions. Try to you know answer them one by one here. I think in terms of the component of, let's say, the margin development, and yes, indeed, it's different elements. I mean, clearly on the material margin, we should you know see a further you know uptick as alluded to, given, let's say, the stabilization on broad level of input costs and let's say continued you know pricing and you know elements in Q4. That's you know clearly here a positive development. I would also here expect, let's say the dilution from acquisitions to, let's say, slightly reduce on that level. On the cost development, yes, I mean, there is a certain sort of inflationary environment overall, in you know, relation to this. I mean, you mentioned here logistics costs, and also constraints being sort of you know, levied to some extent. This should or at least could have a certain you know, positive effect, at least you know, quarter- on- quarter. Then it's really you know, continuing to you know, drive operational efficiency projects. We have also a quite good, continued traction on, let's say, the synergy side, you know, still coming from, you know, the Parex acquisitions. As mentioned, let's say, the one-time cost here relating to MBCC will not be, let's say, any different compared to the ongoing run rate. The second one on, let's say, the EMEA volume decline and in terms of, you know, how widespread this is. I mean, if you look at EMEA overall, it's clearly, let's say, Europe, of course, Europe is big. But again, here Africa, Middle East, actually a very, you know, good development here. In Europe it is, you know, clearly the sort of the main markets. I've mentioned the U.K. specifically. I mean, here we, you know, see quite an impact, but it's also France, for example. To a lesser extent in Germany. I think in sort of trying to compare this, maybe to the, you know, previous declines, we also have to see, and this is, you know, clearly the case on, let's say, the distribution side that the comparison to the previous year obviously is a very steep one. There is different elements here at play. As we had mentioned earlier, on the other hand, we have not really seen, let's say, a further decline, you know, compared to Q2. Probably the particular region a bit more affected is Eastern Europe, compared to, you know, the first part of the year and even Q2. Then thirdly, on the US distribution. Here, I would say yes, there is also, let's say, a slower development, but, you know, still growth. This is, you know, particularly also related to quite a strong comparison in the previous year. We see much less negative dynamics in this area compared to Europe. The next question comes from Yassine Touahri from On Field Investment Research. Please go ahead. Yes, good afternoon. A couple of questions on my side on MBCC. First, what are the level of EBIT margins that you expect for MBCC assets, when you consolidate the operation? I remind a level of approximately 8% EBIT margin, after integrating the impact of purchase price allocation and before synergies. Is it the right order of magnitude? Yes, Yassine. The order of magnitude is about right. Obviously, here the details particularly of the PPA still have to be done, and this obviously excludes let's say initial integration cost and also some let's say PPA related one-timers. That's about sort of the initial let's say normalized level, if you will. I have a second question. When you sell the assets from MBCC, will you also sell the intellectual property rights to enable the buyer to develop its own admixture from Polymer? Overall, what kind of research and development capability do you think you want to transfer to maximize the selling price and also to satisfy the antitrust authorities? Yeah, I think it's maybe broadly speaking, obviously the details are not you know fully determined yet. It's you know particularly more related to let's say the sort of to the authorities what here you know the requirements are. I cannot you know give you any specific and definitive answer at this point. Thank you very much. The next question comes from Jean-Christophe Lefèvre-Moulenq from CIC Market Solutions. Please go ahead. Yes, good afternoon. Good, I have two follow-up questions. First, coming back to the European operation, which are posting slightly negative volumes. Could we have more flavor for France, U.K., Germany, and Switzerland in terms of volume decline? Secondly, some of your peers are set to implement a very high price hike beginning of November, which will be the case of Sika in the main European countries. Many thanks. Vielen Dank. Good. Well, first of all, your Swiss German and German is very good. Secondly, let me try to answer the question here on, let's say, the markets a bit more broadly. Clearly, if you look at Europe, I mean, the ones sort of most affected, I would clearly say it's France and the UK and some markets in Eastern Europe in terms of volume development. Whereas in Germany and particularly Switzerland, it's less in relative terms. In pricing, I mean, this is clearly, as mentioned, you know, pricing for us is an ongoing topic. It's also typically not, you know, everywhere and in each area the same magnitude and the same time. Again, I can just reconfirm that we, you know, implement the price increases in various areas, and it very much depends on the overall, you know, circumstances. Let's say that the timing sometimes also, let's say, negotiation progress. There is not a uniform picture, but there will be additional price increases until the end of the year. Many thanks. The last question comes from Christian Arnold from Stifel Schweiz. Please go ahead. Yes, good afternoon. Question on the distribution expansion strategy. You mentioned you have in China increased your points of sale to 170,000 level. What is the end target you have here? And what do you expect for 2023? Will that be also such kind of a support even in a declining market? Thank you. Yes, maybe I can go as far as to say we don't see that this engine is losing steam. This is a huge market and, our market share, is in the high single digits. There is much more room, and we intend also to continue on our path, but we don't limit that with a, let's say, artificial ceiling. We foresee for the next coming years, and also part of our Strategy 2028, that the distribution business in China will further flourish because there is still a conversion from on-site to dry mortars, and there is also still a lot of activities in untapped geographies in China. This momentum will not lose steam, and we will invest in this and will also in 2023 and beyond, use this engine for our China business. You would not rule out that by the end of 2023, maybe 200,000 points of sale, is that for the year a real, realistic number? I know our ambitious management in China. I would say they are clearly going to a target to be beyond the 200,000 by the end of next year. You know, we don't specify that so much. It's part of the expansion plan, but it's a fair assumption. Thank you very much. Thank you, Christine. This was the last question, and this brings us to the end of our call. We thank you for listening to us and for your interest in Sika. We wish you all the best, bye-bye. Thank you. Bye-bye. Bye-bye. Thank you. Bye-bye.