Welfome to our virtual investor event. My name is Ronald Köhler. I have the pleasure to guide you through today's event. We will start with a presentation given by Markus Steilemann, our CEO, followed by a presentation from Thomas Toepfer, our CFO, and we will update you on our vision to become fully circular and on our new way of working. The presentation is available at the Investor Relations webpage for downloading. Afterwards, we will have plenty of time for questions. If you want to ask a question, you can either put that into the Teams chat function, or you can send an email to the Investor Relations department. We will read the question out and answer it afterwards. Before we go to the presentation, I actually want to show you our new campus building, which very well represents our new spirit and our new way of working. A warm welcome to our virtual investor conference. Thank you for tuning in to experience Covestro's transformation toward a successful future. As Ronald said in his introduction, today is about our vision. We become fully circular. Let us explore today where we are on the way of implementing our strategy, Sustainable Future. As always, we trust you have read our safe harbor statement that you can also download from our website. Before we start into the presentation of today, let me start with the big picture of Covestro. As human society, we face universal challenges. These global challenges include scarce resources for a growing population, increasing pollution and climate change, an economic crisis, and the impact of the coronavirus pandemic, and last but not least, de-globalization and trade disputes. Covestro's purpose and vision address these key challenges. Why are we here? We want to make the world a brighter place. Our vision is to become fully circular. The new Covestro strategy, Sustainable Future, was introduced with the full year 2020 earnings call in February this year. Our strategy is about how we set the path for tomorrow. Long term, we want to become fully circular. What does that mean? It means fossil-free polymer production. It means switching to renewable energy. It means managing end-of-life materials and create with our partners joint solution. On our path to circularity, we drive sustainable growth with our strategy. It's all about developing sustainable products and solutions, invest in long-term attractive and sustainable markets, build assets faster and cheaper. The acquisition of the RFM business is also part of this. Through the combination of businesses, we are building a leading sustainable coatings resins player. To achieve all this, we need a strong basis by becoming the best of who we are, so essentially executing on our transformation program LEAP. Along the way, we foster digitalization to become a digital leader in chemistry, and we further develop our We are One culture. These topics also represents today's conference agenda. I will talk about becoming fully circular and sustainable growth. Thomas will cover becoming the best of who we are, complemented by a financial update. Let me first talk about culture, because part of how we want to execute our new strategy is our culture. We call it We are One. Firstly, acting responsibly. During recent quarters of the coronavirus pandemic, I was impressed by how serious the global Covestro team has been about taking care of ourselves and others. Not putting at risk the health of coworkers and business partners truly showed what acting responsibly really means. Secondly, wanting better. Having embarked on our path to a circular economy, I see mind-blowing transformational innovation in our labs, plants, and the entire organization each and every day. Thirdly, winning together. Recent times of constrained supply puts a lot of stress on our customers. Those times also revealed the high level of passion about customer needs that our sales, production, and supply chain teams show every day. Fourth, leading forward. Finally, we have set a future direction towards circularity, and we will lead our industries towards that vision. If you look at the strategic objectives that substantiate our strategy and what we intend to achieve, take a look at the slide at hand. Pursuing these long-term goals will truly transform Covestro. The chapter, Becoming Fully Circular, is all about investing in circular economy projects, almost EUR 1 billion CapEx over the next 10 years, producing 100% of our products from alternative raw materials long-term, and transform polymer research through increasing investments in digital research and development. The next chapter is Driving Sustainable Growth. We grow by long-term average CapEx slightly above D&A. At the same time, we complete an MDI world scale expansion by 2026, and we pursue options for both on acquisitions and Solutions & Specialties segments. The chapter, Become the Best of Who We Are, is about raising the mid-cycle EBITDA from roughly EUR 2.2 billion- EUR 2.8 billion in 2024, maintaining our fixed cost unchanged until 2023 based on the year 2020, improving the EBITDA margin of Solutions & Specialties segment to 17% in 2024. During today's presentation, we are going to elaborate on each of these objectives. depolarizedLet's dive into the first part of today's agenda, Becoming Fully Circular. We have a long history of innovation that is inspired by sustainability. At the lower part of this admittedly very busy chart, you see on the timeline how products and processes related to innovation were inspired by sustainability. Let me pick 1 example. In 2011, we introduced our energy-efficient oxygen depolarized cathode technology for chlorine production at our Uerdingen, Germany site. The ODC technology consumes about 30% less electricity than the conventional process and will be employed in world scale at our new chlorine plant in Tarragona, Spain. The startup is expected during late 2022. At the upper part of the timeline, you see sustainability milestones on a corporate level. Here, I would like to also pick one, a recent one. Our new vision was introduced in 2020. At the beginning of this year, we introduced a carbon dioxide reduction-related component in our long-term bonus system. Today, a significant share of Covestro products positively impact sustainability in our daily lives. Based on 2020 sales, more than 30% of sales are generated in applications that positively impact sustainability. Polyurethane materials, for example, increase energy efficiency of buildings and along the cool chain, as MDI-based rigid foams are excellent insulants. Engineering Plastics, on the other hand, enable e-mobility as lightweight, impact-resistant material options for battery car manufacturers. Polycarbonate blends are also material of choice for electric vehicle charging stations. From our differentiated Solutions & Specialties products, water-borne coating and adhesive systems replace solvent-based systems. Bio-based raw materials replace fossil-based feedstock, all enhancing the ecological footprint of coated objects. This chart, though being incredibly busy, demonstrates Covestro's understanding to a circular economy. Chemolysis is the most promising approach to end-of-life solutions, and I'm going to explain to you why. The gray-pink-purple bubbles in center is our value chain as of today. Each extra processing step on the X-axis requires additional conversion energy on the Y-axis. Hence, moving up. Circular end-of-life solutions aim now to maintain the carbon once extracted from fossil or alternative source in the production loop as long as possible. Conceptually, the smaller the loop, the more attractive for two reasons. Number 1, the smaller the loop, the later the re-entry point as circular feedstock. Second, the smaller the loop, the less energy needed to convert into a circular feedstock. Importantly, any circular loop requires energy to feed carbon back into the value chain. Firstly, obtaining energies from renewable sources, if fossil sources remain the source, the climate effect of circularity might even be negative. Secondly, it is important in this context that producing our products from alternative, that means non-fossil resources. Thirdly, we in the entire value chains, we work and will need to define completely new end-of-life solutions. If mechanical recycling, chemical recycling like chemolysis, pyrolysis, or energy recovery is the best option, that will depend on specific product and industry, as well as the infrastructure and many other factors. Lastly, we strongly believe this task can only be mastered in cross-industry collaboration. On this basis, let's start now with the first of our focus areas. The long-term goal is to obtain all of our electricity from renewable sources. Besides electricity, our required energy also includes heat as well as steam. As of today, three deals on renewable energy are in place. More deals to follow. The first power purchase agreement, or PPA, was signed with Ørsted already back in 2019. Electricity will come from offshore wind park that will be newly built in the North Sea. Starting in 2025, Ørsted will provide us with electricity equivalent to approximately 10% of electricity consumed by Covestro in Germany. The second PPA was signed with ENGIE in early 2021, supplying electricity from 15 newly constructed wind turbines. Since April of this year, about 45% of our site's electricity demand in Antwerp, Belgium is covered by renewable energy, saving about 39 kilotons of carbon dioxide emissions annually. The latest PPA was signed recently with the Chinese company Datang Wuzhong New Energy Corporation for power from solar farms in China's northwest region, Ningxia. This agreement covers the equivalent of roughly 10% of our site's annual electricity demand in Shanghai. The second focus area on our way to circularity is all about alternative raw materials. The long-term goal here is to obtain 100% of products from alternative raw materials. Given the different nature of products, applications, and end-of-life options, we pursue various routes. Three routes shown here, covering some 45 different products that have been commercial for some time and about 90 ongoing research and development projects. Since 2016, we commercially use carbon dioxide from industrial waste streams. Carbon dioxide replaces here up to 20% of crude oil-based feedstock of polyols. Under the product brand Cardyon, these products are marketed, for example, to foamers like Recticel for foam mattresses. In contrast to polyurethane-based foams, polycarbonate can also be mechanically recycled. Here in 2019, we launched our first polycarbonate grades from post-consumer recycled PCR content. These PCR grades have a significantly reduced carbon footprint and are applied in various consumer electronics applications for a second life. Yet another route is pursued for our coatings raw materials. As coatings and adhesives bond to their substrates, separation at end of life is difficult or impossible. Hence, we explore bio-based feedstock. One of our hardeners for automotive coatings contains up to 70% of its carbon basis from renewable raw materials. We work in close collaboration, for example, with the automotive group Audi and the coating experts as BASF Coatings. Another very interesting option in that context is to use certified sustainable feedstock in order to lower the carbon dioxide footprint of our products. It is important to take a more detailed look into this concept. The principle of the so-called mass balance approach is shown on this chart with the example of our raw material for rigid foams, MDI. Fossil and alternative feedstock are mixed in production but separated in bookkeeping. This way, alternative raw materials are tracked through the value chains, and they are attributed to selected end products. The ISCC standard is applied to all stages of the value chain and is recognized for mass balance worldwide. We are all familiar with this concept from electricity. Coal plants, nuclear power stations, wind turbines, solar panels. All sources feed in electricity into the same grid. If a user chooses a 100% renewables tariff, the utility separates the bookkeeping, while the actual electricity is always a mix. The mass balance approach has three main advantages. The first one is alternative raw materials are introduced into value chain as drop-in solutions. Second is this method uses the existing chemical infrastructure with its high efficiency and economies of scale. Thirdly, the quality and properties of products remain the same. The concept of using certified sustainable feedstock as a drop-in solution was a key motivation to enter first supply agreements for mass-balance feedstock in the past 12 months. In the next couple of slides, I would just like to show you the way how it works and how it can be commercialized. We received the first delivery of 1,000 tons of certified mass-balanced phenol in October last year. The Finnish company Neste produces certified bio-based hydrocarbons from renewable raw materials, such as waste or residual oils and fats. Borealis in Austria then converts hydrocarbons from Neste into certified phenol and acetone. We received now the first delivery of 2,000 tons of certified mass-balanced benzene from TotalEnergies in January of this year. For both product groups, these deliveries only mark the beginning. We will expand offer of mass-balanced products in line with customer demand. In order to apply this chain of custody method also to our plants, we also received ISCC Plus certification for Covestro sites. For polycarbonate made in Antwerp, Belgium, and in Shanghai, China, and for MDI made in Herne in Germany and Shanghai, China. I'm pleased to report in this context about an agreement that Covestro entered with a customer, H.B. Fuller, in July of this year. This is a multi-year supply agreement with attractive terms for both parties. If customers see value in sustainable products, their sale can be as profitable as the sale of conventional products. H.B. Fuller is to become the first customer for adhesive application with a mass-balanced MDI. Our joint mission: to replace about 60% of fossil raw materials in MDI by renewable precursor, and thus significantly improve carbon footprint of product. The challenge is to use existing manufacturing processes without technical conversions and to deliver mass-balanced products with no inferior quality compared to conventional alternative. The solution is that Covestro supplies mass-balanced ISCC Plus-certified sustainable MDI as adhesive raw material. H.B. Fuller uses certified MDI for their reactive hot-melt adhesives, mainly used in automotive, wood, composite, and, for example, the textile industries. H.B. Fuller intends to expand the use of this solution into other products and areas of production. The key question for you might be, do we have to invest to supply certified sustainable MDI? This process chart for MDI production illustrates certified sustainable MDI, even with a high mass balance of non-fossil raw materials, is possible with current technology and existing production assets. The dotted green lines indicates non-fossil alternatives for each conversion step. On the right side, we list the various feedstock and intermediates we use along our MDI train. Alternative raw materials as potential drop-in solutions are already commercial or pre-commercial. Covestro is developing bio-based aniline as an alternative precursor. This bio-aniline will be made from industrial sugar. The project is still in an early R&D and, if successfully commercialized, will be our proprietary technology. Another essential question for you might be, what happens if customer demand shifts by large extent to sustainable MDI? Will we be out of business with our existing world-scale production asset? The answer. Due to globally available drop-in solutions for non-fossil MDI raw materials, we see no risk of stranded MDI assets in the foreseeable future. The same that I just explained in principle applies to that question for TDI. Do we have to invest to supply certified sustainable TDI? The list on the right side indicates once again for the various feedstock and intermediates we use along our TDI train, alternative raw materials as potential drop-in solutions are all commercial. Like in MDI, due to a globally available drop-in solution for non-fossil TDI raw materials, we see no risk of stranded TDI assets in the foreseeable future. Now for the purpose of completion, we provide the same analysis also for the production of polycarbonates. Again, alternative raw materials for various feedstock and intermediates along the production are commercially or pre-commercially available as potential drop-in solutions. In total, like in MDI and TDI, we see no risks of stranded polycarbonate assets in the foreseeable future. Having demonstrated now how we really work in depth in all those areas to come to sustainable raw material supply, I would like to take another deep dive in our approach to circularity. I presented four focus areas. Besides renewable energies and alternative raw materials, the other two areas are innovative end-of-life solutions and cross-industry collaboration. Here is one project on this chart as an example for both. Our goal is to reshape the polyurethane value chain for soft foams into a closed loop, as shown in the middle of the chart. The focus is here on chemical recycling of polyurethane mattress foam. We have a proprietary process for recovering both PU components: polyol and the amine or TDA. Our process delivers a recycled polyol in high purity and quality. This is important to enable a high content of recycled raw material in existing processes and plants. Our process also delivers a recycled TDA that fulfills the specifications for conversion into TDI in existing processes and plants. We currently assess that this proprietary recycling process gives us a competitive advantage over solutions that peers are developing for this task. A preliminary life cycle assessment, or LCA, demonstrate a significant improvement of the carbon dioxide footprint compared to the pure fossil route. The significant reductions of carbon dioxide footprints is increasingly becoming a customer demand. We also have developed shared IP on high accuracy, high yield from sorting the respective foam. However, this part of the process is to be covered by an industrial partner. The pilot plant started already up in Leverkusen, Germany in the first quarter of this year. Investment into a first commercial plant is about to be kicked off soon for an intended startup in the mid-2020s. Together, all shown efforts on way to full circularity, we will ultimately progress to climate neutrality. As of today, Covestro can achieve large parts of progress toward climate neutrality with existing technologies and production assets. What does climate neutrality mean? Here, it is all in the discussion about defining climate neutrality as absolute carbon dioxide reduction for Scope 1 and Scope 2 emissions that make up roughly 20% of Covestro's total greenhouse gas emissions and that we can directly influence. Roughly 60%, as shown on the chart of greenhouse gas emissions, are related to our upstream value chain, the majority of this to our feedstock. Switching to renewable feedstock or mass balance feedstock, as presented, would significantly lower the carbon dioxide footprint. Another roughly 20% of greenhouse gas emissions is related to downstream value chain. A large driver here are consumer preferences, behaviors, and the willingness to pay. Those Scope 3 emissions, we can only influence indirectly. There's options for Scope 3 emission targets, and they are in discussions. One would be an intensity target, so reducing emissions per ton of production. Ultimately, the value chain partnership must lower their direct emissions to reduce our indirect Scope 3 emissions. That only works in close partnerships, collaborations, and stewardship along the value chains. Which technical options exist today, and what are their limitations? Well, technical options mostly exist today. Some examples are listed in the lower part of the chart. However, there are various limitations that prevent a short-term adoption. For example, those limitations relate to capacities of alternative feedstock, infrastructure, renewable energies, or necessary investments and readiness of new end-of-life technologies. However, I am optimistic that politics and industry together can solve this, but it requires tremendous efforts. Besides all this, besides all the discussions and preparation and really making of climate neutrality, we also discuss the targets that are associated with that. There is already a comprehensive set of key performance indicators and goals underway as part of the Covestro non-financial disclosure. In our long-term incentive remuneration, a carbon dioxide equivalent reduction key performance indicator was introduced for our top management at the beginning of this year. In the short-term incentive remuneration, we plan the addition of a non-financial KPI for 2022. Data to the Carbon Disclosure Project Climate Questionnaire was submitted during the summer. Our first rating is pending and to be published soon. The Scope 3 greenhouse gas emissions are in preparation to be included in our annual report 2021 and will be audited by KPMG. At the same time, we are planning a more comprehensive climate-related disclosure according to the standards of the Task Force for Climate-Related Financial Reporting, short TCFD, as a part of our full-year 2021 results. The full-year 2021 results will also contain disclosure in line with the EU taxonomy. I am convinced the additional non-financial disclosure underscores our commitment to sustainability and will in future better allow to track our progress towards our vision of becoming fully circular. With that, allow me to switch to the next chapter of our Sustainable Future strategy. The recent political initiatives create a material demand boost for our products. Around the world, quantitative climate targets have been agreed. According measures and initiatives are being set up. This applies to the European Union end-2019, to China in fall 2020, and recently to the United States as well. They all target for the reduction of greenhouse gas emissions and climate neutrality. What they all have in common, in all regions, we see emission reduction targets for building and insulation. Reducing emissions through higher energy efficiency standards for new buildings and promoting renovations of existing or old buildings to higher standards. In all regions, we see emission reduction targets for automotive transportation, mainly by shifting from combustion engines based on fossil fuels to emission-free electric vehicles. How Covestro products provide solutions to these challenges is what we are going to look at on the following pages. Let's first and foremost look at the standards for buildings. How do increasing energy efficiency standards and renovations of older buildings to higher energy efficiency standards impact Covestro? These macro trends increase long-term demand for polyurethanes. Higher energy standards are difficult to achieve with inferior insulation materials. Polyurethane-based insulation is one of the best options to reach high energy efficiency or zero emission standards. All over the United States of America, the European Union, and China, higher energy efficiency standards for buildings have been declared. How much more polyurethane per building is required to insulate a building in order to fulfill the targeted high-efficiency standards? You see regional values on the right-hand side of this chart. In Western Europe and in the U.S., it's around 40% more polyurethane than used for current insulation standards. In China, it's about 30% more polyurethane. It becomes even more tangible if you look at the absolute values. Building a standard one-family house at zero emission standard in Western Europe requires around 1.2 tons of polyurethane for insulation. Interestingly, we are indifferent to new building versus renovation because upgrading a standard one-family house with insulation standards of the 1970s to a modern zero-emission standard also requires around 1 ton of polyurethane. How do climate-related policy targets around the globe affect the Covestro-relevant automotive market? A shift towards electric vehicles means a boost to the demand of Covestro products. The chart in the center combines two trends. First, shown by the lower part, the light pink part of the columns. Industry consultants expect the number of annually produced light vehicles to increase by 25 million by 2025. This is translating into an annual growth rate of 6%. The major growth driver for automotive industry are electric vehicles. Hence, the annual number of produced battery electric vehicles, or BEVs, is expected to increase from around 2 million in 2020 to more than 13 million in 2025. Shown as the dark pink part of the column, this share is to increase from 3% as of today to 13% of total light vehicles. Especially the expected outgrowth of BEVs translates into increasing demand for polycarbonates per vehicle, and that is also shown on the columns on the right-hand side. While an average conventional combustion engine car consumes around 10 kg of polycarbonates, single crash-absorbing battery housing of a BEV car already consumes around 8 kg of polycarbonates. This application alone nearly doubles the need for polycarbonate per car. Other aspects of e-mobility from car design to functionality also favor the use of our polymers. Generally speaking, upper-class vehicles consume significantly more Covestro polymers than standard models. Accordingly, an upper-class BEV needs up to 5x more polycarbonate than a conventional car. How do future demand trends translate for the global demand of MDI? We expect MDI demand growth to accelerate from today around 5% to around 6% per year. The key underlying driver here, as already elaborated, is the increasing demand in construction coming from both new buildings and renovation of existing buildings. Both factors together let PU-based insulation outgrow the general construction. The superior price-performance ratio of MDI also supports the substitution of competing inferior insulation materials. Against this backdrop, we expect MDI demand to outgrow MDI supply in the foreseeable future. The MDI industry utilization rate is expected to move towards levels with pricing power for suppliers. The expected annual supply growth amounts to 5% between 2020 and 2025. Herein, the by far biggest announced expansion of 500 kilotons by one competitor in China has already been on stream since February this year. During the next two years, we do not foresee any major capacity expansion at all. I think it is now the right time to talk about an MDI investment. With this very favorable outlook for MDI, we resume our MDI world-scale investment to enable further growth. As a recap, in October 2018, we initially published our investment plans into an MDI world-scale plant in Baytown, U.S. In January 2020, we put these plans on hold. Today, our MDI production assets are virtually fully utilized in all regions. Despite some planned debottlenecking, we are only able to grow below demand growth until the start-up of a new plant. The investment will also allow us to grow with the market for many years. While we had paused the project, Covestro reached a milestone for higher resource efficiency. In Brunsbüttel, Germany, we successfully launched the pilot plant for MDI production based on the highly energy-efficient AdiP technology. Our proprietary adiabatic isothermal phosgenation technology reduces energy-related carbon dioxide emissions by up to 35% compared with a high-performance phosgenation technology. The reaction is controlled more efficiently and does not require an external heat supply, as the heat generated during the reaction process is used. Also, this significantly improves our cost position. The 12 months pilot phase is now about to be completed, exactly in time for application at large scale in our newly planned MDI asset. After the current project stage, we will analyze and decide if the location will be U.S. or China. Why do we pursue both options? Well, construction costs in the U.S. have significantly increased, leading to a lower return on capital employed versus our original plan. Nonetheless, and unchanged versus our original plans, the U.S. is a highly attractive market in comparison. In China, construction costs have remained relatively flat with attractive return on capital employed. Additionally, strong demand growth in China and Asia creates the need of another plant in this region. In both cases, a ramp-up is planned in 2026. Besides MDI, we also expect accelerating demand for the product group TDI. For TDI, we project the five-year average demand to accelerate from around 5% per year to around 6% per year. There are two key drivers. First one, the recent stay-at-home trend increases demand in furniture with increasing demand for comfort. TDI-based soft foam as the basis for mattresses and upholstery benefit from this trend. Secondly, in automotive and transport, the growth of vehicle production in total and a comfort trend within substitution towards TDI spur future growth. As a consequence, the TDI industry is expected to move into balance. An accelerated expectation of TDI demand growth, as described, meets a lower expectation of supply growth over the next five years. The average annual supply growth decreases from 3%- 2%. Both trends are favorable for a faster than before expected normalization of the TDI supply and demand balance. With competitor projects in delay, we now expect only one relevant capacity addition in the industry until 2025. Covestro aims to grow its TDI volumes in line with industry demand growth. This is supported by a debottleneck investment in Dormagen, Germany, ramping up around 2023, and further debottlenecking measures after 2025. Remember that Covestro is the global cost leader in TDI with a cost advantage of about 55% versus the average of the five least competitive plants. Our favorable cash cost position puts us in a strong competitive position, even in low cycles. Looking at standard MDI and TDI as they are both part of our new segment Performance Materials. It is important in this context to look at the new segment structure. How does future growth of this segment compare to the Covestro group and the other segment Solutions & Specialties? We aim to grow the segment Performance Materials by 3%-4% per year or below the respective market development as we are limited by our product availability. We expect to accelerate this growth again with the ramp-up of our new MDI world-scale plant in 2026. In contrast, we expect a higher growth rate in the Solutions & Specialties segment of 6%-7% per year. The differentiated business is expected to outgrow volumes of our standard business until 2025. We forecast the segment Solutions & Specialties to increase its relative share of volumes from about 1/3 to about 1/2 of our group by 2025. The outgrowth in Solutions & Specialties is mainly driven by Engineering Plastics and S pecialty Films, while other business entities are expected to grow in line with the market. Let us have a closer look at the growth drivers on the following pages. Let's start with Engineering Plastics. Engineering Plastics as one strong growth driver of our Solutions & Specialties segments is heading towards selling higher value products. Instead of selling standard polycarbonates to the merchant market, we plan to steadily increase the internal use, therefore creating more value and outgrowing the market in E ngineering Plastics. The big driver here is, amongst others, auto and transport with 9% market growth per year, especially driven by the structural growth coming from the shift towards electric vehicles. The other two customer industries of Engineering P lastics, Electro and Healthcare, also show healthy demand growth over the next years. Electro benefits from generally strong demand, as well as from 5G and connectivity trends. Healthcare benefits from an aging population and a trend towards home care with flexible devices. With Engineering Plastics, we aim to grow in line with the high growth differentiated polycarbonate business with 8% growth per year. For this, we are investing into additional compounding capacities. Compounding means upgrading of standard polycarbonates with an additional conversion step to highly differentiated polycarbonates. Let's turn now to Specialty Films. Another strong growth driver of our Solutions & Specialties segment is Specialty Films. Here, we expect to double our sales until 2025. With market demand growth of 6% on 2025, we plan to grow the Covestro volume by 14%. We are pushing for raising market share via differentiation with customer-tailored applications. Herein, we contribute our strong technical expertise and filled innovation pipeline. Further relevant driver are joint developments with customers with long-term contracts. We particularly push for market share increase in the medical segment, where we benefit from IP protection, and we plan to outgrow the industry with more than 20% sales growth per year. In the augmented reality business, where we want to grow with the emerging market of holographic light guiding, we're going for both in the existing but still small market of head-up displays in vehicles, as well as in the new market of virtual head-mounted displays and glasses. For additional volumes, we are investing almost EUR 200 million between 2020 and 2025. In our coatings and adhesive business, we aim to grow with the market. We had a period of flat sales volume development in a highly competitive environment with limitations of global supply chains. Currently, we are already sold out in several product lines. For additional capacities, we will invest up to EUR 300 million. With that, we plan to again grow with the market demand. Additionally, there are the top-line synergies from the RFM acquisition, and they are contributing EUR 100 million of sales, what goes along with EUR 40 million of EBITDA impact. Close to my heart is now the next topic. Besides demand-driven and investment-driven growth, innovation is another important growth driver, especially in Solutions & Specialties. The highlight is our new area of digital research and development that has the potential to transform chemistry as we know it today. The principle of work is shown on the chart. There is data generated in labs, and they are transferred to a digital infrastructure. The digital applications allow now seamless data processing. Another example is regarding cheminformatics. For future engineering of chemical reactions in new processes or plants, the data input is taken from the lab plant and digitally scaled up to world scale. This is about time and resource-consuming scale-up process from lab scale to demo scale being replaced by a digital solution, because then all the way forward to a commercial scale would be skipped. Looking at the benefits for Covestro with these two examples, we today estimate that applying digital research and development consistently would result in an increase of research and development efficiency of up to 20%. Secondly, our competitive edge in polymer research could be expanded by digitally simulating reactions for our polymers without time-consuming experience. Thirdly, we also consider to provide digital services to other companies and license models. As a fourth point, the focus for new production technologies is on circular economy. Last but not least, digital research and development will also drive the development of new product formulas for the development of new catalysts. One focus in this area of digital research and development is quantum computing. Quantum computing has an essential advantage compared to high-performance computing, and this is all about scaling. Computational power in terms of bits is growing in a linear fashion, while computational power of qubits, so for quantum computing, is growing exponentially. There's a huge advantage of quantum computing, for example, in computational chemistry, because in the end, computational chemistry is highly complex mathematics. The Covestro approach is shown on the right side of the chart. We work in a network of selected partners. Covestro's key competence within this network is translating issues of computational chemistry into hardware requirements of partners. This is a fundamental challenge because the available number of so-called qubits are below the required number of qubits as of today for an adequately depicting and simulating of molecule segments. At this point, we're working, for example, with two companies, HQS and QC Ware, to develop various elements of the software stack. Google provides the hardware. Last but not least, university research is doing research on fundamental topics, for example, in areas of theoretical physics. I hope I could give you a first impression about where we are on our journey. With that, I'm now handing over to Thomas, who will guide you through our third strategy chapter, Become the Best of Who We Are. Well, ladies and gentlemen, also from my side, a very warm welcome to our virtual investor conference. I'm very happy that you're joining this event, and thank you, Markus, for your presentation of the first two strategy pillars. Let me now talk after the, presenting the vision of the growth path, talk about the transformation to become the best of who we really are. We have grouped all ongoing transformational activities in one program, which we call LEAP, and we initiated this program in 2020. Before diving into the details of that program, let me familiarize you with four major principles that really drive the key actions that are embedded in LEAP, and you have them here on the page. The first one on the upper left-hand side, the first principle is we regroup our businesses in line with the key success factors and according to the idea of customer centricity. That is new because in our old structure, our business units were most of the time grouped according to chemistries, which from a customer perspective, but also from a commercial success perspective, is not always the best solution. The second principle, and you'll find it on the upper right-hand side, is that we make each business entity accountable for all business specific and all success critical resources, and we call this collectively our Run activities. That is also new because before, and you can see this on the slide, there was a missing end-to-end resource responsibility, and our structure did not really foster true entrepreneurship in the company. Principle number 4 of our transformation is that we realign our strategic cross-functional competencies and group functions to foster really the long-term development of Covestro and to promote key strategic initiatives. That's also new because before that, many things were dispersed across the company and not really effective. The last and 4th principle, you'll find it on the lower right-hand side of the page, is we develop a future-proof and competitive cost structure. I'll talk about it in some more detail, but it's also a clear new paradigm because before, our cost structure was not always reflecting the distinct and specific operating models. The laid out transformation of LEAP is really substantial, and these things really started with the top leadership team. Now as you can see, the structure is effective since July 1st of this year. There are no personal changes on the level of the board of management. However, we have shifted some important responsibilities also on this level, I will, and I will talk about it in just one minute. What you see here and what is really important is that the new seven business entities are led by experienced leaders, and you have their pictures on the lower side of the page. You can see this is a diverse team of international experienced Covestro managers. All of them have several years of experience in our companies. They represent various nationalities, academic backgrounds, and professional trainings, as well as locations. I think this is a fantastic proof point for the great talent pool that we have. I should also mention the BU leaders that some of you might know, from some conferences that we held in the past, all have left Covestro for different personal reasons. I said there is an important transformation going on, and I would like to illustrate this, and maybe the best thing to do is with the allocation of our full-time equivalents, so FTEs in the company. You can see this in the two pie charts. The left-hand side shows you the former situation, and the right-hand side is after the transformation of LEAP. What you see on the left-hand side is that the area of our Chief Technology Officer, Klaus Schäfer, used to be responsible for all production plans and a central procurement unit, and that is the light blue area of the pie chart on the left. Reporting to our Chief Commercial Officer, Sucheta Govil, were the three business units, PUR, PCS, and CAS, with their dedicated marketing and sales organizations. What has happened with the transformation, and I think that is really well illustrated in the pie chart in the middle, is that the majority of the FTEs is now part of the operational business entities, and that is shown in pink on the right-hand side. The new seven business entities continue to report to our CCO, Sucheta Govil, but they're now fully responsible and accountable not only for the sales and marketing functions, but really for the end-to-end resource chain. That is a big change in how we run the business, and that most of the employees are in market-facing units and are fully embedded into a P&L responsible entity. The comprehensive redesign of the new business set up and also the new reporting structures, we already presented that earlier this year. The operational run activities, as well as the new reporting segments, reflect two distinctively different operating models, which are derived from a customer-centric view. I would like to talk you through this. First of all, there is the segment Performance Materials. It comprises standard products with focus on reliable supply, competitive pricing, and lowest internal cost. As you can see on the chart, the reporting segment Performance Materials is identical with the business entity Performance Materials. On the lower right-hand side of the page, you see the segment Solutions and Specialties comprises differentiated chemical products that have a higher complexity, that need much closer customer interaction, where innovation and product management are absolutely key. The reporting segment Solutions and Specialties unites the six business entities, which are all sharing the same operational model of a solution specialty provider. Like before, we will also report the segment Others and Consolidation. You see the little gray bar on the bottom, which basically comprises the group functions. Our reporting in the new segmentation will start with the Q3 interim statement of this year, and we will look at some historic numbers in more detail, which we have reconciled with the new structure. You will find this, and I will present this, in the later part of this presentation. Let me just reiterate one thing, which I think is absolutely critical and important to understand our new transformation, because these seven business entities are now fully accountable for all business-specific and success-critical resources. And this chart wants to illustrate the step that we have taken and also the difference to the old organization. On the left-hand side, you see the former three business units which we had, and they were accountable essentially for sales and marketing and some BU-specific R&D. However, they did not oversee the integrated planning. They had no influence on the raw material purchasing, and also not on the production of their products. And on the right-hand side, you see that the allocation of responsibilities for the newly created BEs is different. They have the full sales and marketing responsibility. They do BE-specific research and product application development. They are responsible for the integrated supply chain planning. They do the purchasing of critical products for their specific BEs, and they're also overseeing the production facilities, because they're very different from a 24/7 production to a batch production, which you may have in a Solutions & Specialties situation. That is really one of the key thoughts, and it's a major change in how we run this business. We would like to help you with the reconciliation, of course, from the former business units to the new business entities. The principle that we're consistently following is the distinction between the standard business and the differentiated business. The graph that you see here essentially has two dimensions. The first one is we show the sizes of the former and also the new business entities in proportion to their 2020 sales, and that is excluding our RFM acquisition, simply for the reason of simplicity. The second dimension is that the breakup of the business of the former business units and the allocation to the new seven business entities within the two reporting segments, so that you can really track and trace how things have evolved. You see the segment Performance Materials, it is shown in orange. It comprises our standard MDI, our standard TDI, the long-chain polyols, the standard polycarbonate resins, and also the basic chemicals. The segment Solutions & Specialties, that is shown in pink, comprises coatings and adhesives, raw materials in our business entity Coatings and Adhesives. It has the polycarbonate compounds in our business entity Engineering Plastics. It has specialty MDI and polyols in the business entity Tailored Urethanes, as well as the business entities Specialty Films, Elastomers, and Thermoplastic Polyurethanes, which are comprising the respective businesses. I hope this chart helps you to reconcile the old with the new world. Let us dive a little bit deeper into the two segments, and start with Performance Materials. On the left-hand side of the chart, you have the products again. I just gave you the highlights. What is more important is what you find in the middle. What are the key success factors for the Performance Materials entity? It's first of all ensuring high asset utilization. In order to optimize our output, the entire supply chain and the large-scale production will be planned and steered in an integrated process. Secondly, it's about reliably supplying our customers, and that means both for the external customers as well as the internal customers. Our clear goal is we want to be our customers' preferred supplier. The third key success factor is really strengthening our superior cost position. We have a focused customer and product portfolio, and we will be based on standard products, so cost efficiency and lean order management are really key. What do we achieve with this? You'll find it on the right-hand side of the chart. The benefits for our group is we want to maintain the leadership in our core industries. We want to also implement our growth strategy centered around our vision of being fully circular. We want to create the critical mass for Covestro in these standard offerings. Of course, we will also want to supply our downstream businesses based on market prices. That last sentence is very important. I'll talk about it in some more detail, please remember the allocation or the delivery of products in our inter BE structures is based on market-based pricing. Let's look at the same chart for our Solutions & Specialties business. Not surprisingly, this looks very different. Again, you've got the products on the left-hand side of the chart, and what counts are the success factors in the middle. First of all, it's about implementing a pull supply chain. We will use our deep customer understanding to deliver unique value to our customers. The second thing is being leading in innovation. In order to maximize the value proposition to our customers, we continuously innovate products and applications to stay in the lead. Last but not least, it's about managing complexity. On the one hand, we have to efficiently steer customers and products at a small scale. On the other hand, we have to balance our cost of each solution against the value for the customer and also the value that we can extract in terms of the pricing. That setup will, again, contribute and deliver benefits for our group, and you have them on the right-hand side of the chart. We will maintain our leadership in differentiated niche applications. As for the Performance Materials, this will help us to grow and fulfill our vision of eventually becoming fully circular, and it will also improve the earnings margin from a relatively low starting point. I will talk about this also in some more detail just in a couple of charts. While the two segments comprise essentially our run activities, our group functions, we bundled them on a strategic level to create the so-called build activities. What I'm talking about here, I think you can see in the chart in the bubble, it's about the group innovation. Markus talked about the chances of digitalization and digital chemistry. It's about sustainability, our process technology and engineering functions, but also functions like IT, HR, strategy, and M&A. What we're doing is really bundle those functions as central functions to make sure that we have the critical mass to really be powerful and innovate, to drive the transformational solutions beyond our current business, to anchor sustainability and circularity on a group-wide basis, and to systematically embed and align the measures for the innovation digitalization. As I said, Markus gave you the example of digital R&D. What is key here is we cannot afford to do those things seven times in the group. We want to do it one time centrally and with more force so that we really drive the transformation of the group. I have one example for you which maybe illustrates very well what we mean by this, and the example is for the group function process technology. You don't have to read all the little dots on the chart. Essentially, what we're doing is transforming a decentralized community into a centralized technology enabler. Before the reorganization, each of these 12 colorful dots was one group sitting in different business units, and therefore, it was a very decentralized community. What we're doing is bring this all together in one central process technology organization. First, our process technology now bundles the key technology competencies and digital capabilities to maximize efficiency and reliability of our core manufacturing processes. Secondly, process technology supports Covestro's sustainable growth strategy by rapid upscaling and implementation of leading process technologies. Thirdly, this new process technology groups also supports the transformation to full circularity by developing new process technologies based on renewable raw materials. I think it's easy to imagine you cannot do these things seven times. You can only do it one time, and you need the critical mass in a central function to really have the efficiency and effectiveness for those functions that you need. Let me just touch on one other topic, which is our headcount development. You know that in 2020, we reduced our headcount by 700 FTE to roughly 16,500 FTE by executing our Perspective program, which we then successfully closed at the end of last year. This year, we're steering towards another reduction of roughly 400 FTEs to roughly speaking 16,100 FTE until the end of the year. We are on a good path to achieve this. This is, of course, excluding the people that we took on board with our RFM acquisition. If you include this number at the year end, we will probably look at roughly 17,900 FTEs in the group. What the bar on the very right-hand side in the chart also indicates is that probably with LEAP, we do have further potential for further efficiencies in the group. I will talk about this now in some more detail because what matters much more than FTEs is our ambition to keep our fixed cost flat. That is the key message here. Remember, I said the fourth principle of LEAP was to build a future-proof and competitive cost structure. We said this will be manifested by the target to keep our fixed costs flat all the way until 2023 relative to the 2020 level. Let me just give you a brief recap. We published these numbers with our full year 2020 results in February of this year. They are unchanged since then. As I said, the target is to maintain fixed costs flat until 2023 based on the full year 2020. I should also reiterate that this excludes the STI and LTI bonus schemes because they are, of course, fluctuating. I would like to say that it might sound unambitious, but actually we do think that this is a quite challenging target because first there is a cost inflation that we have to tackle every year, especially wage inflation. Secondly, 2020 is a very low-cost year because remember, we implemented a lot of contingency measures and successfully concluded the Perspective p rogram, so it is a very low base. I would just like to look a little bit at the historic numbers so you can see that the fixed cost development was almost flat in the years 2016 and 2017, despite some dis-synergies that we had, because of the separation from Bayer. There was a strong increase in 2018 given the full focus on growth and many hirings, especially in the engineering and process technology area. In 2019 and 2020, as you can see, active cost management through our Perspective program and some short-term measurements led to decrease in costs. Now let's look into the future and into this year. For 2021, we're expecting a EUR 100 million-EUR 200 million cost increase. This is simply due to some swing backs, but also due to some higher maintenance costs and an increase in investments for digitalization and circularity. In 2022 and 2023, we expect to counterbalance those increases through the implementation of LEAP, so that if you take those three years together, we should be at the same level as we left it in 2020. That concludes our third strategy pillar, and I would now like to talk about the financials. Let me first say, what is the impact of all these things that we did in terms of strategy, but also in terms of acquisitions? I think the first key message for you is we're raising our mid-cycle EBITDA guidance from EUR 2.2 billion in 2021 to EUR 2.8 billion in 2024. Let me just remind everybody on the call, what do we mean with mid-cycle EBITDA? It is the EBITDA that the group should be generating in mid-cycle conditions of the market. We are raising this, as I said, to EUR 2.8 billion. What you can see is that the dotted blue line obviously is much steeper from 2021 to 2024 than it has been in the historic years. There's a clear increase or over proportional increase in our earnings capabilities across the cycle. Now what is driving this rise in EBITDA? First, it is of course, the step up from the acquired RFM business, which we closed successfully in April of this year. Secondly, I will talk about it in some more detail in just one slide. We will generate the synergies from this acquisition, and we're well on track to achieve this. Thirdly, of course, the LEAP program with our cost containment measures will also positively contribute to this increase together, of course, with the growth that we see in the market. As I said, RFM is of course an important factor in this step up, and I would like to give you an update on where we stand with the integration. The key message here is the integration is running well. We can fully reconfirm the synergies, and we're very happy with the operational performance. You have some more details here on the slide. Let me just remind you, when we announced the deal, we said we would target synergies of EUR 120 million. We are now wix months the owner of the business, and I can say that the identified potentials have been successfully detailed, validated and quantified for all measures. Therefore, now six months owning this business, we can reconfirm the EUR 120 million, and we are even slightly ahead in the implementation of our cost synergies. You can see in the chart we are targeting EUR 20 million for this year, and we had originally only penciled in EUR 10 million for 2021. I would also like to highlight that the operational performance of RFM is going well and fully in line with our expectations and the business case that we had. Last but not least, but maybe this is also a very important factor, we are very pleased with the outcome of an employee survey which we conducted because 94% of the RFM employees who joined us said that they were happy with Covestro and positively excited about the integration. I think this is maybe a soft factor, but many of you know that this is the basis for really also a successful financial integration and the business success that we want to achieve with this acquisition. Let me now talk about our cash allocation and our priorities. You know that we have always depicted our priorities in declining order from the left to the right, and that has not changed. Our first priority is CapEx, because with our industry and cost leadership position, this has been the most value-creating use of cash, and we also think it will be the most value-creating use of cash going forward. Second is dividend. We do want to pay an attractive dividend to our shareholders, and therefore we have changed our dividend policy to a payout ratio of 35%-55% based on our net income. Number three is portfolio, and the most prominent example, obviously, is the RFM acquisition. I just talked about it. We're very pleased with the integration. Finally, on the right-hand side, what has our lowest priority are share buybacks. I can tell you we would only do this in a very opportunistic and anti-cyclical way. Currently, this is certainly nothing that is in the cards for us. We're not looking at any options here. Let me talk in some more details, therefore, about the first three priorities that we have, and start with CapEx. If you look at the slide, you see for all the years, first of all, our CapEx spending and also the D&A. Those are the two columns. You see the bluish line, which shows you the relationship of those two. The key message is that over the years, we are roughly spending in line also with our depreciation and amortization. Let's look a little bit into the historic years. You can see that in 2015, or from 2015- 2017, we were essentially underspending because we were growing into our capacities. For this year, 2021, we're expecting a CapEx number of around EUR 800 million, and this is including RFM. For 2022 and 2023, we're expecting CapEx around our D&A, gradually increasing because of also our bigger asset base. For 2024 to 2026, we foresee CapEx above D&A, because CapEx is including the growth investments into the MDI world scale asset. The outer years, so after 2026, we expect CapEx again below the D&A level, with the long-term outlook of CapEx around D&A. I would just like to make a couple of comments. First of all, these projections also include investments into our circular economy projects of almost EUR 1 billion over 10 years, and Markus alluded to that as well. For each year, the numbers that you see here, they also include our maintenance CapEx. For 2021, this is roughly between EUR 350 million and EUR 400 million. The maintenance part should, in absolute terms, slightly increase over time in line with our growing asset base. Let's talk about the dividend. As I said, we clearly want to pay an attractive dividend, and we want that our shareholders participate in the growth of the company with an attractive payout. Our dividend policy is a payout ratio of 35%-55% based on net income, and that policy has been in place since 2020, and I would like to reconfirm it for the future. Now, of course, your most pressing question is what does this mean for the 2021 dividend? We have sketched out a little mathematical exercise here on the chart, and I will comment on that. You know that our EBITDA guidance is EUR 2.7 billion-EUR 3.1 billion for the year, and this would translate into a net income number somewhere between EUR 1.25 billion and EUR 1.6 billion, and you find the number here on the chart. If you apply the payout range of 35%-55% to that would lead to a dividend of between EUR 440 million and EUR 880 million, and you have the per share dividend then below those bars. I think my personal comment would be, when we talk about the payout range, I do personally not consider 2021 to be an absolute peak year, and therefore I would not think that the very low end of the range should be appropriate for this year's dividend. This is of course the CFO's opinion, and I'm not alone determining what will happen. It will also not give you the exact dividend, but at least it will tell you where I personally think it should not be for 2021. With that, let's briefly speak about M&A and portfolio. We have two things here for you. On the left-hand side is the divestments, which maybe sometimes were a little bit unnoticed over the past years. What you can see is that we divested businesses with total sales number of EUR 600 million and an EBITDA of EUR 20 million. However, at a very attractive multiple of 10x. What we acquired on the right-hand side is the RFM business, almost EUR 1 billion in sales with an EV to EBITDA multiple of 6x if you take into full consideration the synergies. We do think that this was a smart approach, and I would say that we will further pursue value-enhancing bolt-on acquisitions for our Solutions & Specialties segment. Of course, we will continue to be very selective in terms of that they have to be value accretive and have to be attractive in terms of the IRR. With that, I would like to go a little bit deeper into the numbers for our two segments. What we have done is to restate the historic numbers into the current structure. Let us now take a look at the financials of our new segments. Here you see, first of all, the Performance Materials segment. What you see is there is a strong recovery after the coronavirus pandemic, and that is the very right-hand bar on the chart. You also see that the numbers, so the sales numbers, but more importantly, the EBITDA and also the margin, are quite fluctuating over time because they're driven by supply and demand. In the years 2017 and 2018, the EBITDA was contributed by the fly up margin in TDI, then the competitive environment began to be quite challenging at the end of 2018. In addition to that, the first half of 2020 was burdened by the impact from the coronavirus pandemic. Since then, however, we have seen a very broad-based rebound and recovery, and we've been virtually sold out since Q4 2020 against the backdrop of strong demand and consistently constrained supply. This is why the numbers are fluctuating. What is important to note is that there is obviously captive supply from the segment Performance Materials to the segment Solutions & Specialties. We charge this at market prices. Therefore, the EBITDA margin that you see here is including the intercompany earnings, but it is without the corresponding internal sales. I think this is something that you have to keep in mind when you look at the EBITDA margin from Performance Materials. Let's now take the exact same view on our second segment, Solutions & Specialties. Compared with the Performance Materials business, the performance of Solutions & Specialties is relatively stable. You see sales are growing until 2018 and then declining from the pass-through of lower raw material costs. During the coronavirus pandemic, Solutions & Specialties was even stronger affected by the automotive industry, which was the industry that was obviously hardest hit. Since then, I would say that volume growth and price increases have led to a strong rebound, and you can see that the EBITDA margin is also fluctuating, but to a lesser extent than with Performance Materials. Again, I would like to reiterate, the captive supply by Performance Materials is charged at Performance Materials market prices, and therefore, the lower margins that you see in 2017 and 2018 went obviously along with higher sales prices from Performance Materials. Let's look at the third segment, which is our Others and Consolidation segment. Essentially, this bundles all the items that are beyond control of our operational segments. Business-wise, this means and includes the side business activities like infrastructure, real estate, and the sale of used assets. It also bundles the group functions, the board of management costs, and the central group projects. Compared to our reporting and our previous structure, the Others and Consolidation now includes really all costs of group functions that are beyond the control of the operational entities, and therefore, the numbers are lower or more negative than in our previous reporting. I would like to spend 1 more minute on this topic of intercompany supply, because here what we tried to depict is the impact and illustrate the impact of the intersegment earnings. With that, the standard product market prices charged by Performance Materials impact our Solutions & Specialties earnings in an anti-cyclical way. What you see here is the blue dotted line that shows the adjusted EBITDA margin of Performance Materials, and it excludes the intersegment earnings. With that, it only shows the earnings with the corresponding external sales which are considered. The intersegment supply is charged at market prices, so the intersegment earnings are determined by two things. One is the Performance Materials prices, and secondly, of course, the Solutions and Specialties volumes. With that, you see the intersegment earnings in 2017-2018 are very high with an anti-cyclical, so negative effect on the EBITDA margin of Solutions and Specialties. I think this relationship is just important to be understood when you look at the numbers of our two segments. There is, however, one thing beyond the pure technicality that I would very clearly highlight here. For, you see here the EBITDA margin for our Solutions & Specialties segment. Our clear message is, and that is the green dotted line that you see, we want to bring the margin of that segment to 17% by 2024. In the past periods, irrespective whether they were more peak or more trough, Solutions & Specialties never delivered more than 14%. We do think that this is unsatisfactory. On the other hand, what I would also say, the major advantage of our new structure is that it gives us full transparency on where we stand with our profitability on a standalone basis for our businesses. Therefore, the key thing for us is to tackle the issue and improve the margin of Solutions & Specialties. You see the key measures on the right-hand side. The number 1 thing for me is focus on value-based pricing. Really be absolutely clear what is the additional value that we deliver to the customer, what are the costs that we are having, and make sure that we can command an adequate pricing and compensation for this added value. This, of course, got blurred in the past because people were looking at the integrated margin. This is over. We will look at standalone margins. I think personally, this will be a very big lever to improve profitability. Secondly, also you see it on the right-hand side, there should be fixed cost dilution because of the strong growth that we're expecting. Markus talked about the 6%-7% until 2025. We have the RFM business and the synergies that we will generate that should also be helpful. Last but not least, of course, also LEAP will help to increase the margin of this business. With that, let me just summarize the Covestro financials. The key message is Covestro is on a growth path. We are raising our mid-cycle EBITDA guidance from EUR 2.2 billion- EUR 2.8 billion in 2024. We're also fully confirming and reconfirming the EUR 120 million synergies that we will generate with the RFM acquisition. We will focus on CapEx, with CapEx being on average slightly above our depreciation amortization. We will improve the EBITDA margin of our Solutions & Specialties business to 17% by 2024. We reconfirm our dividend policy of a payout ratio of 35%-55%. Again, you have also heard my personal assessment of where it could be in 2021. With that, I would like to hand it back to Markus for the concluding remarks. Thank you very much, Thomas. It's always a pleasure to listen to you when you are presenting all those numbers and make it very easy to understand what we are all about and what this business is all about. Allow me to wrap it up for today. As we demonstrated, Covestro is transforming toward a successful future. Therefore, I would like to once again come back to the key highlights. Covestro is to become fully circular with attractive business cases building on mass balances, drop-in alternative raw materials, energy, and innovation end-of-life solutions. Secondly, the future demand growth of Covestro products is boosted by political initiatives around the globe enforcing climate protection and sustainability. The organic as well as inorganic Covestro growth is progressing with the MDI world scale plant project resumed and strengthening Solutions & Specialties business. Our transformation exploit the full Covestro potential supported by customer-centric organization, fostered entrepreneurship, and a future-proof cost structure. We would like to thank you for your trust and loyalty and invite you to be part of our journey. With this, back to Ronald. Yeah. Thank you very much, Markus and Thomas. Thank you all for listening, and I hope you were not overwhelmed by all the details we have given to you. Nevertheless, we still will give you time for more detailed questions. We want to do a five-minute break, and we will see each other then in five minutes from our side back in the studio and from your side, yeah, we are open to receive more questions. We already have a lot. Of course, it's still possible to suggest more questions. See you in five minutes. Yeah, bye. [Break] Welcome back to our Q&A sessions. As I said, we already received a lot of questions. We will try to answer the questions in the following order as they came in. At the end of the day, we already had actually questions which were posted at 11:30 A.M., so be not surprised. If you have posted a question at 2:00 P.M., you might be not the first one. We have so far 22 questions, but as I said, the row is open and you can insert more questions if you like. The first six questions are actually coming from Christian Faitz, who was indeed the first one submitting the first question at 11:30 A.M., but then some more following-up questions. I will read them out and then the team will answer it. The first question is actually on the forced power outages in China, and is there an effect on Covestro or on our value chain? Markus, perhaps for you. Yeah, Christian, warm welcome from my side and thanks for your question. To actually be very precise and clear, we have not been affected as Covestro from those forced power outages, nor to our knowledge, any one of our suppliers has been affected to a significant extent. We go for the second question, and it's regarding our MDI project. Your MDI project, what had led to the decision to optionally do this in China? In 2018, you were discussing $1.5 billion of CapEx. Is that still a current figure for the MDI project? Perhaps, Thomas, for you. Thanks, Christian. There are many things, of course, playing into our decision. I think we talked about China, which is a strongly growing market, but I think you're specifically alluding to the CapEx number, the EUR 1.5 billion, which we cited in 2018. I would say it's not a secret that there has been significant cost inflation since then, especially for materials like steel, but also for labor, especially in the U.S. This is of course also one of the reasons why we're looking into all options that we have. I would say relative to the $1.5 billion, there would be a slight increase to that in China, but there would certainly be a significant increase to that in the U.S., and therefore we are in a very early stage to resume the project and to evaluate exactly this, and to have then a full-fledged business case to then take a well-founded decision. I think we stay with Thomas for the next question, and that is, how do you currently cope with the higher feedstock cost? Are customers still accepting higher prices? Well, I would say the general answer is yes. We have been able to successfully push through the prices to our customers. Therefore, if you look at the mark to market number, which I think is a good indication of what's going on, it stood at $3.1 billion in the middle of the year. It still stands at $3.1 billion as we speak today. I think this is just another proof point that, yes, we have been able so far to push through the price increases to our customers, especially in the more commoditized products. The next question, or the next three I guess, are for Markus. The first one of these three is, do you see a volume impact from the car industry structurally semi supply issues on Covestro? Can you quantify this impact or do your products simply go somewhere else outside of the car industry? Well, Christian, if you look at the trends in the automotive industry, you can see that this semi crisis as your structure, semi supply issues as you have named them, are not there since today. They have been around for a couple of months. I would say even for the last eight months, nine months. It was becoming obvious that therefore there is some topics. On the other hand, I can say that we not only successfully shifted respective demands from the automotive industry into other segments where necessary and possible, but that we are still sold out. That's the current situation. We have seen first slight signs of a very small amount of orders that has been canceled or been postponed, but we are still sold out with all respective assets and with all respective materials that go into the automotive industry. That's the current situation. The next is on the MDI Tarragona project, and the question is a debottlenecking towards 220,000 kilotons by 2022 still in the plan? An additional question on that, are you still planning on 130 KT expansion in polycarbonate in Uerdingen? I guess polycarbonate is actually referring to the compounding we have there in Uerdingen. Christian, on the MDI topic for Tarragona, as we have looked into the investment plans as of 2020, and we have therefore also postponed some of the projects, MDI in Tarragona was affected by these revised investment plans, and that's why from today's perspective, we would expect this 220,000 tons of MDI in Tarragona to come on stream by 2025. With regard to Uerdingen, here we are talking about polycarbonate compounds. That means material that goes into the new business entity, Engineering Plastics. Here we have consistently, let's say, pushed through the respective investments, and that's why these respective investments are actually on stream and are available to the market. Yes. I would like to clarify with Tarragona, we are talking about the 50,000 expansion going from 170,000 tons- 220,000 tons, and that is postponed. Good. That were the six questions. Oh, no, there's another. The sixth one, I forgot it, from Christian still. What happened to your PCS brownfield expansion plans in Caojing? Markus. Yeah. Christian, also here, we have followed up with those plans. Therefore, there's no changes to the original plans. That means we have actually expanded the capacity, based on the existing infrastructure that we have built many years ago already by 150,000 tons. We keep the option to also have an additional 50,000 tons in this overall PCS investment at hand for expansion at a later stage. Yeah. There's another follow-up question from Sebastian. That's on the MDI plant. I'm just reading actually, the additional aspect, which is the return on capital employed. What is our view on the return on capital employed pre-tax or after tax on the China or U.S. MDI investment? Perhaps Thomas. Yes, you know that we have very strict targets, so we want to achieve a return on capital employed that is in line with our incentive system, which says it should be 7 percentage points above our cost of capital, so that roughly equals 15%. That is certainly a challenge for a greenfield investment. We think that we will be at least close to that. Therefore, this is also why we're critically looking into all the options with respect to locations. I alluded to the fact that there has been quite a significant cost inflation in the United States, and therefore it's really a very thorough business case that we're currently building to see what is the right location, also with respect to the returns that we can generate. Therefore, your question is spot on to what we are currently looking into with our assessments. There is another question regarding a trading update question. Okay. Not unexpected, obviously. The question is Q3 trading update. Can you elaborate on the current development? Perhaps also for Thomas. Yes, I think what I would simply like to do is reiterate what Markus said earlier today in an interview. We have given you a range for our expected Q3 EBITDA results between EUR 760 million and EUR 860 million. As I said earlier, pricing has been holding up quite nicely, and therefore we're currently expecting Q3 to come out around the upper end of the guidance range that we have given, so around the EUR 860 million. That is in line with what we said earlier, that pricing has been strong. Next question, potentially also for Thomas, it's from Georgina Iwamoto, who changed, so to say, to Goldman Sachs. The question is, "How do you see the availability of alternative feedstock, and how will you evolve over the next 10 years? Are you able to lock in long-term supply contracts? On what basis are prices negotiated?" Thomas? I think, Georgina, many things baked into this one question. I think we have to really distinguish between very different topics in terms of alternative feedstock. If we talk about energy, you've seen that we have embarked on several PPA contracts with Ørsted, but also for Antwerp and also for other regions. Those things, of course, are long-term contracts and the market is increasingly developing. I think it's slightly more difficult in locations like China and the U.S., but especially in Europe, I think we do have much more opportunities, and here we have long-term prices that we can lock in. The market for those bio-based drop-in feedstock products that we need for our drop-in solutions, that is really currently in its infancy, and I would say, or we would say, that we are the ones who will promote this market and build this market. Because essentially what we're looking at as a chain is increasingly our customers are asking for certified products to also fulfill their Scope 3 emission ambitions that they have and to fulfill the promises that they are making to their customers, and therefore, we do see a pull from our customers. It's clear that we want to be also very proactive to ask those drop-in solutions from our suppliers, and therefore the market is developing. Currently, there is, however, no long-term contracts. The prices are made very much on the basis of supply, demand, and expectations that we have what our customers will ask, and therefore we are very committed to build this market, because we think it will clearly take off over the next number of years. There is an additional question which goes in the similar direction. I'll just read actually the second part. I think we answered the first part. The second part is, "How is Covestro able to make much more ambitious CO2 and circularity targets versus peers?" Perfect question for Markus. Georgina, also warm welcome from my side, and thanks for the question. If you look at this, there's never one single reason in this, let's say, I would say, transformational change of the entire industry. What does that mean? I believe that instead of just focusing on proclaiming even more ambitious targets for this or the other topic, for example, in carbon dioxide or on circularity, what we are aiming for is getting into the making. That means driving the respective projects, making sure we talk to our respective partners on the supplier side and on the customer side. See which feasibilities, opportunities, and possibilities we have by, for example, referring back to Thomas, now really driving also and developing markets for bio-based or alternative feedstock as drop-in solutions. There's numerous aspects that we as a corporation can and will drive ourselves. On top of that, there is customer demand, because we see now in recent months a significant pickup and increase in customers actively asking for products with a lower carbon dioxide footprint, so to reduce their Scope 3 emissions and total emissions for carbon dioxide in their value chains. On top of that, for sure, there is measures by, for example, governments and the regulatory bodies that could help to further push this development forward. We're not waiting for politicians and politics to decide. We try to figure out in which fields can we move forward, in which fields do we have our destiny in our own hands. There we start already doing things and get into the making. The rest, so to say, is the icing on the cake. If regulators walk in the right direction jointly with us, that is highly welcome, but not a precondition for us to move forward. Georgina is also asking a question regarding TDI, and I believe we received many questions on that. I think we elaborate a bit broader here, and then we might skip one or the other follow-up question on that. The question here is demand TDI 6% appears higher than historic trends. What is the driving force behind that, and how confident are you about that 6% growth pattern? Markus? Yeah. Also here, thanks Georgina for the question. If you look at this, there's numerous factors that come into play with those numbers. Number 1 is we are taking into consideration for the five years also the low basis in 2020. That means 2020, the market was down by roughly -8% according to our insights. If you include that and not taking a 10-year outlook, but rather a five-year outlook, you come to growth rates in the order of magnitude of 5%-6%. Secondly, as we have mentioned in our presentations, Thomas has done that, and I also have done that, we're looking into a shift of TDI demand because there is this stay-at-home trend. I do not think that that stay-at-home trend is just a short-term development, but this will change also to some extent or remain, to some extent, after the coronavirus pandemic. That drives demand for furniture, that drives demand for upholstered devices, that drives demand for mattresses, for example. We see as part of the change towards electromobility, also an increased wish for higher comfort. That means different seating in cars, and that requires higher amounts of TDI. These are just some of the reasons that from our perspective, are driving higher demand for TDI. As always, we take lots of data into consideration and we have given you the best shot in terms of a good risk weighting about how we look into the mid-term future. That means the next five years. That trend, if you look at the 10 years horizon, will, from our today's perspective, not stay at that level. In the next five years, we are confident that it stays on that level, as confident as you can be looking into the future. The next three questions coming from Isha Sharma, from Stifel. The first one is about MDI and the MDI exposure to construction. The question is, "Isn't your exposure in construction higher in commercial buildings versus residential buildings? Does this differ regionally? What would it take to penetrate the residential market?" I think it's obviously referring also to our charts with the increased use in residential. Markus, I guess for you. Sharma, it's not easy, because you're referring, let's say, to different individual markets with regard to the property market. Residential versus commercial buildings, at the same time looking at different regions. Yes, there are differences in the respective regions. However, coming back to what we have presented earlier, what I also said in terms of homes that need to be refurbished and renovated versus newly built homes, we clearly can say that jointly with our customers, the polyurethane solutions, the MDI solutions, are still in terms of performance and price, one of the best, if not at least to my understanding, the best material that you can get for money with the respective performance that MDI-based rigid foams have for housing insulation. Long story short, there is opportunities for our customers to penetrate the markets in the respective regions. All those markets are very local, so there is no global recipe to that. Nonetheless, recent years have shown that polyurethane-based insulation systems are gaining market share exactly due to the price performance range. That is happening actually everywhere across the globe. We expect, despite slight differences in the respective markets, that this trend also will continue and with that will also globally benefit the MDI total demand. There is a follow-up detailed question on TDI from Isha, and this is, we also have actually seen a decreasing number of supply projects coming on stream. Specifically, what was pushed out? She suggested, is it Dahua which is pushed out, or is it Wanhua Fujian which is pushed out? Our answer, Markus. Yeah, thanks for that. I'm actually not sure who is actually currently pushing out. My understanding is that Wanhua is not the one according to what we have, who is actually pushing out, but I would actually refer back here to Ronald. Maybe Ronald, you have the details at hand. Yeah, indeed. We obviously always look at a period. This period is now 2020 to 2025. Indeed from our judgment, Dahua will not be able to deliver inside of 2025. If they're coming and we still have them in our models, they will be definitely rather going several years later. On the other side, based on our information, Wanhua Fujian project is running according to schedule. At least we have no other information on that's therefore still in our supply projections for the five years. The last, but least, the question from Isha, regarding China and what could be the potential impact of the current developments in China on Covestro, given the regional importance in production and demand growth? I guess also Markus. Isha. Looking at the overall impact of Evergrande that it might potentially have, first look at the overall GDP contribution of the entire, let's call it construction and also associated service industry in construction. You see that we are just talking about an overall GDP contribution of the entire industry of maybe around something like 10-ish, so 10%, 15%, let's say, of the total GDP contribution. If you put now this into perspective, what could it mean in a worst case or in a base case, according to a recent study that has been published by Goldman Sachs, you can say that maybe the impact of the Evergrande, let's say, issues has an impact of 1% lower GDP growth. There is also certain scenarios that going in a worst case of up to 4%. This is about newly constructed buildings, at the same time, we see and I have elaborated on that earlier, that there is very strong demand also in terms of renovating existing buildings. That alone is a key driver for the respective demand for MDI-based insulation solutions. From that perspective, I would not expect that this has a significant impact on the opportunities for our MDI growth in China or in Asia Pacific. On the energy topics, and I think that is somewhat related to a question that was asked by Christian Faitz earlier, we do currently not see any impacts on our production sites in Shanghai, and we do also not expect any significant impacts on our production sites in Shanghai. The next question comes from Tim Jones, Deutsche Bank, and the question is, do you see differences in how easily available renewable energies or alternative raw materials are in China, Europe, and the U.S., or are all three regions the same? I think, Thomas. Yeah, I can try to take this, Tim. I would say the answer is yes, there are differences from region to region. Just in one sentence, it seems for us the easiest in Europe, then comes the United States, and the most difficult in terms of energy is China. One of the reasons, China, you have got a regulated energy market. You're essentially allocated the energy, and the influence that you have is relatively limited. We're taking various measures here to speak to the government, but our options in Europe are certainly better, and this is why many of the examples that we have cited do have their origin in Europe. In the U.S., the issue is when you're sitting in the Houston area, the wind energy typically is rather produced in California, so it's not so obvious to bring it then to the Houston area if you don't want to deal with certificates and other things. Here it's also a little bit more complicated than what we can do in Europe. I can tell you, we're looking into all options. It's not that we're just focusing on Europe. We really have a broad view on all our production sites in all the regions, and the solutions will be different. Also the situations, as I just described, is different. With respect to bio-based feedstock, also, I would say, but Markus, you can correct me, the situation in Europe is probably the furthest advanced and Europe has a head start relative to other regions with respect to the availability. Good. We would have actually had an additional question from Charlie Webb from Morgan Stanley. I believe they are both on TDI, and both are answered so far, and it's the same as for me from Sebastian Buch's question on TDI. If that would be not the case, I guess, write it again, please, if you see another feature here. Let's go for the follow-up question from Isha from Stifel. The first one is, why do we not receive the volume price split for the new segments, Thomas? Yes, Isha, thank you so much for that question. The answer is you will receive it for our Q3 numbers, and therefore you will have the respective numbers for 2021 and then also the comparables for 2020. Just to manage yours and everybody's expectations, what we will not be able to do is a complete restatement of those bridges and those analyses all the way back to 2016, and therefore, as I said, starting in Q3, you will receive the numbers with their respective previous year comparables. There is also a follow-up question from Isha and another on polycarbonate. Could you also give us an update on the polycarbonate supply and demand dynamic? How do you expect the BPA tightness to develop here? What impact would it have on margins over the next quarters? I am looking a bit, Thomas. I can take it. BPA tightness, I think that's maybe a difficult one. It has been very tight. It has been slightly relaxed over the last, I would say, couple of months or so. We do not have a precise prediction on how exactly BPA prices will develop, but the fact is that we are quite independent because we are producing BPA ourselves. Therefore, we think that at least the tightness will potentially continue for a little while, thereby preserving the margins that we are currently seeing. I think on polycarbonate supply and demand dynamic, we gave you the numbers in the chart. I think this would be all that. There's nothing beyond that that I could currently report, Isha, on the supply-demand balance for PC. I would add to that, the chart we provided all with at our roadshow presentation is, so to say, up to date. We didn't have it here in the set. From that perspective, polycarbonate remains the only segment where we see over the next two years more supply coming on stream than demand. That also makes us obviously cautious on the polycarbonate commodity side, but also as a reminder, we obviously want to take also our upstream commodity part, so to say, and put it on downstream in engineering plastic, and therefore we see An ongoing, let's say, good results in the Engineering Plastics, but potentially some correction, so to say, on the price side of the commodity part. Yes, that's still part of our expectation. We have some several questions. Nevertheless, I would like to take the opportunity and remind you there is still the chance to put in more questions either into the system or send us an email to ir@covestro.com. The next question is from an undisclosed participant, and it is, with the new structure, are there some economies of scale losses as each division purchases separately? Also purchasing. There are some companies in the industry going the other way to ensure efficient supply chains. If you could elaborate on the pros and cons of both, please. Who wants to take it? I think I could take it. I think to be very clear, we did a split, and maybe this did not come across clearly enough. What the BEs are purchasing themselves are the BE-specific and BE-critical materials that they need. All the things that go across BEs, so basic chemicals or also energy, remains in a function that does the purchasing centrally for all the BEs that need those materials. What we put into the BEs are a number of very mission-critical, BE-specific materials where it makes absolute sense that they control also the procurement of those materials. We're not forgoing any synergies here. The next three questions coming from Dan Chung from Redburn. The first one is, any further color on approximate investments on the MDI capacity and, MDI, I think CapEx and capacity? What is the rationale for 2026 ramp up? I thought a world scale greenfield plant takes seven to eight years. I think, Thomas? Yeah, I can take this. I would say, remember, it's not a pure greenfield. Irrespective whether we take the decision to build it in the U.S. or in China, it would be on an existing site. Therefore, that is, I think, the first consideration. If it was China, it would be essentially, not call it copy-paste, but very much a close copy of what we already have as an MDI train in China. That obviously makes it much more efficient and would also accelerate the building. For the U.S., remember, we have already done some work in the years 2018 and 2019, which we can now take out of the drawer and bring to the most recent status. Therefore, the 7-8 years, that is probably on the long side. Therefore, we think that we can be ready by 2026, in terms of the heavy spending. Because, A, as I said, it's on an existing site, and B, there has already been done some work that we can now usefully apply. Yeah. In terms of capacity, we are aimed at world scale capacity and world scale for us, we obviously aim in general for around 500,000 tons. However, that is also up for a final decision on that. Second question from Dan is, for the growth in margins for Solutions & Specialties to 17%, does this assume further acquisitions or all organic? Thomas. Yeah, I can take this. I think the 17% ambition and the target, that really is a purely organic on a standalone basis. I described the measures, and again, for me, the most important one is this value-based pricing that the managers really take into full account what is the value that we're adding and make sure that we command adequate pricing from our customers. I think that is truly self-help measures and looking into the numbers. What I also would like to say very clearly, it does not exclude that we are looking for further bolt-on acquisitions and therefore, especially our segment Solutions & Specialties, of course, would be a field where we would look for potential opportunities with the view that we always have. It has to really to be value accretive and make sense for our investors. The next question from Dan. If we compare the new S&S margins to the old CAS division, it seems that Engineering Plastic and Tailored Urethanes are dilutive. Any thoughts on whether there can be still pruning of the portfolio to also improve profitability? Thomas. Let me be very clear here. We have not chosen that structure as a preparation for divestments. We consider all the six BEs in our Solutions & Specialties segment as being core. They all earn their cost of capital. They all have a positive margin, obviously. We do see some improvement potential. That is not specifically a single BE. That is pretty much across many BEs, where we think improvements can be done. Clear answer to the question, this is not a preparation for a sell-off. They all belong to our core business. Good. We go on for Charlie Webb from Morgan Stanley with some follow-up questions. The first one, can you explain the logic behind the company's positioning on share buybacks? Why does Covestro focus on where earnings are in the cycle? Surely, that could be combined with the current share price and how the implied value looks versus mid-cycle. Under the current strategy, it would suggest that Covestro is extremely unlikely to engage in a buyback. Perfect question for Thomas. Well, Charlie. Our view is we don't want to run this company with an inefficient balance sheet, and we do want that our shareholders participate in our success. The reason why I would consider a share buyback unlikely, and maybe I scratched out the super unlikely that you put in your question, is simply that we have a dividend policy that enables us to be much more flexible and to also pay in years of high success, a very attractive dividend. Therefore, we think this is the much more flexible and better tool to achieve this objective, that our shareholders participate in our success, that we run the company with an efficient balance sheet. Therefore, a share buyback, as I said, we would only consider this in a very specific, opportunistic situation, and it would have to be really anti-cyclical so that it is value accretive for the company and the shareholders. The last question here, again, for the segment Solutions & Specialties. The low teens margins for Solutions & Specialties is low compared to other specialty chemical business. Can you share with us how the returns, and I guess return on capital employed, compare to the Performance Materials business at the top and the bottom of the cycle? I also think Thomas. First of all, both segments, Performance Materials and also Solutions & Specialties, they earn their cost of capital. Also the six BEs within Solutions & Specialties earn their cost of capital. Of course, there's a high variation. Let me just remind you also why this is, because of course, the Performance Materials business is much more asset-heavy, and the Solutions & Specialties are much more asset-light, and therefore, you have to put the EBITDA margin, this is not a secret, in relation to those asset bases, which are very, very different. I think it's no secret that the fluctuation in the Performance Materials segment is much higher. We've seen years of fly-up margins, especially for TDI, but to some extent also for MDI in 2017 and 2018, where the return on capital employed was just phenomenal. There are also years where it is significantly lower and the segment is struggling. Across the cycle, it is definitely accretive and earning their cost of capital. The same is true for our Solutions & Specialties, with much lower fluctuations. Therefore, both are, across the cycle, roughly comparable, but the patterns are very, very different. The next set of questions coming from Markus Mayer from Baader Helvea. The first one is: do you also have the ambition to convert Performance Materials assets capacity in Solutions & Specialties business? Would the portfolio change towards Solutions & Specialties mainly happen by organic growth within the division? Markus. Yeah. Also here, thanks for the question. If you look at this, what we have done with the transformational change into the two segments, one of Performance Materials and the other one Solutions & Specialties, we have exactly done this split along the lines, where are the true commodities in our portfolio and where are the true specialties and solutions? We have taken a specific point in time, which was the July 1st, and said, okay, what we know from today, how the markets work, how the products behave, how the pricing is working, what is important to the customers, to go for a very clear split. That still means that some of the products that are sold in Solutions & Specialties are produced in assets from the Performance Materials, and to very, very limited extent, it even goes into the other direction, so that the Solutions & Specialties assets which are selling a very, let's say, limited amount into the Performance Materials. There is no further opportunity within the given assets of Performance Materials, at least as of today's perspective, to really now shift further assets and convert those assets into Solutions & Specialties business. Where this is possible, we have done this. Where we have a different product location fitting more to Solutions & Specialties, we're selling already out of the Performance Materials into the respective business entities of Solutions & Specialties. Long story short, over time, I see limited opportunities for further assets to be converted, and therefore, the majority of the Solutions & Specialties segment growth is coming from organic growth, as Thomas h as already outlined in the context of our margin expectations and margin and also growth ambitions. If I might add a slight detail. In polycarbonate, standard polycarbonate, we currently still sell a significant part into the merchant market, which clearly the strategy is to convert that much more downstream into Solutions & Specialties. This means we will not shift the assets, but we obviously will downstream sell more of our products than as an added value product, and that's obviously also part of the growth story and part of the growth restrictions for Performance Materials for external sales. Just also to make you aware of that. Next question is, how much of your raw material supply will be based on recycled materials by 2025? As the supply of, as an example, used mattresses seems to be an issue, will you install an organization for the collection or will you work with external partners? Markus? Yeah. That is also a question, let's say, that has many different loose ends, which we need to knit together to come to a complete picture. There's a lot of assumptions also in that question. First, if you look at the point that we last year had a little bit more than 1,500 tons, maybe 2,000 tons of alternative or bio-based sourced or carbon dioxide-based raw materials in our portfolio. This year, we have already purchased something a little bit more than 10,000 tons. You see the dynamic development in these markets. Does that now mean that we can increase that supply at the same amount or with the same amount and the same speed in the next couple of years? That depends pretty much on how those markets are developing. We are actively pushing the development of those markets with our suppliers. We have named a few in our presentation. Take Neste, take Borealis, take Total. There's other players which are currently entering into that market of sustainable and alternative raw materials. It is a very dynamic development where it is very difficult to really now already predict where the numbers in 2025 will be. We have started. We see continued dynamic. On the mattresses, it is not so much the issue to get access, let's say, to mattresses because many consumers, particularly in Europe and to an increasing extent also in the U.S. and partially to some extent in China, have the ability after useful lifetime of a mattress to really give it back. Those mattresses are collected. The key topic today is that there's no meaningful use for those mattresses to be recycled to a large extent, and that why, for example, in Europe, many of those mattresses are actually ending up being incinerated as an alternative to, for example, oil or gas as a source of energy in some industries that require a high amount of energy to run their processes. Long story short, the chemical recycling is now being built. The chemical recycling is now moving forward, and that would also enable alternative routes for mattresses to be used. It's not the availability of mattresses, more that we have to shift streams towards chemical recycling for the industry. I believe with the plans we have, with the growth opportunities that are there, we will not run short of mattresses for quite some time. We have four questions from an undisclosed participant. The first one is on Solutions & Specialties margin. It has been relatively low. What does this tell us about the nature of the products included in this segment? Are these rather semi-commodity segments with a mixed margin across the product range? Let me maybe take this question. The answer is no. What it tells you is not that it's maybe a semi-commodity or only semi-specialty. What it tells you is that people in the past have looked at the integrated margin, including what is today in Performance Materials, so including the upstream business, and they were happy with the margin and not distinguishing what is really the value add of the downstream business and what is really the pricing that they command for exactly this value add. I can tell you that the products are definitely specialty and solution products. What we observe across the portfolio is exactly what you described, but for a different reason that, for different customers with similar products, we see different pricing. We do see that some of our salespeople are more focused on exactly commanding the right price than others. Therefore, I think the indication of the low margin, which we, I think, clearly labeled as unsatisfactory from our point of view, is not an indication of the product portfolio. It’s an indication of the right management of the business. Therefore, it was a great experience to have the first session with our BU leaders who fully embraced this new transparency and came up with an abundance of new ideas and measures how to drive the business forward. So I can really report this is not just the finance department who has this ambition. It’s the entire organization who found this, to some extent, eye-opening and is now following up on this with measures. I think that is what is really behind. Yeah. We had a question around energy, but I guess this is a bit more specific. Here is a question. Impact from energy spike in Europe, if any, on Covestro. Thomas? Yeah. Energy prices are rising, as I said. Not just Europe, I think it's across the world, and therefore it's not just limited to Europe. So far, we have been able to pass on those prices to our customers, and therefore, as an indication, I gave you the mark to market, which continues to stand at EUR 3.1 billion. Yes, we do see that things are rising further also into 2022, and therefore the focus must be to continue to pass on those prices to the customer. My prediction would be there is no impact, but there is a clear challenge for the organization to make sure that we watch the development very carefully and include it in our pricing. Third question is, can you give us a timeline on the commercialization of the recycled polyurethane foam? Markus? Yeah. If you look at the respective opportunities for commercialization. We first talk with PU foam about PU soft foam. The mattress example that I have given earlier and that has been asked earlier about, and here, as indicated in the previous presentation, if now the lab-scale demonstration plant is running according to plan, delivering the right products, which it does, then we would foresee a first commercially available product based on an investment that needs to be done to really scale it up in the mid-2020s. That is very difficult to exactly predict that as there is still a number of steps that we have to take before this can be scaled up to a commercial scale. I think the mid-2020s is a good timeframe for this ambition. The last question for that complex is, I'm still not sure how does LEAP help lower the cost? I can understand better access service to customers and possible better growth, but what drives the cost savings, Thomas? Yes, thank you for that question. Probably, we were not explicit enough and did not bring this across very well, but it's a good question. LEAP, if you look at it, really fundamentally changes the organization. I showed you the chart where we depicted that thousands of employees are changing into market-facing organizations, that we implement a full end-to-end P&L responsibility. What we did in parallel to the implementation of that organization was, of course, to challenge the business leaders to come up with a list of measures to really implement their new organizations in the right lean and mean way. I can tell you, of course, that for somebody who's running a commoditized standard business like our Performance Materials business, this has been a clear task and challenge to set up the new organization in a way that complies with, I would say, the standard in the market. The same is true for the other businesses. It was not only about let's change the organization, but let's change it and set it up in the right way and let's just focus on the things that are necessary, and let's get away with all the things that are not necessary. Therefore, it is clearly not just a reorganization, but we use the reorganization to implement a full set of optimization measures that will then lead to cost savings. Just my last comment, don't underestimate the power of a reorganization in a corporate environment. It is very difficult to change things if the structures and processes and responsibilities stay the same. It's much easier if there are changes and to use this wave to then really implement things that are driving cost efficiency. That is what we're doing in parallel, of course. Therefore, you're right, it is of course about customer centricity, but it's also about efficiency and effectiveness. We have still three questions on our list, but we would also have time for more. Again, if you want to have another question, put it in Teams or send us an email. The next question is coming from Adrian Cattley from CapeView Capital. The question is, how are the staff reacting to the P&L responsible and more customer-focused rather than product-focused? Markus? I think Thomas has alluded to that a little bit earlier, though in a different context. It is really providing a lot of fresh energy in the entire organization. On the other hand, with the reorganization, there comes also some uncertainty, at least for some time, for some people in the company. That is two effects. You have a short-term effect on the one hand with regard to some insecurity, because you have new colleagues, you have maybe a new supervisor, or you have new subordinates, and that needs some time to readjust. On the other hand, exactly focusing now your entire internal supply chain and value chain on a very specific segment, and really making sure that you have everything that is needed for that particular segment, for these particular products and for these particular customers and industries that you are serving. Not having to change hats all the time between a more commodity-prone market or a more Solutions & Specialties market, that drives a lot of energy. Exactly like Thomas has said now, it's also where then the opportunities come from to be faster, to be more agile, to really focus all your attention on specific needs that those markets have. I think that drives a lot of energy. Not looking at short-term effects that I just described, but mid to long-term, that will have a very positive impact. There's more and more colleagues now that we're talking about it, now that we're living in a new organization, who say that makes absolute sense, let's continue that. Finally, I feel really fully responsible to deliver, and that gives me exactly the agility and customer centricity that I need. I would say the perception is getting more and more positive by the day. The energy level is increasing more and more by the day. There is a follow-up question from Christian Faitz. This says, can you retrofit existing isocyanate plants with the AdiP technology? How expensive would that be? Markus? Yeah, Christian, that is now a very challenging question. Let me start from the MDI production overall. We had one slide where we explained a little bit how, let's say, difficult or easy it is to find drop-in solutions for the different stages of an MDI production. It doesn't come as a coincidence that when we talk about MDI, we talk about a so-called train. That means the real MDI product is the last chemical reaction of a long chain of different chemical reactions that we are running. If we are talking about retrofitting with the AdiP technology, we talk about MDI trains, and here we're talking about the last step, so from MDA to MDI. Here, according to my knowledge, you cannot take an existing last step reaction and just retrofit it, but you would have to rebuild this last step. That would come, let's say, at costs which currently, I think, we're not disclosing in this context. Once again, it is not an easy retrofit where you just shut down the plants for a couple of weeks and all of a sudden you have the AdiP technology implemented, but you would really need to build the last step from scratch. However, in an existing infrastructure, which then for sure would lower the cost and not come as a greenfield investment. I hope that answer, even though it is a little bit longer, it describes a little bit in which environment we are operating, and therefore this simple, easy retrofit solution that you might have in mind will not work for that. There are two last questions from an undisclosed participant. The first one is, are you assuming a higher through-cycle price than the raised mid-cycle guidance of EUR 2.8 billion compared to what had been baked into the earlier EUR 2.2 billion? Thomas? Ralf, do you want to read out the second question as well? Okay, we take the second question together. Could you break out any other building blocks outside the program and the RFM that get you to the EUR 600 million increase? Because I think those things essentially belong together. I would say to the first one, no, it's not that we're just assuming a little bit of higher price and then that gives you the EUR 600 million increase. That would be way too easy. Of course, price is a big lever, but it's really operational building blocks that we think we have lined up that should give us this increase. It is, of course, the RFM business. It is the synergies of EUR 120 million. It is the growth that we assume to be 3%-4% every year, and it is the stable fixed cost at the same time. Those are the key building blocks. I would say if you add them all together, you might even arrive at a higher number than the EUR 2.8 billion. Our assessment is that in corporate reality, not always 100% of all the things go right. It might also be that the one or the other thing does work, not maybe according to plan. This is also part of the equation that we have put into this. Therefore, we're pretty confident that the EUR 600 million step up with the measures that we have lined up should be achievable, and we did not simply assume higher pricing to get to that number. Good. The last question I see on my list is again from Sebastian Buch. The question is, you have announced that you will spend EUR 1 billion on circularity projects over the next 10 years. Is this just a cost of doing business, or can investors expect a return on this investment thanks to the better prices or higher growth? Who wants to take it? Maybe just as an indication, we have not defined, for example, a lower return on capital threshold for those projects. There was a big debate in the organization, shouldn't that be a lower threshold? It's easy to label everything as circularity projects. We said no. Those projects have to earn also their cost of capital and generate a return. We think that we have a sufficiently high number of ideas that those projects will be profitable. I think the best indication is that customers are actively asking for those solutions. Therefore, we do think there's a market, we do think there's a price, and we think it will be a profitable investment. It is also fair to say that not all these projects that are part of this EUR 1 billion have already fully been specified, and therefore, if the next question is, can you please break it down by projects, I think that would be too early to give an answer to that. It was just another quick additions from Georgina Iwamoto. Question, potential for any raw material shortages in Europe on the back of higher energy costs, driving production stoppage, and we have seen that with ammonia productions, which is obviously not our chemistry. Yes, we have seen that. The same question, is there any risk of curtailments in China? I guess, good for Markus. Yeah, Georgina, we have also read the news with high interest. These are not news that are absolutely new. They just made it to the headlines in recent days. Nonetheless, looking at the supply situation for us also with regard to ammonia, I'm talking now not only Europe, but talking for all regions in the world, we currently do not foresee any supply issues for our ammonia supply to rise, to happen. Therefore, we also do currently not see any risk that this current situation and short-term situation in Europe is actually impacting our ability to produce, in particular, as ammonia can be transported also across and in between regions. Therefore, there is different and additional opportunities also to source ammonia, and we are prepared to do so. Good. Another two follow-up questions from Charlie Webb. The first one is, can you provide us the current view on commodity inventories across regions and products? I think that perhaps for Thomas. Yes. If you talk about commodity inventories, you probably mean our products, what is the inventory level, and also in the supply chain and at our customers. I would say, the assessment that we have is the big inventory refilling is probably over, but still our customers and also dealers are not sitting on a huge amount of inventory. That is also due to the fact that, remember, there has been this consistent question hanging around, will prices decrease over time over the course of the year, and that was even part of our own guidance for our own products. I think that is then always a driver that especially dealers don't want to sit on too much of an inventory level. Therefore, to turn it around, I don't currently see the risk that there is high inventories, which will be first used and therefore could have a negative effect on the demand. I think inventories are still, I would say, relatively tight or to normal in terms of their level, and therefore, we don't see this as a threat to the business. The next question, rather similar, I would say. Could you also provide a quick snapshot of the current demand by regions, assuming you were not sold out? Of course we are sold out, but perhaps Markus has a bit more insight into the demand development. Yeah, that's a quite hypothetical question, I would say, but let's assume we would have more to supply. I think that we see across the regions and across some materials, a little bit different dynamics. As I said, for example, and just take the automotive industry, despite the fact that there is the so-called shortages on semiconductors, we still see that there would be significantly higher demand, and significantly means really a few percentage points higher demand, for some of our polycarbonate products and grades if there would be more semiconductors available. If the automotive industry could produce more. Similar trends we also see, for example, in the MDI industry, there would be significantly more demand. Once again, we are sold out. Where we see, for example, a little bit of a slowdown in demand is in Asia Pacific, and here, particularly in China, on some TDI components. From that perspective here, you see some signs of a cool down. However, still, we have sufficient opportunity to sell our materials there in the respective markets, by the way, also, due to our very competitive cost position, so that still obviously some players in the markets are not able to produce at the current, let's say, market prices and given the current supply restrictions in other areas. Long story short, we still see that even if we would have higher supply, there would be a significant amount of higher supply needed to really fulfill the current demand. That is also, I think, reflected in the current, let's say, pricing, that is still on a very healthy level from our perspective, and we also do currently not foresee this to change on short notice. Good. The last question for today comes from Martin Evans from HSBC. The question is: A lot of work has gone into the creation of the seven new units from the original three and the restatements. Did you use management consultants in helping you to draw up the new structure? If so, were there any areas they suggested that you did not think were not suitable or not? I think, I guess it's about the structure of our company. Do we think to change anything, and what does the consultant suggest, Markus? Well, first and foremost, the board of management runs this company, and that means for sure we go here and there, in some very specific areas and also ask for external support, as a decision-making support. The decisions are taken by the board of management. From that perspective, for sure, we have come up with ideas. We have come up also with opportunities where we think the structure was less effective and less efficient than the structure that we have today. I can truly say that we looked into each and every opportunity, and that we believe that the current structure is the right structure as the foundation for the transformational program that we are intending with the entire Sustainable Future strategy. The new structures that have been developed as part of the first strategy chapter to become the best of who we are. The LEAP program, which was fundamental in this first chapter to drive the organizational changes, has actually been used to the full extent to put those structures into place that we believe are the right foundation for the years to come. Yes, in this context, we have also asked for some external support, but more as a decision support, and additional data points, for example, benchmark that you normally not have readily available in your company for those specific projects that only happen, let's say, every five or maybe 10 years. I hope that gives you some insights into what we have done. Thomas, you would like to add something? Just maybe one little addition because I'm tempted to give an answer here because, I think if there was one good thing about the coronavirus pandemic was that throughout the entire year 2020, the entire management board was sitting in Leverkusen, not traveling around the globe. Believe it or not, the development of the LEAP structure started with a little small offsite meeting that just the four of us had, and then we met on a weekly cadence every week to discuss ideas and then throw them away again and come up with new ideas. Yes, as Markus said, we had somebody who acted as a moderator, but it was a very intense exercise among the four board members and we used the time that all of a sudden, Corona offered us, to, as I said, meet on a weekly basis. Therefore, I can really say it was a very intense teamwork and nothing that came from an external idea. Good. Thank you very much. It seems there are no further questions at that point. If there would be further questions later, obviously don't hesitate and you can always contact the Investor Relations Department. Thank you very much for your strong interest and for all the questions we received, and I wish you a good rest of the day, and I hope to see you soon. With that, goodbye.