Ladies and gentlemen, welcome to our virtual Capital Markets Day. It's a pleasure to have you join online. We are streaming this event from our corporate headquarters in Ludwigshafen. A replay will later be available today. Before we take a closer look at today's agenda, allow me two organizational information. Today's presentations contain forward-looking statements. We do not assume any obligation to update these forward-looking statements above and beyond the legal requirements. Furthermore, ladies and gentlemen, we will be using a chat tool to take your questions for the Q&A sessions. During and after the respective presentations, analysts and investors are requested to submit their questions there. I will later read them out in the Q&A sessions. Moving on to the agenda. Today's Capital Markets Day has three major blocks. Martin Brudermüller, Chairman of the Board of Executive Directors, will kick it off with his keynote illustrating BASF's aspiration to lead the chemical industry in terms of CO2 reductions. During the subsequent Q&A, he will be joined by Hans-Ulrich Engel. Following the keynote, we will provide you with a deep dive on two segments, Industrial Solutions and Nutrition & Care. These segments will be presented by the respective board members, Markus Kamieth and Saori Dubourg. During the Q&A, they will be joined by the responsible division presidents. Now without further ado, let's move straight to Martin Brudermüller and his keynote. The floor is yours. Ladies and gentlemen, thank you for joining our virtual Capital Markets Day. The past year has been dominated by the pandemic. We must not let this distract us from one of the greatest challenges of our time, climate change. We have not neglected this important topic. In today's keynote, I will show you that we are working hard on fundamentally new low emission production technologies and processes. This will enable us to significantly reduce greenhouse gas emissions, especially in the production of base chemicals. Based on our progress, we are stepping up our ambitions and commitments to contribute to the Paris Agreement. Let me begin with our commitments. We want to reduce our absolute CO2 emissions by 25% by 2030 compared with 2018. We are committing to achieve net zero emissions at BASF by 2050. We are setting a more ambitious reduction target for 2030, and for the first time, we are setting a target for 2050, net zero emissions. At BASF, we do not take such commitments lightly. Over the past three years, we have made great progress in developing new technologies. This gives us the confidence that we will be able to reduce our emissions faster than anticipated so far. While major emission reductions will kick in beyond 2030, we plan to realize some of them before 2030. As we have said before, we have intensively analyzed the status quo. We have questioned habits and beliefs, started new development for processes, and developed bold new ideas. We call this initiative our carbon management, and we are learning at a fast pace. Today, we can tell you it is technically possible to eliminate our CO2 emissions almost entirely. Are all these steps economically feasible? Not yet. Some measures are already attractive today. Others are challenging today, but will be attractive in the future with different regulations, lower prices for renewable energy, and higher CO2 prices. Our journey to net zero will be an ambitious journey over decades. We need entirely new technologies, and we need to use renewable energy on a large scale. Most importantly, we need to act now to get there. We are stepping up our efforts, and that is why we are committing to more ambitious reduction targets by 2030 to get to net zero by 2050. It is the first mile that makes the difference. Let's first focus on key levers of our transformation. We are in an excellent starting position to further lead the transformation of the chemical industry. We can build on our sound database, our high technology expertise, and in particular, the advantages of implementation of our deeply integrated Verbund sites. We are leading the net zero transformation of base chemicals, including downstream value chains. We have extensive sustainability and operational experience. We develop and invest in pioneering low emission technologies. We implement them step by step in the Verbund to the benefit of our whole product portfolio. With this, we demonstrate how we live up to our corporate purpose. We Create Chemistry for a Sustainable Future. This is our path to reduce our CO2 emissions by 25% by 2030 compared with the 2018 baseline. To meet our new target, we will deploy six major levers. I will touch on all of them today to demonstrate that we are not just communicating a target, but are capable of delivering on our promises. Our measures are evaluated based on CO₂ avoidance cost and how they compare with each other. The final order in which they will be used depends on a number of factors. What is clear today is that renewable energy will play a key role already between now and 2030, but even more so beyond 2030. By harnessing the CO₂ avoidance potential of all of these technology levers, BASF could reduce its absolute CO₂ emissions by about 50% compared with the 2018 level. Our challenge is that BASF also wants to grow. Our target is to grow sales volumes faster than global chemical production. This will lead to higher CO₂ emissions, which we need to more than compensate. Since 1990, BASF has already significantly reduced its CO₂ emissions by optimizing its energy production and integration, as well as its production processes. All low-hanging fruit has been harvested today. Over the past few decades, we have shifted our fuel demand from coal to natural gas. We have established high efficient combined heat and power plants around the world, and we have significantly reduced our nitrous oxide emissions. If we compare the BASF Group's CO₂ emissions in 2018 and 1990, we have reduced our absolute greenhouse gas emissions by more than 45%. With our new target, we will reduce greenhouse gas emissions by 60% by 2030 compared with 1990. This ambition exceeds the European Union's CO₂ reduction target and is more than in line with the Paris Climate Agreement. To reduce greenhouse gases emissions even further in the future, we are developing and implementing fundamentally new low-emission production processes. The plan is to pilot the first technologies between now and 2025, and then scale them up between 2025 and 2030. Additional new technologies will follow from 2030 onwards. This is how we want to achieve net zero by 2050. On this slide, you can see our greenhouse gas emissions in 2018, broken down by the main emitter categories. Worldwide, the BASF Group emits 22 million metric tons of CO₂ in 2018. Half of it is from energy production, more or less equally divided between electrical power and steam production. About nine million metric tons are from our upstream plants. Major emitters are a small number of base chemical plants, the largest being the steam crackers, ammonia, and hydrogen plants. Our downstream plants are much less energy-intensive and account for only two million metric tons. This split holds true for the chemical industry in general and underlines two key facts. Firstly, the need for a lot of renewable energy to succeed. Secondly, the need to reduce upstream emissions to have a relevant impact on entire value chains. In other words, no downstream decarbonization without upstream decarbonization. On this slide, the technology levers to reduce BASF CO₂ emissions have been added in green. CO₂ avoidance potential in electric power and steam production is covered by the gray to green and the power to steam levers. CO₂ emissions in our upstream and, to a lesser extent, also downstream plants, are addressed by new technologies, most of which we are developing as a part of our carbon management. In addition, bio-based feedstocks will be used seamlessly in our production, partially replacing fossil feedstocks. Continuous OpEx will be applied at all levels. These operational excellence measures help us to continuously reduce our CO₂ emissions. They have the greatest impact at our Verbund sites. Let's talk about our levers to reduce BASF's CO2 emissions in detail. They will help us to reduce Scope 1 as well as Scope 2 emissions on our journey to net zero emissions by 2050. I would like to emphasize that we will develop these technologies in partnerships. This allows us to accelerate or generate additional value together. We have announced partnerships with Siemens Energy as well as with SABIC and Linde. Further partnerships will follow. Let me briefly comment on temporary measures. To bridge the periods until new technologies are implemented, we will also consider external offsetting measures to a limited extent. If we purchase certificates, we will only use high-quality criteria for external compensation measures like the WWF Gold Standard. Now let's take a closer look at the lever gray to green. Our way forward is electrification. This means that we will need large amounts of renewable energy. The law of thermodynamics cannot be changed, and we need energy to drive our chemical processes. We can replace fossil-based power with green power. Renewable energy from sources like offshore wind parks will be a key lever to achieve our targets. You all know what happens when demand outstrips supply. It is the same for all markets, and the energy market is no exception. Price increases. Taking Germany as an example, energy from renewable sources is how near able to meet demand until 2050. Demand for renewable energy is increasing sharply due to the electrification of all major industrial sectors and the chemical industry in particular. E-mobility and heating buildings will contribute to the increase in demand. This is why we are strongly advocating building additional renewable energy capacities at an accelerated pace. Additional renewable energy capacities at competitive prices are a precondition for a successful energy transformation. As you can imagine, we have been intensively assessing the different options for sourcing renewable energy. What technologies and power volumes are available at what costs? How will costs develop in the future? We see great potential in offshore wind energy. This is one of the technologies that can provide industrial-scale volumes at competitive prices. Offshore wind energy is already a competitive renewable technology today, even non-subsidized offshore wind parks. In many cases, average costs are already lower than for gas-based electricity, and we anticipate further cost reductions for offshore wind farms. These will mainly be driven by technology improvements, increased capacities, and longer service life, as well as lower installation and running costs. At the same time, costs for coal-fired and gas-based power stations will continue to increase due to lower capacity utilization as a result of fewer running hours and the increased costs from carbon pricing or carbon capture storage. Let me go into more detail. To meet our demand for renewable energy, we will focus on two pillars. These will ensure additionality to effectively contribute to CO2 reduction. We want to build up a diversified portfolio taking into account costs, flexibility, and availability. Firstly, we want to cover our renewable energy demand by selectively investing in own renewable power assets. Secondly, we will also purchase green power from third parties. In other words, we will combine, make, and buy for green electricity. Looking at investments in own renewable power assets, we are assessing different potentials and potential projects such as offshore wind parks, which can provide access to significant power volumes. With these investments, we want to secure our long-term supply at or close to producer economics. We have dedicated teams in place that are working hard to make this a success. Next to wind power, we will also explore local solutions such as solar power at BASF sites. Besides investing in assets, BASF will also purchase green power from third parties. We will continue to conclude special green power contracts known as power purchase agreements or PPAs. They will help us diversify our renewable energy portfolio with a competitive mix of technologies and regions. For example, we have already signed PPAs for green power at two of our sites in Texas. We recently concluded a 35 MW wind power purchase agreement that will bring 25 MW of wind power to BASF's Verbund site in Freeport and 10 MW of wind power to our Pasadena site in Texas. This is in addition to another recently announced PPA to supply the Freeport site with 55 MW of power from the EDF Renewables Space City Solar Project. Approximately 70% of the power supplied to the Pasadena site and more than 90% of the power purchased by the Freeport site will be from renewable resources. Overall, our make-and-buy strategy aims to provide us with the required amounts of renewable energy at competitive prices. Let's now move on to the lever power to steam. This is about capturing the energetic potential of waste heat for steam production. In Ludwigshafen alone, we release waste heat of up to 30 TWh per year into the air or the Rhine River. We do not currently reuse this energy below certain temperature. Instead, we cool and release cooling water into the Rhine River. A dedicated team analyzed the current situation and developed a concept to gradually replace steam production at our cogeneration plants with heat pumps and steam compressors. This is technically possible. Our analysis shows that in many cases, the economics are viable. Redeploying waste heat from our chemical plants using electric heat pumps on a scale never seen before. This is something we want to realize together with Siemens Energy, first at our Ludwigshafen site, and then globally. Let me make this more tangible with a project that has already been implemented at our Tarragona site in Spain. In 2018, we replaced a steam turbine in our propane dehydrogenation plant with an e-drive. The investment was recovered in less than two years, thanks to reduced energy costs. The team in Tarragona managed to reduce CO2 emissions by 34 kilotons per year. At the same time, production was increased by freed up cooling capacity. The key takeaway of this is that some of the commercially available technologies can be adapted to local needs and opportunities quickly. The right mix makes the difference, and there is no one size fits all. Another important lever is low-emission technologies, which are mainly developed under the umbrella of our carbon management. Let me walk you through the different technologies one by one, once I have outlined where we are starting from. This slide shows you that 10 base chemical production technologies cause the majority of BASF CO2 emissions. The most CO2-intensive processes are steam cracking, as well as ammonia and hydrogen production. You will see how we are addressing the different processes in the following. Let's start by looking at the electrification of steam crackers. The e-furnace projects, which we are pursuing together with SABIC and Linde, is addressing the CO2 emissions reduction potential in this process. In steam crackers, crude oil fractions are heated at 850 degrees Celsius in the presence of steam. At that temperatures, carbon chains break into smaller building blocks for our chemical value chains. Today, cracker furnaces are heated with gas and produce about one metric ton of CO2 per metric ton of olefin. In the future, we intend to heat the coils with renewable energy. This technology leap will be a milestone on the path to a low-emission chemical industry. We have developed the world's first electrical heating concept for steam crackers together with our partners. Now, we also want to demonstrate the reliability of key components for this type of high-temperature reactors. Investment support and competitive renewable energy prices are needed to be able to drive a timely scale-up and industrial implementation of this technology. Together with SABIC and Linde, we have applied for grants from the EU Innovation Fund and Decarbonization in Industry, a new program from the German Federal Ministry for the Environment. If funding is granted, a multi-megawatt pilot plant at BASF's Ludwigshafen site could start as early as 2023. For BASF, the CO2 emissions reduction potential in ammonia and hydrogen production is roughly the same as for the steam cracking. Let's take a look at our progress in this area. BASF mainly uses hydrogen as a raw material. In total, BASF's global hydrogen demand amounts to around 1 million metric tons per year. We currently produce around 0.5 million metric tons ourselves, the highest share with steam reforming of methane. This process emits around 10 metric tons of CO2 per metric ton of hydrogen. In the first step, we want to investigate internally produced green hydrogen into our Verbund production in Ludwigshafen. We want to do this by starting up a large water electrolysis plant in 2024. In today's market environment, this is not an economically viable project. We have been applying for funding through IPCEI Hydrogen Technologies and Systems. The EUR 90 million investment will increase our green hydrogen capacity by 8,000 metric tons per year. This capacity will be mainly used as a raw material in the BASF Verbund. Some of the hydrogen will be provided to develop the local hydrogen mobility market. Water electrolysis is a commercially available technology with the disadvantage that it consumes large amounts of electricity. This is why we are working on scaling up our methane pyrolysis process. We regard methane pyrolysis, which is cleaving natural gas into carbon and hydrogen, as a key technology for CO2-free hydrogen in the coming decades. The methane pyrolysis process requires less than one-fifth of the electrical energy of water electrolysis. We are a leader here with our development and are in the process of starting up our pilot reactor. Methane pyrolysis is the most cost-effective way to produce CO2-free hydrogen. Production costs are much closer to steam reforming today than production costs for water electrolysis will likely be for a long time. The first commercial methane pyrolysis plants are only projected to start up at the end of this decade. We will tap into both technologies, taking a first step with a commercial water electrolysis plant. Let's move on to a very different technology. The Port of Antwerp is a world-class port and at the same time, the biggest European chemical cluster. Under the lead of the port authorities, a consortium named Antwerp@C was founded in 2019 to evaluate potential CO2 infrastructure to capture and store CO2 at the port. Having industrial partners work together gives us the opportunity to create the infrastructure to reduce CO2 emissions on an industrial and cost-efficient scale. The idea is to have a gathering backbone pipeline throughout the port, a terminal where CO2 is liquefied for transport by ship, and an export pipeline to Rotterdam. This infrastructure would make it possible to transport CO2 to offshore sinks, such as depleted gas and oil fields in the North Sea, both by ship and by pipeline. This would be one of the biggest projects of its kind in Europe. Antwerp@C has applied for and received subsidies under the Connecting Europe Facility for the studies. As a founding member of Antwerp@C, BASF is actively looking into ways to capture CO2 at the Antwerp Verbund site and transport it to an offshore sink. This could easily absorb volumes of more than 1 million metric tons of CO2 per year. We aim to make a final investment decision in 2022 based on the results of the study and based on the public funding granted. As I already mentioned, green electricity is expected to be in short supply, particularly in Europe. It is important to know which technologies have the biggest savings potential per megawatt-hour of electricity used. These are questions we tackle in our carbon management. For example, methane pyrolysis can avoid about five times more CO2 per megawatt-hour than water electrolysis. Compared to a standard fuel-fired furnace, an e-furnace can save 0.2 tons of CO2 per megawatt-hour. This method can be used to prioritize competing options but i t is not our only criterion. The absolute emissions can be avoided by a certain technology and must also be factored in. Steam crackers typically have large capacities and are big emitters in absolute terms, and they are crucial for the Verbund. This is our motivation for developing an emission-free e-furnace despite the lower CO2 reduction potential per megawatt-hour compared to other technologies. Our Carbon Management Program and our Circular Economy Program, which we presented in December 2020 in great detail, enable us to support our customers with tailor-made innovations all the way to CO2 neutrality. These innovations drive BASF's sustainable growth. In the following, I will touch on the bio-based materials that can be used as feedstocks in our Verbund, partially replacing fossil feedstocks. Bio-based feedstocks can contribute by substituting fossil-based feedstocks, and this is where the strength of our Verbund concept comes into play. We can use bio-based feedstocks directly at the entry point of our Verbund, replacing naphtha or natural gas. At the same time, process innovations will enable us to phase in bio-based feedstocks, such as sugar or vegetable oils, directly into downstream processes, benefiting specific product lines. The benefits are tangible. For example, heating our steam crackers with biomethane could be used as a fast-track drop-in solution, only limited by the current availability. This would immediately take out a couple of hundred kilotons per year of CO2. Continuous improvement is at the core of our culture, optimizing our Verbund with integrated energy concepts or by minimizing the loss of valuable carbon atoms to CO2, to name just two examples. We will only look at comparatively small project today. However, the sum of all these activities provides significant CO2 reduction potential for the BASF Group. Let me illustrate this with one example from our process digitalization initiative. Installing advanced process control in our nitrous acid plant allows us to basically eliminate the remaining 1% of nitrous oxide in the off gas. This is achieved by keeping the decomposition catalyst in its optimum temperature zone. This one single measure alone avoids an additional 145 kilotons per year of CO2 equivalents. This measure is one of 1,500 operational excellence measures we are currently pursuing all over the company to reduce CO2 emissions and improve our energy efficiency. I will now focus on two different sites to illustrate how we are integrating some of the technologies I have just talked about. We are drawing up detailed engineering plans for our new Verbund site in South China. We are designing it to have the lowest possible CO2 emissions. According to our projections, the smart Verbund site will emit 50% less CO2 than a state-of-the-art gas-powered petrochemical site. If you compare it with a coal-fired petrochemical site, the CO2 avoidance potential is significantly higher. It is important to note that this is only possible at a Verbund site. Only a Verbund site can use the methane generated in the steam cracker as a side product, as a raw material in another plant. Only a Verbund site can use the steam released by the cracker, freed up as we plan to use e-drives to replace fossil steam generation. Purchasing green electricity is a key part of the plan. We are initially assuming 50% of green power. We applied the grid factor for the remaining power demand in this graph. If we succeed in covering the site's entire electricity demand with green power, the CO2 reduction potential would be even higher. Moving on to BASF Schwarzheide site in the German state of Brandenburg. This production site has what it takes to be a proof of concept for the energy transition at mid-sized chemical sites. More than 360 MW of capacity from renewable energy sources have been installed in and around Schwarzheide, and another 300 MW are planned. This means that much more renewable energy is being produced than consumers in the regions are using. In some cases, it is actually more than the grid can take. At the Schwarzheide site, our gas and steam turbine power plant is already being modernized. BASF is investing EUR 73 million so that it can generate electricity and steam with an even smaller carbon footprint. Part of the electrical infrastructure upgrade also involves the use of wind and solar power to supply production facilities. We want to use this pilot project to show that renewable energies can be used on an industrial scale, despite the chemical industry's great need for security of supply. The modernized plant will be able to optimally absorb fluctuation, and it can be powered up and down in minutes. BASF is also considering investing in its own solar farm with more than 20 MW to supplement the local electricity supply. Finally, we are fleshing out a plan to test two different battery storage systems. We will pilot the technologies and roll them out further. Let's continue with the necessary investments and other requirements that must be met. Ladies and gentlemen, over the next five years, we will need less than EUR 1 billion to develop the low-emission technologies presented today and scale them up in pilot plants. This is already included in our CapEx budget, which we published in late February 2021. We applied for public funding to study these breakthrough technologies and for pilot projects. We expect politics to make good on its offer to support accelerated implementation of pioneering new low-emission technologies. In the following five years period, from 2026 to 2030, capital expenditures will increase to around EUR 2 billion-EUR 3 billion. During these years, we plan to bring our first carbon management technologies to scale and shift up a gear in our efforts to electrify our energy demand. From 2030 onwards, significantly higher investments are to be expected. This will be required to build world-scale production plants using the new technologies and to scale up the use of renewable energy. The Verbund site in South China will already be fully operational by that time when these higher investments are necessary. An all-hand-on-deck approach is mission-critical to successfully navigate the transition towards emission-free chemical manufacturing, particularly in the EU. While the industry is working on technology deployment, policymakers will have to create a supportive and enabling regulatory framework. This is paramount to maintaining international competitiveness and a level playing field. Ample renewable electricity at competitive prices is critical for large-scale investments in new manufacturing technologies. Removing policy-induced cost in the form of levies and surcharge remains a top priority, particularly for the German government. Since we do not expect electricity-based technologies to be cost competitive under current conditions, policymakers need to ramp up funding programs as well as new policies to bridge the economic gap for cost-sensitive business competing in the global marketplace. This is particularly important in the upcoming ETS reform, a key legislative project in the EU that will have a major impact on the competitiveness of energy-intensive chemical industry. Sufficient infrastructure needs to be developed to allow renewable electricity to flow freely from regions with abundant renewable energy production to industrial consumers. Existing grid bottlenecks, domestic and cross-border, need to be addressed as quickly as possible. Governments need to provide more areas for renewable energies and speed up the approval process for electricity generation and transmission. CO2-free hydrogen is a critical raw material to make chemical products emission-free. We encourage policymakers to prioritize the use of green hydrogen as a raw material for industrial consumers, rather than incentivizing the inefficient use of hydrogen for electricity generation or residential heating. Those sectors have a broad range of alternative technologies, and valuable hydrogen should not be wasted. Moving on to the last part of today's keynote, business opportunities through low-carbon products. Ladies and gentlemen, while the technology portfolio to reduce BASF CO2 emissions presented today, we will be able to offer more and more low-carbon products to our customers. As an integrated company with base chemical production, we are a key enabler in helping our customers decarbonize their value chains. Let me give you some examples of how we do this. Many of our customers aim to reduce their carbon footprint. To support them, a new level of transparency is required. As we have already communicated, we will provide our customers with carbon footprints for all of our 45,000 sales products by the end of 2021. With our proprietary digital solutions, we can determine the overall CO2 emissions for each individual sales product. The product carbon footprint is reported in terms of metric ton of CO2 per metric ton of product. It includes all emissions that occur on the product when the product leaves the factory gate, meaning Scope 1, Scope 2, and Scope 3 emissions. BASF customers have shown huge interest in this increased transparency, offering business opportunities for BASF. With our innovative solutions, we are a frontrunner when it comes to additional customer benefit through CO2 reduction. We want to give our customers choices. We already offer a toolbox and are continuously expanding this. It includes recycled feedstock through ChemCycling technology, renewable feedstock under the biomass balance approach, renewable energy sources, and last but not least, the necessary transparency on footprints and the reduction potentials. This toolbox enables us to support our customers with sustainable solutions. It allows us to differentiate from competitors. It is clear, however, that incremental specific CO2 reductions have their price for customers and ultimately consumers. At the same time, lower emission products have higher growth rates and will have higher prices. This is why we are convinced that the transformation towards a low carbon and circular economy will create opportunities for BASF profitable growth. Here is a specific example from our aroma ingredients business. Key customers in this business are already keenly seeking solutions to reduce CO2 emissions along the value chain. In addition to our existing portfolio, we have recently started piloting new offerings with lower CO2 emissions or even using renewable feedstocks through biomass balancing. It is too early to comment on the success of these pilots, but we expect the additional value created by lowering the CO2 emissions to become more tangible soon, as at the end, consumers demand this. As a result, we see opportunities for capturing a return on the required investments for CO2 reductions. From the selected levers, different CO2 emissions reductions can be achieved. We can tailor product properties to match the specific customer need. In this particular example, an overall reduction of up to 85% is currently possible. We are a frontrunner with this approach. What is needed, however, is cross-industry standardization on the calculation of product carbon footprints, and the cost of investing in emission reduction needs to be spread along the value chain. Cross-industry standardization would help us when dealing with our suppliers. Why is it important to also talk about our suppliers and our procurement activities? Well, in 2018, BASF emitted around 20 million metric tons of CO2 per year from its own operations, what is known as Scope 1 and Scope 2 emissions. Another estimated 52 million metric tons of CO2 came from raw material purchases as Scope 3. As our customers demand from us a lower product carbon footprint, we also demand from our suppliers certified product carbon footprints for all raw materials we purchase. To support our suppliers and the industry, BASF will share its knowledge on product carbon footprints and strive to create an international standard for CO2 transparency tools. We will work together with our suppliers to reduce upstream Scope 3 emissions in parallel with our own efforts. Ladies and gentlemen, in the end, you rightfully want to know what impact decarbonization will have on our bottom line. Markets are transitioning. Awareness and transparency around ESG in societies and capital markets, particularly in the EU, are increasing rapidly. Ultimately, decarbonization will only succeed macroeconomically if consumers accept that they have to pay more for low or zero carbon consumer products. This development has become mainstream around the globe. Initially, this transition will be economically challenging for companies. Ultimately, we expect a positive impact on sales and profitability. Due to rising demand, products with a lower carbon footprint will see above-average volume growth and higher prices, compensating for higher production costs. Consumers will increasingly be willing to pay higher prices for low carbon products. We expect higher margins for those products when they are produced at our highly efficient Verbund sites. Regarding CapEx and costs, we expect increased CapEx to be partially mitigated through public funding for pioneering new technologies. Mass balance approaches in our existing Verbund assets, likely the use of green electricity, green hydrogen, or bio-based feedstocks, are associated with minor incremental costs. At the same time, we are fully aware that the external environment will also be decisive. High initial variable costs for renewable energy have to decline, accompanied by increasing availability and favorable regulatory changes. A supportive overall regulatory environment will drive positive economics and accelerate the transformation. We currently find a pragmatic, solution-oriented framework in China and with the Biden administration, expect this also in the United States too. Whether we will ultimately have an investment-friendly environment in the EU as well, translating the European Green Deal into an enabling framework for the chemical industry, remains to be seen. To conclude, ladies and gentlemen, let me summarize. We are a key enabler for the net zero transformation of base chemicals and respective downstream value chains. Globally, we want to reduce our absolute CO2 emissions by 25% by 2030 compared with 2018. This means that compared with 1990, we aim to reduce our global CO2 emissions by 60% by 2030, exceeding the European Union's target and more than in line with the Paris Agreement. We aim to achieve net zero emissions at BASF by 2050. We are a frontrunner in offering our consumers a portfolio of products with lower carbon footprints to enable their decarbonization. With that, I would like to thank you for your attention. Now Hans and Stefanie will join me on stage, and we are looking forward to your questions. Thank you, Martin, for your presentation. Yeah, Hans is joining us on stage. We have a couple of questions already. The first one is from Andrew Stott, UBS. Thanks for the presentation. Regarding the CapEx outlay for your new CO2 target, is this a gross number, so before assumed subsidy? If so, roughly what percentage of this CapEx might be covered by government incentives, either direct subsidies or fiscal benefits, or is this just too early to know? Andrew, it's a gross number, certainly because we cannot plan for any share because we don't know what the funding at the very end will be. Also the share of funding is very difficult to predict because there are so many different funding schemes and not each and every project could be applied for the respective scheme. What you can imagine is that if you go for a very early stage, higher risk technology with a relatively large effect on decarbonization in a pilot plan in a very early stage of development, you get a higher share of funding and risk covering by the public than you actually do when you are later in the process and you might even scale up. We don't expect so much support anymore when we are actually building world scale plans. I think it is fair now with the immense pressure on decarbonization, which is on the industry basically all over the world, that also public is supporting that. We applied now for several projects, and we will then see how that comes in. I expect for the first step, a significant funding participation. The next question is from Charlie Webb, Morgan Stanley. Can you provide a bit more detail what above-average volume growth of products with low carbon footprint means in relation to current chemical growth? Similarly, what premium do you believe these solutions warrant? Well, I think this is a very general question. At the very end, you know that our Verbund and integration means we drive value chains. I think you could learn that the hard CO2 or the heavy CO2 load is at the very beginning of the value chains. The further you go down the steps, not add so much CO2 anymore. You know we have a very broad portfolio. One thing is for sure, that also going into the future, we have to look also on the CO2 footprint of the respective businesses. You know that we have, with our SBUs, the strategic business units, we have different or separate, let's say, growth rates for them. Certainly in these areas where I think the customer pressure is high to reduce CO2, where the opportunities are good to reduce CO2 per kilo of product. That translates faster and quicker also into growth on one hand, but also in return on the margins. One thing is for sure, for investments, for business decisions, for offerings in the market, the CO2 footprint will be a comprehensive part and not go away anymore. The next question is from Jaideep Pandya, On Field Investment Research. What is the split between Scope 1 and Scope 2 emission reduction by 2030? How will increase in renewable energy purchases change the energy bill of BASF? Do you envisage buying carbon credits in the market if you execute this plan for 25% reduction by 2030? That was a lot of questions in one. Yeah. First, the split Scope 1 and Scope 2 emissions. Yeah, I mean- By 2030. I think it is very clear. You have not the pattern about Scope 1 and Scope 2. This is different by each and every technology. You saw that also on this one chart, that the energy demand for green energy is kicking in beyond 2030, because that is when the other 75% of CO2 have to be actually decarbonized. This is where we have then to scale up the availability of green energy. As I said already today, earlier on, is that offshore wind parks, non-subsidized, are competitive with the energy prices of electricity which we produce in a gas-fired plant. You can imagine that this is a good chance from the production side actually to replace over time all the innovation coming in the current cost. I think what creates the headache in most of the markets is actually what is between production and delivery point, because you have to go through grids, which is you have grid fees, you have levies and taxes on energy. In Germany, you have the so-called EEG, which is an extra levy which covers actually subsidized alternative or renewable plants from the past. I think it is not so much on the production side where we expect that the electricity bill or the energy bill gets bigger. It is actually that we really get the support from the public and from the politician, that we can stay competitive because it is not so much the replacement of the way we produce energy. You know that in most of our large sites, we already produce our energy ourselves today. Only a minor part, actually, of the energy is bought in from or purchased from the outside. This is, I think, the part of the equation, which I also mentioned, which is not solved today. We certainly hope that we have a very clear picture in the different regions until 2030, because the main part is then kicking in beyond 2030. Until there, these factors have to be clear. Let me be very frank, Decarbonisation will not continue after 2030 if that is not a given framework, because otherwise that will not be competitive. The carbon credits, I think you mentioned during the speech already. Yeah. The only thing I can say is, first of all, I think additionality is important. We don't buy certificates to actually catch limited capacity from the market from others. We actually want with our activities that additional capacity is added either by participation in those producing assets or by the PPA. What I said about the certificates, I think there's a big difference in terms of origin quality. Let's also see, I expect that regulation is all setting a clear framework on which kind of certificates are in and out of our balance and considerations. There's a follow-up question from Charlie Webb, Morgan Stanley. Do you believe there will be opportunities to license out some of these decarbonizing production processes that you are developing to other market participants? Do you have IP already in place for any of these new production processes? Very clearly. You can imagine that part of the carbon management part, and particularly the research part, is certainly that we generate IP on those technologies, and we protect our, let's say, innovations. That's very clear. You saw on the other end, and I mentioned that explicitly, we team up. I think the challenge for the industry is so big, and the timescale is so short. We have actually to share our capabilities and then also share the fruits out of that. I think the e-furnace project is a good example where a steam cracker, let's say, company or one of the companies that you can buy from steam cracker technology is Linde. They are very advanced in this. On the other hand, we noticed that SABIC has similar interests like us, so we joined forces, and we saw actually that the different capabilities actually fit very nicely together. I think very fair, we want to generate on one hand diversification and differentiation from our competitors. On the other hand, we certainly also want to help that chemical industry can decarbonize relatively quickly. In certain areas, I think that can be clearly a model that you license out. If you just take the steam cracker example again, everyone buys actually steam cracker technology from a couple of companies today. Why not also an electrical furnace in the future? I think it could be also an income model for BASF in future if you have generated that technology that you certainly also earn money with it. We have a question on current trading, so that is probably more for Hans. A couple of questions on current trading, I would say. Christian Faitz from Kepler Cheuvreux asks, "Can you please update us on current trends, including potential supply chain issues stemming from the Suez blockage, Texas freeze, or COVID-19 related? How is the continued chronic semiconductor shortage in automotive affecting demand from that very important customer segment at present?" It was basically four topics, Suez, Texas freeze, COVID-19, and then semiconductor. Okay. Yeah, thanks, Christian, for your question. I'll start with the question on Suez. Apparently, we have a captain who is an artist as long as he's in open waters, and not as skilled once he starts to enter more narrow water streets. Effect of that, there's a lot of speculation out there. In fact, at 10 o'clock, I had a brief call with our supply chain team. Yeah, there are several BASF containers stuck also now in the Suez. Nothing that I would call dramatic at this point in time. The key question is, when can the ship be moved again? Talking to the shipping lines, the expectation seems to be that sometime during the weekend, but at this point in time, all speculation. If that does not happen, you need to reroute and go via South Africa, which typically takes 7- 10 days longer. Nobody's made that decision at this point in time. They're all waiting for, hopefully, a quick reopening of the channel. That was the first one. The second one was. Texas freeze. -on the freeze, which by the way, is not only Texas. It more or less affected- Yeah, Gulf Coast -the entire U.S. Gulf Coast. On our side, up and running at all sites. Last site to start up and last big plant to start up already on March 7th was the cracker in Port Arthur. The supply chains are still affected, I have to say. That is a very close network at the U.S. Gulf Coast. Other companies got more severely hit than BASF. It takes apparently longer to work its way through the system. You look at the number of outages that are still reported, the number of force majeure situations, it's significant. On our side, our estimate has not changed. We think this will be roughly an impact in Q1, order of magnitude, EBIT impact, high double-digit millions. The third question was on- General COVID-19 related COVID-19 question. I think as BASF, we've put all precautionary measures in place as early as we could. We have at none of our sites any COVID-related impacts that require us to shut down. We had, at one point in time, an issue which we could resolve relatively quickly in a Catalysts site in Poland. That also seems to be under control. Overall, on the supply chain side, absolutely right. There's a lot happening. It seems to be under control. There was a fourth one? Semiconductor shortage. The semiconductor shortage. The semiconductor shortage hitting automotive industry in particular, what do we experience there? We're working with the same estimates that the industry is working with. Probably has an impact order of magnitude 1.5 million-2 million light vehicles in the first half of the year. The expectation is that that can be made up during the second half of the year. In our business, we're tracking very closely which plants. Automotive plants are down for what period of time. We're seeing now that Easter holidays are started a little earlier. They may last a little longer. At this point in time, no significant impact on our business. Here and there, we see that orders were canceled. This is still to a relatively small extent. We need to see how that situation develops, in particular now after the fire in the semiconductor plant in Japan. That comes on top of all of it. We move back to a question regarding the keynote. It's from Thomas Wrigglesworth, Citi. "You have been basic in oil and now plan to be basic in renewable power, yet your view on oil has changed over the years. What gives you conviction that renewable power will be scarce, and over what timeframe? In the long term, all power must be renewable and therefore commoditized. Yeah. First of all, I think this is a long journey. I think I expressed this. I would say that renewable energy is, in the future, the same magic ingredient like maybe a few decades ago, natural gas has been, particularly on the energy side. If you look on the situation, I think I made this clear from an innovation point of view, from a cost point of view, I think this can be really competitive. It is very clear, a huge amount of energy we need, it is not so many of these kind of renewable technologies that you can cover for chemical industry. You can supplement with solar, at least in Europe, but the main asset is, I think, the offshore wind parks. If you look actually on the capacities that are planned in the moment within the EU, it is not sufficient to cover all the needs at the same time. For that reason, we will have a question of availability. We have a question of regional spread. You might have those, let's say, production in areas where there is no consumption. That is also why it is connected with the grid, which I have addressed. I think it needs a comprehensive strategy at the very end, and if it still remains a scarce resource, there will be a fight for it, and on the other hand, there might be also prioritization, and this is also what I showed you on our technology scale, which technologies make more sense under certain framework conditions. I think there are many variables in the formula, which I have to say is a little bit foggy today, at least here in the EU. We have talked now a lot about the Green Deal and about the ambition level. Very high altitude. I think it's now time to come down and to be on the ground and say how we actually do it. What are the right measures? I think I made this very clear. It can only work if on one hand, innovation, I would say boldness, entrepreneurship from the industry comes together with policies that are actually not generating a punishing framework, but generating an enabling framework. One thing is definitely that we need much more locations and much quicker availability of locations to build offshoring parks. That's very clear, and I think this will become transparent very soon, that you can have targets politically, but they will not materialize if we don't cater also for the implementation. The next question now is from Georgina Fraser, Goldman Sachs. I believe you have stated the China Verbund site will be set up to accept recycled chem recycled raw materials. What are your assumptions in the percent of fossil-based raw materials you will be able to replace with renewables in the initial phase and also longer-term? Are there limitations to replacing all cracker feedstock with recycled materials? Well, Georgina, I have to say, in China, I think ChemCycling and recycling plastic is just going to start. It is far behind also what we see in other regions. There are basically no established recycling circles, not even on the mechanical part there. We discussed this with the government and the government officials over there. They are very interested in this because actually it would allow them to close the loops. If you just think about the city of Zhanjiang, not so much known to the wider public, is a city with about seven to eight million inhabitants, has also a significant amount of waste. I think if you discuss about that, you have to start from the very basics by collecting the waste, then actually select it into the right fractions, which you then also can use over there. It's a long way to go, but I think the important part is that technically our plants are feasible to do that. Whenever that ramps up, and you know China is very quick in ramping up, then we are actually can go into this. Let me also be very clear, that only makes sense if your customers ask for it. There is increasingly interest also to talk about that and with Chinese customers. I would say the push for doing that and going into circular is much higher in Europe than it currently is in China. I think the fact that the waste recycling initiative is directly reporting to President Xi actually shows how high it is on the agenda, and I think it is fair to expect that we will see rather quick regulation and progress over there, and we just want to be prepared and want to participate in that whenever that chance evolves. The next question is on our product carbon footprint. It is from Laurent Favre, Exane BNP Paribas. You started to talk publicly about the cradle-to-gate approach many months ago. What has been the early feedback from customers? How confident are you that you will be able to realize the pricing premium required to offset the higher costs related to decarbonization over the next five years? Well, look, there is hardly any week where I do not get at least one letter from a customer who tells us that there is a certain time frame when they want to see their products they buy from us be with reduced CO2 footprint. Very often, it's something like 50% at the end of the decade. Very clearly, if you start engaging discussions, that's exactly what we would like to do because with many of these customers, we have already a strategic partnership for a long time. Actually, with all the other stuff you discuss about innovation, there is now one additional element which takes more and more space is exactly decarbonization. Well, if you talk about them and you say, "Okay, I could apply recycled feedstock. I can also apply renewable energy, and I can take bio-based ingredients or intermediates," it automatically translates into cost adders. I think where we are, that there is kind of settling of realities that this is not for free. The question at the very end is also for customers. They can ask you for that, but if you cannot offer, where they should actually go? I think there are not so many companies that drive that so systematically, and this transparency is at the very beginning of that. You sometimes see in these discussions that from a pure idea to make it happen is a long way. I think we see that with a lot of customers who actually engage. They know it will not be for free, but they still engage with us into strategic plans and going step by step within this. The interesting thing is it is not only a single industry. I would say you have this kind of lead customers in almost all the industries. This is also why our operating divisions now are basically adapting these parts also in their marketing approaches, offer solutions and ideas. With that, I think it's spreading very quickly, and the number of customers is going up quickly, and it's also not only Europeans, it's actually also international accounts. The next question is on the projected Verbund site in Guangdong. It is from David Simmons, ShoreView Capital. How much will the new China plant or Verbund site reflect the future of crackers, electricity fed furnaces, portion of renewable energy mix? What will the CO2 intensity be against Ludwigshafen? Well, you have some restrictions, or let's say it's more complicated and getting more expensive if you have to replace and change something in an existing plant. It's more easy if you design something totally freshly and just start with a different concept. One, for example, is that, as I mentioned in my speech, that the cracking is also partially not only going to olefins, but partially cracking down to a simple one C atom at the very end, which is then methane, which normally is used basically to close the loop and use this gas to then heat up the furnaces. We now use this as another raw material where we actually save fossil raw materials coming from other sources. That is something if you design that from the beginning, you can actually nicely feeding this in. Doesn't increase investment cost, but gives totally different opportunities. One part is all over the world, actually, the big aggregates, like the compressors, they are all fed by steam because also a cracker is producing actually steam. We also do this electrically from day one. We take e-drives instead of steam turbines. With this, we free up the steam for something else. Actually, we have all factored in what is possible into the new setup in China. Make very clear, build the most modern setup, which we can find anywhere in the world when you compare with other petrochemical sites. It will be highly digitalized. It will have all these, let's say, innovations on the technology side in it, and that gives a totally different starting base also to build on that, because there will other things come. In that respect, you cannot compare that and immediately basically copy that in a site like Antwerp or Ludwigshafen. This is why I also mentioned that actually each and every site has to have an individual plan doing this. There is no one-size-fits-all, I have three measures, apply them, and that's it. You have to really study the setup, which is partially historically grown, with limits and opportunities, to really take these technologies and have the right portfolio to move forward. The advantage now in China is that we can really do that from scratch. The next question is related to CapEx. It is from Chetan Udeshi, JP Morgan. How do you ensure that decarbonization investments of BASF are shared by others? Chemical companies with no upstream production assets, in theory, don't have to spend the same level of CapEx for decarbonization. Are you demanding some prepayments from key customers to fund your decarbonization spending? We are talking about more than €10 billion from 2030 onwards. This is a significant amount. You want me to answer? Yeah. Okay, Hans. The CapEx question, how does that compare to others, Chetan. Thanks for that question. I think what we need to look at is, where is BASF in the respective value chains? What do our suppliers do? As Martin has mentioned already during the keynote, we'll start Monday of next week to reach out to all of our suppliers, and start intense discussions about Scope 3 because what we are requesting from them will be exactly what our customers will request from us. How this will all work out in the respective value chains, I think, needs to be seen over time. Let's keep in mind, what we're talking about here is a program that we now intensify that will go to 2025 out to 2030 with the clear targets that we set ourselves. There is a lot that still needs to be detailed, worked out in detail. I'm actually looking forward to what we will have to offer, and we'll keep you for sure updated as we go forward with our carbon management program. Maybe to quickly add on that, Chetan, I said at the beginning, we are leading also on this base chemical side because at the very end, if the customer want to have zero emission on its sales product, they have to include the very first step, the base chemical. Now you can say, I buy my stuff with someone who doesn't have the base chemicals, but in the account, they get all the CO2 that comes with the raw material. If that company and supplier has no solution how to reduce, you will always have that in your backpack. If we are the integrated company and we have also a solution for that, might be more expensive, but we have at all the solutions. I think this is a differentiating opportunity, and this is also why we will not give up. We see actually encouragement in having solution for base chemical because this is a real differentiation. I'm sure we are at a point someday where people have to, and customers pay for it because they are happy that there is a company who can solve that part of CO2 that comes with the final product. I'm very positive on this opportunity to differentiate. The next question is related to the e-furnace. It's from Sebastian Bray, Berenberg. At current European electricity prices, what is the operating cost position of an electric cracker at scale versus one heated by natural gas? What could be the implied cost of refitting all of BASF's crackers globally to run on electricity? How much retrofit is included in the EUR 4 billion CapEx to 2030? Let me start from the last one. There is no money in the retrofitting because I said in my speech. This is now a pilot plant to see whether this is a reliable technology. We have not factored in anything in really applying this in big scale commercially in our crackers. That will be beyond 2030. I made very clear, if there is not the framework condition to close the gaps in both investment costs but also in OpEx, then this is simply not going to materialize, at least not at the scale as it is maybe wished by some in the society. That is, I think, where we have the chance also to work on the framework conditions. Understand that I will not mention you a number here for competitive reasons, because I know also some competitors are in the call here. Under today's circumstances, it is significantly more expensive, both from the investment side, because also the electrical infrastructure is adding costs, and also the running costs with the energy price, particularly with the EEG and everything on top, is more expensive compared to natural gas. The question is here at the very end, if these smaller volumes, and it is not very big plants, I said it is a multi-megawatt oven for the first time, but we will use this also in the mass balance approach for some high-value products. These high-value products, they might carry this additional cost, because this might be the building block to bring them totally to zero CO2. I think it is very clear, and this is what I really want to radiate here. We have now all these options. We have all the technologies. We test them. We do first bigger steps. Then the order and the scale will depend on the framework condition. It will also depend on where we do it. There might be, in Europe, there will be not the framework condition. We see them rather in China or in the U.S. We will proceed much faster in those regions than we actually do here. I think this is also the charming element of that. We have looked into this in detail. We are very clear about what we can do until 2025. Sorry, until 2030. The pace after 2030 will depend a lot on the framework conditions. We have options. I think this is the important part. There's one related to the Suez issue, so perhaps this is for Hans. It's from Vincent Andrews, Pictet. With the current issues in supply chain across the world, Suez, Texas, or Gulf Coast, is the Verbund concept showing its strength? I would say so. There's something else that's showing its strength, which is BASF's basic philosophy to produce in the markets where our customers are. Irrespective of where you go, and we already talked briefly about the new Verbund site in China. Irrespective of where we are, we want to produce where our customers are. We've never followed a concept where we built our upstream plants where cheap raw material is available. We built also our upstream plants in the markets where our customers are. That gives us, in particular, in situations like that, with these kind of supply chain distortions, in particular in global trade, I think that gives us a good, strong position. Other than that, the Verbund in itself, also from the perspective of reducing CO2 emissions, clearly gives you advantages, because the transportation that you need to do, you do primarily via pipeline, and you don't have to transport your goods by ship, by truck, by railroad, over many miles or kilometers. If you allow one more current trading question, Christian Faitz is using the opportunity. It's related to ag. On agricultural solutions, could you please briefly share with us how the Nordic Hemisphere planting season has kicked off for your product offerings? Totally different topic. Yeah. Christian, looks good. We had a good strong start into the season already in early January. Planting, still a little difficult to say. Looks like there's a bit of a delay in Northwestern Europe due to the weather conditions. If I look at what's been bought so far, irrespective of whether that's seed or whether that's crop protection product, that looks like a good start in total to the business in the Northern Hemisphere. Let's not forget about the following. Last year, we had some pre-buying happening in March as a result of nobody knowing what the pandemic would actually mean then for the month April going forward. That's something that we need to keep in mind when we look then finally at the figures for Q1 in ag. There's something else that we need to keep in mind, which is the U.S. dollar, which at roughly 120, 121 in average so far this quarter, is about 10% lower compared to the euro than it was last year, and that may have an effect also once we have the figures for the full quarter. The next question is for Martin. It's related to our R&D webcast in December, more the ChemCycling topic. It's from Elliot Jones. We note BASF's recent commentary around the use of chemically recycled feedstock in Styropor packaging. How is the chemical recycling side of things going with regard to receiving pyrolysis oil, and is the target of 250,000 tons naphtha for 2025 still on track? There's still the same target. It is a challenging target, I clearly have to say this. I think you named the right lever here, which is to build up the capacities for producing the pyrolysis oil, also setting up the waste streams, basically the raw material for the pyrolysis oil. I think this is the major challenge. It is not so much a challenge for us to employ more of that raw material and substitute fossil ones. I can also say that we have a very broad project base throughout the Verbund, with many customers in different industries. They also to scale that up and ask for bigger volumes. I would say both from the end and from the beginning of that value chain, I think we are prepared for that. I think there's also some legislation going around, and particularly here in Europe, where we address in the Green Deal, on one hand, that circular is a must going forward. I think we need also an enabling framework. We need the support and clear conditions how to employ the chemical recycling. This is not meant to be a competition to mechanical recycling, but it is mechanical and chemical recycling. I think also here I can clearly address, like in the other examples I used before, we need a new way of working together to accelerate this between the industry, the chemical industry, on one hand, committing and taking money to make that possible, the customers willing to buy these goods, and the politics to actually generate an enabling framework. There's many question marks on that, but from our end, we are prepared to deliver on that target. The next question is from John O'Donnell, Veriato. I think there's perhaps a little misunderstanding from what you said. He liked your presentation. He writes, "Good presentation. Which divisions have the lowest hanging fruits with respect to CO2 reductions? What percent of group sales do they make up?" I think you said they have been harvested, but perhaps you can differentiate a little bit. No, I cannot say much to this. I can only say that actually all the ODs have taken up that as an opportunity. They try to translate into those products where this makes more sense. I said even this transparency about the carbon footprints, actually for our own people to learn about it. We learn now on the product offering. We can even go to customer and say, "Are you aware that option A is higher CO or more CO2 intensive than option B?" Then you have the plans how you can reduce this by different steps. I would say it penetrates the whole portfolio. I could not mention now or allocate, let's say, shares on but it's the charming element that is actually going throughout the Verbund portfolio. The nice thing is actually then on this, I think I emphasized on the Verbund is having a real good opportunity with the mass balance approaches that we really can apply all the levers for reduction to almost every product in the portfolio. It depends on this combination, transparency, willingness of the customer, but I would say it's penetrating everywhere. Please understand that I cannot give some areas because I'm actually very happy that it penetrates so vastly. The next question is related to the cooperation with SABIC and Linde announced this week, Andrew Stott, UBS, he asked in regards to your joint efforts with SABIC and Linde, "What is the current difference in cost between a conventional furnace and an e-furnace pre-subsidy? Or asked another way, what would be the impact on ethylene cash cost per ton? That's actually Andrew, it was the second try to get out that number from me. I will not, for competitive reason, will not tell you, but it is not insignificant, I have to say. It's not prohibitive, but it is also not insignificant. I think in the first step now where we don't have the low energy prices, where we don't have the scale up, because certainly it will also become a little bit more economic when you build this peak. We have now to find let's say, the limited amounts we will get out of that cracker oven because it will actually produce ethylene, significant amount of ethylene, and we will then, with the mass balance, allocate this into exactly those areas where actually margins are higher, where there is customer industry, where maybe also the application allows for higher costs. Then we will scale it up. I can only leave it with that, Andrew. It is a little bit higher on the CapEx side, and it is also higher on the OpEx side. We have another question from Jaideep Pandya, On Field Investment Research. It's a bit political. What is your view on carbon border tax as a protection for you against competition from regions which are not carbon efficient? In connection to that, what is your view on renewable naphtha in Europe? Does that feature in your plans to reduce CO2 Scope 1? Well, now I'm in the middle of politician minefield, I would say. I understand where carbon border adjustment measures come from, to somehow compensate and having a global level playing field. However, my starting point is the best would be don't need any of these mechanisms at the border by exactly doing what I mentioned several times already. If we make the innovation compatible with an enabling framework, and we manage this transformation without needing a correction, it ensures actually that we all along the transformation have competitiveness internationally. I think that already is something that makes others to copy what we have. I see major problems, and I think this is also where Brussels struggles with, is how you can make this WTO competitive and also very clearly, if others import and they have to go through this mechanism, you have to have a fair, let's say, transparency, how big is actually the CO2 footprint of that product? That's the first question where you can long talk about it and actually what kind of energy was used to produce it. There might be even products with renewable energy coming in, where then the border adjustment measures do not have any effect. I think it's a discussion, very intense now. I would rather find it useful if we have an overall setup where we don't need it. So on the- Second part. -on the renewable side, as cracker feed, yes, we're using renewables. At this point in time, I think it's fair to say, Martin, to a very low extent only. As you've heard, we are working on other ways. This is more in circular, where, in various ways, we're finding routes to use pyrolysis benzene for our cracker feed. On both areas, as Martin has alluded to fill the 250,000 tons that we are targeting for 2025. A way to go, but I think we're on a good path overall. The next question is from Chetan Udeshi. He asked a bit about the motivation why we published these targets today. Here's his question. At the end of 2018, BASF had announced the target of carbon neutral growth until 2030. Today, the target is to achieve 25% CO2 emissions reductions. Besides investor focus, what drove this significant change? Has the availability of low-carbon alternatives changed? Has this been a key driver of target change? Chetan, I actually thank you very much for this question because I can clarify this. Basically, we don't do anything different than we have actually announced in 2018. The big difference is we made so much progress over the last two, three years, that we actually accelerate the one or the other measure that was planned after 2030, which is now ahead of 2030. With this, also the reduction potential, which was thought to kick in after 2030, is now actually contributing to the reduction before 2030. With this, we just have the ramp of actually being carbon neutral until we are enabled with our technologies to contribute for absolute reduction has actually accelerated. I think this is, per se, a very good news, because I think you see that we are dedicated, and this is also to the technological strengths of BASF, which is always a pride and also an important success factor for us, that by the way, we wanted to communicate this. The other part is, I think what I mentioned. We need this engagement with politics to fight for positive framework conditions. I think what really changed until 2018 is the customer interest. We did not have any customer basically seriously talking with that about us. Today, I have letters from them in writing. They basically tell me, "Give me a plan. How you actually provide me with low CO2 footprint in 2030?" I'm actually happy that this whole thing accelerates. The demand from society, the translation into politics, that all accelerates. I think there is no way out of that anymore. I think it is mainstream. I think it is also a surprise that we see that COVID did not actually decelerate this whole development. Actually, quite interesting. It accelerates the development. With this, I think we are on the spot, and I am deeply convinced that will be a differentiating component for the future, that you can offer that. I think it is also contributing to the market capitalization of BASF. We can clearly demonstrate we have solutions to these challenges. I think this is differentiating us from the competitors, and this is why it was important also to radiate this confidence, which we have in this progress, with you. Because I think this is important now talking about ESG, where to put your money on. You want to be in chemicals. Which company in chemicals you think is best prepared for the future. I think this is what we really want to say, that we made huge progress. We always said at the beginning already that beyond 2030, we want to reduce in absolute terms. Basically, what we do now is the progress allows us to accelerate, I think I reiterated this as well. We have a lot of ideas, and this is maybe an important message for you, too. I think we talked about this in the one or the other talk before. We have a huge motivation of our own staff. They actually love that where the company goes to, and they come up with so much creativity on the technology field. I think what I mentioned with the steam generation, to electrify steam generation using heat pumps, that is actually something we had not so much on our mind in 2018, and we just realized some time ago how much potential is there. I think overall, that is a very positive message to you. We are confident. I think it makes BASF more valuable in the future. Customers approaching BASF to work with us, so great. He has a follow-up question directly related to public funding. How much of the 25% planned CO2 emission reduction is dependent on government funding? In other words, what is the realistic reduction achievable without public funding? That is hard to define. I don't answer too much because that is also now getting political. At the very end, I said this, there's different schemes that go there, and we applied for them. I think it is fair, and we hope that we really get support over there. I think this is also shown and demonstrated from the other part, and we go now step by step. Let me really stay with this because it is also a little bit of competitiveness and competitive information. Now we have two more current trading questions. I guess it's for Hans. The first one is from Gianmarco Migliavacca, Neuberger Berman. Will your CapEx plan and possible M&A appetite affect your dividend policy and lead you to reconsider it, or do you remain confident to be able to increase dividend every year? I'm not so sure that I would put this in the current trading question section. Sorry. That was the next one. Thanks for that question. I think importance of dividends, we have emphasized for BASF with the proposal that we'll make to the AGM, which is to pay a dividend of €3.30 for the year 2020, same as for the year 2019. This after a year, you all have seen what happened with the heavy impact that the pandemic had on our results. I think that clearly shows what BASF intends to do, also intends to do going forward. What we have in the CapEx plan for the years 2021 through 2025 is obviously reflected in what we do. On the M&A side, here in particular on acquisitions, I think we were also very clear already with launching the new corporate strategy in the end of 2018. We clearly said we de-emphasize acquisitions. There is much more focus on organic growth, with organic growth in particular from a geographic perspective in Asia and with that in China. You're all familiar with what we intend to do with the new Verbund site, but also with our battery materials business, in which we invest with two new plants in northwestern Europe. I think from that perspective, not current trading, but I hope a good and satisfying answer. Now comes the current trading. Sorry, that was the next one from Dominik Frauendienst, Ayora Capital. Could I please ask you about trading and guidance again? Given the developments in Q1 and the order book on hand for Q2, could you please provide us with updated thoughts on full year guidance? You mentioned that the upper end is achievable. Is this still the case, and is there a possibility for the upper end to be exceeded? Let me reiterate what we said in the end of February. We had a good January. We had a good February, which supported at the end of February to say in that range, which reflects the overall uncertainty that we have. In that range, we think that the upper end might be in reach should these conditions continue that we experienced back then in the first seven weeks of the new year. I think I can say that what we then saw in March is in line with the developments that we had in January and in February, which gives me the confidence to say that come our earnings release for Q1, we'll probably be able to give you a bit more and more specific guidance for the remainder of the year than on the basis of Q1's figures. We come back to the keynote and the topics addressed there. Next question is from Thomas Wrigglesworth, Citi. Is there a carbon price at which all technologies work for decarbonization? If so, what is it? Do you envisage that your decarbonization framework and targets, which include inorganic growth, has forced you to revisit your M&A pipeline? No, Thomas, there is a relatively big spread in really abatement cost, and it's not surprising. I think I mentioned that some of that stuff, for example, the replacement of steam turbines by e-drives, has a very low CO2 price equivalent and I think is a no regret move. It's also very clear that the last, let's say, amount of CO2, which we'll maybe have to reduce on the last meters of the journey when you approach 2045-2050, there are stuff that has abatement cost of a couple of hundred EUR per ton, I would say. I'm not worried about that because there will be so much happening until then. First of all, technological progress, different regulatory framework. I think we should not be so much worried about that. There is a significant part, a relatively broad curve, where you need higher prices than you have currently as you have, for example, certificate prices in the [European] in the ETS. I think that's why I reiterate all the time things have to go together. We need a secure planning horizon for CO2 pricing, certainly CO2 pricing has to increase over time. The best would be you have actually a perspective to know for the next 20, 25 years exactly how that is ramping up. If that then comes together with what I said earlier, positive enabling framework and also the energy prices really from production go down to the consumers, then actually this is step by step possible to mitigate, we will crawl up the abatement level of the cost. It is a relatively high spread from the low, let's say tens of Euro to a couple of hundreds Euros. Next question is from Sebastian Bray, Berenberg. How much does BASF expect its free CO2 allowances in the EU to be reduced over the next five years? Second part of the question, why is the electricity use rising so heavily to 2035, mainly e-furnaces? First part is the allowances in the EU. Yeah. Sebastian, thanks for that question. On the allowances, we enter the fourth trading period in a very good position. BASF's technology in many areas leading as a result of that. We're getting certain allocations of certificates. The question is now, what's going to happen with the increased reduction targets from 30% to 55%, that path is not yet clearly defined as a result of that. I do not yet have a good answer that would allow you to somehow reflect that in your calculations. We need to see how the political discussion develops there and what that then means actually with respect to certificates, certificate requirements, and allowances. I take the second part, which is the kicking in strong increase in green energy demand beyond 2030 direction, 2035, 2040. That is actually the scaling up. Yes, it could be the e-furnaces. I mentioned already that we will decide the order on the abatement cost and the framework condition. One thing is very clear, that is then the area where you have to also shut down coal-fired plants and basically replace it with green energy, both directly on the electricity side, but also using then the green electricity to produce then also steam. This is where it really scales up dramatically. Another question from Christian Faitz, Kepler Cheuvreux. In terms of terawatt hour per year in 2030, what do you believe will be the split between own power generation assets and bought energy? He's referring to one of your slides, which was not so specific. Well, Christian, there is no target in the moment because it depends also on realism, what is actually possible and how many projects are there. The only thing is sure, if you want to also mitigate the availability of it, you need to have a portfolio of different sites and locations and different assets to actually flatten the curve over there. It simply will depend on the acceleration of projects, who are the partners with whom you work. I would say we are fairly open to this, but at the very end, each and every project has to be decided with its own investment logic. You can ensure that we go through all these projects as we go through every BASF investment project, and so it's simply too early to say this. We have a high flexibility, but what is also very clear, it will become a global portfolio because we don't talk only about Europe. We have two more question. The next one is from [Aaron Bostugli]. I probably pronounced that not correctly. What about the cost and the CO2 emission caused by transporting bio-based feedstocks from refineries to the industrial sites? Are you accounting for those? How can you improve there? Can you repeat the question? Bio-based feedstocks, so about the transportation costs, and whether we account for that and how we could improve. Well, to the extent it's part of the Scope 3 definition, we will account for it. I'm not 100% sure, to be honest, how that's done. I promise you next time I have the right answer for that. The final question is from Thomas Wrigglesworth, Citi again. Is there a carbon price at which all technologies work-- Oh, no. Sorry. I think we had that one. Yeah. My mistake. With that, we are a bit faster than anticipated. We will take a break. That is now really a lunch break, and would like to resume the program with Industrial Solutions at 2:00 P.M. CET. Journalists that have followed the keynote presentation until this point are invited to join the telephone press conference that are offered by the media relations colleagues, and will also begin at 2:00 P.M. CET. Thank you. Thank you very much. Bye-bye. [Break] This is audio from Hong Kong. Testing one, two, three. Testing one, two, three. This is audio from Hong Kong. We're hearing your music loud and clear. Thank you. Welcome back, ladies and gentlemen. With me on stage is Markus Kamieth, Member of the Board of Executive Directors since 2017. He is responsible for the Industrial Solutions. Sorry, for the Dispersions & Pigments and Performance Chemicals divisions, as well as Coatings and Catalysts. Furthermore, the Asia Pacific region falls under his responsibility. Markus will now give us his presentation on Industrial Solutions, with that, I hand things over. The floor is yours. Thank you, Steffi. Welcome also from my side, ladies and gentlemen. I'm glad to host here the session on Industrial Solutions this afternoon, together with the two division presidents who will join me later for the Q&A session. I'm really looking forward to hopefully an engaging Q&A session together with you. I think it's very timely to discuss and to take a deep dive into the two interesting segments, Industrial Solutions and Nutrition & Care, because these segments were also formed as such right after the introduction of our new corporate strategy out of the formerly known Performance Products segment. You will see today how we are really doing the course of the implementation of our corporate strategy, transformed these not only into two distinctly different reporting segments to make it maybe easier for some of you to analyze BASF, but also this has really flown into the strategic positioning of these two segments, which is distinctly different. You will see also the portfolio role of these segments are very different today. I will start with the Industrial Solutions segment, then later on you will have a chance to discuss with Saori and the team the Nutrition & Care business. When I thought about the key themes of Industrial Solutions and what characterizes the segment to BASF today, apart from the portfolio role, I came up with three key themes for Industrial Solutions, namely focus, integration, and customer value. The segment has been changed a lot over the last years. We did a lot of portfolio moves, and we focused the portfolio really to be present and take leadership positions in distinctly defined industries, customer industries, with a broad and very powerful product portfolio. The segment is also deeply integrated into the BASF Verbund. Many of the businesses in the Industrial Solutions are very high-value outlets for our BASF Verbund value chains and provide additional value to our upstream divisions. On the other hand, we have the ability through our differentiated businesses to demonstrate everyday superior customer value, especially based on deep application expertise, which characterizes the predominant business model in these businesses here to provide sophisticated chemistry out of competitive assets with deep application expertise to tailor-make success for our customer and their processes. Customer value in increasing fashion means in today's environment, sustainability means lowering of carbon footprints, means driving circular economy and increasing resource efficiency for our customers, very much in line with what you heard this morning also from Martin and Hans. This is basically the general characterization of what Industrial Solutions is all about. If you see the position today of Industrial Solutions in the portfolio of BASF, you can see the distinct role that Industrial Solutions also plays, and I will explain to you a little bit how this is then characterized through also strategic decision-making and resource allocation. As you can see here already, Industrial Solutions is one of the businesses that we characterize predominantly as a core business with relatively low CapEx and M&A relevance. We are focusing very much on cash generation and improving our ROCE in this segment. There you can also see the difference very much pronounced to, for example, the Nutrition & Care segment. Short view on a couple of sales splits here for Industrial Solutions. You can see on the right-hand side the split between the two divisions, Performance Chemicals, roughly one-third of sales, and Dispersions & Pigments, two-thirds of sales. This split, of course, still includes the Pigments business, which we are in the course of divesting. If you take the Pigments business out, the split will be more in the order of 60/40. On the left-hand side, you can see the regional split of Industrial Solutions, and here it looks relatively normal, but it has a strong dynamic, an underlying dynamic of growth in Asia Pacific. Just five years ago, the share of Asia Pacific in Industrial Solutions sales was less than 25%. Already today, we're at 30%. This is, of course, strongly increasing. This is something you can also see in the information that was provided to you in the divisional slide decks of strong investment activity in both divisions in Asia Pacific. When you look at the performance history of Industrial Solutions, you can see Industrial Solutions has developed into a very stable earnings contributor for BASF Group and a strong cash generator. The left-hand side shows the sales development as well as EBITDA margin and ROCE development. Of course, the segment has been characterized by a significant amount of portfolio activities, especially divestments and, let's say, spin-outs. I will go to this in a second. You can see the sales have actually declined quite a bit since 2017, predominantly because of M&A activities. However, on the other hand, we have stabilized the EBITDA development despite the strong loss of top line, which shows a significant positive margin increase, especially over the last two years, where we were able to improve the EBITDA margin significantly by almost four percentage points. Over the last six years, Industrial Solutions has, on average, achieved a ROCE of 11%. If you take the one-offs out, we can clearly say that this segment contributes to a strong ROCE of BASF Group in each and every year. This is also part of the important portfolio role, which we also anticipate going forward. How we envision this is coming out of the right-hand side of this chart quite a bit. You can see that with 13% of sales, but 16% of EBITDA contribution, Industrial Solutions is over-proportionally contributing to the profitability of BASF Group. You can see with 8% R&D expenses, which corresponds to roughly a 2.5% of R&D intensity, it is an R&D-intensive business. I would say in contrast to some other businesses, very much heavy on the D side. A lot of investment goes into close to customer development activities where we tailor-make products together with our customers for specific applications. On the lower right-hand side, you can see our estimated CapEx allocation to Industrial Solutions, and here you can see significantly under proportional, which shows that we are, especially in Industrial Solutions, going to be very disciplined when it comes to CapEx allocation. This equates to roughly a EUR 200 million per year average over the next five years. Based on an EBITDA before special items, which last year was in the order of EUR 1.2 billion, you can already see that the cash generation from EBITDA in Industrial Solutions is very favorable for BASF, and this is exactly the role that we see also for Industrial Solutions in our portfolio. I talked to you about the three dimensions: focus, integration, and customer value, and I would like to go through these three themes a little bit more in detail together with you. When we talk about focus, you really see here the strong development over the last five, six years of the portfolio of Industrial Solutions. Significant overhaul and focus on these industries and these businesses where we feel we have a competitive advantage and we bring actual customer value to the market, we feel we are in markets that allow us to grow profitably going forward. We have exited quite a number of businesses where we felt this, at least not by ourselves, was no longer the option to go. We divested the Textile Chemicals business, brought our Leather Chemicals business into Stahl Group in 2019, formed the joint venture Solenis together with a private equity partner where we still hold 49% today, we have decided to divest our Pigments business, which is a transaction that should close during the course of the second quarter in 2021. We've also done quite a number of smaller, let's say, divestitures, and this really shows the hard work over the last years to focus the portfolio on improving our market positions and on the other end also, of course, improving our financial performance. What I've done here on the right-hand side, I've kind of remodeled, if you want, in hindsight, a pro forma statement. If you took all the portfolio moves retroactively out, you can see that these portfolio moves have been accretive to the financial performance of Industrial Solutions, both in terms of EBITDA margin as well as EBITDA growth, and also have significantly contributed to the ROCE development of this segment. We have done all these portfolio moves because we wanted a more powerful and more capable portfolio for BASF's Industrial Solutions segments going forward. I can say the portfolio that we have today, we like it a lot because it combines strong market positions, it combines competitiveness, also competitive assets, at least to the large extent. We have a very competitive and good asset footprint. It also brings high customer value in most of the businesses because we have significant innovation power in the businesses that we maintain in our portfolio today. Now I would like to go through the two divisions and the components of their portfolio on a relatively high level, because you will have a chance to discuss this in much more detail with Thomas Kloster and Gops Pillay later on, who know much more about the portfolio than I do. You can really discuss also with them how they drive success in these particular businesses. Looking into the Dispersions & Pigments division, here on this slide, already taking out the pigments business. This is how the Dispersions & Pigments division will look like after the pigments divestiture. We will also have to change the name, of course, of the division. You can see that this is practically two big parts. The three businesses on the left-hand side, namely dispersions, resins, and additives, they are all catering to the industry that is coatings or coatings-related. Everything around sealants, adhesives, coatings type of businesses. This is the main customer industry, and this is where also through the combination of this broad product portfolio, BASF brings a superior solution capability to customers in this growing industry. You can also see some of the big names of the coatings industry are all our key customers in this segment. This focused portfolio represents more than 80% of the sales of Dispersions & Pigments after the pigments exit. There's one other business, which is the electronic chemicals business, which by technology or product has not so much overlap with the three other businesses, but from a business model perspective is actually quite similar. This is why the Dispersions & Pigments division is a good home for our electronic chemicals business or electronic materials business, where we are currently very much focused on the semiconductor industry. We're one of the leading suppliers to the global manufacturers of semiconductors. As you can imagine, this is a business that, especially over the last two years, we have enjoyed significant growth rates here as well. The Performance Chemicals division also is probably the division that has changed most of its characteristics over the last five, six years because it was most heavily impacted by the active portfolio management that I mentioned earlier. You can see that roughly 85% of the sales of Performance Chemicals today are concentrated in two large core businesses here. The one is plastic additives, where we are the market leader in both the antioxidants as well as the light stabilizer business that goes into everything related to the plastics industry, from upstream polyolefin manufacturing as well as compounding and engineering plastics and a lot of specialty solutions in plastic additives. The second franchise is then our fuel and lubricants solutions business, which is a very powerful combination between a variety of different businesses that all go into this fuel and lubricants space, namely automotive fluids. That means coolants and brake fluids. It is fuel performance packages, both the diesel and the gasoline space, as well as components for this, and lubricant components, as well as a finished lubricants business that we still maintain in North America in the transportation sector. We have two businesses that are smaller in size and also cater to specific niches in the primary resources sector, namely oil field and mining. This is predominantly an approach where we take products out of the BASF Verbund, and without owning own assets, these businesses bring these products then into specific applications for the oil field and the mining industry. As soon as these industries have a good cycle, so to say, these can be very profitable outlets for products out of the BASF Verbund for us with a very technically intensive marketing and sales approach towards these industries. Last but not least, we also have a kaolin business, which is a mining business. We take the kaolin minerals, and we market it as an additive into a variety of different industrial sectors, Coatings, but also into, for example, thermal paper. A much more focused portfolio than what you have seen maybe three or five years ago, and a much stronger portfolio with strong market positions and significant customer value that we bring to these industries. I also talked about integration. Just one data point here, about almost 40% of all the raw materials that Industrial Solutions consumes is sourced from the BASF Verbund, strengthening a lot of our key value chains that we operate within BASF. You can see some examples here, and I will show you also a couple on the next slide. There's only very little internal sales, so where out of Industrial Solutions, we sell products to other divisions. The most prominent example is, of course, the businesses that go from our Dispersions & Pigments division to our own Coatings division, which sits in surface technologies. A couple of examples for this integration to make it a little bit more transparent. One example here, the dispersions business and its deep integration into the C3 value chain in BASF. You can see the propylene value chain goes via acrylic acid and the acrylate monomers to dispersions. BASF today is the market leader in water-based acrylate dispersions. You can see that 90% of all the C3-based raw materials that we source for dispersions are coming out of the BASF Verbund, so either from BASF or from our joint ventures. On the other hand, dispersions are very high value outlet because it's far downstream. A very high value outlet for our C3 value chain. If you want the last molecule of propylene that BASF has, we would always like to make a dispersion out of it, because this provides actually the highest value. While dispersions in itself is certainly a fragmented business and also has parts that are more commoditized than others, for example, in paper coatings, it still represents a significant value adding outlet for our C3 value chain. The second example here that I brought is the integration of our fuel and lubricants business into the C4 value chain, in particular on isobutene. You can see that 85% of our fuel additives business is actually based on this C4 molecule via polyisobutene as the key component. On the other hand, the fuel and lubricants business is consuming almost two-thirds of our entire isobutene that come out of our crackers here in Ludwigshafen and Antwerp. You see the deep integration of Industrial Solutions and the added value that this segment provides to some of our key value streams. When we talk about superior customer value, it's of course very specific to specific industries that we serve in Industrial Solutions. I still try to find some overarching themes that are, I think, representative to most of the businesses that we run in Industrial Solutions. I came up with three key themes that I observe across the board. The one is a clear trend of our customers to require more environmentally friendly products for their applications, and this relates both to toxicity characteristics as well as lower carbon footprints. The second is, of course, the enablement of the efficient use of resources and reduction of waste in our main customers' processes. The third theme is the increasing opportunities that we have by combining the deep domain knowledge that we have in many of these customer industries with our new capabilities around artificial intelligence and digitalization to create new opportunities and new growth vectors for us. I will go through one example each of these three elements to give you a flavor for the characteristic of industrial segment of Industrial Solutions, and we can then talk a little bit more in the Q&A maybe on further examples from Thomas and Gops. An example for the theme of environmentally friendly products is our newest generation of acrylate dispersions, so-called Acronal 6292, which is a new styrene-acrylate dispersion, which is a rather old chemistry. What we bring it to the market with completely new properties. One of the properties is that it actually has superior binding property for pigment, which allows our customers to reduce the pigment load and achieving the same hiding power of the paint. This brings immediate cost savings to our customers. However, this is not the most standout characteristic of this product class because it also allows our customers, for the first time, to bring a paint to the market that is completely biocide-free. Typically, if you buy an interior paint, that is typically spiked with a biocide to prevent the paint from fouling before and during application. This particular acrylate dispersion allows our customers to put a product on the shelf that is biocide-free and is also labeled as such. This caters to a strong consumer trend towards biocide-free products to, of course, avoid topics and discussions around allergies towards biocides and also improve indoor quality, in particular, when it comes to the application of paint. Fitting to the theme of this morning, we also offer this Acronal dispersion in a biomass balance version. This takes then credit to biomass balance certificates that we get out of feeding biofuel into our steam cracker and pulling it all the way through the C3 value chain into the acrylate dispersion. This means that our customers can buy this product at exactly the same properties that they're used to also at a 90% reduced carbon footprint. As you can imagine, this is not an easy development, but it doesn't require completely new chemistry, but is an adaptation of existing chemistry towards the specific needs of a customer industry driven by strong consumer demand. This is why this example is so characteristic of what Industrial Solutions is all about. It's a very successful example as well. We launched the product three years ago, and it has actually doubled the volume in each and every year ever since. The second example that I wanted to share here is relating to the efficient use of resources and the reduction of waste. This is not a product example as much as it is a market opportunity example. You can see that the amount of plastics recycling, of mechanical plastic recycling, will increase significantly over the next 10 years. Not surprising, but in terms of scale, absolutely challenging, because up until 2030, we expect that almost 100 million tons of plastics will be mechanically recycled. That means that you have to find use for 100 million tons of recycled plastic materials. Of course, it's highly valuable if you find a way, and if you find technologies how to maintain the mechanical and optical properties of recycled plastics to increase the use space for recycled plastics, as opposed to virgin plastics. Here's where new additive concepts will come in. The protection against, for example, oxidative damage of plastic materials will be a key property that will be injected into the virgin plastic material, but also in the plastics recycling process. That is, of course, playing to our strength in additivation of plastic materials, deep understanding of the degradation mechanisms of plastics, and that is what our people are working on today, together with customers, recyclers, and other industry participants, to develop solutions that mechanical recycling, at the end of the day, can become a valuable and strong element in a circular economy. The third example is also very representative of what we do in many of our businesses in Industrial Solutions, and this plays on the theme of digitalization and creating new business models. In this example, we partnered with a company called IntelliSense.io, who are experts in artificial intelligence, algorithms, and software. We combined our chemical expertise and application expertise in the mining industry together with them to provide a service product, a software-based service product to mines worldwide, and we call this the BASF Intelligent Mine. Why is this of particular importance in the mining sector? Today, roughly 3,500 mines are operated globally. One characteristic of the mining industry, none of these mines are standardized. It's a natural fact that every mine is different. That means also optimization of a mine is a very complicated task. In the past, a lot of that was done by experience and trial and error. In the future, by combining the chemical knowhow of BASF and all the data we have always collected in our mining chemicals business and in mining operations, combined with the smart artificial intelligence algorithms that IntelliSense can provide. We combine this into a product that we offer to mines and that allows them to holistically optimize their economics, their operations with regards to inputs like chemicals, for example, and of course, also optimizing the output and the energy use in between. While maybe 10 or 15 years ago, BASF would have approached such a topic in a way as a vehicle, so to say, to sell more chemicals, today, we distinctively set this up as a separate business that creates its own revenue stream. We will generate via license income, through an optimization as a service business model, a revenue stream, even at mines where we do not sell any pound of chemical. Summing this up a little bit, the Industrial Solutions segment, as you've seen, caters to a variety of different industries, but it has some common themes, I think, and I hope I was able to bring these themes across. Deep confidence in what we do, bring high customer relevance, and at the end of the day, allow us to bring new formulations, compounds, and constant innovation to our customers and allowing them to drive sustainable solutions in their respective applications. Summing this up. I think the Industrial Solutions segment has a very strong portfolio today. We have optimized the portfolio, and as I said, we are confident that the portfolio is based on strong market positions, competitive assets, and strong customer relevance or customer value. We've based it on deep application knowhow, meeting our current and future customer needs, especially around resource efficiency and sustainability. When it comes to the portfolio role, and here I'm closing the loop to what I said in the very beginning. Industrial Solutions for us is a core business that focuses on strong cash generation and strong ROCE. You can see our ambitions here quantitatively, growth of roughly 2%-4% organic volume growth per year. This is, of course, limited by, on the one hand side, the moderate growth of most of our customer industries, but also already the strong market positions that we have in most of the segments. Strong EBITDA margin development over the last years will be also maintained in the future. I think this compares very well to relevant peers in the industry and a significant overproportional contribution to a strong ROCE based on strong capital and fixed cost discipline going forward. With this was the short introduction of the Industrial Solutions segment. Now I would like to invite Steffi and Thomas with me on stage to go into the Q&A. Thank you, Markus, for your presentation. Let's move on to the Q&A. Before that, I would like to introduce the two colleagues joining us. It's Gops Pillay from Hong Kong, and Thomas Kloster, here in the room in Ludwigshafen. Before we get started, it's my pleasure to briefly introduce Gops Pillay and Thomas to you. Gops is President of the Dispersions & Pigments division. He studied at the University of Natal, South Africa, and completed his degree in chemistry in 1988. He also finished an executive business education at INSEAD Business School. He joined BASF South Africa in Johannesburg in 1995, and over the course of his career, he has held various business management positions in Singapore, Tokyo, Hong Kong, as well as Ludwigshafen. Now, moving on to Thomas, I will briefly give an introduction later on. Thomas has recently assumed responsibility for the Performance Chemicals division, actually two months ago only. Just before that, he was senior vice president Automotive OEM Coating Solutions, and over the course of his career, he has held various business management positions in Germany as well as China. Before joining BASF in 2001, he worked for McKinsey & Company in Frankfurt. He earned his PhD at the Faculty of Business Administration at Mannheim University. With that, I would like to hand things over to Gops first to give his introductory statement, and then he will hand over to Thomas. Thanks, Steffi. Good day, ladies and gentlemen. Thank you very much for joining us. Dispersions & Pigments provide key raw materials to multiple industries that are important to everyday life. It impacts each one of us in different touchpoints as you move around in your everyday life. Our business growth tracks GDP, which offers a very steady demand. We enjoy very strong partnerships with customers that value our innovation capabilities and industry know-how. As Markus has alluded to, we are an integral part of the BASF C3 value chain. Operational excellence is part of our DNA. We are well positioned to deliver long-term profitable growth, and I look forward to answering your questions and also comments from the audience. Thank you very much. Good afternoon from my side. Markus has shared with you today many examples about Industrial Solutions and Performance Chemicals from BASF. Performance Chemicals are indispensable chemical additives for making our customers' products perform at the highest level. Our customers, like Volkswagen, LyondellBasell, Exxon, Sinopec, Shell, and many others, approach us almost every day to talk about joint development for more sustainable solutions, because resource efficiency is our DNA. The mega trend of sustainability will make our products even more important for our customers by enabling energy efficiency, emission reduction, and circular economy. We have strengthened our global production network over the recent years, specifically in Asia Pacific, and based from here, we will grow via smart debottlenecking. Our current business has shown consistent volume growth pre-pandemic, and we have proven a very resilient business performance in 2020. Based on that track record, we are confident to contribute to BASF Group with above-average return on capital employed. With that, I'm also looking forward to your questions, and I would like to hand back to you, Stefanie. Thank you, Gops. Thank you, Thomas. Yeah. Now we get started with your questions. The first one is from Andrew Stott, UBS. A question on technology disruption. How do you feel you and your customers will cope with the growth of EVs, especially in areas like oil and lubricant additives? Good question. Maybe I start a little bit, then I give it to Thomas, and maybe, Gops, you can also say a little bit about electric mobility because it also affects your business. Of course, we are following the electric mobility transformation of the automotive industry very closely. As you know, big picture for BASF, electric mobility is overall a trend that is going to be positive because of our strong engagement in battery materials. If you look at the chemical content of a car, actually electric mobility has a chance of significantly improving the footprint of BASF and the innovation opportunity we have in the automotive industry. However, it also goes against some of the more classical businesses. Of course, one of the businesses that is most obvious is, of course, the fuel and lubricants business. I would just share one thought, and then Thomas, you can take over. Of course, when we look at the automotive transformation, we often talk about the build rates. If you model this out and even at the, let's say, highest expected penetration rates of electric mobility into automotive build rates, we will still have a lot of cars on the road for a long period of time, given the average lifetime of a car of 10 to 15 years, that will be running on an internal combustion engine. There, the expectations to lowering emission and meeting highest environmental standards will, of course, drive innovation also in this segment. Thomas. Yeah, Markus, I think you touched on one of the key points in that respect, I would like to say it's a great question. It was one of the first question I asked myself when I joined the division. I was positively surprised to learn that there are many opportunities also in the electric vehicle space, specifically when we talk about coolants and coolants requirements. The requirements for coolants in an EV vehicle is much higher, bigger volumes and higher characteristics that you need to fulfill. Therefore, I would like to say there are as many opportunities in that transformation of the transportation industry as there are challenges for us. Yeah. Maybe, Stef, just to add to that. Battery materials is a hot topic, electro mobility, as my colleagues have mentioned. I think within Dispersions & Pigments, we have specialty dispersions that improve the efficiency to prevent swelling in the electrode separators. This is very embryonic type of development. Actually, as we are speeding up on this, you get a much more high efficacy in these cathode materials. We are pretty excited about launching that in China, which is the biggest market for battery materials. Andrew, you see a lot of opportunities come around this transformation. There is always businesses that come under threat and especially more classical applications, low-grade applications. When you think about lubricants with low efficiency, let's say last generation, fuel additivization packages and so forth, they come under threat, but there are still significant innovation pressure. Also in overall, let's say, sectors that are maybe no longer growing with such high rates, there's always innovation opportunities because the drive for resource efficiency also in a technology like internal combustion engine is going to increase. We have a next question from Laurent Favre, Exane BNP Paribas. It's an M&A question, so it might be one for Markus. Can you please talk about the time horizon you have in mind for the full exit of Stahl and Solenis? Are you looking to sell to existing partners, or do you need to wait for the assets to be IPO ready? Both of these participations that we have, a relatively low share participation in Stahl and a 49% in Solenis, are, of course, participations that we would like to exit at one point in time. We are discussing with the respective partners what the right timing and the right conditions here are, but we are under no particular time pressure to do so. We are following very strictly, always the philosophy of looking for value, optimizing exits. At this point in time, there is no particular target timing. There is, let's say, a close observation of both of the participations and nothing to report at this point in time beyond that. Again, on M&A from Christian Faitz, Kepler Cheuvreux, would you see any gaps in your Industrial Solutions portfolio in terms of potential acquisitions? I do not personally see a gap in our portfolio. There's always, of course, let's say, technologies, individual product lines where we look a little bit across the fence and we'd be happy if we would, let's say, have this. If you look at the overall strength of our individual businesses, as I try to explain this, these are in and itself, if you look at plastic additives, fuel and lubricant additives, dispersions, resins, additives, and so forth. If you look at these franchises, these are powerful enough. They are of critical mass. They supply superior customer value. We don't feel that we have a portfolio gap that we need to close to compete. I also mentioned that for Industrial Solutions, M&A is, let's say the M&A relevance is relatively low, so we're not on the active search to complete our portfolio. However, there is certainly the one or the other target out there that might be very synergistic in the future, but certainly nothing short term. We don't feel that M&A is a significant element of any of our division strategy in Industrial Solutions. Next question is from Thomas Wrigglesworth, Citi. What is Industrial Solutions contribution to accelerator sales? Can this segment deliver above target growth rates in accelerator sales? How can this be achieved? It's more related to ESG. I have to look a little bit on you. We don't publish accelerator sales per segment, correct? I will not give you a number now. I can tell you that accelerator sales also in Industrial Solutions play a big role and also achieve overproportional growth rates in both of the divisions and also, let's say, are setting the key direction in all our innovation strategies. Maybe here Gops and Thomas can complement a little bit. Gops, maybe you start. Maybe I can jump in first. Thanks, Markus. I think Thomas, what is really important is, Markus mentioned it in the intro, is that we are working very closely with customers. The customers, especially if I use coating customers as an example, they are looking for brand equity. For brand equity, they need functionality. Therefore, we are always have to launch and tweak products so that they can actually have better brand equity and also have higher functionalities. If you look at our overall sales, not to give a number out there, it's over proportionally our innovation sales grow every year, at least by a single digit on a year-to-year basis. It's pretty healthy vitality index if you look at the innovation sales. I would like to echo also what Martin said this morning. The topic of accelerator sales is closely linked to the topic of sustainability, and the customer interest is steadily increasing on that topic. While two, three years ago, you would present a new solution, a new product to a customer, and they would challenge you by saying, "Okay, it's interesting, but only if it's also lowering my cost." Today, you have an open door to discuss also some of the solutions that come at a slightly higher price point if they really help to achieve the sustainability goals together. In that respect, I'm very confident about our accelerator sales. I can say, if you look at the share of R&D projects that are linked to improving the accelerator sales in both divisions, the share of R&D projects that have this characteristic is rather high. However, I would like to also say that you were asking about the specific share of accelerator sales in this segment compared to the group. We have to acknowledge also that some of the chemistry that we do is well-established. For example, some key plastic additives, molecules have been around for a long period of time, and they are still key essential elements to this. This is then, of course, also limiting to some extent the share of accelerator sales. Overall, this is also a key development direction for this segment. The next question is from Laurence Alexander, Jefferies. With respect to both mechanical recycling and biodegradable adhesives and polymers, can you give a sense for how much of an increase BASF can see in its dispersion and additive revenues for each kilogram of plastic or adhesive produced? It's a bit analytical. I can repeat once again. Yeah. It's complicated. With respect to both mechanical recycling and biodegradable adhesives and polymers, can you give a sense for how much of an increase BASF can see in its dispersion and additive revenues for each kilogram of plastic and adhesive produced? I will probably not be able to give a quantitative answer. Maybe we can elaborate a little bit on some of the themes that you imply in your question. I think mechanical as well as chemical recycling will put a lot of, let's say, constraints around the composition of consumer products. If you think about a certain packaging material, of course, the composition of this material will have to be much more thought through in the future based on the recyclability of the actual article that you produce with it. For example, take a plastic bottle. Then, of course, you will have to make sure that the adhesive that you use to put a label on the bottle or the ink that you make to print directly on the bottle will not be disturbing the recycling process. This, for example, has a lot to do with what Gops and the team are doing in the dispersions business. Maybe, Gops, you have some things to add there. Yeah. Thanks, Markus. I think maybe to give you a concrete example, I think, probably most of you, like myself, love a good cup of coffee in the morning, and normally you're rushing, so you go down to Starbucks. If you look at the Starbucks coffee cup, it's always lined with polyethylene. Of course, a lot of the big brand owners want to go exactly what you mentioned, more towards environmentally friendly solutions. Basically, we are working and we actually have FDA approval now for a product to replace polyethylene in these coffee mugs. Of course, this takes time because you have to work with the tier suppliers to get this into the board and then to the brand owners. As we speak today, and Markus always asks me, "Gops, when are the sales coming?" We have a tangible product right now for this application to replace polyethylene. We are pretty excited about this development. Also to give you a sort of indication, Laurence, is that the percentage is still on a smaller basis, but it's gaining momentum by all the companies and customers. To build on that topic with respect to mechanical recycling, Markus has shown this tremendous growth opportunity of 10% per year that this market really is promising. Of course, the starting base is a rather low number if you compare it to virgin plastic. We see that this share is going to increase, and the race is currently up for the best plastic additives provider to really find the solution for this growing market. In that respect, we will also achieve a higher pricing. I would say there's no formula there to calculate back from a kilogram of recycled plastic to a euro business opportunity for BASF. I can tell you, tremendous amount of customer communications, of joint development projects to tackle these problems. They, at the end of the day, are very specific to the challenge, the individual challenge that you have in certain markets and certain types of recycling streams and so forth. We are active in all of them, and there's actually a revitalization of our innovation conversations that we have with customers in practically all industries. I have another question from Laurence Alexander, Jefferies, on plastic recycling again. On plastic recycling, can your additives make recycled polypropylene completely comparable to virgin polypropylene, for example? Or is there some fraction of the market, such as medical grade, that cannot be addressed by recycled polypropylene? I'm no expert. I don't know if you feel comfortable to give a real black and white answer here. I'm a chemist, so I can maybe give you a certain perspective on this. I doubt whether we will ever get into an area where we will get 100% recycling, let's say closing the loop by mechanical recycling, to achieve each and every property, especially when we go to extremely high performance characteristics and/or let's say medical specifications, for example. I highly doubt whether this is a feasible direction, and maybe I'm proven wrong by some technologies that are still yet to develop. This is why I believe that at the end of the day, to put all your chips on pure mechanical recycling is also going to be not the right strategy. That's why we believe chemical recycling, so to break polypropylene, in your example, down into its chemical components and again, circle back through the Verbund and make either new polypropylene out of it or a completely different molecule. This has to be part of a circular economy and will become overall a very competitive and increasingly important part of recycling. We cannot rely on mechanical recycling alone in these spaces. This is exactly what I wanted to say. There is a space for both types of recycling. This question was really touching on the highest requirements with respect to polypropylene recycling, and we are not there yet. We really start now that journey together with our customers. We will, of course, start with a bit of the easier applications of mechanically recycled polypropylene. Maybe eventually we'll also get to that, overcome that hurdle. It's certainly not the first topic on our list and on the list of our customers. This is already touching one point where if you once have a pure polypropylene stream, you're already in good shape. Today, most of the plastics that is actually up for recycling and that you could access to start recycling is actually mixed plastic waste. Also here you need solutions to compatibilize the different material types into a recycling stream. This is another, let's say, R&D activity that we have today, developing compatibilizers to make sure that you don't have to, let's say, drive the separation and the cleaning of plastic streams to the extreme, but you can accommodate more and more cross-contamination to again, achieve great properties of recycled plastics. The next question is from Andreas Heine, Stifel. He's requesting a figure we might not be able to deliver right away. A peer mentioned to generate EUR 350 million with additives, catalysts for the recycling of plastics by 2030. How does that compare to your own ambitions? A competitor mentioned EUR 350 million with additives, catalysts for recycling of plastics by 2030. We don't have a number for sure. I've never seen one. Maybe Thomas has one. Not a number we would like to share here. EUR 350 million, I don't know what the exact scope is, cannot comment on this. We don't have a specific target number here, would also be, from my perspective, a little bit speculative. Thomas, have you seen anything? No. Any guidance there, no? No. I think it's a rather evolving field. It's dynamic. There's a lot of technologies. We cooperate with startup companies also in this area. I think the technology landscape is still somewhat opaque, and I would not feel comfortable now to pin down a number already for 2030 in such a dynamic area. The next question is on our customer industry, automotive. It is from Tim Jones, Deutsche Bank. Do you think that the automotive industry is generally willing to pay more for lower carbon solutions that Industrial Solutions is increasingly looking to provide, or will they just demand the products for the same price? That is a good question. Having had quite some experience in the automotive industry, as Thomas said as well, in his last job, we joined some experience in the automotive Coatings business. It's a little bit difficult to say that the automotive industry is willing to pay a higher price if you know the procurement environment in automotive is a tough one. This comes, of course, from the high-value add that typically suppliers provide to the automotive industry. I can tell you one thing. The automotive industry is in a huge transformation right now, probably the biggest transformation that it had to go through over the last century. The automotive industry is always willing to honor and pay for innovation that separates and that brings differentiation, either in their cost structure or differentiating their product in their competitive space. I think this has always been the mode of action why BASF has been successful in automotive, because we were always able to bring superior solutions to automotive customers and also differentiate. In the past, this was very much driven on functionality. Came cost and use as a second topic over the last decade, extremely. Now it comes sustainability. If you differentiate your offer into the automotive industry in these aspects, I think there's a high chance you can have a very good business in automotive. We have shown this over the last decade. There is not a per se willingness to pay higher prices in the automotive industry, for sure not. If you are on par with everybody else, it's a tough place to be. If you differentiate, and I think also in the future in increasing share, if you differentiate, for example, by providing the lowest CO2 footprint for a given product, you will be able to get a premium also in the automotive industry. CO2 footprint has become a backpack that is seen and also valued by the automotive industry. Therefore, it has become a certain currency that we try to also use in our favor. It will come down to supply and demand, be the first one in the market with an opportunity that has a lower footprint. I'm convinced we can convince some of the more difficult procurement colleagues that Markus and myself have met over our careers that this is value for both of us. Next question is on margin development. It's from Chetan Udeshi, JP Morgan. How cyclical is the margin with raw material price development? Specifically today, the raw material prices are rising significantly across the board. Does the division have enough pricing power to maintain the margin? All right, I give this right on to the two division presidents. It's, of course, one of the key topics at the moment, and Gops, maybe you'll allow me to give a first response. Yes, please. from the Performance Chemicals side. Go ahead, Thomas. We see this, of course. We see the raw material development. Our customers see that. Luckily, both of us see a very strong demand at the moment. In that respect, there's also certain pricing power on our customer side and as well on our side. In an environment where raw materials go up, this is, from my point of view and from my experience, very crucial. We constantly monitor that. We work very hard. You have seen our announcements regarding price increases. They come actually on rather short notice because the increase of the raw material side has been very sharp. We are confident that we can also share that burden with some of our customers. Gops. Yeah. Thanks, Thomas. I think just to add to what Thomas and I think, Markus, thanks for passing this on because this is a famous question from Markus. I think that's also part of, I mentioned earlier, the operational excellence. I think we have, if I talk about Dispersions & Pigments, we have also part of the portfolio that is formula pricing. The formula pricing of part of the portfolio, we have call it the unit margins are pretty much safe. I think the other thing is what Markus alluded to earlier on. We have very strong partnerships. If you talk about in the slide deck, you saw a company like Bayer that we work very closely over 20 years. Here we discuss very openly the situation. It's no secret we have freight costs that are going up. We have the U.S. freeze. There's force majeure on certain raw materials. I think that the main advantage we have in terms of pricing power, we have these relationships with these customers that are strong in their marketplace, and we work together to get prices up. It's very clear it's not a comfortable discussions all the time, but certainly we've proven over a period of time over the last five years that we are capable of getting unit margins up, and our customers do understand the rationale behind that. I think the other point that's pretty important that Thomas alluded to, is that the demand is strong. I think, if you have a market where the demand is strong, we have recovery in certain industries, there's a willingness also to accept a higher price level so you can actually look at how you position these products in the market. I would maybe just conclude that, of course, in times of rising raw materials, the downstream businesses come under pressure. We have a relatively high share of businesses in Industrial Solutions that have formula pricing, which on the one hand side sounds always easy because margins are locked in, but remember, there is always a price lag. In times of increasing prices. Yeah You often see a certain margin, a temporary margin drag there. A combination of increasing raw materials and a strong demand is typically not threatening to us because of the, let's say, strong market positions that we have and the arguments that Thomas and Gops mentioned. We also had times where you remember maybe back in 2017, where our raw materials went up and we had a rather weak environment. I still remember this vividly because it was my first year on the board, and many of you have challenged me with that margin development back then. That is then a more challenging task, and we had to work very hard over the course of 2017 and 2018 to restore some of the margins because it was an overall weaker demand environment. That is different today. We are also confident that throughout 2021, we will continue to see a very strong demand development and this gives us hope that we will not see a significant margin drag here. The next question is on circularity. It is from Georgina Fraser, Goldman Sachs. Does your innovation in Industrial Solutions keep in mind recyclability of the end products? Are there legacy products in the portfolio that do not have a future in the circular economy due to hard to remove or catalyst poisoning additives? I would like to start. Yeah. No, you start. In the same way how we work with our customers to find more sustainable solutions, we of course constantly screen our own product portfolio. I think we did also publish that with respect to accelerator sales. Where are the areas in our portfolio that we need to challenge ourselves? I think there we have done, I would say 80%, 90% of our homework. Wherever we found a substitute, we have also implemented that. There might be a few small grams and kg left in our portfolio where we still need to work on. Of course, there are some unsolved challenges for the industry where none of our competitors, not even us here have a solution yet. This is a very small part of our portfolio. Gops, anything to add? I think Thomas said everything. I think, in most of these portfolios, this is very much an active portfolio management. If you look at just the dispersion in pigments, we are very much skewed towards water-based solutions. Yes, we still have some solvent-based products in our portfolio, this is very much the minority. In those sort of categories, there is no alternative solution right now as we speak, even from competition. We continue to work along those lines to find more, call it, acceptable solutions. I would also refer back, Thomas indicated this, to our TripleS exercise. We segment really our entire portfolio, and we not only carve out the accelerator sales, which we always talk about, these are the sustainability accelerating products that we have in the portfolio. We also have transitioners, and we have a product on the other end of the spectrum. We do this very diligently, and we address also products that not only from a regulatory side come under pressure, which is the extreme scenario, but we also identify products very clearly that are, let's say, a drag to sustainability targets, for example, of our customer industries. There's always, let's say, complications there in the one or the other maybe circularity idea. I now also going through this in my head, I do not come up with a category of products that I would fear is really right now a certain problem also in the establishment of the circular business models that we and our customers have in front of us. I don't see any significant red flags there. The next question is from Christian Faitz, Kepler Cheuvreux. "What kind of demand trends are you currently seeing from the coatings industry?" That's more about current trading, coatings industry. Yeah. Gops, I give it directly to you. You are one of the largest suppliers to the Coatings industry. You should know best. Thanks, Markus. Christian, the coatings industry is really enjoying a very positive demand at the moment. It's just kind of strange. When we had the chat, when Markus asked me same time last year, when COVID first hit. I think the DIY segment, do-it-yourself segment, has really skyrocketed, especially if I look at Germany, Northern Europe, and the U.S. You saw the results of the big coaters, be this AkzoNobel, be this Sherwin-Williams. You look at coatings in general, especially DIY, strong demand. However, I have to say, it'll be naive to think that this strong demand is there to stay for the next four or five quarters. We started the year in Q1, very strong demand. We think this will continue slightly into Q2, but we expect a slight softening. Also, if you look at the press releases from the main coating accounts, they also see it this way. Very strong performance, especially Q4, Q3 last year. Yeah. I would also say that this special strength in DIY coatings, as you know, we also have our own decorative paints business in the Coatings division in Brazil. I think we've seen the same thing there, this trend towards an increasing demand for DIY paint because people are just spending more time in their home over the last 12 months than ever before. This was clearly visible, for sure, if lockdowns go away, if people return back to normal, you can only paint so many walls in your house. This will also certainly normalize. I would say the other big segments in the coatings industry, industrial follows very much the demand of the overall industrial sectors. Automotive was automotive in 2020. Very difficult, extremely difficult, I have to say, but also has returned rather positively and surprisingly positive as of Q4 last year, especially driven by a strong rebound of China. It's a question related to the slide you showed with EBITDA margins and ROCE. It comes from Rob Hales, Morningstar. Is the pigments divestment included in your pro forma impacts on historical EBITDA margin and ROCE? Or if not, how much does that divestment contribute to your new EBITDA margin and ROCE targets? Yeah, I'm not quite sure which slide you refer to. If you refer to the slide that had the bar charts on it, this was as reported figures. Pigments are in, including also in the year 2020, including also some one-offs or special items that affected the ROCE negatively in 2020 coming from preparation of the pigments divestiture. I indicated on this slide where I showed the timeline and the individual divestitures and joint ventures we made. I indicated a, let's say, pro forma backward-looking, let's say, trend indicator there, and this is where I included the pigments divestiture. I anticipated that, so to say. I will not give you a specific number of what the individual contribution on the financial KPI will be of the pigment deal, but I can tell you overall, we expect that the pigment divestiture will contribute to a positive ROCE development in Industrial Solutions. We have another question from Laurence Alexander, Jefferies. The ROCE targets both look to be setting a floor 1%-2% above the five-year range without much of a step-up in margins. Can you walk through the key levers? In particular, will growth CapEx need to be stepped up in the next three to five years? I would say since these ambitions, so to say, the corridors we've given you on the last slide are certainly our midterm expectations for the segment. They are specifically a little bit broader, especially when it comes to EBITDA margin, because we have a certain volatility. We discussed a little bit earlier also the impact of raw materials, for example, on the segment margin. You will see the same thing in Nutrition & Care as well. It should give you an orientation of where we expect in our midterm planning the segment to be. Certainly with an EBITDA margin that also last year was in Industrial Solutions very good. We are rather on the higher end in that range. This at least for us, our target corridor, we would be happy to beat the target corridor in any given year for sure, and we will strive and we will try our best to do it. When it comes to ROCE, I would say there is a significant improvement in ROCE that you see compared to historic averages that we target. This comes from two aspects. The one is the full accretion, so to say, of all our portfolio moves now that are completed and that will be completed in 2021. An overall portfolio effect. The second thing is, of course, now a normalization, I would call it, of the CapEx expenditure in this segment. As Thomas alluded earlier in his comments, focus very much on smart de-bottlenecking measures rather than big investments over the next year that will also help to further streamline the capital base of the segment. That along with a, let's say, on average 3%-4% volume growth, leads to the target corridors that I presented. There's no magic behind it. It is basically a continuous volume growth at attractive margins with strong capital discipline gives you that target range, but also quite clear our ambition is to not disappoint, but rather take the corridor as a minimum expectation. We have another question from Tim Jones, Deutsche Bank. Over the past two years, BASF has moved around 20,000 people from head office functions or from functions into the divisions. Can you let us know how this move has impacted the Industrial Solutions business? Also, can you comment on how do you assess what the financial impact has been for the segment of this move? Okay. The second part I will take, because I will also tell you, Tim, that we will not now also dissect the contribution of our overall excellence measures, and we will not break this down onto the segment level, because this would, I think, go a little bit too far. I can start a little bit by saying, but then I would really ask Gops and Thomas to chime in, because this is a perfect question actually for the division presidents. When we were going as a board through this exercise to say, do we have actually an organizational model that is contributing to our mission to become more focused on the customer, to work more externally focused, to be more organic growth focused, and do we have the right setup to do this? We made the decision to say to drive competitiveness in our corresponding businesses, we have to move these people closer into the business units to bring decisions closer to the markets and so forth. And I think this has, from an organizational implementation perspective, taken off really well. Whether it now actually brings the divisions into a position that you feel more empowered and stronger in exerting your business models, maybe Thomas and Gops can share their thoughts on this. Happy to start, there's a clear message from the division president that this was a very positive and important move of our company. We want all our employees to know what customer they serve. Markus has shown in his chart that we serve very distinct markets, also with very different customer requirements. Responsiveness is key. Decision-making is very important to come back to a customer and to say, I can offer this product at that price or not. I have the logistics solution that we need. We have the joint decision that we invest into a certain manufacturing process. In that respect, this has really accelerated in our division, and also this customer mindset has further grown. In that respect, I think it was a very important move for our company. Also my first discussions with my new team members show that there's a very positive momentum behind that change. Gops? Yeah. Thanks, Thomas. I think to add what Thomas said, maybe, Tim, to speak to with a concrete example. I think when we talk about putting the customer first and customer intimacy, it's all about driving content. If I take a concrete example of electronics materials business. For example, in Ultrapure, we are number one if you look at electronic-grade sulfuric acid. We have now engineering and maintenance that's sitting within Dispersions & Pigments, sitting within electronic materials. A lot of these projects that we're investing, we're putting a new capacity in Taiwan. We plan new capacities also in China in the coming years. If you look at that, you have a dedicated team and a lot of these projects are time-critical. You're dealing with an Intel of the world, the TSMCs. You follow the electronics industry in terms of the chips. I think by having these teams in the operating divisions, you're having this ownership to the customer. You're also having very much content-driven discussions, which customers also can dial into. As Thomas said, a huge step forward. Not also to say that it was really bad in the past, but I think it's a lot more focused moving forward. That's one example. The second example is also if you look at when we have all these shortages with force majeure. You're having dedicated customer teams, for example, in the customer service offices that understand and connect with customers so that you actually can do a lot better planning in terms of firefighting. We are pretty excited about that, and it took us a while, at least six months to get embedded. I think now we are much more than one year into it and very positive outcomes, Tim. That's good. Let me just conclude on one thing. This transformation is also not finished. As you also have heard that we are still in the course of now going into the next phase of establishing our Global Business Services division that will then at the end of the day, really tackle the next step of efficiency gains and of operational excellence through harmonization and digitalization of many of our service-related processes. This is really where we expect a significant contribution to our Excellence Program also over the next year. It's not done, but as you've heard, very authentic statements from people who run a business in BASF, it created already positive momentum where it matters most. Okay, we have another question from Laurent Favre, Exane BNP Paribas. A question for Markus is what he writes. It is on M&A. There has been a lot of cleanup in the division or the segment probably he means. Is there scope for further fine-tuning? Would you participate as a consolidator in oil field surfactants? Is the kaolin business core? As I said, Laurent, I think the portfolio we have today, we like this portfolio a lot. There is always, let's say, things we are looking at. I would say in Industrial Solutions, we are very selective. I think based on very good market positions and the businesses we have optimized now over this period of time. For example, an area like oilfield, I would not see us in a role as a consolidator of this industry. I have limited appetite now to go out and buy an oilfield chemicals business. Wouldn't be making a lot of sense for us because I think also synergies would be compared to what we do rather limited. This is not sounding like a great idea to me. Overall, the smaller businesses that we have in the portfolio, we always on a very frequent basis look at their value contribution to the overall portfolio. As I said right now, there's nothing to discuss or comment upon. The portfolio we have is a good one, and we like it, and this is how I would leave it. Thank you very much for your questions. We do not have any further questions from analysts or investors. We've come to the end of this Q&A session. We will have another break before we resume with the Nutrition & Care segment at 3:45 P.M., Central European Time. Please rejoin us in about half an hour. Bye. Thank you. Thank you. Bye bye. [Break] Welcome back, ladies and gentlemen. We have come to the final block of today's Capital Markets Day. With me on stage is Saori Dubourg, Member of the Board of Executive Directors since 2017. She is an economist by education and responsible for the Care Chemicals, the Nutrition & Health divisions, as well as the Agricultural Solutions division. She oversees the region Europe. Saori will now showcase the Nutrition & Care segment in detail. With that, the floor is yours. Thank you. Good afternoon, ladies and gentlemen. Thank you for joining us for our third session of the day in which we would like to showcase our Nutrition & Care segment. Looking at the segment from a bird's eye view, I would like to start my presentation with four underlying characteristics of the segment. Firstly, catering to the demands of nutrition, hygiene, health, and beauty industry means being able to adapt quickly to market trends. The pace at which these trends are changing is ever increasing. This provides us with opportunities to make a difference with our offering. Secondly, we are serving resilient end consumer markets. Despite the effects of the pandemic, the demand environment remains strong. As such, segment volumes increased +3% in 2020. Private consumer spending will be the one major factor of continued economic recovery. This will lend to further support to volume growth in these markets. A third aspect is our offering of natural ingredients. Consumers are increasingly environmentally conscious and are looking for product alternatives. We meet these changing consumer demands and behaviors with our broad product range. Natural flavors and fragrances are one example. Going forward, they will outgrow most synthetic ingredients. Finally, our clear focus on growth markets. We are optimizing our global asset footprint to take advantage of that. From a geographical point of view, especially the markets in Asia Pacific, will continue to grow above the global average. Here, we continue to expand our capacities to participate in that growth with domestically produced volumes. Let us now briefly touch on the role of Nutrition & Care segment in BASF's group portfolio. We strive to expand the segment's position as a leading provider of Nutrition & Care ingredients for consumer products. We combined these businesses since they share common target markets and demand trends. Customers include food and feed producers, as well as the pharmaceutical, cosmetics, and detergents and cleaning industries. We aim to enhance and broaden our product and technology portfolio. Our clear focus of our innovation activities are more sustainable solutions. Our efforts in the development of bio-based, biodegradable ingredients and the implementation of technologies to reduce CO2 footprints are testament to that. Organic growth continues to be a strong driver by focusing on emerging markets with ongoing investments, by new business models, and by proactively contributing to sustainable solutions in consumer markets. Targeted acquisitions and corporations will continue to be relevant in the Nutrition & Care segment, creating further growth opportunities. On this slide, you can see the segment sales by region. On the left, the sales and the division on the right-hand side. Look at the geographical split. The European sales still makes up almost half of the segment sales. Going forward, the European business environment will be shaped by the European Green Deal. With its clear objectives towards climate neutrality, circular economy, and sustainable food systems, the Green Deal will accelerate new innovations and growth markets. Here, we are systematically screening for new growth opportunities. This will provide BASF with differentiated potential in the marketplace, offering products that provide solutions for these targets. At the same time, we strive to take part in the growth opportunities of the Asian market and grow its relative share of sales. The Asian population increases in size and wealth, calorie-rich diets drive health and wellbeing, Asian consumers are very receptive to adapt to digital solutions. Several investment projects will allow us to organically grow in this region, targeting consumer-driven end markets like food ingredients and personal care, with robust growth rates and low cyclicity. Let us now recap the business performance over the past five years. The team has delivered robust returns despite several challenges. The segment was impacted by supply disruptions, especially in the years 2017 and 2018, with force majeures in key product lines. Despite these effects, it still managed to achieve an EBITDA before special items compounded average growth rate of 5%. The average return on capital employed at 10% was above the cost of capital rate. As already mentioned, with plus 3%, we have achieved strong volume growth in 2020, clearly above the global chemical production. Several product lines experienced exceptional demand due to the pandemic. For example, the oleo surfactants going into cleaning and cleansing applications. Our customers appreciated our abilities to supply when the markets were tight. Looking ahead for the year 2021, we assume to have improved product availability, especially in the Nutrition & Health division. We expect the segment's EBIT before special items to be slightly above the previous year. This is due to a higher contribution from the Nutrition & Health division, driven by volume growth. For the Care Chemicals division, we are forecasting a slight year-on-year decrease in EBIT before special items as certain markets, like, for example, UV filters, are not expected to fully recover yet due to the pandemic. We also expect slightly higher fixed costs due to some startups of new plants. This chart clearly illustrates our efforts to drive structural change. Let me explain what I mean with that. First, we exited the pharma custom synthesis business in 2015 as a logical step given the increasingly lower market entry barriers. Second, we have restructured our production setup to further optimize the operational asset base. Third, with our divestment of stilbene-based optical brighteners to Archroma in 2019, we focused our activities on the specialty optical brighteners technology, Tinopal CBS, with a manufacturing base in Monthey, Switzerland. Overall, the point over the last years was really to consistently refocus our portfolio towards more innovative growth opportunities. While taking out significant asset structures, we have managed to increase the segment sales volume. Going forward, we will continue to work now on qualitative growth systematically, focusing on markets such as accelerated by the European Green Deal. Let's now look at the current setup of Care Chemicals division and its business units. The division is a clear global market leader for home and personal care ingredients, serving resilient markets worth EUR 50 billion. First, in our personal care unit, which generates half of the division's sales, we manufacture a broad range of value-added products ranging from oleo surfactants, emulsifiers, cosmetic active ingredients, and UV filters. Here, we combine our broad technology expertise with our understanding of market trends. This enables us to co-develop formulations and provide scientific proof of efficacy for our customers. We are also the largest provider of natural ingredients, with almost 150 ingredients registered with the COSMOS worldwide. Second, in the home care industrial and institutional cleaning unit, we have a broad portfolio for detergents and cleaning solutions worldwide. As the innovation leader in this market, we offer choices to our customers by combining our technology understanding, development, and application expertise. Our global development capabilities, combined with regional application expertise, make us a partner of choice for our customers when it comes to innovation and especially in sustainable innovation solutions. Third, there is an industrial formulator business where we develop and commercialize a portfolio of processing aids, additive, and surface active building blocks for a wide range of applications. Our leading technology expertise for consumer industries enable us to cross-leverage these applications in our industries. Let us now move on to Nutrition & Care. It targets a consumer-driven ingredient market worth EUR 80 billion with robust growth rates and low cyclicity. Divisional sales are quite evenly distributed among the four business units. We are the global leading supplier of large-scale and cost-competitive aroma ingredients to growing flavors and fragrance industry. We support our customers in the production of their fragrance and flavor creations with products that are characterized by high purity, consistent quality, and excellent availability. Our animal nutrition business offers innovative feed additives for livestock, aquaculture, and companion animals. Our cost leadership in the well-known vitamin A will further strengthen our capacity expansion in Ludwigshafen. Health ingredients form the core of our human nutrition business. We have a long history of developing products in this market and harness our application expertise. Paired with operating world-scale assets for vitamins and carotenoids, we are able to create superior food ingredients. Our Pharma Solutions business focuses on the production of excipients and active ingredients. It has proven specifically the resilience during the pandemic and continues to deliver active and very attractive growth rates. The 1% sales share you see depicted on the right of this chart represents our remaining enzyme business. The larger feed enzyme business is reported under Animal Nutrition. We have established a significant market position in biofuel enzymes and are in the process of establishing a sizable position in enzymes also for detergents. We are confident that this will allow us to establish enzymes as a business that will further grow considerably. In the next chart, you see the segment is really benefiting also from strong fundamentals. What are the major market trends the two divisions can benefit from? First of all, future market growth in our market will be driven by trends like growing consumer awareness and the resulting demand for sustainable product solution, natural and organic ingredients, and their traceability. More than three-fourths of end consumers today are choosing their preferred brands based on environmental criteria. Accordingly, we actively shift our portfolio towards these more contributing products. Second of all, a significantly larger middle class, especially in emerging markets and increasingly aging populations, will drive the trends toward healthier living. Third, products that support the health and overall wellbeing of people, providing them with options for a more balanced diet and protecting them against malnutrition will be key. In addition, the shift towards individualization and local production will support new players and business models. Digitalization and a focused technology and product portfolio, as well as close collaboration with our customers, will be crucial to meet these dynamic market requirements. In the following, I will illustrate how we translate these trends into business opportunities and qualitative growth. Let's begin with some milestones we are working on or are already achieving in addressing it to customers regarding sustainability needs. We reached our goal of only sourcing RSPO-certified palm oil and palm kernel oil by 2020 and avoided more than 300,000 tons of CO2 along the way. By 2025, we want to do the same for the most important intermediate products based on palm oil and palm kernel oil. As outlined by Martin earlier today, we will soon be able to offer customers the possibility to reduce the CO2 emissions associated with products they buy from BASF with various measures. Using the renewable feedstock is one example. It allows the reduction of emission intensity by up to 20%. The product carbon footprints of the entire Nutrition & Care segment will be available by the end of 2021. R&D expenses for the segment amounted to EUR 160 million in 2020. Over half of this amount was actually spent on solutions dedicated to upgrade the portfolio's sustainability profile even further. These R&D expenses for bio-based and biodegradable ingredients make sense because this category is currently highly sought after in formulations for example, home and personal care products. What you see on this chart are essentially two product formulations. On the left-hand side, you have a typical laundry formulation. On the right-hand side, the ingredients of a typical face cream. What is immediately evident is that for almost all the different formulation categories, BASF has a commercially available bio offering. The chelating agents Trilon M, for example, is a strong alternative to phosphates in modern dishwashing formulations. We have maintained the product's competitive advantage by constantly innovating, leading to an annual increase in sales of 20% over the past eight years. Lately, it is not only readily biodegradable, but also available as a renewable-based grade. Already today, the Care Chemicals division achieves two-thirds of its sales with bio-based or biodegradable ingredients, and we aim to significantly increase this share over the next years to come. I'm personally very confident that this will contribute to a qualitative growth over the next years. Let's move on to new business models. I talked about digitalization and innovative digital business models because they are essential pillars of our future growth and success in our industry. ZoomLab is a perfect example on how we complement our manufacturing business with digital solutions, improving the overall customer experience. What is ZoomLab? Quite simply, it predicts optimized formulations of pharmaceutical drugs faster and more precisely than previously possible. At the core lies an advanced proprietary algorithm. In a conventional process, finding the right combination between active pharmaceutical ingredients and excipients is very time-consuming. This virtual assistant saves us on average three to six months development time due to the accurateness of its prediction. For BASF, this translate really into tangible business. We experience considerable sales increase as a result of new business development projects using the ZoomLab Assistant. We will continue to enhance this tool with additional functionalities going forward. Another example, the flavors and fragrance industry, which is increasingly in need of natural ingredients. Fluctuating product qualities, availability, and sustainability are constant challenges to our flavors and fragrance customers, especially regarding natural ingredients. With the acquisition of Isobionics in 2019, we have leveraged an innovative biotech platform and entered the fermentation-based aroma ingredients market. The first joint product that has been launched in July 2020 was Isobionics Santalol, a convincing alternative to sandalwood oil produced in a biotechnological basis from a renewable raw material. With this, further product launches depicted on this chart, we will increase the overall Isobionics sales significantly in the first year after acquisition. With the underlying market growing substantially over the next year, we target similar business growth rates in 2021 and beyond. Why do we think we are able to do so? Because BASF stands for high-quality standards, traceability, and excellent regulatory know-how. We leverage our biotechnological strengths to make an impact. Those capabilities, paired with our broad market reach, make us confident that we can make a difference in the natural aroma ingredient market at competitive price levels. Let us move on to the equally innovative field of white biotechnology. Here, BASF is focusing on biotechnology and fermentation processes that offer a direct and more efficient route to particular chemical products. It is also useful for enabling completely new products not accessible using conventional synthesis approaches. Our current pipeline is set to deliver 6- 10 product launches every year. One of the more recent launches have been several newly developed Lavergy Pro formulation variants. These are detergent enzyme proteases that enable our customers to effectively use protease in a wider range of detergent formulations, allowing consumers to wash at lower temperatures while reducing the need for use of chemicals that are harsh to the environment. What makes our R&D approach rather unique is that typically peers in the chemical world do not have such vast capabilities in biotech research, whereas peers in biotech and enzymes do not have the capability in chemistry research. We have them both in-house. BASF is pursuing a long-term vision in this field, developing more sustainable solutions and actively supporting this transformation. Our strong reputation as a reliable supplier and a broad network of customers in underlying markets provide us with a clear path to market. While we mentioned networks, let us also discuss the segment's benefit from the Verbund. Key product lines of the segments like citral, oleochemicals, and polyvinylpyrrolidone are deeply rooted in the wider BASF Verbund. This allows us for raw material cost advantages as well as further advantages from utilities like steam that form the basis of our competitive production setup. What is equally important for this segment are the Verbund dimensions of digitalization and markets. Digitalization helps us to harvest the advantages of a vast amount of data available within BASF more efficiently and effectively. This results in an offering like ZoomLab Assistant I described earlier. In such a consumer trend-driven business, our ability to create customer relevance through our size and broad portfolio is also hugely important. Successful innovation in our industry stems from close collaboration with customers, and we can say we are really working very closely together with the market leaders in the industry, like a Procter & Gamble or a L'Oréal. With Procter & Gamble, we are sharing joint labs in Ludwigshafen, for example. This collaboration resulted in many product innovations for well-known home care brands. Together with L'Oréal, for example, we have set up a joint incubator in Shanghai. It is designed to quickly react to market trends in a fast-moving consumer goods industry and to reduce our time to market significantly. While we are talking about customers, many of them, especially in consumer-driven markets, have recently set themselves ambitious goals to significantly reduce their CO2 emissions in the years to come. To create transparency by the end of 2021, BASF will be the first chemical company to provide its customer with a product carbon footprint for all of our 45,000 sales products. With our proprietary digital solution, we will be able to determine the CO2 emission for our products. In this way, we combine sustainability and digitalization into a highly innovative offering for our customers. Many of our customers, like here, for example, Henkel, engages us in dialogues about how our products can contribute to their own emission goals. Ultimately, this will translate into further innovation requirements for product solutions, supporting our business going forward. Ladies and gentlemen, I have shown you how we intend to further develop our Nutrition & Care business in the years to come. Our clear ambition for this segment is to be a major contributor to the financial targets of BASF Group. We are targeting an average organic volume between 3%-5%. We will achieve this by continuing investments in new capacities as this is a growth segment, as well as further growing into capacities that we recently built up. Our efforts will focus on qualitative growth in resilient and emerging markets, such as we strongly are growing the Asian market. At the same time, we intend to keep the EBITDA before special items margin in a corridor between 17%-20%. We are convinced that our position as leading provider of sustainable solutions in our industry will allow us to meet this target. We aim to keep the return on capital employed above 10% with the planned CapEx being balanced out by additional margin contributions of added capacities and further improvements in the underlying businesses. Let me conclude by sharing that I truly believe we are set to grow in the Nutrition & Care segment. With the accelerated portfolio buildup, specifically in natural, bio-based, and biodegradable products paired with the increased transparency for our customers, we have the tools needed to succeed in today's business environment and set the groundwork for future and qualitative growth. With that, I would like to very much, thanking you for the attention, and I would like to hand over to Stefanie. I'm looking forward for my new two colleagues that will join us here. Thank you, Saori, for your presentation. We are now accompanied by Ralph Schweens and Anup Kothari. Before we get started with the Q&A, let me briefly introduce Ralph and also Anup. Ralph Schweens is President of the Care Chemicals division. Before that, he was regional president for the region South America, based in São Paulo, Brazil. He received a diploma master's degree in business administration from the University of Mannheim and joined BASF in 1990. Over the course of his career, he has held various business management positions in Mexico, Germany and also Belgium. Anup Kothari has recently assumed responsibility for the Nutrition & Health division, actually also since February 1. Before that, he was President of the Performance Chemicals division. He earned a master's degree in chemical engineering from the University of Kentucky and an MBA from the University of Chicago. He joined BASF Corporation in New Jersey in 1999 and has held various business management positions in the U.S., Germany and China. I would like to hand things over first to Ralph for his introductory statement and then to Anup. Thank you very much, Stefanie. Good afternoon. The Care Chemicals Division of BASF is the global market leader in home and personal care ingredients. We serve a resilient and growing market, worth EUR 50 billion, and we reach roughly one third of the world's population via our customers' products. Together with our customers, we partner to develop sustainable and superior solutions for a better life and a cleaner future. We offer the most differentiated product portfolio in the industry, and we generate already today 2/3 of our sales with bio-based and biodegradable ingredients. With this, I hand things over to Anup. Thank you, Ralph. Good afternoon from my side also. As Saori noted in her presentation, the Nutrition & Health division is quite resilient. Even in the pandemic year last year, we had good growth. Last five years, we have delivered on average 21% EBITDA margin, and our ambition for this division is to drive growth. We are focused on five value creation themes. Number 1, we want to grow in our core vitamin business, which you are well aware of, and we are investing in Ludwigshafen. Number 2, we want to grow in Asia, and here we are expanding our asset footprint, and we built our world-scale aroma plant in 2018. Number 3, as Saori noted, we're expanding in bio-based nutrients. Here are the examples of enzyme buildup and also our Isobionics acquisition goes in this direction. Number 4, especially for pharma solutions, we are introducing digital solutions like the ZoomLab that Saori mentioned, and this is really driving growth for our core products. Finally, we are really offering a differentiation through product carbon footprint reduction that Martin mentioned in his keynote. In summary, I really have many more examples which are now in our presentation that we loaded up and would be happy to take any questions in the Q&A. Now indeed, we get started with your questions submitted via the chat tool. The first one is addressing one of the topics you mentioned. Christian Faitz, Kepler Cheuvreux, asked for quantitative information. We might give a qualitative answer, though. Would you be able to quantify the COVID-19 effect on Nutrition & Care in both a negative as well as a potentially positive way? I would say, Anup, straight away to you. I just said we were resilient, but maybe, Anup- Yeah -elude a little bit more, please. Well, I think I can address it. If we look at the COVID impact on the Nutrition & Health at a very micro level, there was some shift in consumption. People were consuming more at home and maybe less in restaurants. Overall, it was still a very resilient demand, and we actually grew strongly in the entire year. In the first half, actually, there was a lot of pre-buys, we even had a very strong Q1 and Q2. Overall, it really proved the entire portfolio was very resilient during the pandemic time. Shall we also do maybe you? Yeah. Yeah. Ralph had an experience as well. I think it explains a little bit how the business is positively or negatively impacted because w e saw consumption behaviors that changed during COVID-19. I think that would be probably interesting for Mr. Faitz. Yeah, exactly. We had very different developments in our business. On the one hand side, what we saw when COVID-19 started, we saw high demand for, how we call it, basic cleaning and cleansing products. Everything that was related to automatic dishwashing, to fabric care, to hard surface cleaning, this went really up, and this then combined also with disinfectants, really caused a huge run on our products, starting basically a year ago. We also had some downsides. When travel stopped, we saw that the markets of high-end beauty care started to struggle a bit. With no real summer for vacation, we also saw that our UV filters business had some issues. We also, and Anup mentioned this, have some interesting tendencies in some other industries. For instance, we also serve the industrial and institutional part of the cleaning business. There, of course, with bars, restaurants, hotels, cruise lines closed or not operating, we saw also a dip here. Overall, I think our business showed to be quite robust, and we also at the end had in many businesses, a volume growth. Overall, what you can say, right, Steffi, that with vacation in summer, we really hope that some of the sun care UV-related businesses will come back because we do not have an underlying issue. It's just COVID-19 related and the high-end cosmetics linked to less duty-free purchases. Here, this will be certainly normalized. We have to wait and see, because this is certainly impacted by the global lockdowns. The next question is from Peter Clark, Societe Generale. It's about CapEx planning for the segment. It's a bit of a longer question. Looking at the new five-year CapEx plan, one of the standard numbers for me was the leap in projected spend in Nutrition & Care by EUR 850 million or 40% on the last five-year plan. What is behind that? I do see in the presentation, you made clear the importance of Asia. Am I right in assuming that the CapEx includes some step up of investments in Asia, perhaps even some related to the new Chinese Verbund site? Let me just draw a little bit of an umbrella, and then you will talk in both businesses. We have in both businesses organic growth initiatives because this is a segment, Markus alluded on Industrial Solutions where ROCE optimization is at the center core. In this business, we are talking very much about strategic growth that we want to capture. This is EBITDA related that we target high margin business. What we have decided that in both businesses, we do fundamental investments in CapEx. Maybe, if you allow, I would start with Anup and then go to you, Ralph, because there are two major pillars in that. Maybe, Anup, you can explain a little what we do in the vitamin and other sectors for citral, and then you go into your alkox plant, Antwerp, and so on and so forth. Yeah. For our Nutrition & Health, we have capacity expansion going on in Ludwigshafen. Here, this capacity was commissioned end of last year, and we expect to bring online in the first half. This is one part of CapEx that is going on. We are also looking for further investments, and this I mentioned in Asia. We already built an aroma world scale plant in Malaysia, and we will further look into further expansions, but likely in the aroma ingredients area, and that will be part of the CapEx planning that we have right now. We have a number of projects also going on to debottleneck capacities also in pharma solutions, and this is probably part of this picture. Mm-hmm. Thanks. Maybe Ralph. Yeah. We have developed quite a pipeline of investments for the next couple of years. To put it into a figure, if you look until 2025, we will roughly add 20% of new capacity for our main product lines. This includes, for instance, an MSA plant, a product that we use in industrial formulators business. We will start end of 2022, a big new alkoxylation p lant in Antwerp. This is combined with an investment also in Ludwigshafen. What we are also foreseeing is a couple of investments in the market that will be growing the fastest. We will add new capacity for our UV filters business. As Saori rightfully mentioned, this is rather a temporarily drop in demand. We see this coming, and we are in close discussions with our customers there. We will also participate in the new Verbund project of BASF in China. China is the market that will be growing the fastest. We have also done some investments and also an acquisition very recently in Jinshan, in China, where we bought a surfactants asset from Sinopec. This year we will further invest in a very sustainable technology, purely bio-based surfactants, also in our Jinshan plant in China. Okay. The next question is from Andrew Stott, UBS. He's a bit critical. He says: Why is the margin guidance conservative, both relative to your recent performance and also to your peers? First of all, I think you always have to look at the portfolio of peers. Yeah. We have a mixture of businesses, depends on who you compare us to, of course. First of all, as I said, over the last years, we have significantly taken out structures where we felt it's not the future, the growth could be better, margin could be optimized. This is certainly something which we have done very consequently. Going forward, we spoke about the high share of bio-based, biodegradable share in this segment. We are very confident there is growth coming. Let me give you a little bit insight what are the portfolio compositions, maybe very shortly, so that you get a better understanding why it's not always 100% comparable, because our portfolio might differ. Maybe Anup very shortly and Ralph very shortly, what the composition really is. Yeah. Thanks, Saori. I think for our portfolio, if you compare us versus peers, is actually quite unique. We are, of course, in animal nutrition, human nutrition, aroma ingredients, and also in pharma solutions. It's a fairly broad portfolio, which is not necessarily the same for many of our peers. In terms of EBITDA margin, part of the story also is, like was mentioned in Saori's presentation, we have done some structural measures where we have exited some business to improve our EBITDA margins, and the focus going forward is really on growth. Here we are doing also some acquisition. We are also investing in, for example, in enzymes, and this will require some initial investments to really drive this forward-looking growth. In our case also, some of the investments that we just mentioned are also very attractive investments for BASF. In total, our business is growing, and I take one of the questions up that came earlier, so about accelerator products. We have a very significant share in our portfolio of accelerator business, and we are further increasing this. Here we also, apart from seeing higher margins than in the average of our portfolio, we see also the highest growth opportunities. Investing also in the field of sustainable bio-based and biodegradable products will benefit in future. The next question relates to a business that Anup just mentioned, the enzymes. It's from Matthew Yates, Bank of America. You mentioned being in the process of creating a sizable enzyme business, oh, no, sorry, detergent is then more in this direction. How long do you think it will take to commercialize your offering, and what market share ambition do you have? Detergents, actually. Yeah. We are already working with customers, but maybe, Ralph, you can give a little bit more feedback on the detergents enzymes, because this is really in your shop. Exactly. Yeah. We have been working on this for some time, and we have already a commercial product in the market. I'm happy that you showed also this case where we also see the advantages of BASF in this respective segment because we can combine chemicals with enzymes that lead to a more differentiated portfolio. What I can say in terms of market share, we have ambitious market share ambitions. I would not say a number, but this is, of course, something that will not come from one day to the other. This will be developing. For us, the enzymes business is a very important part of our sustainability strategy in our home and fabric care business. Next question is also on enzymes. It's from Thomas Wrigglesworth, Citi. Very short question: What can BASF offer enzyme customers other than lower prices? Perhaps now it's on Anup again. I hand over to you in a second. Maybe let me just explain what we did in the enzymes business. This is a category buildup that we do since many years now because we realized, and this is the difference that Ralph just mentioned, there are, of course, enzymes player out there, but what is unique, you need to have a combination of knowhow. Number 1, is the chemical knowhow that we can bring in as an add-on. This has nothing to do with pricing, and our intent is, rest assured, it's not the key focus. The key focus in the enzyme is innovation, because there's a lot of problems that we need to solve for customers. The combination of enzyme knowhow together with chemical knowhow is where we see a leading triangle for the future, because then the application knowhow is important. We have started out with dietetic license. We have built this business over time now, and maybe, Anup, you can represent a little bit the view from the Nutrition & Care part, because we heard from Ralph how the detergent looks like. This is a joint undertaking between the two divisions. Yep. I think building on what Saori said, we have this unique position of chemistry knowhow plus the biotechnology. Just think from a perspective of customer, like a P&G or Henkel that Ralph mentioned. They are buying a lot of chemistry solutions right now. Now we can bring this knowhow and combine with our biotechnology knowhow to give this combined solution. We have the customer access, and with this combination, we get really good feedback with customers that we can develop further solutions. We acquired a company, Verenium, which has given us very good access to technology in terms of strains, and now we are building a platform on the production side, on the R&D side. Yes, we will have some products which are maybe me-too. This is just phase 1 or step 1. We are very confident we can develop then the differentiated solutions building on this close customer collaboration. The next question is from Andreas Heine, Stifel. How does nutrition benefit from higher vitamin prices in 2021? Can you provide an update on the progress with the new vitamin A plant? You mentioned already, Anup. Can you become more specific how you will grow the share of Asian sales? I would say- Yeah. Why don't you go ahead directly? I think we are basically on track with our expansion of capacity for vitamin A. We are right now in the, let's say, initial stage, and we will have the startup plan in the May timeframe. Because we are doing it at our existing site, we have to reduce and restrict our sales, and we also have some quality constraints. Our expectation is in the second half, we can increase our volumes, and we will then show growth there. What was the second question? Asian sales. I think, already Asia is a big part of our market. We have a good market position, people on the ground. The capacity is being built here. This is really for global markets. We will, of course, focus also on China and Asia with that. Mm-hmm. The next question now is from Thomas Wrigglesworth, Citi. What is your route to market in animal nutrition, and how do you capture your value proposition if you are not selling directly to farmers? Maybe if you allow, Anup, I would give it a little bit of an umbrella, because that's a wider question than it looks like from the beginning. As you know, in the past, Anup alluded to, and that is probably the perception of a lot of people, that we are very strong in the vitamin field, especially in the animal area. What we have done preparing and really proactively shaping the portfolio for the future, we have looked more systematically into various fields where we want to grow, and this is clearly linked to the Green Deal chances. We have identified lots of new interesting market fields which are very close to our portfolio. Preparing the future in a proactive manner here is the way for more qualitative growth. With that, I will not say more because I want to give Anup the chance to talk a little bit about that. I think building on that, of course, our core business is supplying vitamins. This we have a very good position. We also have a second part of the portfolio, for example, feed enzymes. This also connects back to the enzyme platform we are building, which we have further potential to grow. Also, we acquired recently, a small company, the technology company, Cloudfarms, and essentially, this company is providing a software. Their focus is on pig farming, where you can get a 360-degree view from a farmer's perspective on the feed, on the medicines, on the vaccination, and also the breeding and the entire cycle. These data insights will allow us to link the different parts of this value chain. There are a number of things we are working on the animal nutrition, also driven by the Farm to Fork Strategy that Saori mentioned, which offers us new areas where we can use our good position with vitamins but develop this part of the portfolio. The next question is on our product carbon footprints. It's from Tim Jones, Deutsche Bank. Do you see customers paying for the lower carbon footprint in your products, or is it something they just insist on as part of a long-term relationship? Is there any big difference in this trend across customer groups, say, pharma, consumer, and food feed industries? Yeah. Maybe the thing is, first of all, we are probably the first chemical company out that it has such a distinctive number of data on the CO2 footprint. The willingness to pay of course does not relate to CO2 values. And I think we can give you concrete examples with Ralph and Anup in a second. What we do see, there is a paradigm shift happening at customers. Maybe 10 years ago, it was a little bit more difficult. With regulatory frameworks changing, be it in Europe, but also foreseeable, the United States and China, there is increasingly pressure at the customer frontier, and they are heavily looking for solutions. Besides the topics that we will share in a second on our accelerator sales, what I see at the moment in a lot of strategic dialogues, those companies who come first helping with the CO2 values, they will get additional share of wallet. Yeah, because they look for solutions, and they look themselves for fast solutions. On top of that, margin-wise, I think you have a good example, Ralph, right? How this translates in businesses for us. Yeah, of course. Let me start maybe with a very interesting example. I've been attending the so-called ACI, the conference of the American Cleaning Institute, which normally takes place in Orlando. This year it was a pure virtual conference. What I can tell you is that two years ago, back in 2019, sustainability was a important topic. Last year it was already the most important topic. What we discussed with our customers this year was basically sustainability. What we put on the table were the options that Martin also mentioned this morning, and we are in the starting phase here. I would like to come back to the topic I mentioned in terms of accelerator sales. The products that are more bio-based, more biodegradable, which are part of our accelerator sales, here we see really higher margins already today. I think this shows a little bit in which direction this can go. When we looked at the various markets, and Anup can also give one example, I think. What we do observe at the moment, the future-oriented markets that are more bio-based, that are Green Deal-ready, show a growth rate that is going far beyond the traditional markets. It's what we saw from an outside-in perspective, just looking from outside in, depending on which area you depict, they are between 2% up to 35% growth, depending on where you go. This shows you there's a strong demand, and I'm sure, Anup, you're experiencing the same, right? Yeah. In your businesses, in the customer dialogues we were in. I think I can also share one example, maybe picking from our aroma ingredients business. These are the ingredients going to the flavor and fragrances houses, and there is a very strong consumer demand for these bio-based trends, or also looking for lower CO2 footprint. Here we have already certified three products in our value chain, and this was the example, actually, that Martin mentioned in the keynote, where the green energy and also the renewable feedstock and using the mass balance approach, we can tell our customers this is lower CO2 footprint than our maybe other competitive offerings. Customers, when they're looking to buy things from us, they look at price, they look at quality, they look at reliability, and they are adding sustainability and carbon footprint as one of the criteria. This will definitely first, I think, allow us to grow, and the willingness to pay will come, but this is, of course, the big discussion with customers. I'm confident this will give us growth and the willingness to pay will come as we move forward. We have a next question on pharma excipients. It's from Chetan Udeshi, JP Morgan. Can you discuss your activities for the pharma excipients business? One of your key peers is highlighting this as a high-growth business with mRNA lipids. Can you discuss how BASF has grown in this business and strategic targets? Yeah, maybe Anup can go into the details in a second. Let me just allude to you what we experienced during COVID-19, because what most people are not aware, of course, we are also cooperating with a lot of pharma conglomerates and have been active in a lot of these developments around solutions for COVID-19. This shows you there's a lot of opportunity field, but maybe, Anup, you can go a little bit deeper into that. Yeah. I think to the question, I think I can also confirm this is actually a good growth engine for us. We are seeing very solid growth in our pharma excipient business. For us, the toolbox that we have is the BASF Verbund, and we have different chemistries and the application expertise, the formulation knowhow, and this allows us to offer solutions to our customers. One area which is growing really fast in this entire industry is the biopharma segment. Here is really one of the examples that is also in the presentation that was loaded up, where we have really used our application expertise and our chemistry, and we are seeing very significant growth in this fast-growing segment. Overall, this is a good business we really like, and the digital solutions that we are also providing essentially are creating pull for these products because these digital tools are essentially helping our customers develop medicines faster, and they're using our toolbox to figure out what excipients to use, and this creates a pull for our products. The next question is from Christian Faitz, Kepler Cheuvreux. I'm just looking whether I really get it. The second part is clear, but I read it out. Out of historic context, you inherited one major customer with the Cognis acquisition. Can you allude to a bit more how you have diversified your customer structure per today? I'm just wondering which exact customer you are referring to. Anyhow, because we have many, and that maybe is the answer to your question, because I can't even refer to just one, Ralph. I think we are very broadly in terms of customer connectivities there. What happened for sure is that we were looking at the synergy capture when we acquired Cognis years ago, and it has definitely strengthened, for example, in Nutrition & Care, our field into the nutritional ingredient field. This is what we try to develop further. Our customer base there, because I was long time ago before that business is certainly very diversified. My answer, I cannot even refer to just one. Maybe that's an answer, Anup. Do you? Do you have just one? No, I don't. I'm not sure, yeah. What was the reference? Yeah. Okay, we continue with Chetan Udeshi, JP Morgan. One more question. Does bio-based product portfolio for consumer markets offer any competitive edge anymore? It appears that most supplier of products to the personal care and cleaning products have bio-based products in their arsenal. Is BASF doing anything differently on bio-based products? That is a bit related to the slide you had in your presentation. Yeah. Quite frankly, I've been in strategic dialogues together with Ralph during the so-called ACI conference. I didn't have that impression, to be quite honest, because at the moment we are in deep dialogue with key accounts globally because there are a lot of unresolved problems with certain ingredients. They know that we have, by far, the broadest bio-based technologies in our house. Ralph, maybe you can allude a little bit more detail where these ingredients are, because I want to give you the opportunity to go a little bit deeper for him. Yeah. What happens here is that most of our customers, almost all of our customers, have committed to very ambitious sustainability targets. These targets have to be achieved. One thing is the CO2 footprint, but other targets are also related to the kind of products that are in the formulations of our customers. I will give you just one very recent example where we see a good field for growth. We have already a broad portfolio of bio-based surfactants and APGs, our one product class where BASF is really leading globally. There's other markets also where we see that there can be made very good claims for our customers' products, and one of these areas is, for instance, the glycolipids. In our case, we have just communicated two partnerships, one with a Japanese company, ACS, that is focusing on sophorolipids. These are biosurfactants that then can be used in quite a number of application and substitute also other surfactants. We have a technology partnership with a U.K.-based company called Holiferm, where we will work on the process and the technology and how to produce these products more efficiently and more competitively. I think there's many other cases. We are having a big R&D portfolio in terms of our biopolymers business. This is a product class where we will be launching more and more products that are then also bio-based and/or biodegradable. This is also a strong need and a wish from our customers to be stronger in these products because they will make the competitive edge in future. Let me add and build on what Ralph said. The customers are not just looking at one factor. You have to imagine BASF has originally already 240 different formulation technologies. There's a broad experience across various industries that we, research-wise, can tap in. That's number 1. You have heard this morning from the CO2 data footprint that in combination with bio-based, this is a whole package of modular solutions that we offer to customers up to the certified palm oil. What they are looking for is a partner that can tap into various option fields of optimizing their portfolio because the targets of these customers are going across various fields. If you can provide what we saw this morning, a very clear carbon strategy that builds into their purchasing target for CO2 reduction, a wide variety of product solutions on bio-based, certified processes along the value chain, that is what makes it very interesting for customers. This is what I observed in our dialogues, that they really appreciate the broad kind of modules that BASF can offer. For Nutrition & Care, for example, we are the only player out there in the market that has a combination of food and agricultural solutions. The future will be about CO2 capturing along the entire, we call it Farm to Fork value chain. We are one of the only player who can do this along the whole value chain. This is where I think we really have a differentiation factor. This is why it was so important what Martin said this morning and what Markus alluded to. We have multiple experience layers across the company that we can bring to the customer, and they really appreciate it. We have another question on the Care Chemicals division. It's from Rob Hales, Morningstar. In Care Chemicals, can you elaborate on what areas within the segment, or that's in this case a division, have high value products versus areas where you are primarily competing on cost? Let's take the example of our personal care business. Here we have quite a number of high-value segments, if you will. We are talking about our UV filter business. We are talking about our bioactives business. We are talking about specialty surfactants. I just mentioned a new product class that will also be part of our portfolio there. Here we have a rather specialized product portfolio. What we, of course, also have in our offering is the oleochemical business, which is the oleo-based surfactants. Here we are, of course, in a more standard range, but I think the beauty here is also that this is also a very resilient business, and we saw that especially back in 2020 when we had this high demand for basic cleaning, cleansing, which are areas where this went and where this goes and where we have been also been highly efficient in our processes. Yes, of course, there is the two parts, but these gave us also, or give us also inroads into other customers. These products also make us very important at a number of customers, and especially in emerging markets, this sometimes is also the first step into the BASF world. Again, what I would like to mention here, our portfolio in the personal care arena, we have the highest number of natural products that can be then also claimed in natural or bio products. We have the highest or the largest or the broadest range in our portfolio of all competitors, and we can basically formulate all the products that our customers do. Here, both things come together, but I think it's a good combination. We have one question that is really directed to Saori. It is from Tim Jones, Deutsche Bank. Your role overseeing the BASF Corporate Sustainability Board, could you comment on how embedded the need for change regarding sustainability and/or carbon management is already within BASF, looking bottom-up from the factory floor all the way to the board? I think if you look at the presentations today, my colleague Markus, his peers, my colleagues here on the stage, they have all talked about this the whole day. I think first of all, it really has arrived at the core and center stage of BASF. Specifically, when you looked this morning at Martin's presentation, where he looked from production technologies to all kinds of methodologies where we can capture carbon, for example. You can really tell it's the number one topic at the moment across our company. What I would like to say is this is not just now. We have started years ago. For example, in 2017, we have asked 9,000 experts, external experts, policymakers, NGOs, opinion leaders, what are the megatrends to come up in this sector of sustainability? It was visible already years ago that we would enter a phase, 2021, by the way, was the year where lots of things technology-wise would pop up with a stronger emphasis. That was visible in that study with the experts. We could see there is an acceleration of the trend of sustainability, and the core sentence we believe is, if you react, there's one thing for sure, you are too late. Having said that, we started with the board, together, for example, also with Hans Engel and others. What does this mean if we transform the company? How do we prepare for this? It goes from production-related technologies that you have seen this morning, and we are really prepared in various angles up to portfolio-related moves that we do. We have analyzed in detail the Green Deal with all the regulatory frameworks. Yes, of course, there are challenges, but we have also looked at the chances and what this means for our portfolio up to the sustainable finance area, where my colleague Hans Engel is very active as well. You know that we are also together with other companies working on reportings. This is thanks to our finance department, for example, who has over years already reported in an integrated way if you look at our business report. All this experience and this integrated reporting, and Steffi, you know that better than me, is years old. Yeah. This is the basis for why we have so much data. In the integrated reporting alone, we own as BASF 8 million data from all kinds of angles, greenhouse gas and impact. This enabled us, this work years ago, to now come out with a CO2 footprint. I want to say really humble, of course, we are not perfect. We are learning every day. One thing you can rest assured, Tim, this company is working like hell to make this really a good narrative, also specifically for our customers. I think there's a lot of passion in our company for the topic. There are no further questions that haven't been addressed before. This brings us to the end of this Q&A session and to our Capital Markets Day overall. We hope you enjoyed it and gained valuable insights. Thank you very much for joining us online today. We wish you a wonderful weekend and say goodbye for now. Thank you very much. Thank you.