Please note this call is being recorded. Today I'm pleased to present Thomas Altmann. Please begin your meeting. Thank you, Anika. Good afternoon, ladies and gentlemen. On behalf of Brenntag, I would like to welcome you to the earnings call for the first quarter of 2024. On the call with me today are our CEO, Dr. Christian Kohlpaintner, and our CFO, Dr. Kristin Neumann. They will walk you through today's presentation, which is followed by a Q&A session. Our relevant documents have been published this morning on our website and can be found at brenntag.com in the investor relations section. In that same area, you will also find the recording of this call later today. Before we begin, allow me to point you to our Safe Harbor Statement, which you will find at the end of the slide deck. With that, I will hand over to our CEO, Dr. Christian Kohlpaintner. Christian, over to you. Yes, thank you, Thomas, and good afternoon, ladies and gentlemen. I will start with the summary of the first quarter 2024, and Kristin will then walk you through the details of our financial performance. As usual, we are both happy to answer your questions after the presentation. In the first quarter of 2024, we reported results which were not in line with our own ambitions. Our performance in both divisions was impacted by the challenging environment as well as pricing pressures in various markets and industries. Although we managed to capture additional volumes in a positive demand environment, particularly in Industrial Chemicals, pricing remained challenging. Overall, higher volumes were not able to fully compensate for the lower sales prices. Sales amounted to around EUR 4 billion, which is 11% lower compared to a relatively strong prior year period. Operating Gross Profit stood at EUR 984 million, which represents a decline of 5%. Operating EBITDA amounted to EUR 260 million, a decline of 24% respectively. Earnings per share stood at EUR 0.97 compared to EUR 1.40 in the first quarter 2023. The combination of slower performance, higher CapEx, and higher investments in working capital led to a free cash flow of EUR 175 million. This is significantly lower compared to the exceptionally high cash flow in the prior year period, but in the range of a normalized seasonal Q1 pattern. In fact, the free cash flow generated in Q1 2024 marks the second best free cash flow Brenntag ever achieved in the first quarter. Just recently, we placed two Eurobonds with a total amount of EUR 1 billion. With this strategic decision, we address upcoming maturities early and secure long-term financing for Brenntag. Now, let me say a few words on the outlook. In light of the performance in the first quarter and the trends we have seen continuing into the second quarter, we expect the Brenntag Group's Operating EBITDA for 2024 to be now at the lower end of the guidance provided with our full year results in March. Let's have a closer look at our strategy execution. Ladies and gentlemen, let me start with the portfolio shifts of our two divisions. As already announced last summer and presented in more detail at our Capital Markets Day in December, we implemented portfolio shifts and the corresponding changes in our reporting with the first quarter 2024. Since January, selected businesses have been reallocated between Brenntag Essentials and Brenntag Specialties to further strengthen the coherence of the business models of the respective divisions. On the one hand, we transferred the water treatment business and the finished lubricants business from Brenntag Specialties to Brenntag Essentials. Furthermore, we shifted semi-specialty products to Brenntag Essentials due to their more commoditized nature, and we also allocated the entire operating activities from all other segments, which is now called Group and Regional Services, to our Essentials division. This includes the operations of Brenntag International Chemicals GmbH, which buys and sells chemicals in bulk on an international scale. On the other hand, we combined all pharma activities under the roof of Brenntag Specialties. These shifts increased the value creation potential by allocating all products which are larger in bulk quantities and which require last-mile efficiencies to Brenntag Essentials. All products which are driven by value-added services, formulation, and innovation capabilities are allocated to Brenntag Specialties. In addition, the changes also include a partial shift of specific functions, responsibilities, and activities from corporate level to the divisions, such as business and operations-related HR, service, and excellence functions. These changes are all reflected in our external reporting structure this quarter for the first time. Regarding our path towards Horizon 3, we have started the process of our legal and operational disentanglement early this year. However, as indicated at our Capital Markets Day end of last year, the disentanglement of our legal entity structure and our operations will be a longer-term exercise which needs to be carried out diligently. As of today, we have defined and properly staffed the relevant project resources internally and have selected the required external legal and tax advisors. This is important to secure our strategy execution while maintaining focus on our day-to-day operations. We are now in a detailed design phase where we create the necessary transparency on the disentanglement and define what is required to be executed at the lowest local level. In addition, the implementation of our cost containment measures announced at our capital markets day last year is on track, and we define further savings potentials as we speak. We are doing this in light of the current economic conditions and against the background of our performance in the first quarter. Lastly, let me provide a quick update on our M&A activities. Since the beginning of the year, we closed or signed three acquisitions, strengthening key focus industries and geographies in both of our divisions. In Brenntag Specialties, we acquired Lawrence Industries, a leading specialties distributor in the U.K. with top-tier supply partners and a high-quality portfolio within materials science. In Brenntag Essentials, we acquired Rental Service Specialty, a rental equipment supplier based in Louisiana, which focuses on providing specialty equipment for pipeline integrity and maintenance services to the oil and gas, midstream, and downstream markets. And just recently, we signed the acquisition of Quimica Delta, a leading chemical distributor in Mexico. The company's access to toll gates through marine terminals and last-mile infrastructure complements and expands the Brenntag Essentials Triple Strategy, which we have outlined in detail during our Capital Markets Day last December. We will continue our M&A execution and are assessing several promising targets in our pipeline in line with our divisional strategies. Now I would like to hand over to Kristin, who will talk about the financial performance in the first quarter in more detail. Please, Kristin. Thank you, Christian. Also from my side, a warm welcome to everyone on this call. I will now talk about our key financial figures for the first quarter 2024, and I will start with the development of our operating EBITDA on group level. As a reminder, when talking about growth rates, we generally talk about FX-adjusted rates. Please have a look at the bridge on the left-hand side of slide 6. In Q1 2023, we reported an operating EBITDA of EUR 345 million, which was driven by a more positive pricing environment. The translational foreign exchange effect in the first quarter of 2024 had a negative impact of EUR 3 million. Our acquisitions contributed EUR 6 million to the operating EBITDA development. Here, I would like to emphasize that our largest acquisition in 2023, the acquisition of Sorventis, was signed last year, but it is not closed yet. Therefore, the M&A contribution is not included in our Q1 results. Looking at the EBITDA bridge again, organic operating EBITDA declined by EUR 88 million compared to the first quarter last year. Overall, we reported an operating EBITDA of EUR 260 million for the whole group, which is 24% below the prior year figure. The EBITDA conversion ratio for the group came in at 26%. Our results were overall characterized by a continuously challenging market environment. As expected, volumes were higher compared to Q1 2023. However, higher volumes were not able to fully offset pricing normalization. Gross profit per unit was lower compared to the first quarter last year. On the right-hand side, you find a more detailed view by divisions and group and regional services. Let us now have a look at Brenntag Specialties on page 7. Brenntag Specialties reported an operating gross profit decline of 8% to EUR 286 million in Q1 2024. Operating EBITDA declined by 23% and reached EUR 108 million. The EBITDA conversion ratio for Brenntag Specialties was 38% and below the prior year level of 45%. The results of Brenntag Specialties were affected by a negative gross profit per unit development, where volumes almost reached the prior year level. Operating expenses for Brenntag Specialties increased slightly year-over-year, mainly driven by M&A. On an organic basis, we kept our costs relatively stable despite inflation and the internal allocation of further costs in connection with our Direct Initiative. These are costs from prior years which had previously remained in Group and Regional Services, or formerly known as All Other Segments, and were charged on this year when various digital products went into operation. Let us have a closer look at our segments and business units. The segment Life Science reported a year-over-year EBITDA decline of 19%, whereas the operating EBITDA in Material Science declined by 18%. All business units in the Life Science segment, except Beauty and Care, saw a negative operating gross profit development year-over-year. In Nutrition, market prices in several regions increased at the end of Q1. However, we do not see enough evidence for a broad market trend of increasing prices yet. In Beauty and Care, the market remains challenging overall. We achieved a higher operating gross profit in most regions, mainly driven by M&A contribution. Pharma showed a solid performance. In fact, Q1 2024 was the third best quarter ever for our Pharma BU, but it was still not enough to replicate the exceptionally strong prior year results. The performance in Material Science was below the level of Q1 2023, but in line with expectations. We saw slight improvements in construction, particularly in EMEA, which is an encouraging development. When looking at the performance of Brenntag Specialties on a sequential basis, so compared to the fourth quarter 2023, we saw a slight increase in volumes and a slight sequential improvement in gross profit per unit. Coming to the performance of Brenntag Essentials on page 8, Brenntag Essentials reported an operating gross profit of EUR 698 million, which is 4% lower compared to the prior year result. All our segments in Brenntag Essentials achieved a positive volume development. At the same time, gross profit per unit was lower in all segments, leading to a slight decline in overall operating gross profit for the division. Only in APEC, the volume increases were able to fully offset the pressure from lower gross profit per unit. Operating EBITDA of Brenntag Essentials stood at EUR 186 million. This is 23% below Q1 last year. All segments were negatively impacted by volume-driven increases in transport costs. In addition, costs in connection with the Direct Initiative were allocated internally. These are costs from previous years which had been booked in Group and Regional Services, formerly known as All Other Segments, and were only charged in this year when various digital products went into operations. These higher expenses were an additional factor for the decline in operating EBITDA in EMEA, North America, and Latin America. The performance in Latin America is generally driven by the economic conditions in the region in combination with higher costs. In addition, the prior year period was positively impacted by a non-recurring other income item. Only APEC saw a positive performance in Operating EBITDA. The EBITDA conversion ratio for the division came in at around 27% compared to 33% in the first quarter 2023. Let me also briefly comment on the performance of Brenntag Essentials on a sequential basis, so compared to the fourth quarter 2023. Here, we saw a slight increase in volumes, but at the same time, gross profit per unit decreased slightly. Moving to slide 9, where we look at the income statement in more detail, we generated sales of EUR 4 billion, a decline of 11%. Our operating gross profit stood at EUR 984 million. This represents a decline of 5% year-over-year. Operating expenses, excluding special items, increased slightly on an FX-adjusted basis and stood at EUR 643 million in the first quarter. I will talk about our cost development in more detail in a minute, but let us first continue with the income statement. We reported an Operating EBITDA of EUR 260 million in the first quarter 2024. Special Items below Operating EBITDA had a negative effect of EUR 8 million. This includes legal provisions, additional costs incurred in connection to a fire at the Brenntag site in Canada, as well as advisory and other one-time expenses associated with the legal and operational disentanglement of our two divisions, Brenntag Essentials and Brenntag Specialties, with a combined amount of EUR 17 million. The Special Items also include a positive effect of around EUR 8 million that was booked due to a lower-than-expected tax liability in connection with excise tax risks in Sweden. Depreciation and amortization amounted to EUR 94 million and remained roughly stable compared to last year. The finance cost stood at EUR 34 million, which is also stable compared to Q1 2023. Our financial performance translated into a profit after tax of EUR 144 million and earnings per share of 0.97. This compares to the prior year profit after tax of EUR 217 million and earnings per share of EUR 1.40 last year. To provide more clarity on the development of our operating expenses, we show an OPEX bridge on slide 10. The first quarter 2023, we reported operating expenses of EUR 625 million. The translational foreign exchange effect in Q1 this year had a positive impact of around EUR 5 million. Operating expenses increased by around EUR 20 million, mainly driven by additional costs from acquired companies, but also from our Directs and IT investments. When looking at our underlying cost development, we kept our OPEX flat compared to Q1 2023 despite overall cost inflation, particularly in wages, and despite higher volumes. This is partly driven by lower variable personnel expenses, but also by our cost-containment measures. As a result, operating expenses for the group stood at EUR 643 million at the end of Q1 2024. As already mentioned, our overall results are not in line with our own ambitions, and we will continue to focus on our cost development and strict discipline. The cost measures announced at our Capital Markets Day are on track. In addition, we will consider postponing discretionary spend and stretching IT and Direct Investments over a longer period of time. Coming to page 11 and the free cash flow, in Q1 2024, we generated a free cash flow of EUR 175 million. This is clearly below the record number of EUR 449 million last year, but still marks the second-best free cash flow Brenntag has ever achieved in the first quarter. The decline in free cash flow generation is partly driven by lower operating performance, but also due to the slight cash outflow for investments in our working capital, whereas we reported an inflow from working capital release last year. Our working capital turnover was higher compared to last year and stood at 7.9 times. The increase reflects our initiatives to manage our working capital more effectively and is mainly related to lower days of inventory held and higher days of purchases outstanding compared to the first quarter 2023. Looking at our balance sheet, our net financial liabilities amounted to EUR 2.2 billion at the end of the first quarter. Our leverage ratio, which is net debt to Operating EBITDA, remains on low levels and stood at 1.5 times. On the right-hand side of the slide, you can see our current maturity profile. Here, I would like to highlight our recent bond placement. We successfully issued 2 Eurobonds in the amount of EUR 500 million each, one with a maturity of 4 years and a coupon of 3.75%, and one with a maturity of 8 years and a coupon of 3.875%. With the proceeds from the new bonds, we are addressing upcoming debt maturities early, improving the maturity profile of our financial liabilities, and supporting the business activities of Brenntag. With this, I would like to hand back to Christian to talk about the outlook for 2024. Yes. Thank you, Kristin. And ladies and gentlemen, let me close with the outlook. For 2024, we continue to expect a challenging business environment, which is characterized by ongoing geopolitical uncertainty and macroeconomic challenges. At the same time, we also expect continued improvement in overall demand, which should lead to higher volumes in the course of the year. This volume development was already visible in the first months of 2024. We are cautiously optimistic that market conditions will improve throughout 2024, with the first half of the year being more challenging than the second. We expect overall operating expenses to be higher than 2023 due to the continued inflationary trends, mainly from personnel expenses and due to slightly higher costs for Directs and investments. Furthermore, the expected increase in volumes will have an impact on the development of variable cost components. In light of the performance in the first quarter and the trends we have seen continuing into the second quarter, we expect the Brenntag Group's operating EBITDA for 2024 to be now at the lower end of the guidance provided with our full year results in March. To reach our guidance, we will continue to focus on our cost development with strict discipline. The cost measures announced at our Capital Markets Day are on track. And in addition, we will consider postponing discretionary spend and stretching IT and Directs investments over a longer period of time. With this, I would like to close the presentation now and thank all of you for participating in today's call. We are looking forward now to your questions. Thank you. If you do wish to ask an audio question, please press star one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing star two to cancel. There will be a brief pause while questions are being registered. The first question comes from the line of Suhasini Varanasi from Goldman Sachs. Please go ahead. Hi. Good afternoon. Thank you for taking my questions. I have three, please. Given where you delivered profits in Q1, which was EUR 260 million, even at lower end of the range, new guidance, you do need a pretty big step up in the profitability over Q2, Q3, and Q4 to achieve it. Can you maybe talk about what gives you comfort about your ability to reach that lower end of the guidance range? How have developments been in April so far? That's my first question. I can take it one by one if that's okay. Yeah. That's fine if you're fine. Let me take that first question. Or you can ask all three questions. That helps us a little bit to arrange us if you want. Sure. Sure. I think the second question is around the transportation cost, which you flagged came in higher than expected in one Q. Is that something that you've been unable to pass on to customers, or has there been a lag effect that has impacted profits in one Q? And the third question is on the M&A of RSS, which marks a move into the rental industry, and it's a new vertical, a new industry altogether. Can you maybe talk about the strategic rationale behind the move, given there are already several pure rental players in the U.S.? And is this a one-off move? Do you have plans to further expand your presence in the rental market? Just some color that would be helpful. Thank you. Yeah. Thanks a lot. I will take the first and the third question and ask Kristin to answer the transportation cost question. When we look at the moving parts and as we see currently in the market environment, what has been seen in the first months of this year was indeed a sequential volume recovery, which continues as we speak, also in particular in April. So as the market has been also on the manufacturing side quite surprised by this movement and the strong recovery we have seen now in Q1 and beginning of Q2 in the manufacturing side as well, it is incrementally or it was incrementally difficult to basically define the pricing points. So we see the sequential volume recovery sustained, at least for the first four months now. We do expect, and that's the second moving part, an improvement in the way we do our pricing. I think I have early on indicated to you in our full-year earnings call that finding the right price points at this moment is a little bit tricky, and we have not been fully meeting the expectations here in Q1. But we do see some encouraging signs in the pricing improvements. In particular, when we talk about our warehouse business, we obviously see the vast majority of our business. And thirdly, we focus on the cost takeout measures even more and will clearly also have additional contributions from cost-saving measures as we go forward. And taking those three moving parts together, we believe that the lower end of our guidance is ambitious but still achievable. On the third topic, on the rental industry topic, it is a rather opportunistic move complementing our efforts in the oil and gas industry. It has been a small acquisition, which made a lot of sense in that specific spot. It's not intended now to be a large strategic direction we are taking to go into this vertical offering. It's a very particular case in that very, very particular locality around the rental agreements, which is supporting our strong business, which we have there. It's a complementary but not really a strategic move here. Now about the transport cost, Kristin, please. Thank you, Christian, and hi for Suhasini. So the transportation cost, we have several angles here. So first of all, there's a volume element in which is reflected in our OPEX. Generally, we are able to also pass through higher transport costs to our customers. However, on the other hand side, we also had pressure in the prices in these and therefore also in the GP per ton, which makes it a little bit more difficult. On top of that, if we overall look at our cost position, there are some elements in there which we are able to pass through. Transportation costs are for sure something we can pass through. However, there are also some other elements in, as for instance, the higher investments in our IT landscape and our Directs program, where it's not that easy to pass that through. I hope that this helped to answer your question. Yes, it does. Thank you so much. The next question comes from the line of Rory McKenzie from UBS. Please go ahead. Good afternoon. It's Rory here. Two questions first, please. Can we assume that M&A added about 2% to volumes in Q1? Organic volumes sound like they were also up low single digits. So therefore, total volumes were up about 4%-5% year-over-year. And then secondly, if that's true, then that would imply that the average gross profit per unit was down 9%-10% year-over-year in Q1, which obviously looks quite steep. Can you just go into more detail on what's driving this? We understand that GP per unit has been elevated after the pandemic and therefore set to normalize. But given your scale compared to your customers, normally, you would talk about being able to pass on any product price changes carefully to kind of protect and smooth your own markups. Were you unable to track the product prices and so misprice contracts? What exactly had happened within that GP per unit for? That was the first question, or was there two questions? Yeah. Two parts of that, please. Okay. So yeah, I mean, I think we had some pressure on the gross profit per ton. I think it's 9%-10% would be on the high end from my side. And we talk about small movements here, in particular on the gross profit per unit in absolute EUR per ton, as you can imagine, as we ship so many products. I think we have seen remarkable differences in our direct business versus our warehouse business. Our direct business, which is where we actually handle through stuff and deliver full tank truck loads directly from supplier sites to our customers, that direct business has seen higher pressure on the pricing than we saw on our warehouse business. The warehouse business is the largest portion of our business, and we have been quite pleased with the development also as we move now into second quarter with our price development on the direct warehouse business. M&A contributed 2%-3% on EBITDA level, not as much as volumes. I think here the number would be not the correct one if I see it, but please, Kristin, correct me if I'm wrong. So that's all the moving parts here. It is currently, from a pricing standpoint, as I said, a quite opaque situation. I said it over the last two months, also talking to our investors about this, that in principle, the whole industry has been quite surprised by the change in the demand pattern, and pricing currently is searching for the proper level. We got it wrong in the Q1, but also I think knowing our distribution model, we always can course correct this rather quickly, and that's what we expect for the year going forward. Okay. Thank you. Separately on the cost base, you both said that the cost containment measures you discussed at the CMD are on track. I guess we can't see that externally, and you've obviously been making growth investments as well, so that the net cost base is still rising. Can you commit to reducing absolute SG&A from here? And when are you going to come back with updated plans on things like the Directs programs and those investments? Yeah. I think Kristin has also maybe you'll talk a little bit about the cost base and the development as we see it. I mean, we need to clearly distinguish, and you know that, Rory, between the variable cost impacts we have. And this is as volumes are improving. You see in our OpEx, of course, also the variable expense going up. So that's something we should always have in mind. Plus also the M&A contributions we see also on the SG&A side in our numbers. We are totally committed to reduce our SG&A costs in absolute terms going forward, except of M&A contributions and the variable expenses. I think it has been maybe not clearly enough as shown that we had indeed quite substantial inflationary cost trends in our numbers, which could totally offset with our initial or our internal efforts to actually reduce those costs and have those cost increases fully digested, particularly when they come from fixed personnel costs and other influencing factors. But, Kristin, also feel free to add here. Yeah. Absolutely, Christian, but you have already covered a lot here. So as also indicated in the Capital Markets Day, we will see inflationary trends over our cost positions. We will see M&A, and we will also see higher volumes, which also will lead to the fact that our absolute cost bases will increase. So I think that is what we have already indicated back in December. If you look at our SG&A costs, that is something we are working on. As also indicated back in December, that is also something which is dependent, especially on the SG&A costs, on our system landscape. And that is, of course, something which is not done very quickly, especially if it comes to the ERP systems. So therefore, it was also not expected that in 2024, we'd see some effects here. All in all, we were able to counterbalance all those mentioned effects during Q1, and that is also what we planned in the Capital Markets Day numbers. Okay. Thank you both. The next question comes from the line of Chetan Udeshi from J.P. Morgan. Please go ahead. Yeah. Hi. Thanks. Maybe if I follow up with the first question around the guidance outlook, and I was just doing some simple math. And if I just take your Q1 and if I take your full year EBITDA guidance, it seems your quarterly run rate for the remainder of the year needs to be somewhere close to EUR 320 million-EUR 325 million. Are you happy with that sort of run rate for us to model in second quarter, or do you think there is much more to be done in second half to achieve the guidance so that we get the phasing correctly in terms of modeling? The other question I had was just coming back to the shipping costs, etc. I remember one of the things, Christian, you've talked about in the past was leveraging the global footprint to be able to meet just the opportunities in different regions. We've seen some of the freight forwarders in chemicals talk about, number one, the shipping cost just going up quite significantly. Is that something you see in your cost base at the moment? And how does that change the opportunity for, let's say, leveraging the global scale and arbitraging between regions in the short run, but also how you see that dynamic in the long run? Thank you. Yeah. Chetan, thanks for the questions. On the phasing, I think we said it in our call here that we see first half and second half different here. So I think one needs to now see how that plays out. Currently, volume development, I would say, was or is encouraging as we entered into the second quarter. EV will be a pricing topic. And again, I think it's currently a very fluid market development, very fluid markets overall in the chemical industry. I'm sure you hear this also from other players in the industry. So when you model, I would rather take what we have said in our call, second half better than first half. On the shipping costs, I think it's a good topic to talk about because we see indeed that logistic costs do go up substantially, in particular out of the Asian sphere or space into Europe and into North America. So we have seen already substantial cost takeups, which also, when you take the Red Sea concern with us, it's not a disruptive move at this time. It is more, as we interpret our nuisance or how we feel it, is more nuisance to us. For us, it's more important on playing that regional game, not so much on the logistic costs and the advantages or disadvantages you might have there, but it's really playing the arbitrage game, which exists in the various markets. And what we currently see is that the arbitrage opportunities at this moment are lower or not as expressed as they used to be. But again, that does not mean that it is not possible going forward that there is, again, arbitrage opportunities for shipping products across the regions. We believe and are convinced that this is the right strategy for our essentials business to draw on those opportunities. And as we speak, are building up the capability more and more and also steering our business very clearly if we want to call it a source-to-rack, so really to optimize our business also in that sense from, as I said, source-to-rack and rack-to-source. This is our direct business from our warehouses to our customers. We, of course, manage also very clearly and very tight. So that's how I see it. Shipping costs is a pain. We can push most of the pricing forward to our customers and passing on. Not always that's possible, but it's also not threatening a situation as we speak at this moment. Can I ask one follow-up? Otherwise, I think I'll probably go into the queue and come back so others can ask questions first. Oh, go ahead. Go ahead. Yeah. I was just using your point about arbitrage, and I was just thinking out loud here. Let's say, just for the sake of argument, if I'm sure you work with BASF, and if you try to undercut BASF in Europe by buying something from China and selling it at a lower price, would that not impact your relationship with BASF on the specialties? Have you seen that instances where maybe what is good for essentials might not be necessarily good for specialties in terms of supplier relationship, or is that something you don't see in your day-to-day business? Chetan, that's what we actually don't see. And this is also one of the reasons why we are clearly pushing towards those differentiated business models. And I take now your example of BASF. The decision about the business cooperation between a distributor and a supplier like BASF is taken at the third or fourth level of that company, which is a business unit. And the business unit food ingredients in BASF, which is working on specialties, has nothing to do with, let's say, the business unit petrochemicals of BASF, where the industrial chemicals are basically distributed. And so I think we have to always make that clear distinction that the relationship is defined almost business unit by business unit, even in those large conglomerates. And also the character of that relationship is different. Wherever it might be in the specialties field, an exclusive relationship. In industrial chemicals, sometimes it's not even an exclusive relationship. So we also always have to have that in mind. So the collateral damage you try to describe is actually not something which we experience in our day-to-day business. That's great. Thank you. You're welcome. The next question comes from the line of Christian Obst from Baader Bank. Please go ahead. Yeah. Thank you and good afternoon. First, I have a question concerning your announcement that you might stretch investments into IT and Directs. I'm not really sure what that means, and how does it come to the conclusion that you might stretch these investments because you don't have a free cash flow problem? Now, on the other hand, doesn't it make sense to make it as quick as possible to reap any fruits afterwards? So this is the first question. Yeah. Christian, very, very valid point. I think a couple of things one needs to be mindful of. First of all, when we talk about stretching investments into Directs IT, unfortunately, due to the changes in the accounting standards, investments you take into IT and IT infrastructure and those programs need now to be OPEX. And in the past, these were CAPEX. So indeed, if you would talk about CapEx, it would not make. That's a different thing. But we need to carefully watch our OpEx development and our impact it has on our Operating EBITDA, which is our key performance indicator. So absolutely, that's number one. Absolutely, we are looking into how do we spend or how do we actually take these, let's say, costs into our scheme as we invest into that infrastructure and carefully balancing it out between what we believe is absolutely now necessary to do and what maybe is I would not call it discretionary, but is something where you think about stretching this further out and not having this high spend in 2024. 2024 is a critical year in our Directs and IT investments because it's the year of the highest spendings, 2024 and 2025. So we have to have that in mind. But we also need to manage now the situation. As I've said, with the results we have shown to you, we cannot be satisfied, and we need to address that. Okay. In the end, is this some kind of flexibility to come up towards the low end of your guidance in the end, to move some of these kind of OpEx into the new year 2025? As I said, there are many moving parts, right? One is clear cost containment and addressing our SG&A costs and making sure that we reduce our spend here. The other one is, of course, managing our margins. Price management is a core topic. And I think Q1 was a bad example of how you should do it or should not do it. And then it's, of course, also projects and programs, initiatives you have planned for a certain year, but then you need to recognize that this, in order to safeguard our results, is something where you just need to reprioritize. And that's what's happening as we speak. Okay. Understood. Thank you. And the second one is on your separation efforts. So you started more or less at the beginning of the year with everything. So what have you implemented or what have you done so far, and what was a main surprise you recognized in these first steps? I mean, we are and I think Kristin can add to that. Maybe I start with the surprises. Surprises are, of course, that this or not surprises, I must say. But when you go to the real detail of the disentanglement and how you basically go into the separation and what kind of parameters you need to define and what does it mean on the local level is quite complex tasks, talking about, for instance, with the 600 sites we're operating worldwide and making sure that we can disentangle those operations as we go forward. So we discover that the devil is in the detail, as we say it in Germany, in many cases. But we need to sort that out. I mean, for me, that's not a surprise, but sometimes it is surprising of how many topics actually are identified. As we have said in our call, the teams have been staffed. We have a dedicated project organization working on that with clear dedication, but also separating this as much as we can from the operational business because the legal disentanglement, the tax disentanglement, should not be an excuse for our people to not raise a sharp refocusing on execution of our business and our operations. So that's where we stand at this moment. And we have also seen that we have already some spending in our extraordinary items associated to that effort. But we push for it because we are firmly believing that we need to be faster here to make that disentanglement happen. And Kristin, again, maybe your views on that one as well. Yeah. Absolutely. And you also asked what we are currently doing. We exactly make a detailed plan how to do it. And Christian mentioned already the 600 different sites. We plan which site goes into which division. We also look at the legal entity structure and also decide here, where do we need which legal entity and how to do that most effectively. So that is exactly what we are doing right now. So we are in the detailed planning modules. Okay. Thank you. And one last additional question related to that. You have these other Special Items in your net expenses coming from Special Items, which was EUR 8 million. And you said that it's, in some cases, related to legal and operational separation of the two business units. And it's one-time expenses. So what can we expect that these kinds of expenses will go on and on quarter by quarter going forward? So we have guided the capital markets that all in all, the cost together with the cost to achieve the cost out program, it's very important to mention that. And also including the tax leakage will be EUR 450 million-EUR 650 million. So also, again, here, that also includes the tax leakage. We have guided for this year to a low three-digit million amount. If I look at it right now, I would rather say that this is a high two-digit million amount towards a low three-digit million amount. Okay. Thank you very much. The next question comes from the line of Rikin Patel from BNP Paribas Exane. Please go ahead. Hi. Thanks for taking my questions. I've got two. Firstly, a follow-up on pricing. Christian, you mentioned that you are in the process of correcting pricing. Does that mean that we should expect sequential improvements in GPP units into Q2, or is that something which will be more weighted towards the second half? And secondly, last week, you announced the acquisition of Química Delta in Mexico. I think the business was reported to have had sales in the high $300 million range in 2023, which would make it one of the larger acquisitions you've done in recent times. Could you maybe give us a sense of the margin profile around that business? Thank you very much. Yeah. Rikin, thank you very much. Again, on the pricing, as I've said, we see moving parts in our pricing, our direct business versus our warehouse business. So that's, in particular, also in the essentials business, stabilizing and slightly going up. So we probably see some effects here. On the specialties side, there's still some pressure on the pricing side, which we are, of course, correcting now as we speak. The good thing about our business model is that typically, we can correct those pricing topics rather quickly because we're not locked in with a bi-quarterly or even a quarterly pricing scheme. So I think the organization is fully alert about the importance of pricing and that we do not lose the margins we have established so far and also using our strong position we have in that value chain. On Quimica Delta, yes, you're right. It's one of the larger acquisitions which we have been doing in the past. We firmly believe that Mexico is an important space to be as we go forward for the next 5-10 years. We see a strong chemical price, a strong chemical market in Mexico arising. And also when we talk about the Americas in principle, and here, I'm talking about Canada, North America, and Mexico in that sense. So we are convinced that we need to play that strong position in Mexico, which Química Delta gives us. We will be then the largest distributor in Mexico, I think, strategically, a very good move. On the margin profiles, I mean, you will see it as we go forward. Once we have closed the acquisition, it is something which follows our strict rules of how we assess a target and what internal rate of returns we do expect from an acquisition. Otherwise, we would not do it. So as always, you can expect us to stay totally disciplined on that valuation parameters and how we assess a certain target. But it has been a good and important move for us in Mexico. Okay. Thank you. Once again, ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. The next question comes from the line of Himanshu Agarwal from Bank of America. Please go ahead. Hi. Thanks for taking my questions. Good afternoon. The first question is on the guidance. Sorry to come back to that. I just wanted to ask how much visibility you have into second half at this stage, as that would be critical to achieving the full-year guidance. And also, if you could quantify the contribution of cost containment measures, which I presume to be back half-weighted. So that's the first one. And then secondly, if you can talk about the volume development. I know you have mentioned that volume development has been sustained into March, April. But during the full-year 2023 call, you mentioned that we need a few more months of data to confirm if it's just transitory or an actual cyclical recovery. So if you could give us an update on that, please. Thank you. Yeah. I will let Kristin answer the guidance topic. On the volume development, I think I've said it in the full-year call. At that point of time, it was hard to distinguish between is it the restocking peak we are seeing, or is it really marking the turning of the cycle? After now four months into the year and also talking to the large manufacturers, I would not book it under the short-term restocking peak. I would say this is on a lower level, stabilizing, sequentially improving volume demand. You saw it in the results of manufacturers that their results improved substantially sometimes because of better utilization rates of their capacity. And this has helped them to improve their margins, which, again, is not the case in our business. But nevertheless, you clearly see that the volume development is encouraging for all of them. Now, let's see how long that will hold. In principle, we see encouraging signs in general from the various industries we are active in that destocking, of course, has been completed quite some time ago. And now what we see is real underlying demand. And therefore, we believe that as we progress further and using the momentum and the sequential improvement we have observed now over the last four months, that we believe that, in particular, towards the second half of 2024, we will continue to see a gradual improvement in the volume demand. Key is and remains the pricing topic, also for manufacturers, by the way, is where is the right price point in this market dynamic? It's currently a very dynamic, a very volatile environment we're operating in. And this is why we are a little bit cautious in our connotation here. But nevertheless, we see that the clear demand pattern is changing in this turning compared to the years 2023 and also, to some extent, 2022. Kristin, you want to talk about the guidance topic again? Absolutely, Christian. So on the cost topic, so what we see is that we will implement measures in a mid- to high two-digit million EUR amount. But again, it's important to mention here that it helps us to counterbalance inflation and also helps us to counterbalance volume-driven cost increases. So that does not mean, in absolute terms, that our costs will be lower compared to the year 2023. I think it's important to mention that again. Thank you. And just briefly, on the second half, the confidence into second-half recovery? You mean the visibility? You heard the first question we had? Yes. Yes. Yes. Yes. Yes. Yes. Yes. Yes. Yes. Yes. Okay. So normally, we have a good visibility 4-6 weeks to 2 months into the year. So yes, the visibility into the second half of the year is quite limited. But of course, we are also looking into market data, which is available but not directly visible from our side. And if I may add, I mean, we are talking to our key suppliers every day. And so when they look in their business, we also take their assessments into our considerations when we come to a statement like this. I think this has been encouraging, what you hear from manufacturers. All have been surprised by what we have indicated earlier already, that the markets are more robust than a lot of people think. They have been also surprised about the first quarter development and also how April has continued into the second quarter. Now again, taking all those comments, taking all those assessments across the industries - and here we talk from petrochemicals to food and nutrition, from pharma to personal care - we believe the condensed statement we can give here by having all those insights into all those value chains, the condensed comment is that we believe second half will, from a volume standpoint, be better than the first half of 2024. I've said it also last year already, if you remember. I said that the second half of 2023 will be better than the first half of 2023. That materialized. I also said that 2024 will be better volume than 2023. I still stick to that statement and now add to it that we believe second half of 2024 will be also, from a volume standpoint of view, better than first half of 2024. Thank you. Just if I may ask a quick follow-up, please. Yes, please. Go ahead. Yeah. I just wanted to ask because you gave guidance just two months ago. So what has changed since then? Because at that time, you must have known about the pricing development in Q1, etc. So what has really changed in the last two months? I think it is indeed the pricing topic, which is currently, I would say, the most challenging topic, to find the right price points and making sure that our gross profit per unit are stabilizing and increasing again and not just eroding away. This is what we have been fighting now over the last weeks and months. And that, I would say, is a difference from what we came to a conclusion when we formulated the guidance, which typically happens mid-February and February before we go out with the full-year results. So that was when, early year, we were a little bit more positive on the price environment. And now, as we have Q1 behind us and running into Q2, we see that pricing still is probably the most it is the most important moving part. On the volume side, again, we are actually fully in line with what we have anticipated. Thank you. You're welcome. There are currently no further questions. With that said I hand the conference back to you, Thomas. Thank you, Anika. This brings us to the end of the conference call. In case of further questions, please don't hesitate to reach out to the IR team. Our Q2 results will be published on August 13, 2024. Ladies and gentlemen, thank you very much for joining us today. Have a great rest of the week, and goodbye. Thank you.