Ladies and gentlemen, welcome to the Evonik Industries Q3 2024 earnings conference call. I'm Vicky, the call operator. I would like to remind you that all participants are in a listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star, then zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christian Kullmann, CEO. Please go ahead, sir. Ladies and gentlemen, good morning and a very warm welcome from my side and the side of the team to our quarterly earnings call. It is another quarter in which we have delivered on expectations. It is another quarter of sector-leading earnings growth and still another quarter of free cash flow generation. Some of you might say, "Now, Kullmann, wait a moment. I've heard that introduction before." You know what? Yes, you're right. It is correct. That was mine, but good news like that never gets out of fashion and confirms our focus on consistent delivery. From now on, however, I promise only news, no repeats. News on our cost-saving initiatives, which are more and more reflected in our numbers. News on the realignment of our portfolio, where we continue to address underperforming businesses, and news on innovation, where we have defined our three new growth areas. Maike, you want to start with the. Sure, Christian, and welcome from me as well. In the third quarter, we have increased our margin to 15%, which is not only an improvement by five basis points from the trough level in 2023, but also a further improvement compared to Q2, despite flat or even slightly declining volumes sequentially. This is another proof point that our cost-saving initiatives are more and more paying off and will further ramp up next year. On the one hand, admittedly, we will partly revert our short-term contingencies, which we started in 2023. They were designed to immediately counter the drastic volume declines back then. Now, with volumes coming back, we will and have to visit more trade fairs again or enable more trainings for our employees. So EUR 100 million of the contingencies will come back in 2025. But that is more than offset by the ramp-up of the savings under our Evonik Tailor-Made program, as well as by our business optimization measures. For example, we will start the backward integration of our U.S. methionine plant in Mobile in the second half of 2025. That will result in a quite notable improvement of our cost position. Right. I guess business optimization is a perfect keyword, somewhat like a buzzword for me. Three weeks ago, we have communicated the realignment of our two business lines, Healthcare and Coating & Adhesive Resins. Both have one thing in common. They have for sure very good businesses and quite weak ones. We tried, we tried hard to restructure the weak ones for quite some time and now decided to pull the ripcord. We'll exit our divested businesses with a combined sales of EUR 350 million and a negative EBITDA. This will not only enable us to focus management resources and CapEx on the areas where the strongest growth with the strongest growth potential. It will also improve the financial KPIs quite drastically. In the case of Coating & Adhesive Resins, for example, the EBITDA margin will improve by more than 10% once the businesses are exited or divested. This should be the case by the end of next year. But we are not only working on the cost side. There is also good progress on the growth part. You know our six innovation growth fields. They continue to deliver good growth despite the quite challenging macro environment. They have generated around EUR 700 million of new sales over the last eight years at an average EBITDA margin of around 20%. So we thought it is about time to focus and sharpen our innovation activities further. At our R&D press event back in September, we have defined three new innovation growth areas, which from now on takes the place of the six growth fields: Biosolutions, Circular Economy, and Energy Transition are some of the most eminent sustainability trends in our industry and at our customers. We are positioned quite strongly here already today. So we are another EUR 1.5 billion of new sales from these growth areas by the year 2032. Nucleic acid-based medicines, anion exchange membranes for water electrolysis, or ceramic membranes for lithium recovery are only three very promising examples of our innovation pipeline. With that, Maike, I guess it is your turn because now back to the numbers. I think I can keep that quite short today. There are not many surprises, and that is quite positive news in today's environment. We told you three months ago that we expect Q3 EBITDA on the level of Q2, and it is fully in line. We are confirming our free cash flow target for the year with a conversion rate around 40%, and we are confirming our EBITDA outlook range. Looking into Q4, we see the usual year-end seasonality, which is only somewhat more pronounced in performance materials. We will have a quite solid finish of what it is a pretty decent year for Evonik and can from now on put our focus on the next year, 2025. Far from our side, a presentation below 10 minutes confirms our new efficiency focus. We are now ready to take your questions. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to use only handsets while asking a question. Anyone who has a question may press star and one at this time. The first question is from Thomas Wrigglesworth, Morgan Stanley. Please go ahead, sir. Thank you very much for the presentation. Two questions, if I may. The first is on the Animal Nutrition business. Can you just talk, break out the volumes in nutrition and care between the two businesses? I'm just keen to understand what you think the underlying rate of growth for Animal Nutrition is and how you see that progressing into 2025. That's my first question. Second question is on Silica's and the tire businesses. We're seeing a number of announcements from some of your customers, I assume, who are talking about closure of capacity in Europe, potential kind of low-demand environment. I wanted your interpretation of what's happening in the industry. Is the shift from European tire manufacturers to Asian tire manufacturers going to be a challenge for the business? Thank you. Tom, just one clarification on your first question. What do you mean with the two businesses and the volume split in Animal Nutrition? Sorry, you've given a 3% year-on-year volume growth for Nutrition & Care. So I just wanted to understand how much of what the volume growth is in Health care versus Animal Nutrition and what you see the underlying growth rate in Animal Nutrition at. Okay, understood. Thank you. Christian starts with Silica and then Maike can. Okay. Hi, Tom. Here's some details, some color about our Silica business. As you have already seen, it was for us in Silica a pretty good quarter across virtually, I may say, all industries. We've seen a pretty good demand, which translates into a volume growth of year-on-year, a 6% plus, so it was similar to the first and to the second quarter, maybe as add-on. On this path, we have additionally improved our cost positions, which has helped us. For example, so far, we have already reduced the headcount in our Silica business of around 100 employees, which was, as already mentioned in respect of our cost position, really helpful. That is an ongoing process. Of the biggest markets, the biggest end market, it is for sure right now that here you should think about the tire demand, the tire industry. By having said this, you should, let me say, consider that roughly two-thirds of the tire market I've talked about is focused in the replacement businesses. So having said this, the year 2024 in respect to Silica, the growth is pretty well underpinned. Maybe sugar on the icing or icing on the sugar, as you like it, you should consider that also the smaller markets, for example, specialty silica for food, specialty silica for agro, specialty silica in the electronics area is also running pretty well. So that is what I could give you as an answer to the Silica question with this. I hand over to Maike. Yeah, good morning, Tom, from my side as well. After your clarification regarding Animal Nutrition and Health and Care, so the growth rate we see in both, let's say, businesses is roughly 3%. Animal Nutrition a little lower, but Health and Care roughly 3%, with Care Solutions stronger and Healthcare a bit weaker. And then regarding your market expectations, I think you were asking about the outlook in 2025 and on the short-term Q4. So I focus on that one. So the market is expected to grow further also in 2025, pretty much in line with what we have seen now in 2024, by 3%-4%, especially driven by Asia, about 4%. On the one hand side, we have commented on the new supply coming to the market, but also we see, of course, some recent capacity reductions, CJ, for example, with a 60 KT capacity reduction, Sumitomo with a capacity reduction in two steps, 2023 and 2024, up to 70 KT. So we really see that the smaller players with unfavorable positions on the cost curve really are expected to review their positions in mid-term. And maybe one more word about the prices. We expect them so far to stay relatively solid. We see a slow and cent-wise decline, and we assume that this will stay like we see that right now. I hope that helps. Thank you both very much. The next question from Chetan Udeshi, J.P. Morgan, please go ahead. Yeah, hi. Thanks for taking my question. I really appreciate your short introduction. I don't know if it's a sign of efficiency, but at least it's a sign for us of better time management. I just wanted to go back to the slide five of your presentation, which talks about all the key moving parts on savings. And I think I can see some of the numbers listed there, but if I look at your cash flow statement in third quarter, there is a big positive number in the miscellaneous assets and liabilities, which you have called out to be related to bonus accruals. And in Q3 alone, it seems to be like EUR 120 million. So I'm just curious, as we look into next year, how will that line item develop? Is it going to be stable? Is it going to be lower in terms of accruals? How do you see bonus accruals impacting your cost base next year? And just on top, if you can help us to understand, what is your typical wage inflation that you see every year? Because I guess that's something we'll have to incorporate in our bridge for next year. And the second question I had was, just given weaker dynamics in the performance materials market as we see today, is it fair to assume that the sale of this business or any strategic transaction on this business is unlikely in the near term? Thank you. All right. Then I suggest I start with your questions regarding the free cash flow, Chetan. So basically, maybe starting with the broad assumption that, of course, our free cash flow indication for 2025, obviously, it's one of our major KPIs. So the cash flow conversion rate remains clearly our target for the next year as well for 40%. So what are the moving parts? And you mentioned the one with the accruals. Of course, we have the moving parts, self-help measures, ETM, etc. So we see that we have first larger cash outs expected, but they will be clearly overcompensated. What we have mentioned also when we started the program, they will be clearly overcompensated by higher net savings, and also not only cash-wise, but also EBITDA-wise. So CapEx was quite low in 2024. We have also mentioned before that a more sustainable level is roughly EUR 800 million or even above. Yeah, we see a higher bonus payout for 2024 compared to 2023. We see now the higher accruals, especially if you compare them to 2023, where we had a major decline in the bonus. We have higher accruals this year and will have higher cash out next year. Everything else of the free cash flow, of course, depends on the operating performance, and this is too early now to be more specific. To make that very clear, we are confident to continue our strong free cash flow track record of the last years. Then I take the wage inflation. We assume that is roughly 4% compensated operational efficiency measures. Okay. And then I take the question about the future of C4. Chetan, thanks a lot for this question. Are we under pressure? Are we in a hurry? These are rhetorical questions because the answer is crystal clear, and therefore it is no, we are not. What does it mean in respect of our C4 business? Everybody knows and is familiar with, here we talk about a cyclical business. And yes, we had a pretty good first half of the year, and now over the course of the second half of the year, it is becoming weakened. Dependent on specific markets like rubber, auto, or the construction, and the differences in specific regions, for example, Europe, we here do see that it will become a little bit, not a little bit, but it will become weaker in the second half of the year as it was in the first half. That is what we've taken in consideration, and that is what we are contributing to in respect of our strategy to find, to identify the right point of time to start the divestment process to get a maximized value out of this process. And that is, of course, as of today, not the right point of time. So we will continuously monitor and analyze the market situation, and then we will keep you informed about when we are going to start the process, the official divestment process, but as of today, we will not. Thank you. Pleasure. The next question from Andreas Heine, Stifel, please go ahead. Yes, three short ones, if I may. The first is on High Performance Polymers. Can you elucidate a little bit more how that business is running? You invested a lot, and the Smart Materials business was growing by volume 2%, and Silica more than that. So I guess that High Performance Polymers is still not up too much in volume. And the second one is on Q4, actually. How do you see the seasonality in this year? So last year, yourself, but also your customers were running down inventories like hell to optimize the balance sheet. How is that proceeding this year? And the last one is in Healthcare. Healthcare is pretty weak. Is that just the aftermath of this COVID boom you had, or is there something different ongoing? So is it something structurally what you see here, or do we have just to wait that pipeline projects come to the market? Yeah, thank you, Andreas. I suggest Maike does the first two on PA12 and on the Q4 outlook and seasonality, and Christian continues with Healthcare. Yeah, Andreas, good morning. Regarding your PA12 question, we have seen a positive volume development in PA12, although very clearly the demand remains impacted by the overall weak macro situation. We see sequentially some volume improvement because on the one hand side, automotive remains relatively stable, strongly, of course, particularly in Asia regarding the conversion to e-mobility. Home appliances, I think we have mentioned that before, the dishwashers are stabilizing as the corona effects are now fading. Consumer goods are also getting more and more positive. A new channel to market is high-end running shoes, and also the additive manufacturing is getting a bit stronger after the destocking. We had to make some price concessions, especially here in Europe. But on the other hand, we have very, very clearly further, not first, but further cost-cutting measures initiated, and we see a very high cost discipline to support our EBITDA growth. Then regarding your Q4, we see actually the usual seasonality. We see and we plan with the usual seasonality a bit higher, a bit more pronounced, basically because we have the further earnings decline in performance materials. And so that will be close to what we have Q4 2023. To remind you, we have seen a break-even in Q4. So this is what we have to plan for regarding performance materials. Okay. Thanks a lot, Maike. And now about Healthcare. In a nutshell, mixed picture. On the one side, we have a pretty good development and therefore delivery on our numbers and figures in respect of our drug, for example, and for sure in respect of our lipids. They are running pretty well. On the other side, as mentioned already during my introduction statement, we do suffer from the amino acids, from the keto amino acids, so from our exclusive synthesis businesses in particular in Hanau. And that is why we have taken a decision, and that is a very strong and hard one to say, "Okay, here we will close these sites in Hanau," which will help us to better the perspectives for this business. So the business of the Healthcare core business is pretty intact, and it is running well, as mentioned, our drug delivery and our lipids. On the other side, those businesses where we have to suffer from a new situation, a new competitive strong situation, as I've mentioned, in the amino acid business, we have taken the decision, and to that end, we will close those capacities in Hanau to better our cost position. A final statement. Regularly, usually, we have over the course of the fourth quarter, let's keep it like this, a typical strong revenue development that will this year be a little bit less pronounced, a little bit less pronounced because of the global economic environment. Thanks a lot. The next question from Sebastian Bray, Berenberg, please go ahead. Hello, hello. Good morning, and thank you for taking my questions. I have three, please. The first is, when you look at the tech and infrastructure segment line for EBITDA in 2025, what do you tend towards thinking is an underlying run rate for that business? My second question is on Healthcare. If we exclude the businesses that have been classified as non-core or where something is going to be done on the portfolio or scope side, how was the underlying business actually performing in Q3? It seems to have been fine, but was it up year on year or flat? My third question is on performance materials. It builds on the question that Chetan asked earlier. Relative to the expectation set out at the 2022 capital markets day to find a partner for this business or divested it, has anything changed in the company's approach, or is it just that the M&A markets have not been open enough in European chemicals for making a transaction of this size? Thank you. Hi, Sebastian. I take the last one and the first one, and the answer to the last one is very easy: no. Our strategy remains in our strategy. We stay put to our strategy, though it is in respect of the perspectives of our C4 business. Goes without saying that here we stay put, and it depends on an attractive occasion. The first question was about our infrastructure and technology division. Here you have asked about some numbers and figures. I will give you a little bit more color about and to provide you with some more details. Our Technology and Infrastructure division in 2023 has reached revenues of about, by some rule, EUR 3 billion. Next, you have to split these 3 billion up, which means 25% belong to the technology and around two-thirds belong to the infrastructure. And out of this infrastructure, these give or take EUR 2 billion, roughly the half, half of it belongs to our sites and the respective infrastructure capacities in Marl and in Wesseling. So having options lying on the table, which means it could come to a straight sale, we could start to negotiate about a joint venture or other partnering models, role models. So that is what is still lying on the table. And if you think about the EBITDA, the TE division has gained in 2023. It was around EUR 220 million exclusively external businesses. And in future, thinking about the respective sites in Marl and in Wesseling, as of today, internal business will become external. So in other words, that would definitely translate into a higher EBITDA margin of this standalone business. Having said this, it is my pleasure to hand over to Maike. Thank you. Good morning, Sebastian. Are facing regarding Healthcare, still some operating challenges. So as mentioned before by Christian, the underlying business is doing okay. But you have to keep in mind that we are still having a relatively, let's call it, young product portfolio. So we have, for example, long-term supply agreements with Phathom in the U.S., the biopharmaceutical company for gastric acid-related diseases. And we have a lot of new steps in our assets and in our production. So it's more difficult to perform at the same level with the new steps versus a repeat-only operation we see somewhere else. So the oral drug delivery is doing fine. The lipids are running well, but as I said, we are still facing some operating challenges. I hope that answers the question. Thank you. And if I were to gather the guess at what the number at EBITDA could be for the year 2025 for tech and infrastructure, do I just take the run rate in Q3 or, let's call it, minus €32 or minus €40 for the full year 2025? The reason that I'm asking is that there's been quite a lot of variability in this line, partly associated with energy price volatility in the last two or three years, and net of the cost savings, it's a little difficult to say what the underlying annual EBITDA is. That's true. Also, for us internally, so I would ask you for some patience here. As Christian explained, there's a lot of moving parts, different buckets in the infrastructure technology, different sites that will stay with Evonik, that will leave Evonik. As you said, energy trading, that's just passed through and only business, and we'll keep you updated on the underlying and relevant EBITDA. Christian has given you an idea about the sales number, and EBITDA is a bit more complex, so maybe it's better for the time being to start with the sales number, and we will give you an indication on EBITDA a bit further down the street. That's helpful. Thank you, Tim, Christian, and Maike. The next question from Martin Roediger, Kepler Cheuvreux. Please go ahead. Hello. Thanks for taking my three questions. Sorry, I have to come back to the slide five of your handout. You show the EUR 525 million gross savings for 2025 versus the EUR 400 million gross savings in 2024, but you face some factor cost increases and the reversal of short-term contingencies. When you look at the net savings, what is the delta between 2024 and 2025 in your P&L, not in your cash flow? I guess the delta is less than EUR 125 million. The second question is on Specialty Additives. Can you provide some color which products benefited from this 8% volume growth? You say that virtually all activities performed well except crosslinkers, which means that all other activities excluding crosslinkers must have grown by double-digit. And how does it come? Because the macro environment is not really strong. Thirdly, regarding the effects from the U.S. elections, do you have any exports from Europe to the U.S. which might be affected from any higher tariffs in the U.S.? Thank you. Thank you, Martin. I think Maike starts with the net savings, and then we come to Specialty Additives and the U.S. question. All right. Good morning, Martin. Yeah, regarding slide five and your question regarding the net savings, I guess you are absolutely right that it's not the full EUR 125 million. So you got that. Absolutely right. So the factor cost increases, of course, are going against the gross cost savings from ETM and the business optimization. So we are roughly expecting EUR 200 million factor cost increases expected in 2025. So that's to give you an idea of EUR 5 billion. However, we compensate a large part by the operational excellence measures. We do that year over year. So it's yield optimization, purchasing, etc. But still, very clearly, we still have a mid-double digit number of net factor cost increases. That means the EUR 125 million additional gross savings you calculated minus the net factor cost increase will still remain in our EBITDA with a high double-digit million additional net savings for the full year 2024. And with that, I hand over to Christian. Thanks a lot, Maike. Hi, Martin. I take the last two questions. Answer to your question about Specialty Additives, couldn't agree more. You are totally right. All businesses have run pretty well, and we have seen in those businesses and Specialty Additives, except the crosslinkers, double-digit volume growth year on year. Think about our oil additives. Think about the foams, the foam additives, and think about, for example, coating additives. Here it is pretty holding true that they have, as of today, shown a really attractive year with all of them double-digit volume growth. Yes. Once more, couldn't agree more about your assumption of those businesses. Now back to the question in respect of taxes and tariffs we could be afraid of in respect of the United States of America trade policy. When we've taken the helm in summer 2017, becoming the CEO of Evonik, one of our decisions was to say, "Let's rebalance our portfolio, maybe even all the more, also from a geostrategical point of view," which means in concrete that we aim to have one-third of our revenues in the United States, one-third in Europe, and one-third in Asia. In the United States, we have already delivered on this goal and target, which means we will, if it comes to additional import taxes, if it comes to additional protectionism, we will have the chance with our capacities in respect of Specialty Additives, in respect of Methionine, in respect of amino acids. We will even benefit from those protectionism activities. We maybe could expect from the new president because we are pretty well located in the United States of America, in other words, behind those protectionism walls. Second, as of today, we would not be heavily impacted because of this geostrategic footprint of Evonik Industries. We would not be heavily impacted by additional protectionism by the new government of the United States of America in respect of our US business. So far, so good. Excuse me, I have a follow-up on the Specialty Additives answer. When you have double-digit volume growth in a lousy macro environment, does that mean that you gain market share in oil additives, foam additives, and coating additives? Martin, that means, first of all, that the quality of our goods and products is highly appreciated by our customers. And yes, it means additionally that in certain businesses, to a certain extent, we have been able to better and therefore to grow. Couldn't be clearer. Hope you are satisfied. Thank you. Pleasure. The next question from Jaideep Pandya, On Field Investment Research. Please go ahead. Thanks. Just want to talk about your methionine strategy, sort of considering the two of your competitors in China, which are going to build two large plants, liquid and powder plants, and China, I suppose, is going more on the liquid direction, and I suppose you haven't really grown your methionine volumes much in the last couple of years, so I mean, is your strategy in methionine basically to maintain price discipline, shed share to your Chinese peers, or are you going to resort to defending your share, and therefore we could see some more of a price competition environment in 2025 and 2026. That's my first question. The second question is actually on additives. I remember, I think, a couple of years ago, you alluded to utilization being down significantly in some of your plants. You've had a very good volume environment in the last few quarters. Just wondering, where are we in terms of utilization now across additives and maybe also across materials? And then the last question, I mean, I take a try at this. When you look at Evonik's portfolio outside performance materials, you've got three divisions, and one could argue that you are probably the next Solvay as a candidate for splitting the company. Is that something too crazy a thought for you, or is this something which potentially, or at least on paper, could be under evaluation? I suggest I take the first two questions, and then I hand over to Christian. Good morning, Jaideep. And regarding your methionine strategy, yeah, I mentioned before, so market is growing. And so the new supply, you mentioned totally correctly, is coming into the market, especially, of course, from our Chinese competitor, NHU, with a new plant of 100 KT that is expanding. We had the expansion of lines one and two in the NHU in the first half of the year. And so, yeah, we see that clearly coming in China. However, I'm sorry for that. Very clearly, we expect, and I mentioned that before, we expect that the prices stay solid for the start into the year. So we really expect only a very slow and trend-wise decline. To make that also clear is that with these growing markets, 3%-4%, we are not forced to fight for a market share. But for us, methionine is a financing business, and so we stay in the market like we are right now. Then the utilization rate also for the additive business is still below 80%. So there is still, let's say, room for improvement for us. And then regarding the split, a potential split of the company, I hand over to Christian. Thanks a lot, Maike. And thanks a lot for the question. Let's keep it matter-of-factly. If I should give you something like a hint how I think about the potential split, I would say it is similar to the idea of starting to breed pineapples on the Mount Everest. So it is anything but possible. And that is how we do judge upon our potential idea of splitting the company up. So breeding pineapples on the Mount Everest. Thanks a lot. Pleasure. Ladies and gentlemen, this was the last question. Oh, okay. Having said this, from the moderator, it is up to me to say that brings us to the end of the call, and we, the whole team, Maike and myself, wish you a pleasant autumn and winter and a happy new year, and don't forget to celebrate Christmas, and with this, take care and bye-bye. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.