Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the LANXESS conference call. I would like to turn the conference over to André Simon, Head of Investor Relations. Please go ahead. Yeah, thank you very much, Alexandra, and a warm welcome to everybody to our Q1 2022 conference call from my end as well. As usual, I have our CEO, Matthias Zachert, and our CFO, Michael Pontzen, with me. Please take notice of our safe harbor statement. I would like to flag that against the backdrop of the Russian war on Ukraine and the persisting uncertainties, we have decided to postpone the capital markets day to the second half of the year. This would also enable us to provide more tangible information on strategic steps which we're currently working on, and which might be further advanced in the second half of the year. With that, I'm happy to hand over to Matthias for a brief presentation, afterwards, as always, the Q&A. Matthias, please go ahead. Thank you, André, and welcome everybody on the call. I would like to start the presentation on page 4 immediately, where we address highlights and challenges of the past quarter, Q1. All in all, we can say we had a strong start into 2022, and we clearly walked the talk on addressing where we were lagging behind last year, and that was pricing. As far as top line is concerned, we increased sales by 44%. I've not seen that in my professional life before. That is amazing. EBITDA increased versus previous year strongly, 32%. Also this is a, I would say, very strong start to the year. As far as the segmental contribution is concerned, all segments contributed. In Q4, in March, I got the question from one of the analysts, "Why did Specialty Additives lag behind?" I said, "They will catch up in Q1 as they did." Of course, a strong punch in Q1, more than normal, and therefore don't expect that this is going to continue for the next three quarters. Additives should do well. Q1 was exceptionally strong. Finally, it should be said that we managed a very volatile environment. We managed inflationary input costs and disrupted value chains, which eventually led to a financial P&L strong performance. Last but not least, I would like to say in Q1, we addressed through our focused crisis management everything that needed to be done. Today, I would say we are prepared for liquidity storms, for cost inflation, for gas embargoes, energy price inflation. We have addressed really in the last two months, whatever can be addressed and therefore we feel as a team, pretty strong on our crisis management that we put in place from twenty-fourth of February. Challenges, inflationary environment, of course, weighs on input costs. It's strong when you can pass that on to the customer one-to-one, which we did. Arithmetically, if you add EUR half a billion on sales, keeping bottom line stable or even increasing it, overall your margins suffer. Challenges, again, working capital for 2022, the current price level remains a challenge for sure. If you look into overall our cash flow developments, we have built up working capital by around about EUR 400-500 million. If you blend that out, you see that our underlying operational cash flow came in pretty strong. In light of this inflationary environment, of course, after last year, there was a clear build up in working capital. There will be a build up in the first half of 2022, and then it will most likely seasonally reduce again, and then we should see a clear release in working capital in the second half of the year. Let's turn the attention to page 5. Key financials. I would like to comment here that we have shown Q1 2022 versus 2021. Price, 30.1% price increase. That's the message. Of course, that led to an increase in sales of EUR 500 million. Wow. We kept volume stable in light of the fact that Q1 last year was a relatively strong volume quarter. I think this is sound. Of course, portfolio we added, EKC comes into the P&L and with a very positive performance. EBITDA, the increase of 32% I flagged. With EUR 320 million, this is one of our strong quarters. According to what we see, momentum should continue in a robust way also in the second quarter. EPS adjusted 40% roundabout up, strong one. Liquidity, I mentioned that before. We were early in the process to decide let's beef up safety liquidity, because we in February, March, did not know how financial markets would react. If markets would close up and for that very reason, we decided liquidity is always good to have in the back drawer. Ample liquidity, safety liquidity, and I think with this, whatever comes, Lanxess is prepared. Today, I have to say, we used the right timing. Banks provide feedback and said we were the early ones in the chain. We did not have to queue up. Now, the feedback we are getting, the industry is queuing up. Now at clearly higher rates, we issued a 6-year note, EUR 600 million at 1.75%. If you would issue this today with the BBB flat rating, you would pay 100-150 basis points more. Also here, I would say good timing. Now, ladies and gentlemen, let's come to page 6. We will address here energy and also potential gas embargo. We don't see that as of today, but we got a variety of questions on both topics. For the sake of transparency, we would like to provide that to you and so hopefully this gives you a level of comfort that things are under control, addressed, and implemented. Let's move to page number 7. Here you see the gas price development basically over the last decade. You see that gas prices in Europe but also in Germany, all in all, were relatively stable. We assessed at various times over the last several years, and we always came to the conclusion, going for financial hedges does not make real sense. If gas prices should go up, our portfolio should be able to mitigate that through price pass throughs over the quarters. When we saw, of course, that energy and gas prices started to explode in 2021, basically from the second quarter, I indicated already last year from Q2 onwards that we are going to address that. That we have long-term contracts in place that are definitely locked in on a yearly basis, but most of them running even 2-3 years. With a quarterly lag effect, that would be a theme or that would be something impacting us in 2021. That was the situation last year. That was the situation on prices. Now let's come to actions that we started taking in 2021. Basically here from Q2 onwards, page 8, we basically started globally. We had transparency of course, but not globally on side by side product line by product line. Well, when we saw that energy prices were going through the roof, we basically established global transparency. Also got global clarity on contracts on the table on duration, on energy clauses included or not included. Once this was done, we developed concept by business units that were predominantly impacted the most, and we reflected them to you in the conference calls as well. Of course, we went business unit by business unit to key customer contracts, conveyed the message to the sales force, how we would like to do that, and we clearly didn't take the approach of just passing that on through a neutral letter with take it or leave it. We wanted to explain, we wanted to win our customers over, get ownership, and here reinforce the strategic partnership that we have with our key customers. In most of the cases, this was understood. We started to negotiate with customers, amended contracts where legally possible, either through price clauses or through price adders. By now, Q1, I would like to say that more than 50% of our relevant key contracts have been addressed. Further work is in course, in action, and here and there still needs some convincing. That we are able now to show a completely different financial performance than last year, where we were lagging and running behind. I think started to be visible in Q4, and clearly is visible now in Q1 because Q1 is on a different pricing level than Q4, which was already sky-high. On page number 9, you see the results. We don't have to shy away. We feel proud of what we have done, and this gives us level of comfort in the current situation where energy prices have moved up further in February and March. Of course, it will spill over into the second quarter. You've seen our second quarter guidance. Q2 will see a catch-up on energy prices from Q1 because we basically have most of our contracts a 1-quarter lag on energy costs. Q2 is going to be a toughie. From the guidance we've provided to you, this should give you level of comfort. Now let's go to gas embargo. I got this question damn near every investor discussion that I had over the last 6 weeks. As a matter of fact, at that point in time, we couldn't make a clear statement on this because we started the gas embargo analysis, which we consider still as unlikely. I clearly have to say that. On both sides, on the political side, in Europe and Berlin, but also I don't expect, but who can make projections on an insane mass murder. I don't expect actions from the other sides either, but you don't know. In case of question, you simply should better get prepared. We started the analysis one week after the aggression war started. It took us some time because you have to really go side by side. You have to look at chemical reaction by chemical reaction. You have to see is it batch, is it continuous production? You have to see is it digital, or can you reduce the reduction, the chemical synthesis, and therefore simply do less but still run the reaction. This was quite an intensive work. Several weeks ago, we did not know, is it 40, 50, 60% impact on our plants, or 100% of our plants impacted? To be assessed. I have to say I'm very proud of the team. We did a fantastic work worldwide, and I would now like to show you the reactions and the analysis. Let's address shortly on page 11 the overall approach. Page 11, task force was implemented 10:00 A.M., February 24, where we decided at board level to assess in a transparent way our complete risk exposure sales-wise, asset-wise, liability-wise. We developed crisis scenarios, having our backup plans for OpEx, CapEx. We don't see right now that markets implode, not at all. Momentum is healthy, but it's always good to be prepared. We are prepared. On the procurement side, we assessed all open questions on sourcing and have therefore put this on from alerts to no alerts. Of course, the situation might always change, but I would say we have done our job to get transparency and to be prepared. As far as liquidity is concerned, I make my statements. Liquidity, we have ample of liquidity now, EUR 1.8 billion. That should suffice for whatever comes acquisition-wise, liability-wise. We have incremental liability. On top of that, undrawn revolving credit facility, so liquidity is not an issue. Gas was the remaining question mark. Here, transparency was developed. After transparency had been developed and technical analysis on reactions, chemical reaction was done, we then basically went on prioritization. Should a complete, and I'm stressing this clearly, a complete gas embargo on Russian gas be put in place. Page number 12. All in all, eventually, worldwide, we are using gas everywhere. But in many regions, it's not an issue, like in the United States. There's enough fracking and natural gas in place. Of course, we use gas in Belgium and the Netherlands as well, but also there, it can be addressed. It's not critical. As such, criticality clearly is in Germany. Here, because Germany is most exposed to Russian gas, it has been reduced by a smart minister over the last two months. Still, it's a dominant energy source. Therefore, if there is an issue, it will be in North Rhine-Westphalia on gas and basically for the conversion into steam. Oil embargo we don't consider as an issue. Pricing-wise, of course, it's not nice. We will deal with this. Volume-wise, oil, will be there. If it boils down to something, it is gas. Here you have two sources for which you use it for. Electricity, again here, no red flags because electricity you can get from other sources as well. You can source here in Europe. They're not from gas factories, but then from nuclear power plants or from other sources. Here we feel at ease. It boils down to gas and steam. The analysis we have done was basically then here focused on Germany and here predominantly on our 53 plants in North Rhine-Westphalia, highlighted on page 13. When we did all the assessment with chemical reactions or the technical reaction on the synthesis reaction process, when we assess the intensity for steam, and then also teaming that up with our profitability analysis, we basically came to the conclusion if a complete gas embargo would happen, there's one plant that we would shut down entirely. It's a heavy steam machine. Because of this, of course, more profitability over the last 2-3 years turned softer. It was a stronger contributor in the past, turned softer. Here we would turn that off completely. There would be a few further sites. Our assumption is three, but if everything again goes against odds, it would be five, that we would most likely run with 20%-30% less production, but they will still be on stream. All the other plants, notably 48 or 49, would run full throttle should demand be there. Luckily, these are the plants that are heavy profitability hitters. All in all, when we went through the technical analysis, we came to the conclusion, well, overall, we had feared that a gas embargo would be impacting us from a profitability standpoint quite heavily. This is, I would say now, our assessments on the direct impact of a gas embargo. We conclude that this is not nice. It would hurt us profitability from a profitability standpoint, but it wouldn't hurt us massively. This will be a positive. Of course, we cannot assess the indirect effects of downstream and upstream, but I think it's pretty cool that you have good transparency on your own turf. We've put in management now a process in place should something nasty like a gas embargo happen. We exactly have our game plan in the drawer. We know how to decide. The good thing is I've asked my board member in charge for production and engineering, et cetera, to basically talk to the 4-5 site heads already so that they know one, immediately, instantly what they have to do should, within a few hours, one has to decide on slowing down or shutting down. Basically, we are prepared. Still, I don't think this is going to be the likely scenario, but I always love to be prepared, and therefore we are prepared. Now let's come to the outlook on page number 15. Good start. It's always good to have a quarter in the bank for the year, which we have now with Q1, and therefore the start has been strong. If everything continues as we've seen in Q1, despite heavy inflationary environments, that will be a pretty good year for our group, and we will catch up on what we have lost in 2021. That's clearly the ambition that we have. Now let's look at the economy. I mean, this is pretty volatile out there. The stupid aggression war that is ongoing leads to uncertainty. I think all of us would be confronted here with uncertainty. You can pretend that you know everything. We don't. We think this leads to an uncertain economic environment where things can change on a daily or weekly basis. Our trump card is we are agile, we are prepared, but we don't pretend to know where the world is going in the next nine months. China zero-COVID policy is clearly on alert. However, most likely I will get questions on this. Please take note of the fact this had an impact on our Q1 financials, but not a big one. We have around about 10%-12% of sales to China, but our production base is clearly lower, so the direct impact is there. I have that on my table. I have business units that are impacted, like our disinfection value chain. I mean, what a mess. Disinfection market is the biggest in China. Our production is in the United States. Our finishing is in Europe. You can imagine what a mess this is getting products from Memphis, Tennessee, to Europe to blend them, to finish them, and then ship them to China, where Shanghai is completely congested. You don't get volumes to the biggest market. Hey, that's life in COVID times, and we are not happy about it, but we live with it and try to mitigate as much as possible. China is clearly also on my agenda for Q2 because we still see that China logistics are disrupted, but it doesn't lead to a triple-digit million impacts in our accounts. Now, ongoing challenges. I mean, energy and raws are high. I've alerted you to the lack that we normally have in many of our business units, for Q2, where we will get the higher energy costs fully in the P&L, and therefore that will be a challenge in Q2, no doubt. We think we will be able to manage this. Disruptions, they will at least continue until the end of 2022 and hopefully at least what I'm hearing from the ocean logistics companies, situation should start to improve with additional capacities in 2023 onwards. Let's hope for the best. For the above mentioned reasons, we have decided to be firm on Q2 in terms of quantitative guidance and clearly stress EUR 280-EUR 350. 280 gives you the clear sign we want to be better than last year despite all challenges. Last year, second quarter was a good one, so we want to be better in Q2 than last year. If things go better, we will do better. Therefore, upper end 350. Oh, that's a big number. It would be one of our best quarters in our company history with a completely different portfolio. Last time we got into this range was with rubber. Rubber is gone. Now we have good stuff inside, which is clearly far more resilient. This is the guidance for the quarter, and we stick to the full year guidance. We should be significantly above previous year. Please take note of the fact that year to date, we are EUR 80 million ahead of last year, which gives a good pushing, I would say, to get to where we want to be. These numbers are without IFF. Here we need to say the expected closing first of May is delayed. By now we have got all antitrust approvals, which is positive. However, the other closing conditions are not yet fulfilled by IFF. This basically relates to the carve-outs. Of course, we can only take something on board once it's fully operational and carved out. If the selling sites has delays, we need to accept them. That's the situation where we stand. The two parties assume that closing conditions will be fulfilled in the third quarter of this year. Then, of course, closing can be done. Ladies and gentlemen, that's all from our side in terms of providing you transparency on questions you've raised over the last few months. I understand from our bankers that we are pretty transparent, especially on energy and gas. This should give you a level of comfort. Numbers on Q1 and outlook for Q2 should give you a level of comfort as well. We now open up the floor for your questions. Please go ahead. Ladies and gentlemen, at this time we will begin the question and answer session. Anyone who wishes to ask a question may press zero followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press zero followed by two. If you're using speaker equipment today, please lift the handset before making a selection. Anyone who has a question may press zero followed by one at this time. One moment for the first question, please. The first question is from Charlie Webb of Morgan Stanley. Your line is now open. Afternoon, gentlemen. Thank you for taking the questions. Just a couple from me. Maybe just first off, you know, maybe you can just kind of walk us through and run us around what you're seeing in underlying demand trends. You know, any signs, any pockets of weakness, any risk that, you know, customers are perhaps building some inventory or some safety stock over the last couple of quarters in light of all this inflation, as they kind of continue to buy more than they maybe need? I'm just trying to gauge if you can get any sense on that, as you kind of think about demand. That's the first question. Just the second one around the issue in Consumer Protection from Currenta, and the issues they've had from the outage. Just trying to understand how does that linger into Q2? Can you kind of help us quantify how much the headwind that was for the business in the first quarter? That'd be really helpful. Thank you. Charlie, thanks for your two questions. Underlying demand overall in Q1 was, I would say, good, positive. We see that underlying demand in second quarter continues in a positive way. We see some slight softening, but not a strong softening, a slight softening on the automotive value chain, which by now has, after divestitures of also the leather chemicals business, come further down and is below 20% where it used to be. Therefore, we don't flag that as material. We see basically all in all that Q2 order book is healthy. Otherwise we wouldn't have provided for the guidance on EBITDA that we've done. In the last four quarters, I would say customers could not stock up. They ordered immediately what had been ordered was going into production. My assumption is that second quarter, the industry will be able here and there to start stocking up again because inventory channels are pretty low. They haven't been replenished according to the overall demand. That's the feedback on your first question. As far as Currenta is concerned, we had an impact. I would say that was single digits in millions of EUR. We still have to monitor, because Currenta is supposed to come back on stream as far as the incinerator is concerned. It has not been promised, but at least the indication has been given that it will come back now on stream, and we now have to wait for that. Eventually the official decision on this, I assume, will be taken the next 2-4 weeks. That's basically feedback on Currenta and with this I've answered your questions, I assume. Yes. No, really helpful. Maybe just one really quick kinda follow-up on Consumer Protection then. As we think about the Q1 performance, are you at a stage now where you are more than recovering the raw material inflation with pricing actions, or is this an area where there's still a bit more work to do? Just trying to get my head around that. Well, raws are not the issue in Consumer Protection, and I wouldn't make too big of a story on one quarter. Eventually, I provided feedback to you on additives last quarter. There's a lag, and now you see what I meant with this. Consumer Protection, the contribution or the development is all in all okay. I'm not excited by it. Definitely this is not the case. Raws have been passed on. We have in Q1 on Consumer Protection, two topics that are not great. I'm not excited about this. We have one customer in Saltigo that is still resisting our energy price increase. I know work is being done on this, and it's going to come. At least from what I see, it's going to come. Otherwise, we have to highlight that we will not anymore ship, and then a blockbuster product will be at stake. I don't think this is going to happen, and therefore, you want to have a good customer relationship, and this is what is important to us. Therefore, I assume that the energy surcharge, which is on a yearly basis, I would say a EUR 10 million ticket, will come. The question is when it's going to come. The second is not Currenta related. That would be the third one. The second topic for me in Consumer Protection is disinfection. I mean, disinfection is one of our highest margin value chains. It's really mouth-watering. I alluded to that earlier on. I mean, the intermediates, the Oxone is being produced in Memphis. The formulation is done in Sudbury and here in Germany. From the formulation, it's good that we have two formulation sites, but they're both in Europe. The final, the biggest market on disinfection is eventually China. If you have disrupted logistics in the United States and the others to Europe, and then you have disrupted ocean logistics from Europe to China, you see the lag in profitability. This is visible. I don't like it. The business unit tries everything to mitigate, but we cannot fix ocean traffic jams. We have to wait for the situation to be more stable, and then of course, the performance will be clearly better. Right now, we are clearly lagging behind, and we don't get volumes to the customers. In disinfection, any kiloton is big money. This is something that I don't really like, but I know it's not an internal topic, it's a market situation that will at some point in time ease out. Therefore, I don't put a lot of scrutiny on Consumer Protection, the two businesses. Of course, I monitor the situation. Next question, please. Thank you. The next question is from Andrew Scott of UBS Global Research. Your line is now open. Yeah. Good afternoon, everybody, and thanks for taking the questions. Start with the energy market. Matthias, thanks for the disclosure on the crisis planning. If the worst were to happen, can I just understand how you keep open 40, I think you said 48, 49 plants? Is that because of the grid availability in the region? Obviously showing my complete ignorance of the German power supply situation. If you can help me on that, I'm assuming you have renewables in the region, hence the limited impact. Then on the EBITDA impact you've usefully provided, do I assume you didn't put in any potential benefits from price improvement that may come outside of your affected regions? You know, I'm asking that because, of course, we've seen that across the sector, where often we've overreacted to local production problems, given how tight global supply is. Long question, apologies, but hopefully you got the gist of that. I have a second question as well, if I can follow up. Thanks. Second question. Andrew already has a few sub-questions, so let's address the energy first of all. I mean, Andrew, as you know, we have a variety of production sites in Germany. Three big ones in North Rhine-Westphalia. Then we have Brunsbüttel, we have Brilon, we have Wermelskirchen, we have Mannheim. The 53 are the ones in North Rhine-Westphalia. The others, I mean, if you look at Rhein Chemie, this is not really gas-based, and therefore you don't have to make detailed analysis. The chemical reactions that need gas are in the most heavy hitters are in North Rhine-Westphalia. Now, in the three sites that we have, Leverkusen, Uerdingen, Dormagen, you need to distinguish. Each site has different energy sources. Some are very strongly, and we are talking about steam, as I said before, are very strongly still based on coal. Others are based on gas. Dormagen, for instance, is pretty much gas-related, while Uerdingen and Leverkusen are less gas dependent. They are more coal-dependent. Therefore, you need to go through energy by energy, and simply we went through the grids. In our gas grids, we have gas from Russia, we have gas from Norway, we have gas from the Netherlands. Eventually, this is blended. The entire infrastructure and industry is being supported by this. Our assumption was when the gas-intensive sites that we have basically are running with round about 50% lower volume, and therefore Russian gas is completely disappearing, and you only have the gas coming from the Netherlands, Norway, and LNG. Of course, the allocation to the sites will be lowered. In Leverkusen, our assumption was we will not get 100, we will get something like 50 or 60% of the original volume that will be allocated then to the respective users. Our assumption was when there will be a reduction of round about 40-50%, our reduction will go down likewise. Drastic reduction. As a matter of fact, the industry evaluations that are running by the governments, and the government is orchestrating this right now to get prepared, are having not as drastic scenarios. We really take a double up, take the worst-case scenario and see what would we do if we basically would have by site a reduction of entire volumes coming from Russia. You need to achieve this reduction by production site, i.e. Leverkusen, to addressing your sites. You try to go for the biggest gas consumptions and cut them out completely in order to protect and allocate the remaining gas that you get from Norway and the Netherlands and LNG to the sites that you would like to keep running. That was basically the approach we were taking. I stress it again, the German network electricity institution are running plans, this, and are running scenarios. They are running different scenarios. We have taken the worst-case scenario simply to see what kind of implications this has. That was basically the approach. There would still be molecules, gas molecules that we would get. These gas molecules we will allocate to the products with the highest margin, with the highest return on gas molecule. Point one, that was the first question. Point two, you're right, Andrew. We haven't factored in pricing mechanism. I mean, we know, and for that very reason, this is a dynamic process. The current one plant that we would completely shut down, which is pretty gas intensive, we know the value chains behind them. We know that there are two customers which buy most of these production plants, and that would have severe implications. My assumption would be today, if we shut down, then we will talk, of course, before to our customer. When our customer tells us the pricing would change dramatically, we might reprioritize. That is something, however, that we have not factored into our financials because the financials we provide to you are the financials in our hands. When the customer suddenly pays more, this of course changes the priorities, and then we readjust, and we can readjust pretty quickly because we have cost transparency now on the status quo, and then we simply need to change the arithmetic and allocation. You have to start with a set of numbers, and that's what we convey to you. Thank you. I've got a much shorter follow-up question. Thank you. On working capital, is there anything that you can do in terms of remedial action, or is it a case of sitting there and hoping your inventories and receivables follow a deflationary path at some point? I'm thinking of the IT investments that you've alluded to in the last 12 months. Thanks. Yeah, Andrew, on IT, we have done some safety stocks in preparation for Q2 because we changed systems as we speak here in Europe, predominantly Germany, which is of course a heavy exercise. From what I'm seeing, it's running well. That should, of course, reduce safety stocks going forwards definitely from Q3 onwards. You will anyhow see a seasonal decline in working capital Q3, Q4. Let's face it, I looked at the financials of the other chemical companies and other process industries. In light of inflationary environment, in light of energy costs moving up through the roof, every chemical company that I've seen has had negative or severe impacts on working capital. We are no different. The positive, for those of you that are really interested in operating cash flow, look into our build-up of inventories and receivables. I can only give you the number. We had an increase in raw materials of EUR 400 million. Another EUR 100 million of energy gives you EUR 500 million increase in working capital through price inflation. Price inflation stemming from raws and energy. The EUR 500 million you don't see in the working capital. We had a positive operational cash flow last year in the double digits. We turned EUR 177 million negative. Based on EUR 500 million build-up in working capital, this shows you that the underlying operational cash flow substantially improved. I think I would recommend that you look into this a little bit further. Working capital, from my point of view, will not escalate dramatically further. We've taken the big chunk. Can it go up another EUR 50 million, EUR 100 million of gas embargoes, oil embargoes, and whatever embargoes are in the market? I cannot rule that out, but I don't think that price escalation will be again severe from the level that we have seen now. That should then gradually leads in the remaining quarters, especially Q3 and Q4, then to a better working capital and operational cash flow performance. Thank you, Matthias. Very clear. Thank you, Andrew. Keep safe. The next question is from Andreas Heine of Stifel. Your line is now open. Yeah, a number of smaller questions I have. The first is on Specialty Additives, indeed, a very strong outcome. You highlighted that it was unusually strong. Maybe you can highlight what might be different in the coming quarters. In the commentary you said, or it is mentioned that lubricants did better. I guess that's more volume play, whereas in plastic additives it is driven by prices. In former conference calls, you highlighted whatever we see in the bromine spot prices is not necessarily what you see in your bromine-related business due to the contract structure. Is it fair to assume that now these higher spot prices, which have been higher for a long time, are now kicking in in your more longer-term contracts and that your profitability, especially in the bromine-related businesses, will be on a sustained level, be higher? That's the second. On the guidance, it is broad, which I obviously understand. There's the uncertainty in the market in the second quarter. Is it fair to assume if what you see in trading condition in April and what you have order books for May, if everything runs normal, then it would be very much to the upper end? If you see disturbance from all the uncertainties, then it only would go to the lower end. The very last, only for clarification, did I get that right if it comes to the acquisition of IFF Microbial Control? You have received already all, globally, all antitrust approvals, and it's the only missing thing is the carve-out. These are basically my questions. Thanks. Well, Lieber Herr Heine. I will take them one by one. Let's get the fast one out. IFF antitrust worldwide is done. We had a variety of jurisdictions, but all of them have been cleared by now, so it's no longer, I would say, externally related. This is pure internal IFF. I mean, we take a business on board if everything is on board. That means you have to do worldwide carve-outs. Put all operational businesses in a separate legal entity, then get the approval so that from day one onwards, you can maneuver. This is called a carve-out, and we've done that many times before. We know what that means, and we know our requests. Here we are waiting for it. Everything. Operating license approvals, operating permits, trading permits, systems, IT systems. This is a lot of work. Once this is done, I mean, we are ready, but we are dependent here on the seller who needs to do this job. That's basically it. Now, on guidance, I basically do backwards answering. I would say normal. If everything goes normal, we would be in the mid-range of the guidance, which would be according to my arithmetic, EUR 315. That would be far above previous year, where we posted EUR 277. Please take note of the facts in Q2. We will not have a big catch up in Specialty Additives. I mean, the big hitter in Specialty Additives we've seen in Q1, second. You know, the arithmetics in Advanced Industrial Intermediates, there's the lag on raws and energy always in the following quarter. Then you catch up in the next quarter. We had a good Q1. Q2, again, we will take the hits of the cost inflation in Q1. Should raw materials, energy be high in Q2, we will then, pricing-wise, get the positive catch-up in Q3. The normal thing as you have seen in the last 10 years. It always surprises the markets, but as a matter of fact, it's the same arithmetics that we've seen the last 10 years, and you can put your clock on it. If you factor that into the P&L, I would say if everything goes normal, we reach midpoint of the guidance. That would be in light of the sets of the just said words be a pretty good quarter. That would mean if we hit 2,315, that would be another EUR 35 million-EUR 38 million better than previous year, then we would be arithmetically EUR 110 million after second quarter ahead of last year, which is pretty good. For the current environment, I would say pretty good. It shows the catch up versus 2021, which was, as I stressed in March, a pretty tough year, where for the first time we had a variety of operational screw-ups like blizzards, like disrupted value chains, like force majeures, like chemical park explosion. Whatever you have. We had it last year and this year, therefore, if everything goes normal, that will be a good year. We show it through Q1 and want to show it through Q2. If we have screw-ups, we will be at the lower end. If everything goes to the blue sky scenario and, Michael is behaving like a good CFO and Oliver does not tease me all the time, then we might have a better performance. I'm pretty sure that our business guys will do everything, in order to punch hard. Just to be very clear, I had a little bit of a humor in my words, which I just conveyed. That's the second question on guidance. Now let's come to Q1. I would say here we have the following situation. In Q1, Specialty Additives, there was a catch-up for last quarter volume-wise. Things have been delivered that was therefore positively contributing. We had a very nice volume development, but over proportionally strong due to the catch-up in Q4, where not everything could be shipped. Now, the second part of your question relates to pricing. Here, very clearly, yes, we had some yearly contracts that went out end of December 2021. They have been changed. Pricing for brominated products is definitely currently at a higher level than it was before. We couldn't address that last year because we had to wait and we are legally compliant to the contracts with our customers. That has changed. Pricing level this year will most likely be at a higher level in brominated products compared to last year. On top of that, we also addressed phosphorus. Phosphorus turns tighter in terms of phosphorus supply. Therefore, volumes are more constrained. We cannot produce in the phosphorus derivatives everything that we want. This impacts negatively volumes in course of 2022. We catch up and mitigate basically through pricing, and therefore will also address the phosphorus derivatives in the markets where volumes are scarce. When volumes are scarce, pricing should be higher, and that's also a contributor to the Specialty Additives performance. With this, I think all questions have been answered. Thanks a lot. The next question is. You are most welcome. The next question is from Peter Spengler of DZ Bank. Your line is now open. Yeah, good day to Cologne. Thank you for taking my two questions. First is on your acquisition. IFF is not included in your full year guidance. Do you expect significant EBITDA from IFF already this year or just revenue contributions? The second question is on your very good overview of the gas supply. Many thanks for that. Currently a potential Russian gas embargo would cost you between EUR 80 million-EUR 120 million per year. How would it look next year? Are you preparing for other energy sources? You mentioned something about it. Maybe you can give us a trend or so for next year, significant lower or same number, something like this. Thank you. Welcome, Herr Spengler. How nice to have you on the call. On the first one, IFF, well, we currently assume that the deal will close in July. Of course, we wait and see. Again, this is not in our hands. It's dependent on IFF. Should it close in July, I hope I've said July before, so first of July is our assumption. Should it close on the first of July, then of course, you first of all, in the very first month, you have to address the technicalities like PPA, inventories, et cetera, that leaves P&L-wise its mark. Therefore, the contribution of IFF should it come from first of July onwards for the remainder of the year will be definitely higher on sales and modest on profitability, and that will take then a few quarters, one, two quarters until PPA, especially on the inventories, are ironed out, and then the contribution moves up further. Here, of course, we first of all would like to look into the books once we get it, but that would be the technical assumption once you close it. First of all, we have to close. That's the feedback on IFF, and for that very reason, we just blend it out in our financials and make our projections based on all closed transactions that we have. Now, on gas supply, I mean, we've given you the indication EUR 80 million-120 million per annum. That's what we see today, based on. I mean, this is a virtual discussion, Herr Spengler. Please take that into consideration. We provide clarity and transparency that I have not seen with any other chemical company so far. Therefore, based on what we know today, that would also be our projection for next year. Let's face it, this is done based on what we know as of today. In 12 months, a lot can happen. We are not assuming now a major change in volumes and substantial increase in gas. If there's a substantial increase in gas, I don't know where it's coming from. On LNG terminals, that's basically the one source that would be opening up over the next 12 months. From the feedback that I've been provided, I'm in discussions with the CEOs of energy companies. They basically tell me incremental visible supply will only be there notably from 2024 onwards, and therefore I'm still humble in my statements on gas. Therefore, we simply assume the toughest scenario, which is complete 100% Russian gas embargo, and take it from there. I think with this, we have answered your questions. Yeah. Thank you very much. Very clear. Good. The next question is from Andrés Castanos of Berenberg. Your line is now open. Thank you very much. I want to ask on CapEx. The figure this quarter appears low. I wanted to check that everything's been executed on time and that it will catch up later this year towards your guidance of EUR 500 million. Thank you. Michael will take that one. Thank you for your question, Andres, and hello as well from my side. Yeah, your observation is right. We are a little bit behind the number which we had last year, but we are still in plan and we are, let's say, fulfilling our spending curve as we expected. You know, we have a seasonality in our spending. There is a smaller amount in the first half of the year and a much higher amount in the second half of the year, peaking in fourth quarter. That is why you will see the spending curve accordingly, and we stick to the expectation at this point in time for the CapEx budget for the running year. Yeah. There was a reduction versus previous year in Q1, because in February we decided also to run CapEx tight. We keep it tight. Should there be a continuous good development, we will keep the CapEx at the level of previous year despite incremental acquisitions. We are running CapEx tightly to improve cash flow. Of course, we have increasingly tightened the belts in Q1 in light of the Ukrainian war situation. Of course, if business momentum continues where it is right now, we will not overdo on CapEx reduction. We will release CapEx according to the plan and budget that Michael has just explained. Thank you. A follow-up, maybe you feel comfortable about the occupation of the facilities you're running and the ability to cover demand if there's a spike in terms of volumes? You feel comfortable, Michael? I pretty much do. As do I. Thank you. Thanks. You're welcome. The next question is from Jaideep Pandya of On Field Investment Research. Your line is now open. Thank you a lot, and apologies for asking this, but just wanna understand, you know, how important is share price for you guys? Because, you know, Matthias, you joined in 2014 and done a fantastic job in repositioning LANXESS. When I look at the compensation for management, you know, appreciate share price as a component, but it's a two-to-one ratio to at least your compensation, if my numbers are right, in terms of what cash and bonus you get versus share options. The share price is basically flat since you started. In the light of, you know, upcoming strategy update, just wanna understand, you know, how important is share price performance for you guys. You know, if at all, if I may ask, what is it that in your view is why LANXESS is undervalued on the stock market? That's my first question. The second question really is around free cash flow. I mean, I appreciate you guys have a target I think of 40% conversion, but you know, and appreciate our current situation is ridiculous on raw materials. You know, when will we really start to see structural de-gearing in LANXESS and you know, in free cash flow performance, which used to reflect you know, when you were our Chief Financial Officer. Sorry to bring this, but yeah, and sorry to be direct. Well, let's address them one by one. Share price, I mean, it's relevant, but if you rewind 12 months ago, in March, April last year, I think we were at EUR 65. That gives you the volatility in capital markets. Now we are EUR 37, I think, which of course is surprising and but again, we've seen distortions on share prices ever since, not only with us, with others, with other companies too. At this point in time, clearly, I think this is completely overdone and completely distorted. My assumption was that energy price escalation, inflation, gas embargo would be a drag on us. We provided transparency on this. Share prices can change within 3-6 months dramatically. I've seen that last year when we rebounded to EUR 65. Therefore, sometimes capital markets are volatile and other long-term shareholders then make use of that. I assume that, if we deliver according to what we currently see, we would be at different share prices going forward. Share price, of course, is a part of our remuneration. I've also invested, roundabout EUR 2 million out of my net taxed income into LANXESS shares. They are currently completely underwater, but I'm patient. I know what we are doing and, fundamentals always in the end come through. That's the share price question. Free cashflow, you would have seen a strong rebound in free cashflow this year, if you blend out, working capital inflationary environment. We clearly said last year, we will make strides in the right direction, and strides in the right direction will be through maintaining tight CapEx despite substantial increase in organic portfolio, through the acquisitions we have done. CapEx will be relatively lower, compared to our company size. We also stressed that 150 exceptionals will rather go down to hundreds, and therefore we will reduce exceptionals as well. We clearly indicated that 2023 will be a further improvement in terms of, cash outs being lower, proceeds being higher, EBITDA being higher. Therefore, on free cash flow, I think, we will now show you that, this will turn to the positive sides. Of course in Q1 you see the cash outs because of working capital, and therefore you're smart enough to figure that out. As far as your third question is concerned, I have a great CFO to my sides. It's not him who decided on M&A. It's the entire management board. We decided for two M&A transactions that were costing us more than EUR 50 million one-timers last year. That's not the fault of Michael. It's eventually my fault and the entire management board's. Inflationary environment, I had not to deal with an inflationary environment of that nature when I was CFO. That we had EUR 500 million cash absorption in working capital last year. You should know that we also have a substantial working capital outflow because of inflationary environment settling this year. That's not Michael's fault. It's something that the industry is dealing with. We will deal with this, and we will move this company to a cash-generating company that we have promised. It's on our radar, and we will execute it accordingly. Thanks a lot. Just if I may ask one follow-up on the HPM. Another follow-up. Sorry. Apologies, just one follow-up on the HPM update. In light of the change in macro environment, do you still expect or should we still expect something this year or, you know, current changes in the macro environment could deter this? Appreciate your honesty and clarity on the question. Thanks a lot. Well, Jaideep, I have to be pretty virtual and hypothetical on this one. You know that we do a carve-outs globally. This is work in progress. There are several things in the industry happening that we look at. I don't want to be specific, but also this is somewhat a reason why we delayed the capital market because we think this will be all loose ends from our point of view will somewhat come together in the next, I would say, 2 months. We might be part of that. If we are part of that, then we would like to give clarity because it would be another big move for our company going forwards. That was also one reason for delaying the capital markets to later in the year, because by then, I think, we have clarity also on what we will do with HPM. At this point in time, I look at this positively. I think we also here we are well prepared. We are doing our acts operationally in the business, but also from the strategic sides. We are prepared to move in all directions. Yeah. I mean, team is doing a good work on this. Thanks a lot. You're most welcome, Jaideep. Believe it or not, we are doing our running event in June, twelfth of June. I think last time you flagged that you could be willing to participate. Don't forget us and give a call to Oliver. He takes all logistics on his shoulder to make it happen. You promise to sell HPM well, and I'll come. Well. I'm kidding. Next question. Thanks a lot. I'll try. The next question is from Rikin Patel of BNP Paribas. Your line is now open. Hi. Afternoon. Thanks for taking my questions. Just one there from me. On full year guidance, can you just remind us what contribution you're assuming from EKC? I think last time you mentioned it would be around EUR 80 million, but just curious if the view there has changed in the last couple of weeks and months. Thanks. Well, we have not given a contribution on a yearly basis now going forward. We basically said it's EUR 80 million on an acquired basis. That was 2021. Then there were some incremental EBITDA coming from our own business, and that was basically it. For 2022 now we don't guide on acquisition by acquisition. You will see that Consumer Protection in absolute terms will grow EBITDA-wise. Former EKC, of course, will be a good contributor to it. That's basically what is embedded in our second quarter guidance and also for the full year. Okay. Thank you very much. The next question is from Chetan Udeshi of J.P. Morgan. Your line is now open. Yeah. Hi. Thanks. A couple of questions from my side. I was just looking at the. Sorry, maybe this was addressed previously, but I just wanted to dig a bit deeper. The Specialty Additives, you know, the EBITDA is swinging from EUR 58. So it was EUR 100 in Q3, went to EUR 58, now it's going to EUR 136. You know, this is a more downstream business, more specialty in nature. Can you maybe address why are the earnings swinging so much in this business from one quarter to the other? I understand all the moving parts, et cetera, but the magnitude of the swings is really something which surprises me. The other question, I think you mentioned about the impact of raw material prices on working capital, especially on inventories, et cetera. Did you guys also see some benefit on earnings in Q1 on EBITDA from revaluation of any of that inventory, which was probably bought at lower raw material prices a few months back? Thank you. Yeah, Chetan. Let me address Specialty Additives. Your comments are solid, but I mean, don't look just on two quarters. We've grouped additives together now and reported since, I guess, 2016, 2017. You haven't seen this volatility in the past periods. Now you see it, and there are two drivers for it. The one I mentioned before. When you have globally disrupted value chains and, if you look to the additives, the brominated products, we source them from El Dorado, Eldo, and ship them across the globe. This thing, the product, likes to travel. Traveling these days is cumbersome, especially if you need ocean ships logistics, and containers. Therefore, what we clearly flagged in Q4, we had volumes that were stuck in the harbor, and that was big money, double digits. They were not shipped, they were stuck. No sales, no profits. That was dealt with in Q1, and therefore you have a clear impact from Q4 to Q1, and that is volume related. Now, the second, I stressed also earlier in the call, in Specialty Additives, again in the flame retardants business, and here again in phosphorus and brominated products. We had yearly contracts and some of them were running last year at old pricing with old energy costs, old raw material costs, old market costs. Of course, market prices went up, energy went up, raws went up, everything went up. We changed prices. If you now compare Q1 versus Q4, you basically had a double whammy. One stems from delayed volume and the other stems from delayed pricing. The delayed volume will not come in Q2, Q3, Q4. I hope so, at least, assuming normal logistics. The pricing, higher pricing level you should see in the forthcoming quarters as well. Therefore, from everything that we see today, additives will be a rock-solid division, for the full year 2022, based on the data we currently have. That should answer your Specialty Additives question. Now Michael will address net working capital. Yeah, Chetan. The days are basically over where we have major impacts coming from the revaluation of the inventories. That was still the case when Rubber was part of the group where we had often very huge or big swings in the butadiene market, which was rather volatile. As of today, as the portfolio changed, as the rapid changes in the raw material is, let's say, smoothing out as well compared to the butadiene prices, we no longer have that large swings in the revaluation of the inventory, and that is why we do not see major impacts here coming from any revals. Understood. Thank you very much. You're welcome. As a reminder, if you would like to ask a question, please press zero and one. The next question is from Oliver Schwarz of Berenberg Research. Your line is now open. Thank you for taking my questions. I've got three of those. Firstly, when you look at the wage increases for this and probably also for next year, which number would you pencil in your cost tables, given that inflation seems to run rampant, at least for the time being? That would be my first question. I appreciate all the things you do for, let's say, to rein in the risk of short-term disruptions in regard to gas supply and crude oil supply or basically the products derived from crude oil. If you look at the problem from a longer term perspective, seems like Europe seems to switch from Russian gas and oil supply to basically other suppliers that have longer transportation routes that don't have pipelines to ship the goods but are relying on ship transport and so on and so forth. It seems like we have a structural increase of costs in regards to natural gas and let's say oil derivative supplies here in Europe. What do you think does that to the competitiveness of your sites in Europe? Will be our second question. Thirdly, can you give us an idea of the working capital tied up in all those, let's call that, logistics hiccups that leads to longer lead times, that leads to, let's say, goods stuck in the harbors for several days or even more. If that all would go back to normal, how much working capital would that basically set free in your balance sheet? Thank you. All good questions. Lieber Herr Schwarz, let me address the first one and the other two afterwards. Wage inflation, I mean, with the agreement that the chemical union made in Germany, and I'm only addressing now German environment. Globally, of course, you have to go country by country, but Germany, we have around about 40% of our workforce, or 50% even. The agreement that has been fixed, which is running this year, is basically around about 3% price increase for the German workforce if you blend that down on a yearly basis. So that should answer the first question. What happens then in the second half? I mean, the union did a smart approach, pragmatic. They basically said, "Let's not make a long-term contract. Let's make yearly payments and then meet again in October, November and re-discuss 2023, because then we know where the economy is going to go. It's a pretty pragmatic approach, and that speaks for the rational approach in our industry. Oil and gas. My feedback to you is, oil is not so much on my radar. I mean, I look at that. If I look at the sources that we use, we basically depend on the harbors, Rotterdam, Antwerp, and the like. Eastern Germany is depending on pipelines from Russia. We don't. I don't see this. I mean, oil is not a direct raw material. It's going through the value chains. If you look at the chemical plants here in Western Europe, most of them are rail or harbor-related, and therefore, the oil embargo will lead to a potential increase in pricing. But at the same point in time, increase in prices, I see that at least the nation states, including Germany, are doing everything to open up other sources that in the past were potentially rather denied. I wouldn't be surprised if even countries that currently are still under scrutiny will be addressed, and you will see further sources of oil coming on the market in the next 1-2 years. Is it a current topic? It should be. Everybody should look at that. But from everything I know, I'm not that concerned. Gas is a different issue. Gas, we have pipelines. Germany has pipelines. Everybody knows this. That will take us according to all data that I've seen, and I did quite a lot of work on that, educated myself on, gas supply, grids, pipelines, suppliers. From everything that I'm seeing, it's currently, of course, in the capital market, a big issue. If you look into the financial markets, you see that, the TTF contracts, which is the best indicator for European gas going forward, already goes down quite heavily in 2023. No longer triple digits costs per units, but double digits and then even fading down further. That is what the market is conveying, and as you rightly say, the market, financial market is always right. That is what those financial markets are projecting going forward. My personal assumption, however, is that gas will only ease 2024 onwards because then, if you look into the different contracts that have been made by the German government, if you look at the investments in LNG terminals that have been made, the agreements that we are doing with the other states in the Western area is all geared towards beefing up gas supply from 2024 onwards and then accelerating 2025. I don't think that the current gas price will be a long-term high price. If it is a long-term high price, we will have to look at value chains. Of course, here the name of the game is completely right, globalization versus regionalization. At this point in time, we are still having a clear tendency towards regionalization that started with COVID, disrupted value chains. People are still focusing on local supply more than 2 or 3 years ago. In the last 2 years, we went towards regional supply. Therefore, this is still the overwhelming effect. The implication of energy will be something that has to be on the agenda for the next 2, 3, 4 years, but I don't see that this is going to have an impact for this year or next year because we are still living in disrupted value chains. We are living in a trend where customers tend to localize or regionalize and not to globalize. This is clearly something that should be strategically on the agenda. I hope I gave you enough color on our thinking. Now, on your third question, logistics implications, net working capital. I mean, Michael, help me in this. I've looked at the numbers last year and the safety stocks that we had built up were between EUR 100 million and EUR 150 million. They might be now due to pricing at EUR 200 million, but that would be wiped away if logistics constraints would ease. What's your view? No, that's pretty much what the actual data say. Nothing to add. Understood. Thank you. Most welcome, Herr Schwarz. Is there any open question? I think we've answered all. Simon looks to me and says everything is addressed. If this is so, I thank you for your participation to today's Q1 conference call. We look at seeing you all at in our roadshows that we do physically and virtually. Yeah. Have a good continuation and look forward to speaking to you in the second quarter again. All the best. Bye-bye from LANXESS. Ladies and gentlemen, this concludes the LANXESS conference call. Thank you for joining, and have a pleasant day. Goodbye.