Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the LANXESS conference call. I would now like to turn the conference over to Eva Frerker, Head of Investor Relations. Please go ahead. Thank you, Lucas. Good afternoon, ladies and gentlemen. I would also like to welcome you to our earnings call for the first quarter. As always, in the beginning, I would like to ask you to take notice of our safe harbor statement. With us today are, as always, Matthias Zachert, CEO, and Michael Pontzen, CFO at LANXESS. Matthias will start with a brief presentation, and then we are happy to take your questions. I'm handing over to Matthias. The floor is yours. Thank you, Eva, welcome to everybody here on the LANXESS conference call. I move to page four of the presentation immediately to comment the key financial highlights and priorities. I turn the attention to sales. Overall, I would say, relatively stable, thanks to price continuity and portfolio contribution. However, clearly seeing sluggish demand through modest overall industry demands, especially in construction and E&E. Also severely impacted through destocking. This is weighing on EBITDA as well. We are in line with the guidance we've provided for first quarter, but definitely compared to the peak quarter last year, where a few business units had really phenomenal profitability, like our additives business. Versus a high peak quarter, we see a steep decline in volumes and driven by low demands across the regions, especially Asia and Europe, a nd accelerated by destocking. As far as free cash flow is concerned, after we've seen in fourth quarter already a decline in net working capital to sales, we've continued going in this direction and, therefore, free cash flow turned positive. As far as net working capital to sales, another two-percentage points improvement. This will remain a focus for 2023. Your statement is, we want to see cash, and we will deliver cash. A clear priority for 2023, we would most likely advance in this direction, working capital to sales going down in line with our forecast to somewhat 23% to sales. Should we accelerate further, I do not exclude that if demand remains modest, that EBITDA, we will do that at the expense of EBITDA. Priority, cash is king. Page number six gives you the overall first quarter highlights as far as balance sheets, cash and profitability is concerned. End of March, we received EUR 1.7 billion in cash from the Advent LANXESS transaction that was completed. Free cash flow, as I stated, at EUR 112 million. Normally we have a EUR 100 to 200 million increase in working capital in first quarter and also in second quarter. This is not visible this year. Despite that, we think that especially in the second half, we will again decrease working capital as this reflects the seasonal pattern. EBITDA at EUR 189 million. Definitely weak underlying demand in the markets, being again fostered by destocking in many of our end industries. We get feedback from customers that they are still living from inventories that they built up in course of 2021, 2022, when supply chains were disrupted and they were overstocked. Now they basically sweat out inventories. Whilst however, underlying consumption starts picking up, so production will most likely start to be accelerated again from third quarter, fourth quarter onwards. This is at least customer indication. As you can see on selling prices, we keep them relatively robust, but of course there will be sequential decline also through pass-through contracts that we have put in place. Ladies and gentlemen, you've seen the cash proceeds of EUR 1.7 billion that we've received on 1 April 2023. On the joint venture, I would like to say the following. There were several press releases and communications reach recently that I'll also sum up for you as a service. The joint venture came into fruition into starting position 1 April 2023. The name of the joint venture, I think a good name has been found and communicated now. The joint venture, this polymer champion, will be called Envalior. I think strong name. In the meantime, the syndication has happened, fortunately, with top investors and international institution and banks, this went pretty well. What I would also like to stress, of course, we will comment on a quarterly basis on the financial results as we report them for the joint venture. It's the clear intention that on a full year basis, detailed financial updates will be given on the joint venture and of course, we will orchestrate that together with our joint venture partner. In our quarterly reportings, you will see Envalior being reported as at equity. What I would like to be very clear on, it's, this is something where you should clearly see that this joint venture focuses on deleveraging. As far as net income is concerned, that's not the priority. The net income will be impacted by purchase price accounting in the first two years. Of course, interests will weigh also on the net income and the more and more synergies accelerate and are implemented, the more and more you will see that this net income figure will then from reds turn into black numbers. With this, I turn the attention to page six in the reporting package. Here we comment on the results of the overall group. You see on the left-hand side; price is up 6%. Portfolio does contribute, but volumes are extremely soft. - 14% is especially stemming from intermediates. Here we have big exposure to inorganic pigments to construction, and construction is really ugly across the board. It's the first time that I see China construction negative. Europe is also extremely soft. It's not as bad in the United States. Overall construction, which has an underlying positive trends, 2023 will definitely suffer. The same holds true, not equally pronounced for the E&E industry. Destocking puts a further acceleration on volumes decline. We compare with the peak quarter first quarter 2022. Overall, first quarter 2023 is very soft. My assumption is first quarter and second quarter will be the trough quarters. This is somewhat a reflection of the toxic quarters third quarter, fourth quarter last year, where we produced at peak energy prices, peak raw materials that we are now selling off in the markets. This, of course, is not really leading to accelerated volumes. Customers wait until prices will decline with high stocks in their inventories. They will fully absorb their inventories and then start most likely accelerating buying again in third quarter onwards. The only positive comment on overall financials in first quarter is we achieved the 10 percentage points with a utilization of 65%. This is extremely low. Our company had usually a break-even around 75%. With 65% now, we achieved 10%. Should we move to 75%, 85%, I think we will come back to satisfactory and good earnings. Page number seven gives you an overview on free cash flow generation of the company. There were a few irritating reports that the company never reported free cash flow. This is not factual. On page seven, you see that 15%, 16%, 17% reported free cash flow was delivered. The same for 19%, 20%. 2021, 2022, I think all of us know how much energy accelerated and 2022 raw material price inflation was coming on top of that. We have built net working capital 2021 and 2022 substantially. That should no longer be the case in 2023. Our expectation, clearly, as we've communicated in November last year in our last capital markets day event, free cash flow should clearly be visible in course of 2023, and first quarter gives you proof to the pudding. Next to cash flow being a priority for 2023, deleverage is a priority, and I think this on page eight is visible. On the pro forma reported basis, you see that 3.8% went down to 2.8% because of the cash proceeds stemming from the inclusion of our High-Performance Materials business in the joint venture and handing over 60% of shareholding to Advent. Deleveraging step number one of further cash flow generation is priority number two for the remainder of the year. Of course, as third priority, but clearly this is the order of priority, deleveraging cash flow, and then as much as possible, stabilizing earnings. Let's come to the guidance 2023. Overall economic environment, I think we've outlined. We are no different in our assumptions to the rest of the industry that has reported in the last two to three weeks. First half will be sluggish, will be weak. Our assumption is that China will come back into the order book more visibly in the second half. We do assume that the global economy is going to pick up in the second half. The reason for this is customer feedback. Many customers are conveying to us that the stocks will be more and more deployed in the second quarter, and then from September, October onwards, ordering will pick up. Second, what we see is that consumption is higher than underlying production. We also see that stimulus impacts, not only in China, but continued stimulus in the United States should also lead here for positive volume momentum. This is what we assume for the second half and of course this is embedded in our full year guidance. We have one force majeure that hurts us in consumer protection. We lack chlorine originally, with March numbers we assumed that this will come to an end in the second quarter. This will most likely hurt us until November this year. This will leads to around about EUR 10 to 20 million of EBITDA loss. We've seen something like high single digit in first quarter, the remainder will be visible in the rest of the year. With this, we come to our overall EBITDA outlook, which is EUR 850 to 950 million. I think as in the past, midpoint is always a good orientation. second quarter will not be much different from first quarter. We assume that this will be again, a soft quarter. As I stated before, for me first quarter and second quarter will be the 12 quarters in this downturn. We should see that momentum and volumes will start to improve again. Focus on our side, clearly on cash flow generation. CapEx will be at EUR 400 million, and therefore we keep the guidance of full year numbers in place. What we should also see, more and more from second and especially third quarter onwards, the high-priced inventories will be sweated out. Of course, then low production at lower energy costs will start to kick in and next to better momentum on volumes. Of course, the lower level of input costs should benefit our P&L. This is it for the financial updates. I would like to conclude a few words on personal accounts. My contract was expanded or prolonged by the supervisory board yesterday. My clear priorities are. This was a conscious decision I took to prolong. This was a conscious decision for LANXESS and not doing something else because I have a clear priority. I want to lead 2023 this company through a tough year, and I expect it's going to be a tough year for the chemicals industry. In this tough year, I will steer this company clearly with strong focus on the priorities I've mentioned. We found our portfolio. 2024, 2025, we want to bring this portfolio in this shape to higher margin and profitability levels. That's the focus. I think the transformation on the portfolio largely has been done. 2024, 2025, it's financial delivery. Then 2026 we will see what will happen then. I think focus now is 2023, 2024 and 2025 and then the LANXESS team will strive for new targets. Thank you so much for listening and now we open the floor to your questions. Ladies and gentlemen, at this time, we will begin the question-and-answer session. Anyone who wishes to ask a question may press star one, one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star one, one again. If you're using speaker equipment today, please lift the handsets before making a selection. One moment please for the first question. The first question comes from Andrew Stott at UBS. Thanks. Good afternoon. Simple question. Matthias, it really comes back to what you just said on your personal ambitions. You wanna grow beyond a tough year and deliver on that across the group. The awkward data point from today for me is Advanced Intermediates. If you're now looking at the pre-2019 volume comparison, you're already well down in the end, by the end of 2022 on 19% in volume terms, and then you've dropped another 23% in first quarter. The question is simple, what's gone wrong in that division? Is it something structural in your end markets? Is it walking away from business because of your pricing strategy? Maybe it's a blend of those two things or something else. I'd really appreciate an explanation of why volumes are sort of consistently so weak in that division and what the fix is. Thank you. Well, Andrew, the answer is pretty simple. Advanced Intermediates consists of two business units, and the drag in first quarter very clearly is inorganic pigments. Inorganic pigments has end industry around 55% to 60% construction. Construction has imploded. You hear in Germany declines of 20% to 30%. This is fierce. I've never seen construction being so soft globally. In the last 20 years, I've never seen construction being negative in China. China was always a strong volume machine. Now I reflect to 2009, Lehman. In Lehman crisis, we saw inorganic pigments at EBITDA levels of around 50%. This quarter, the first time in inorganic pigments, this business turned negative in EBITDA. This was always a strongholds, always a cash machine, but the business needs volumes. The volumes based on high inventories at customer level declines. On top of that, we wanted to lower our inventory, so we declined in inventories in first quarter in pigments, and therefore, our utilization was simply as low as low can be. That will not continue like that's our assumption. If you want to have a simple answer on advanced intermediates, it is construction driving inorganic pigments negative. That's the answer. Thank you. You're welcome. Of course, we are looking at this now and we'll take measures to counteract. I mean, this is, this is management responsibility, we will not sit here and watch. We will definitely do everything to reposition this business. It is technology-wise, a strong business with a good industrial cost curve. It is a global leader. I mean, we have here market shares globally of around about 35%, 40%. This is normally in a normally running end industry construction, a good business. They are currently heavily impacted. Therefore, we will do our best to counteract. The next question is coming from Jonathan Chung at Morgan Stanley. Hi. Thanks for taking my questions. Up two, please. Just the first one on order books dynamics. Could you comment a little bit on what you're seeing in terms of the order books in April and May? Also the regional mix as well across divisions. Also my second question is around your consumer protection. Just want to understand how much of the synergies have been delivered from the IFF integration and also the Emerald Kalama. Are you on track to deliver these synergies? Thanks. Yes. I think when you hear us talking about second quarter being similar to first quarter, it's a reflection that in the order book we don't see a big change in momentum. Therefore, we clearly stress that we don't see a rebound in China visible in second quarter. All indications go for that will be visible in third quarter, but not in second quarter. This is the current view on second quarter. As far as regions are concerned, we do see that China picks up in overall consumption, but as far as production value chains are concerned, they are not picking up yet because here companies are sweating out inventories still. As far as Europe is concerned, there's no big change in momentum. We see, I think, and you have seen that in the reporting season, everybody continues being soft also in outlook for Europe, whilst North America appears to remain relatively resilient and stable. As far as synergies is concerned, most of the EKC synergies have been implemented. As far as IFF is concerned, we are in the process of implementing synergies. We have seen by now around about EUR 10 million of the announced savings. Of course, also here, Consumer Protection, disinfection business, personal care, et cetera, these end industries, surprisingly also have turned soft. This is a reflection of consumer spending going down, being softer. Also, here we see in a variety of end industries that we see volumes not growing like in the past two years, but stagnating, and some areas are even declining. Therefore here, we see that overall Consumer Protection volume-wise is relatively robust with only two percentage points volume decline, but volumes are declining. Compared to additives, where volumes declined by around about 15%, and a steep decline in Intermediates, where volumes declined by more than 20%, and this especially stemming from construction industry and Pigments. I think this gives you more clarity on second quarter and order book. Next question, please. The next question is coming from Martin Roediger at Kepler Cheuvreux. Thanks and good afternoon. I have two questions, please. Firstly, on the cash flow. With your guidance on EBITDA and CapEx for this year, you will end up with a cash conversion rate of between 53% and 58% in 2023. In former times, you targeted a cash conversion rate of above 60%. Is this still a realistic target for the midterm? The second question is on discontinued earnings. Matthias, thanks for your comments regarding the net profit of your joint venture with Advent for the next, the foreseeable future, and the drag from PPA-related amortization charges and high interest expenses. When I look at your discontinued earnings, which is still your previous or recent engineering plastics business, that is certainly not affected from these two items. I would wonder, is the -EUR 54 million loss in discontinued earnings due to write-downs or anything else? Thanks. I take first question. Michael will take the second one. 60% cash flow conversion, relative numbers, I think conveyed a few years ago. Let's not go for relative numbers, let's go for free cash flow delivery. We want to deliver free cash flow this year, whatever it takes. I think indication here has been given to you what we want to achieve and therefore, let's not talk relative. I would like to deliver absolute numbers, free cash in course of 2023. Michael? Hello, everybody, as well from my side, Michael Pontzen. With regards to the reported discontinued operations earnings, you're right, that is as reported in the past. There is an effect in that number, and it is as well affecting our, let's say, development in net financial debt, and we discuss it with one or the other with you. We had or we were in a position as we in first quarter already received the payment for the transaction, that we already were in a position to pay around EUR 55 million on tax-related numbers. That number had to be as well reflected in the P&L, obviously. That number you find in the tax statement of the discontinued operations. That is why the result is so negatively. Still, of course, I mean, if you take a look on the operational business with regards to our business and then in respect of the former HPM business, you can imagine that the former HPM business was not doing well either. That was already the case in fourth quarter. While talking about discontinued operation and some accounting issue, I would as well like to address what Matthias said as well before. You should expect from now on in second quarter starting that the effects from the net income change in net income in the joint venture will be reported in the financial result. At least on short term, you should not expect a positive contribution giving the capital structure and the purchase price allocation effects in the joint venture. With regards then to the value of the joint venture, and we had that discussion before, that is not necessarily reflected then by the book value of our asset, but rather by the structure which we negotiated in terms of the signing and the closing of the transaction. We have a slide in the deck at the end of the presentation. I hope that gives an answer to your question, Martin. Thank you. Thank you. The next question is coming from Oliver Schwarz at Warburg Research. Thank you for taking my questions. First of all, I'd like to ask about the still ongoing force majeure in the chlorine production of your supplier. It seems like that situation has started in August and, according to your view, it's dragging on until November this year, which is more than 12 months. I mean, we have large scale chlorine production since more than 100 years now. This shouldn't be rocket science. What is holding your supplier back to come, let's say, on stream with chlorine production in a decent period of time? What took them so long? What was the problem here? Can you share that with us? I can only be aggregated. This is not rocket science. I fully agree with what you are saying. Normally this was never an issue. My understanding is that this is not technology related, it's purely engineering related. Some wrong pipes were installed. That was realized after it was started last year. It started reasonably well. Then it was interrupted again. Then again, force majeure was announced in first quarter. I understand now that equipment is being ordered. In today's world, equipment doesn't come from one day to the next day. It takes a few weeks and months. Then it needs to be replaced. This is happening as we speak, but, with the delivery times and installations, the indication that we have been provided with, will last until, most likely November this year, and then the production will be switched on again. That's basically the background to it. No technology, but simply, engineering delays. Thank you for clearing that up. Second question would be on your outlook, especially on second quarter. Obviously, we no longer expect any adverse impact from winter storms in the US. It seems, based on your full year guidance on the impact of the chlorine situation, the financial impact of that should be lower already in second quarter. Given that the inventory adjustment at customers also petering off, what is basically holding you back in second quarter on a sequential basis when compared to first quarter to not exceed first quarter results? I don't see largely by the industry that everybody is applauding second quarter volume momentum. We see softness in second quarter in most of the end industries, except one or two, like Agro industry is doing well. There is no overall strong commentary from chemical peers on first half and also on second quarter. Therefore, when we are not seeing that order books are starting to gain momentum, there is no reason to pretend that we are seeing a rebound in the global economy. We don't. As I stressed before, our customers still have stocks on hand, and they are sweating that out. We are also, I mean, as I stated before, we want to lower our inventories. We've now in clearly if we want to get down on inventories to sale, we have to produce less than we sell. That will lead to idle costs, and we take that, we absorb that in the P&L. The focus is now on cash generation; therefore, priority is getting inventories down. That this leads to burdening the P&L is the name of the game. The focus, as I stated before, is in this company for 2023, one, deleverage, and took a big stride in that direction. Second, cash flow, and third priority is earnings. We want to stabilize them as much as possible, but priority one and priority two are clearly the ones that we are going for. Yeah. Thank you so much. You're welcome. The next question has come from Chetan Udeshi at JPMorgan. Yeah. Hi, thanks. You know, my question was, you know, Matthias, you mentioned previously that you were running at 65% or so utilization rate, and I was just curious, how does that compare to the previous trough that LANXESS has had in the past? Now, of course, I know the portfolio has changed over the years, but I'm just sort of trying to assess, you know, how does that number compare to what might have been the trough in the past cycles for LANXESS? Just related to that, I was just surprised a little bit that the inventory value on an absolute basis did not change from fourth quarter to first quarter. I would have thought, given the utilizations are so low, we might have seen some sort of drawdown from the inventory. Maybe can you highlight why the inventory was steady? I guess, you know, as you said, you know, the aim now is to bring the inventory down from second quarter onwards, but just in terms of why first quarter did not see that happen already. Thank you. Well, thank you for both questions. Let me address both of them. As far as utilization is concerned, I think the last time we saw severe decline in utilization was in first quarter, second quarter 2009 after Lehman crashed. I recall something like we fell to something like 70% utilization, but this is now 13, 14 years ago, so I don't know if transcripts still exist. That's my recollection. We had something like 70% utilization, my collection was we were double-digit in EBITDA, not in close to EUR 200 million. You might look back into the JPMorgan notes that most likely one of your brilliant colleagues has written at that point in time. That's my humble recollection of 2009. As far as inventory is concerned, normally see in first quarter a stock up by EUR 100 million, EUR 200 million in inventories because in second and third quarter, we do normally have the plant maintenance, so we always ramp up in first quarter inventories. That's the seasonal pattern you've seen over the last decades. This has not happened in first quarter this year. We basically, wherever we have no standstills in or plant maintenance in second quarter, we knocked inventories down. Where we have standstills in second quarter, we produced some more inventories. By and large, you therefore see that inventories in nominal terms are at par versus fourth quarter, which is definitely a strong improvement, and that's the reflection on cash flow generation in first quarter. Clear. Thank you. You're welcome. Next question, please. The next question is coming from Matthew Yates at the Bank of America. Hi, good afternoon, everyone. Couple questions, please. You've given specific guidance for EBITDA for the year, but just indicated to expect a loss on the financial line from the residual nylon contribution. Can I push you to be a bit more specific on the magnitude of that loss? Have you worked out at this point what the PPA impact will be, and a rough idea of the financial expense going through the business? Just if we can try and firm that up a bit. Obviously, LANXESS shareholders still have to care given the residual stake. Then maybe from the ties. Post the closing of this deal, is there a broader plan to right-size the organization given the smaller scope? I know companies report central costs in different ways, and some is on one line and other companies go through divisions. It strikes me that EUR 200 million is quite a big expense in the context of a group the size of LANXESS. Now that you've completed that nylon deal, is there any opportunity there for a new kind of cost-cutting plan to address some of the central costs, or are those more structural than I appreciate? Well, Matthew, as far as net income concerned from the joint venture, we will start commenting on this in second quarter. We are not in a position today to make comments. We have a clarity, but according to legal constraints, we have to abide to them. Once this is reported in net income, it's being commented from our ends. Definitely PPA for business where that is valued on the DSM side, EUR 3.7 billion. On our side, EUR 2.4 billion. You can assume that PPA is meaningful. It's substantial, even though it's not cash, but technical non-cash in nature. It will be a significant amount impacting net income and definitely, you are well advised if you want to minimize taxation that you play here according to legal books. What is possible, you take into consideration. That is as far as PPA is concerned. On recon, I mean, EUR 100 to 200 million we don't guide. I think the guidance for recon is EUR 170 million. You need to take into consideration that our organization, to a very large extent, will provide services to the joint venture for the next two to three years. What happens then in two to three years, we will definitely not, if there's nothing else coming up, sit on idle costs. That's not the approach we are going to take. Please take into consideration that our organization and the countries, but predominantly in group service functions, will support a EUR 4 billion group, polymer group, going forward for the next two to three years. Okay. Thanks very much. Next question, please. The next question is coming from Markus Mayer at Baader Bank. Good afternoon, Matthias, Michael, and Eva. I have two questions from my side. The first one is on what you said that high-priced inventory should be sweated out. Maybe I missed it, but can you give us indication on the inventory devaluation effects you have booked and also the idle costs you had in first quarter? That's my first question. Then the second question is on IFF MC, any kind of flavor in terms of run rate on pricing would be helpful to see how this business has developed. Yeah, that would be helpful. Thank you. Well, thank you for your comments. Michael will take up the first one on devals. I will briefly address IFF. IFF basically stabilized in terms of earnings by and large. As far as contribution is concerned, we saw that energy related industry did well, but the biocides suffered, and also our biocides in LANXESS, former LANXESS, without microbial control, suffered. We saw disinfection in China suffering. Here, farmers are simply very modest currently in expensing, so we see that. That's basically why IFF, by and large, did not profitability-wise contribute stronger. We need to see a rebound here on the underlying volume and demand as well. Now, Michael, devals. Markus, thanks for the question. Yeah, as we no longer have that huge fluctuation, with regard to the, let's say, input cost base and then price base, we don't have truly revels in our inventories. As long as we keep the prices on good levels, which we basically do, and that is what you find in our overall sales bridge. Yeah, there are no devals. We have to make sure not to put too much or additional inventories into the house in stock, and that will cost idle costs. We're not quantifying them, but you can imagine if you're short some EUR 260 to 270 million top line on volume. You are missing a good chunk of EBITDA and therefore carrying the idle cost, yeah. You can do your math your own, because what you finally earn with the missing volume is a very high number, yeah. That is why EBITDA is in fact, declining that sharply, year over year. Okay. Thank you. You're welcome. Next question, please. The next question comes from Jaideep Taneja from ONFIELD Research. Thanks. First of all, well done to the whole team on free cashflow. Second, if I start with the first question on the outlook for 2023, could you give us some color in terms of what volume growth are you baking in your second half versus first half comment, given you've highlighted that you expect some sort of recovery? Would be interesting to see that. The second question is, sorry to ask this, but coming back to the HPM JV. Now, when you take a bit of a step back and you entered into negotiations for consolidation, how much analysis or emphasis was given on the capacity growth in China? I just wanna understand, you know, do you expect the cycle to be long for the next three years, and therefore more need for cost-cutting? One of your key players has obviously announced a shutdown in caprolactam in Europe. I'm just asking in that context. Lastly, I know this is an annoying question, but just from a bromine point of view, is there gonna be an impact from lower bromine prices this year on the results? This is not a problem and this is not an issue and your prices are longer term, and therefore we shouldn't really focus on the bromine changes in China. Thanks a lot. Well, thank you, Jaideep. Let's start with second half. Please recall that we've seen in the second half last year volume declines. In the industry, by and large, volumes were down in third quarter between five and 10 percentage points, and in fourth quarter, 10 to 15 percentage points. That was the average blend I think you've seen by peers in last year's quarterly statements. We enter the second half with a comparable lower base. Our assumption is that we will see, compared to the second half last year, a volume increase, single digits. Which, however, is compared to the first half, where we see 10% to 20% declines in volumes, a major stabilization and rebound. I hope that helps. Your second question. I mean, there is definitely a competitor that has publicly decided to step out of caprol production. That should not be negative for the joint venture. It should be positive. Because we have, I mean, our caprol train is one of the biggest in Europe. We have here a real stronghold, and therefore that has always been a strong backbone, and it should remain a strong backbone. Because with the incremental compound capacity that the joint venture has, of course, the caprol train should always be at 100% utilization, which is definitely beneficial. Our customers always loved to have the backward integration because it offers stability and also quality assurance. Now, third point, the bromine question. I mean, falling bromine prices is t he indicator on falling bromine prices is not a sudden increase in supply. That's not the case. The falling bromine prices in China on the spot markets are a derivative of simply strong decline in demand. This is hurting everybody. If you have long-term contracts or short-term contracts, it doesn't matter. If you have a steep decline in volumes, you simply have lower production and lower earnings. A competitor of us, Albemarle, reported this morning and stated the same thing. Demand is soft in construction and E&E. The decline on their profitability in the comparable segments was 48%. You see that simply here the industry is suffering from a dramatic decline in demand. If I've stated Albemarle, this is wrong. I wanted to refer to ICL that came out with numbers today or yesterday. Of course, ICL is one of our peers in the flame retardants markets. It gives you an indication that simply here the demand worldwide for flame retardants and E&E, sorry. For flame retardants in construction and E&E is simply very soft. Construction and E&E we saw for the last two years always in a very, very good momentum. They will turn back to growth because construction is dearly needed in continental Europe. This is known everywhere. I think, everybody sees also that China will more and more focus on stabilizing and improving construction in China as well. In this quarter and also in fourth quarter, we saw that markets that normally had volume growth for decades in construction suddenly started to stagnate and now going to declining modus. I think that will be still a theme for the second quarter, and then only from third quarter, fourth quarter, starting to stabilize and grow again. With this, I think, Jaideep, all your questions should be answered. Yes. Thanks a lot. Thank you. As a reminder, if you have a question for our speakers, please dial star one one now to enter the queue. The next question is coming from Andreas Heine at Stifel. Yes. Thanks for squeezing me in. I have actually three questions. The first is on Advanced Industrial Intermediates. Well, in normal times, which we don't have, this business was very resilient, but I am obviously noticed that that is not what we can talk about in this destocking environment. If you get back to the second half and destocking is over, and we look to raw material prices, which oil price related came down a lot and the gas price as well, is there any reason why this business should not get back to 20% EBITDA margin? Has anything structurally changed that would not happen? The second question is on the guidance, where you say that the midpoint is the right point to look at. Which is a little bit less than what the former guidance was with saying on par with last year. Is this guidance baking in what you mentioned that the prioritization on cash means that the P&L might be hit to a degree due to the prioritization of networking capital coming down. Is there already a buffer baked into that or would that come on top? Lastly, destocking. It is all over the place, but do you see differences by end markets or by your business lines if it comes to destocking coming earlier to an end and where you see some improvement already, or is that across the board as bad in second quarter as it was in first quarter? Thank you. Well, let me address them one by one. Advanced Intermediates, I mean, I don't want to comment on the 20%. I think in the last November capital market statement, we stated 16% to 18% in a normal economic environment. Normal economic environment means no impact through geopolitical tensions and wars. I mean, the energy crisis that has broken out after the Russian aggression war and mass murder approach, this is something that definitely impacts the European industry. Advanced Intermediates is a German-based production base to a large extent. That this business currently is suffering is not surprising, but the big drag in the division is currently inorganic pigments. If you reflect that inorganic pigments was negative, double-digit negative, however low in the teens in first quarter, you can reflect that the remaining business unit was not that bad. We need to address inorganic pigments. Inorganic pigments, we deployed it inventory. We dramatically declined utilization to get rid of inventories that fostered the negative financial performance. It's something that we simply have decided to prioritize. This leads me to the second question. Midpoint guidance is EUR 900 million. I stated before, this embeds round about 23% of net working capital to sales. If the industry rebounds, we can sweat out inventories. If the industry only modestly rebounds, then we will continue with lower production, and then we have more idle costs, and that, of course, impacts profitability. We clearly stated cash this year is a second priority and clearly prioritize vis-a-vis EBITDA, which is an artificial profit indicator and that should give you clarity on what our assumptions are. Rebound in the second half. We have analytics behind that, and we've provided you arguments for that, why we believe in this. We've given you an indication what our working capital assumption for the year is. If we accelerate and deploy more working capital, then of course we have to pay the price for it. Well, on destocking, we have not seen big momentum in April and order book in May. The feedback of our customers are like everybody else, like we are doing by the way, that we are sweating out inventories. This is across industries with one or two exceptions. Agro is strong, even in consumer-related industries, companies are destocking because they have built up plenty of stocks last year when value chains were disrupted. Everybody has safety stocks and everybody is sweating out safety stocks. We see this as an overall theme for first quarter, but still for second quarter. Thanks a lot. You're welcome. Next question, please. There are no further questions at this time. For closing comments, I hand back to the speakers. Well, thank you very much for your participation. We all look forward to seeing you this quarter, next quarter on road shows. Take good care. All the best. Bye-bye from Cologne. Ladies and gentlemen, this concludes the LANXESS conference call. Thank you for joining, and have a pleasant day. Goodbye.