Hello and welcome to the LANXESS Q1 2024 Results Investor Relations Call. Throughout the call, all participants will be in a listen-only mode, and afterwards there will be a question-and-answer session. Please note that this call is being recorded. Today I'm pleased to present Andre Simon, Head of Investor Relations. Please begin your meeting. Yeah, thank you very much, Sarah, and a warm welcome to everybody to our Q1 2024 conference call from my end as well. As always, we begin by asking you to take notice of our safe harbor statements. With me today is our CEO, Matthias Zachert, and our CFO, Oliver Stratmann. Matthias will start with a short presentation, and then we will open the floor for your questions. With that, I'm happy to take over to Matthias. Please go ahead. Thank you, Andre, and welcome everybody on this conference call for Q1 2024. I start with slide four the presentation has been dispatched. On slide four, we show that as far as year-on-year performance is concerned, we clearly acknowledge a very tough comparison. Q1 2023 was our last somewhat okay quarter, and it was the best quarter in 2023. The comparable base is definitely here the toughest for the running year. This is the case for sales but also for profitability. If we make the year-on-year comparison, no doubt tough quarter. We would like to shed light, however, on what we see in the markets and here in Q1 versus Q4, but as a matter of fact, also versus Q3 and Q2 last year, we see in many of our industries that volumes are picking up. Exception: clearly, agro. Agro started destocking later than other industries, and this accelerated in the second half last year. It turned out to be tough in Q4 last year but now quite severe in Q1 and still severe in Q2. From the indications we are getting from our customers, improving in the second half. For the other industries, we clearly see also in Europe that destocking has come to an end. Customers are starting with regular quarterly orders like they used to do in the past at lower levels, though, but they start to confirm quarterly commitments. This is a change to 2023 when all customers basically just wanted to destock. We see that sales rebound to 1.6 versus Q4 1.4. And this, of course, led to a positive, which is increase in the receivables. If you look into our balance sheet, we have EUR 200 million increase in receivables. And as you know from our turning rate, this turns into cash normally within roundabout 45 days. So while net working capital increased, it increased on one area that we like, which is receivables. Turning to EBITDA, same storyline. We acknowledge the year-on-year comparison being very tough. But here also, the same statements hold true. We see sequential improvements. Even though the base improvement versus Q4 is soft, we clearly have to stress, in Q4 last year, we had no bonus accruals because we paid no bonus for profitability-connected incentive schemes. We had further one-time relief. All in all, this is not operational. And the EUR 101 million that we now report, we fully report on an operational basis despite Saltigo being really in very, very tough turns due to the fact that some of the customers have simply ordered nothing. This we assume to improve modestly in Q2 and then continue further improvement along the lines that I've just said. Further support will definitely come from our FORWARD! initiative. The implementation of cost savings is fully on track. You also see that when you look at the headcount reporting we've done in Q1, in Q4, versus the remaining quarters in 2023, you clearly see that we are clearly accelerating here and are fully on track to get what we wanted to achieve. As far as the Urethanes divestment process is concerned, also here I can confirm this is fully on track. The first round is about to be finalized. We started here with high single-digit numbers. In the second round, you normally tighten the process because you cannot continue with so many interested parties. So we will tighten the process and will take roundabout a handful into the next round. And then eventually, more information is shared. And the final phase is then the negotiation phase that you normally do with two to three interested parties. So also here, I think we do what we want to do. With this, I turn your attention to page number five. We give you here an overview on the sequential development of our segments. Clearly, on Consumer Protection, that was a tough quarter because Saltigo fell out completely. And as you have heard from the agro companies please look at their transcripts they have all confirmed that Q1 2023 was a peak year or a peak quarter. And therefore, also Saltigo had peak volumes and peak profitability. This drops out completely. And therefore, Q1 was hit hard Consumer Protection-wise, notably by agro destocking. Again, I would like to make my comments that the agro industry by and large also sees Q2 as tough but not as tough as Q1. When you look at the transcripts of the big companies I mean, it's on their internet, I cannot comment on customer feedback, but I can give you the statements of Corteva, who says, "We expect to see market growth in the second half of 2024." That's what they clearly confirm, and I understand why. FMC, for instance, makes the statement that market conditions are expected to improve as year progresses. So as they publicly state that, you can assume that they do this on data. And as far as our feedback is concerned, we see that in the agro industry, the feedback from our customers clearly confirms this statement. So from the agro side, we assume that Q3 and Q4, but notably Q3, Q4 normally is seasonally weaker, should show further improvements. And that's reflected also in our guidance. Specialty Additives? Well, also here, you clearly see the rebound in the end industry. However, please take note of the fact that construction is clearly soft, remains soft in China, and is soft in Europe. We assume that here from Q3 onwards, more momentum will come in, not a booster but a gradual improvement. At least this is the indication we are getting from the client sides. So also here, a sequential improvement Q1 versus Q4. We expect further improvements in Q2 and another sequential improvement in Q3. Advanced Intermediates? Definitely. I mean, it's from the product side, not as resilient as the other two segments. But this is a business where the 2023 results were extremely hard-hit. These are two market leaders worldwide, and they come back. We have sweated out the inventories last year, sweated out inventories that were produced at extremely high prices from 2022. So this job has been done for basically roundabout nine to 12 months. We now start from a clean basis, and we now start producing with low energy costs. Now this division turns competitive, and we will take the market back. So here, please expect that this division will see a stronger rebound, profitability-wise than the others because the base is also lower. Now let's come to the guidance, full-year guidance. Comments on economic environment, I think, are known to you. Let's look at LANXESS-specific guidance. We would like to grow EBITDA by 10%-20%. There should be this further sequential improvement versus Q1 and Q2 and then continuing in Q3. The reasons for this I have explained. And then somewhat a softer Q4 due to seasonality. Focus is clearly on cash generation. We take a balanced approach on working capital. I mean, we like receivables, but we will collect them for sure. And as far as inventories, you see that we kept inventories tight so far. As we see momentum strengthening further in our end industries, we will, of course, also here in a focused approach, build inventories if need be because if the market grows, we will supply and then we will collect cash. On CapEx, clear discipline will be there, and you will note this in the quarters going forward. But we will not uninvest. There is no reason for underinvesting. We have a strong asset base, but we don't need to spend growth investments at this point in time when utilization is not at 90%-100%. So this status has not been reached yet. We are improving on utilization, and we will further improve on utilization going forward. But we have enough spare capacity at this point in time to be disciplined on maintenance CapEx and not on growth. Ladies and gentlemen, this is it for the presentation. And Oliver and I will take your questions right away. Thank you. If you do wish to ask an audio question, please press star one on your telephone keypad. If you wish to restore your question at any point, you may do so by pressing star two again to cancel. Once again, that was star one on your telephone keypad to register for any questions. Our first question comes from the line of Jonathan Chung from Morgan Stanley. Please go ahead. Your line is open. Hi. Morning, everyone. I've got two, please. The first one is on your pricing for Specialty Additives. I see the negative 10% decline. How much of that is driven by bromine prices, and how much of that is your active price concession to regain market share? And my second question is on your lithium brine project. Could you give us an update on the brine supply negotiation with Standard Lithium, and when would we expect to see contribution from this agreement? Thanks. Jonathan, thank you for your question and for your time on the call. First, on bromine, I mean, bromine picked up last year, softened again in Q1, and is now picking up again. So it's not so much at this point in time a derivative or driven by supply. It's more driven by demand. And here, I mean, bromine prices, you don't see contractual prices in Europe and North America. You only see the Chinese spot markets on bromine and this gives you the clear indication that the construction industry in China is still struggling. And therefore, as far as bromine prices are concerned, we need to see a pickup in construction in China before bromine prices start to rise to higher levels again. And this is not the case yet. The indicator you are looking at clearly confirms that the Chinese construction industry is still doing very soft and is suffering. That's a reflection of this. As far as ourselves are concerned, we are not here going for market share at this point in time. We clearly focus on the value proposition. Price reductions we currently see are a reflection of either raw materials or in some areas, the reflection of bromine where we sell bromine directly into the markets. That, of course, is also done at lower prices. Now, as far as lithium is concerned, I think there is no update at this point in time. It's fully in the hands of Standard Lithium. I think they flagged very clearly that as far as technicalities, etc., are concerned, they are either done or very far advanced. The next decision they have to do is on basically getting the project capitalized, financed. That is in their hands. Once they have completed this, I think it's in their hands to go forward. That's the status currently on Standard Lithium. Thank you. Most welcome. Next question, please. Thank you. Our next question comes from the line of Sam Perry from UBS. Please go ahead. Your line is open. Hi. Thanks. Just one for me, please. With regards to your comments on sequential improvement in Q2 and Q3, so taking your Q1 EBITDA and the fact that your historic average level of sequential decline in Q4 has been about 20%, it would imply that to hit the midpoint of your guidance, you need to see around high 30s sequential EBITDA growth in Q2 and then again in Q3. Is that the right sort of trajectory of improvement you're seeing in your order book for Q2? And then what gives you confidence in another step up in earnings again in Q3 given the relatively recent comments surrounding low visibility? Thank you. Yeah. Let me take that question, Sam, over here. Well, we've guided to a sequential improvement in earnings Q1 going into Q2 and then further moving on in Q3. The hint towards seasonality in Q4 does not imply that this is in any means a normal year. So the typical earnings distribution that you are alluding to we've seen in the past simply has no basis in a year that we are going through right now. Matthias has pointed to already with regard to agrochemical customers to not only what our customers are saying but even what they are printing on their websites and that they are expecting demand to pick up in Q2 and Q3 even more. So that confirms what we are hearing when we talk to our customers. And I can tell you that we are, of course, also ramping up our cost-savings program forward. As we go through the year, already last quarter, we have said that even though only moderately, we also expect more demand to come in from our construction industry customers. So that gives us, in a summary, the confidence that we will really see a pickup here sequentially over the quarters. And then we just have to bake in for some sequential lower number in Q4. You also asked how confident we are. And when I look into what the market is expecting right now, and I'm looking right into the face of Matthias as well who smiles at me, we can live with the consensus number as it stands right now. So we are confident in this sequential improvement. I'm always smiling at you, Oliver, but now particularly. I hope the question has been answered. Next question, please. Thank you. Our next question comes from the line of Matthew Yates from Bank of America. Please go ahead. Your line is open. Hey, everyone. Thanks for taking the questions. Got a couple, please. Firstly, I appreciate the extra detail you've put in the slides about the development through the course of the quarter and how that may have impacted receivables build and collection. Now that you've given an EBITDA guidance for the year, can you also be a bit more specific on what you would expect for free cash flow generation this year? And then I wanted to come back on Consumer Protection where, essentially, we've seen profits halve, which is somewhat surprising for what's supposed to be an asset-light business with quite resilient end markets. Clearly, peers and customers are experiencing the same phenomenon you are in ag. Is it possible to isolate how much ag or Saltigo contributed to that year-on-year profit decline? Just as an aside, when we see prices in the division reported -5%, does that reflect competitive behavior, or is that more about the raw material deflation pass-through? Thank you. Matthew, thank you for your questions. I will take second and third question, and Oliver will take cash flow. I might chip in here. So let's address consumer protection first. Your assessment is totally correct. The swing in profitability is nearly completely related to Saltigo. I stressed it before. We had, like our customers, a peak year in Q1 2023. Saltigo had a peak year in Q1 2023. Now Q1 2024 is exactly the opposite. Please read the transcript of our customers. They will clearly state that Q1 2024 was a bleak year where they reduced as much as possible, and orders did not come in. So that's a reflection. We make the statements, but I clearly give you the sources where you can check that yourself. Now, as far as pass-through is concerned or your third question is concerned, clearly, this is a one-on-one relation as far as pass-through on raw materials is concerned in Consumer Protection. And that's basically from my side. And now hand over to Oliver. Matthias, thank you. And Matthew, thanks for the question. You asked about free cash flow guidance, and you also mentioned receivables. Now, Matthias has already made the connection to the nice portion or the nice part of this, which is that the driver was really the increased sequential sales number. When I looked into this, I also found, and this is kind of a calendar item, the March 29th was actually Karfreitag here in Germany. So the collection of monies was not happening. And we found money from the receivables coming in first week of April. So that certainly had some seasonal effect here as well, which we didn't see in the year before because then the easter holiday was later in April. On free cash flow guidance, I'm very happy to try and build a little bridge for you. I must say with the caveat that I hope you appreciate that I'd really like to refrain from guiding working capital developments. They heavily depend on the degree of business and demand pickup. But apart from that, if you start off a bridge with what I believe the consensus number around EUR 570 million in EBITDA is right now, we've guided up to EUR 350 million in CapEx, which leads you down to EUR 220 million. And then I believe on the last call, I already mentioned a number in the magnitude of EUR 40 million that you can bake in for interest. We have guided to a cash out related to our forward program that is expected this year of another EUR 50 million. And then as 570 isn't a huge EBITDA number, also the tax number should be limited to a ballpark of 40, which leaves you with still a triple-digit million number that, if my math is correct, should remain open. So this is clearly not a free cash flow guidance because we see the demand picking up. And normally, when you increase sales, your receivables and also your inventory will show some traces of that. But I'd like to reemphasize that we will have a very tight eye on our indebtedness. And we have clearly heard and are acting according to this to focus on bringing down our indebtedness. Hope that answered your first question as well. Oliver, sorry, just quickly. On top of that EUR 50 million for the FORWARD! program, do I also need to include the below-the-line items on digital and IT, or is that already included in the EUR 50 million? No, no. That's not included. The EUR 50 million that I mentioned is purely the forward. And there may be payments that, exactly as you mentioned, for projects like our SAP, once in 15 to 20 years, implementation are coming on top. Okay. Thank you. Welcome. Thank you, Oliver. Next question, please. Our next question comes from the line of Martin Roediger from Kepler Cheuvreux. Please go ahead. Your line is now open. Thanks for taking my questions. Firstly, on your things, can you provide some indication what the sales and the EBITDA figure was in 2023 so that we know what will be missing going forward in case you have disposed that asset? Secondly, sorry to come back to the destocking in agro activity. Within consumer protection, it's not just only Saltigo. It's also some MPP and flavor and fragrance activities which have some exposure to agro. What can you do to overcome that massive destocking impact in agro? I mean, beyond waiting until the things are getting better, can you get some compensation, for example, by using short-time working allowances? Yeah? Third question, just for my interest, are there any major maintenance shutdowns to occur in the course of this year in Q2, Q3, or in Q4? Thanks. Thank you, Martin. Thanks for your time on the call. I will basically take all of them. As far as your things are concerned, please understand that we don't give numbers on selective business units. It's a very, very good business. The good thing is we started here some changes that we implemented last year, and they fully kick in. We had the best-ever quarter in your things in Q1. This will continue in the quarters going forward. We fortunately also have filled the project pipeline with technology projects. So the business will continue to strengthen going forward. Of course, we are very well aware about this. So this is as far as your things are concerned, now coming to agro. I mean, you know the industry pretty well. Your statement is very accurate. Also, the other business units have some agro exposure but definitely not as significant as Saltigo. So when we talk about the business that is really substantially exposed to agro, it's Saltigo. Round about 75% of sales are here committed to the crop protection sector of the agro industry. And with material protection and flavor and fragrances, it's a little portion. So we don't even mention that. The second business unit having more visible exposure to agro is Advanced Intermediates. We've not flagged that here specifically because Advanced Intermediates has normally a very broad, diversified industry base. And therefore, you don't see any negative flags in Advanced Intermediates because all the industries are currently kicking in. And AII, as we abbreviate this business, is starting to show its competitiveness again. So the AII gains power and makes use of it in the marketplace. Through this, overcompensates the agro exposure also Advanced Intermediates has. So this is positive. And as far as short labor is concerned, we are not yet in a situation where we need to go for short labor in Saltigo. You normally apply for short labor if you don't see for the next six to nine months demand picking up. Here, we did relatively well in Saltigo basically until October, November last year. Then the volumes declined. But now in Q1, we already see that in Q2, there is some further orders coming in. So Q2, we don't expect to be as tough as Q1. And then more demand kicking in in Q3. So there is no reason for, at this point in time at least, to apply for short labor. And on shutdowns, I mean, we normally have our shutdowns, the bigger shutdown season in July, August, and then in December time. So the schedule has not changed. We normally flagged shutdowns always when we had our big polymer machines in a shutdown. So we flagged the last biggest shutdown, I think, with the high-performance materials business when our profitability was hit by EUR 20 million - 30 million because of the shutdown. These kind of shutdowns, we will no longer have because the business profile has now changed. We are not protected against Force Majeure of suppliers, of course. This can lead to shutdowns. And this unfortunately happened in flavors and fragrances last year twice. And one is still putting pain on us as we speak. We think that in Q3, latest Q4 is starting to improve in Rotterdam Botlek so that we have more steam supply available, which then should also support also that F&F performs better. But in the future, I don't think we will talk about major turnarounds or shutdowns anymore because the kind of chemistry that we had in the past is different today. I hope this clarifies all your questions, Martin. Thanks a lot. Next question, please. Thank you. Next question comes from the line of Jaideep Pandya from Onfield Research. Please go ahead. Your line is open. Thanks. Yeah, firstly, on AI, Advanced Intermediates, long-awaited recovery. So good to hear the guidance gaining strength. From my memory, normally when raw materials go up, it takes you about one to one and a half quarters to pass them on. And benzene and toluene have kicked up in Q1. So how is the price versus raw material dynamic here for this division as we progress through the year? The second question is sort of tagging onto Matthew's question on Consumer Protection. Curious to hear what is the progress for Emerald and IFF because obviously, there are a lot of moving parts these days. So we've sort of lost them. So just have they also seen the level of destocking as the legacy LANXESS, or they have actually fared better than your expectation? And then just one last question around factoring for receivables. Could you please confirm that you haven't really done any factoring recently, or have you done any factoring recently? And then sorry, but last question maybe for you, Matthias. Since you've joined as the chief operating officer or sorry, CEO of LANXESS, there's been time and again restructuring programs. So how is the morale of the company given that we are now almost coming to a 10-year anniversary for you as a CEO? So a lot of restructuring has been attempted. So how is the morale for the forward program? Thanks a lot for taking my questions. Well, thank you, Jaideep. Let me ask Oliver to take the factoring, and then I will take all the other remaining four questions you have had. Five questions, my friend. And then I'll take the four questions in sequence. Yeah. Now, on factoring, we want to be very transparent here. So Jaideep, whenever we change something materially here, we'll let you know. You can assume that the factoring has remained on a very comparable level. So there is no visible impact on the statements. Then I take over on Advanced Industrial Intermediates. Your question was on the pass-through of raw materials. I clearly confirm that the mechanism on passing through raw materials or energy costs has not changed. So what we bought in Q1 with higher prices on toluene and benzene will be rolled over in Q2. Now, as far as your second, third questions, I take them in combination. You alluded to Emeralds and IFF. If you look at Emeralds, I clearly stated last year, they have been hit hard by the force majeures that we have seen and by the destocking in the entire industry. If you look at our businesses that we have contributed to F&F, flavors and fragrances business units, the same, they have been hit by our business units have been hit by chlorine force majeures and by destocking. So the combination of our new business, in both cases, our LANXESS, all what we have acquired through Emeralds was hit hard. And unfortunately, both by force majeures and, of course, through the product change by destocking, as you have seen with a lot of other chemical players that are close to the consumer. And I think you know all of them. So I don't need to cite them again. So here, this was no different story. Now, on IFF, as far as the business units combination, IFF with material protection is concerned, when we look into last year, we saw that also, especially China, biocides market has been extremely hard-hit. Biocides goes also into paints. Biocides goes also, therefore, into construction. So here, we've seen that the entire business was also hit hard by industry demand softness but also by destocking. We even saw that animal health-related products were going down because of soft markets, because of too high inventories. You saw that other companies in the animal feed sector posted the same messages. So it's not only us. It has been industry-wide a phenomenon. Now, if we look at the two business specifically, biocides, LANXESS, and IFF, biocides, the IFF business did better than the LANXESS business because of the fact that the IFF, biocides business, had a higher exposure to energy and gas, which we never had. And energy and gas, as obviously you can assume, did well and therefore compensated a lot. But all in all, the biocides market in 2023 was not good. This is something which we see now gradually improving because destocking is gone. The market is not back to normal terms. So clearly, going forward, we expect that market demand also on animal feed, animal disinfection will see in the further year a further normalization. But at least in 2024, we see that destocking is no longer a theme, which will be well for our business. I hope with this, I have extensively answered this question. Then I come to the last one, morale. I mean, let's put it like this. I think in none of the chemical companies in Europe, you will see that employees are in 2023 rejoicing how great the industry is doing. And this is also not the case with us. The good thing in LANXESS is, I think, last year, we realized we have to make cuts in order to mitigate the current situation, also stemming from the energy crisis. You should have seen that at a speed of light, we executed the restructuring program. So we announced that to you in summer. We basically had agreement with the workers' council and unions in October already. This is for the industry record speeds. That shows you when we want to get something done, we get it done. Restructuring is no fun for anybody. But my clear speech to the team was, "Let's get it done as quickly as possible. It will be painful. But once it's done, we close the chapter and accelerate again." That's currently the view of the troops. Therefore, we are now prepared to rebound to show our strength. I hope that clarifies everything. Great. Thanks a lot. Also welcome. Next question, please. Thank you. Our next question comes from the line of Georgina Fraser from Goldman Sachs. Please go ahead. Your line is open. Hi. Good afternoon, Matthias. Good afternoon, Oliver. Two questions left or maybe three. I'll try for three. The first one is we've had a response already to price versus raws and Advanced Intermediates. But could you talk about the net pricing that you're seeing across the portfolio? That's something that seems to be particularly positive for a lot of your chemical peers. And it's not obvious to me that LANXESS is seeing those benefits yet. So maybe if you could just expand that question. The second is pretty simple one. You mentioned that you're seeing a bit of a recovery in utilization rates. Could you remind us where we're coming from and where we are today and what sort of utilization improvement is baked into the midpoint of your guidance? And then final question. It feels like we're talking a lot about the upside from a recovery in construction and ag. But if I look at your end market exposures, consumer is pretty material as well. And that seems to be a market where demand is already recovering quite strongly. Is there more upside to come for LANXESS in consumer? Or could you explain why you might not be seeing the same recovery that some peers are in the consumer space? Thank you. Georgina, Oliver will take the first two. I will take the third one. Georgina, net pricing across the portfolio. If you know, the pattern on pricing here is that we pass on our prices indeed with a quarter delay, sometimes two quarters with a majority of our contracts containing for raw materials and energy clauses for those prices to be passed through. What we are indeed doing now, if we look at Q1 versus Q1 2023, is that we compare one quarter in 2023 where we still passed on high prices of the Q4 2022 when raw material and energy escalated with a quarter where prices have already substantially come down. So I think it makes a lot of sense for the Q1 to really look sequentially. And here, we very openly said we had nice volume growth and a price decline of 1%. So year-over-year, I think the view is a bit distorted. And we've proven that in the last four or six quarters, we have always managed to pass on. Nevertheless, the relief we have received on the cost end. And when prices were rising, after a short delay, we have passed that on to our customers as well. On the second question in terms of utilization, indeed, we have seen somewhat of an improvement here. And we've told you that end of last year, for the whole year, we were at a utilization that was just short of 60% in the 50s. We are recovering from that. But I would not like to start a new trend now and basically on a quarterly basis update precisely on utilization rates. We will do that on a full-year basis. I think by pointing to a moderate pickup here, which I also want to make that clear, is still by no means in a magnitude that we appreciate that we like. It goes in the right direction. Thanks, Oliver. And now on consumer. You might not see in Q1 that consumer is picking up too because it's overshadowed by the ag decline. And I stressed last quarter in March when I commented on Q4 that we have customers that don't order anything, which always ordered normally on a quarterly basis. So this is what we currently see in the agro crop protection space. And if you look at the volume decline in Consumer Protection, this is by and large coming from Saltigo. And therefore, that gives you the indication that this is wiping out clearly improvements coming from other areas. And I'm confident what is the right word? I assume and I'm even confident that you will see in Consumer Protection that the trend that you've alluded to will be confirmed in our second quarter numbers. That's great to hear. Thank you both. Thank you, Georgina. Thank you. Next question comes from the line of Andreas Heine from Stifel. Please go ahead. Your line is open. Yeah. Thanks for this a lot. Three questions from my end, please. The first is on the monthly trend in volume. You have shown February over January, March higher than February. Has that continued in that way in April and what you can see so far from May? That's the first question. Secondly, you have in length elucidated on the expected increase from Saltigo in the second half, the end of the supply issues in Rotterdam Botlek, and progressive cost savings. At your midpoint in the guidance, have you included much of a macro recovery to get, especially to Q3? So you have already highlighted that you are fine with the consensus in Q2. But then obviously, a very strong pickup has to come in Q3. I'd like to understand whether this is what you anyhow have in your hands, so the Botlek part, the Saltigo part, and the cost savings, or whether that needs also stronger incoming orders from what you see right now. The last question is more midterm. Well, in the case of recovery, I would still assume that Europe is not the area of strongest growth. The energy situation is structurally different than it has been a couple of years ago. So more of your earnings should come from the U.S. where basically all your acquisitions were made, which has a significantly lower tax rate. The question is whether from the tax perspective, midterm, your tax rate might come down by a couple of percentage points. Thanks. Andreas, thank you for your questions. Great ones. I will hand them all over to Oliver. Matthias, thank you. You're welcome. I'm very, very happy to take even those questions. On a monthly trend, Andreas, we were of the opinion that including a chart that shows January, February, and March makes a lot of sense because we knew people would be looking at our free cash flow, which you could say was impacted by the rise in receivables. We thought the visibly strong pickup in sales, specifically in March so the collection most likely hasn't happened yet was taking place. You know that before in quarters, I can only recollect one time where Matthias was pointing to a certain month-over-month relation that I believe he quoted his son was asking him for. But I wouldn't like to go back to this methodology and hence not now talk about the first days in May or how April trading was because we have provided the guidance that the second quarter is sequentially expected to pick up as we expect a sequential improvement in the Q3. Now, you were asking on the midpoint of our guidance and how much that would include a macro recovery and whether the pickup Q2 versus Q3 then or Q3 versus Q2 would be in our hands. First of all, I want to make clear that my confirmation of the confidence that we have was not only related to where consensus stands in Q2 but expressedly also to where the consensus stands in full year. We can live with both numbers. Now, indeed, I'm very grateful for the question, "How much is in our hands?" because the pickup Q3 should not only be on the back of a business recovery that we have quoted coming in ag, very mildly also in construction. We also said that our savings from forward should be ramping up. And last year, the second half was also impacted still by chlorine outage. And then you remember we had this explosion on our Botlek site. Both are not expected to reoccur. So indeed, a nice chunk of that is in our hands and not only reliant on the business pickup. Then your last question was on taxes based on the fact that indeed, we have grown our foothold of business and respective earnings coming from the US. And when you look into our statements with the acquisitions, we have adjusted our tax guidance. We had guided to a midterm tax rate there of 26%, which is around about two percentage points lower than what we've shown in the past and one lower compared to the guidance we are providing short term. So indeed, don't expect wonders there. The world is rather moving into a direction where everybody wants their share of the cake in terms of taxes. But we will also improve here due to our regional footprint. Thanks a lot. Thank you, Andreas. Thank you. Next one, please. Next question comes from the line of Rikin Patel from BNP Paribas. Please go ahead. Your line is open. Hi. Good afternoon. Thanks for taking my questions. Just had one follow-up left on the ag and destocking. Can you maybe elaborate which regions you are seeing the most weakness in? And also, once your customers do start to restock their raw materials, should we start to see pricing react in the Saltigo business and maybe headwinds start to materialize early on in 2025? Thank you. Rick, as far as regions is concerned, please understand that we are shipping to the agrochemical companies themselves. So we don't supply directly to the regions. They normally use our active further formulated and then ship it out. So basically, significant chunks of our products are being sold here in Europe. While we know that the products that our ag customers are selling, then, of course, goes to the respective regions. Now, on pricing, we normally have in our contracts formula prices with determined margins and then also driven by capacities. So therefore, as far as pricing is concerned, this is normally a reflection then of our contractual formula prices and has to do with raw materials, energy, logistics, etc. I hope that clarifies the point. If we have new contracts coming in and new blockbuster contracts coming in, then you can see margin expansions and change and also pricing differences that kick in. And of course, here, we clearly work on that all the time. This is the custom manufacturing business model. And then you see clearly jump-starting and pricing. But that's the name of the game for the Saltigo business model. Okay. Thank you, Matthias. Thank you. Next question. Next question comes from the line of Tristan Lamotte from Deutsche Bank. Please go ahead. Your line is open. Thanks. Two questions, please. The first is on Envalior. So it looks like you have around -EUR 50 million in income from investments for Q1, which I think is slightly worse than Q4. I'm conscious there are some other items in there. So I was wondering if the JV is still struggling in Q1 or whether there have been some signs of improvement sequentially. And what would you expect as the run rate for this year? And then the second question is on flame retardants. So I was wondering if you could comment on potential regulation in Europe for flame retardants. And with a bromine-leaning flame retardant portfolio, does that put you at a disadvantage against peers who are more geared towards phosphorus? And are there some of your bromine-based flame retardants which are facing regulatory or structural pressure from a move towards more ESG-friendly flame retardants? Thank you. Well, Tristan, very good questions. And let me take them one by one. As far as Envalior is concerned, I mean, I will be fully in line here with my legal obligations and constraints. But clearly, what I can say is if you look into rating agencies' reports, there are clear expectations that this year is going to improve, 2024 versus 2023. Three rating agencies have published their reports. And I think it's commented in the press respectively. And now, I take therefore a further step up. I look at the polymer industry, which we have very detailed insights into. The polymer industry is improving. So definitely, the polymer industry was hit hard, 2023. The polymer industry, in most of the cases, if they go to automotive, if they go to electronics, is rebounding. It will not be a record year, but it will be a clearly better year than 2023. And therefore, my assumption is that this will also be a better environment for the Envalior business. And also, I mean, Envalior has clearly communicated to go for synergies. This is not the first year after creation of Envalior. So synergies should kick in. And again, the precise number of synergies has been communicated by the rating agencies, which can also be looked up. And then I think the storyline should be very clear in what direction this powerful joint venture is going to go. Now, on your second question, flame retardants, I would like to be very clear. Brominated and phosphorus-flaminated flame retardants don't really compete with each other. If you go for brominated flame retardants, you basically talk about marrying them with one specific polymer. Phosphorus flame retardants, you marry with another different polymer. One loves the polyurethanes. The other one loves polystyrene. Both are used for insulating or isolating I'm not sure what the right word is housing and making sure that everything is being properly secured so that energy is not dispersed from rental homes, housing homes, etc. But both flame retardants have different polymers that they are attached to. They don't really compete with each other. Or let's put it like this. The majority does not compete with each other. So therefore, if you have both products in your baskets, you're better positioned to basically supply in its entirety the customer industry. So this is the first part of flame retardants, not the second part. You alluded to phosphorus chemicals being regulated by the European Union. I think it was 2019 where we all in our Capital Markets Day event, I think. I'm not 100% sure. It might have been also the Capital Markets Day event before. But we have a specific presentation on exactly this element, regulation of flame retardants in the European Union. We are not worried about that. So currently, in phosphorus flame retardants, we are currently selling the first generation. And the first generation might come under scrutiny. If you have not the second generation, you have a problem. We have the second generation already developed. Please take note of the fact that in phosphorus flame retardants, LANXESS is one of the leading giants in the industry. We are on both products, gums, one of the top three. In phosphor, we are notably strong. So as a worldwide leader in phosphorus flame retardants, you can assume that we have the second generation. As a matter of fact, we even have the third generation in place. The second generation, we could sell to our customers already today, but it's for them too expensive. I mean, it's unique. It's sophisticated. And therefore, it's innovation. And therefore, it has a higher price. But as it is four times more expensive than the first gen, the first gen is currently being used. The third generation, which we also have, is more expensive than the second gen, but it's top-notch quality. Unfortunately, we are selling it only in grams and kilograms. So this does not suffice. But the clear statement to you is regulation kicking in might not be a risk. It might be a real advantage. And as a market leader, we are prepared for regulation. I hope that clarifies it one by one. Great. Thank you. Thank you. Next question comes from the line of Sebastian Satz from Citi. Please go ahead. Your line is open. Yeah. Thank you very much for taking my question. I just have a follow-up on bromine pricing again. I appreciate your comments on weak volumes and construction. But if I remember correctly, in the past, your contract prices were lagging the spot price by something like two quarters. And given where spot prices are, that would actually suggest another lag down incrementally from where we are today. So I just wonder whether this is already factored into your guidance or whether something has changed in your logic in your pricing contract, please. Thank you very much. Sebastian, thank you. Oliver here. Let me take that one. On bromine pricing, we've been confronted all the way with the one available price that is out there, which is a Chinese spot market price indeed. We've never spoken, to the best of my knowledge, about our contracts and how prices for our bromine derivatives is really agreed upon with customers. What we've said is that from a trend perspective, if the bromine spot price that you can see on the ticker is moving downward and it has moved in the past sharply downward, then you can take that as a trend indication that is reflective at least of the part of the business where we sell elemental bromine. The derivatives that we produce are not necessarily following this price one by one. Maybe against this backdrop comes the perception that there is a certain time lag. There is no time lag really compared to the Chinese spot market price. I hope that answers your question. Understood. Thank you very much. Of course. Next question, please. Thank you. And our next question comes from the line of Konstantin Wiechert from Baader Helvea. Please go ahead. Your line is now open. Yeah. Hi, gentlemen. Thanks for taking my questions as well. Maybe if I may start again with a clarification on the impact of the force majeure that we've seen last year and this year. If I remember correctly, Botlek from basically Q1 on, I think, should be covered by insurance, if that's correct. And so I think the impact from the chlorine force majeure was about EUR 20 million last year with, I think, EUR 8 million in the Q1. So question would be, should we have a net positive effect then potentially from those two force majeure of about EUR 4 million for the next two quarters? And then I think in the Q4 last year, Botlek was about EUR 10 million. So potentially a gap of EUR 14 million then in the Q4. Would that be correct? Maybe second question also on the segment. If you could remind me I'm just not sure anymore whether you ever produce or are still producing neonicotinoids in the Saltigo business. And if yes, how that has maybe impacted your utilization in the Q1 this year as well. And if I may squeeze in a follow-up question on the pricing that you have touched on. I think you said you never passed on more than the raw material prices. So I was just wondering if you could clarify how that fits into your strategy that you basically gave us in the Q4 results call, that you were more aggressively pricing now to try and regain volume-wise market shares. So yeah, that would be it for now, I think. Thanks. Fantastic, Konstantin. Thank you very much. I would say maybe, Matthias, you'd like to take over the Saltigo question on neonicotinoid and the more technical questions maybe on the several force majeure, unfortunately, that you mentioned, which actually reminds me of this miserable year we've had behind us hearing you talk about all of the negative impacts. But indeed, Konstantin, you are right. And I think I mentioned that in the full-year call as well, the bridge that I built also included roundabout EUR 40 million, including the Botlek outage, the chlorine outage, both of them not expected to reoccur. And I would not like to dig even deeper because every year, you do have some instances where in the beginning of the year, sometimes for one week, sometimes for two weeks, plants get frozen in the wintertime in the U.S. So indeed, there is a relief that you can bake in from one year to the other. On raw material pricing, I'd like to give some clarification as well. The contracts that we have, not only on raw materials but starting with the energy crisis in 2022, also with regard to energies, were included for those contracts where really energy and raw materials mattered. And our guidance has always been, "Please perceive any fluctuation in raw material and energy as a pass-through to our customers. And you should continue perceiving it that way." The question is totally valid that you posted, though, because indeed, in Advanced Intermediates, partly also inorganic pigments, we are in a fierce competition. And we are prepared here to be more flexible on pricing, which, of course, is not a thing that will be there for good but a temporary item. Therefore, I'm always saying, "Please don't look only at one quarter, year-over-year to another quarter. Take a longer time frame. And you will see that the price movements that we have are covered by raw material, energy, and logistic pieces where indeed, we aim to not pass on more on the way down than we get as a relief. And should they start to rise again when demand picks up, it will, of course, be our ambition to at least pass on what we have to carry." With that, I'm looking at Matthias for the Saltigo and the neonicotinoid question. Well, Nicos as they are called. Konstantin, very clearly, I mean, we've never stressed this anywhere in our calls as a big item. And clearly, I can here confirm this is simply not relevant for us. Okay. Perfect. Thank you. Most welcome. Next question, please. Thank you. We currently have no more questions registered. I'll hand back to our speakers. Well, ladies and gentlemen, it's the first time in the last few quarters that we see that momentum is coming back. And this feels good. It has been one of the longest severe downturns that I've seen in this industry for the last 20 years. And it's a great industry. And I think we have everything it takes to participate and to turn out to show our strength going forwards. 2024 is not a normal year. So we need to take it step by step. But we clearly want to see and want to focus on 2024 so that we show that this company can accelerate. Thank you for participating, seeing you all on the roadshow. Bye-bye from Cologne. This now concludes our presentation. Thank you all for attending. You may now disconnect.