Welcome everyone, and thank you all for standing by. At this time, all participants are in listen only mode, and after the presentation, we will conduct a Q&A session. To ask your question, you may press Star followed by the number one. Today's call is being recorded. If you have any objections, you may disconnect at this time. I'll turn the meeting over to your host, Kenny Chae. You may begin. Good morning, and hello, and welcome to AkzoNobel's investor update for the third quarter of 2022. I'm Kenny Chae, Head of Investor Relations. Today, our CEO, Thierry Vanlancker, and CFO, Maarten de Vries, will guide you through our results. We refer to the presentation, which you can follow on screen and download from our website at akzonobel.com. A replay of this webcast will also be available. There will be an opportunity to ask questions after the presentation. For additional information, please contact our investor relations team. Before we start, I would like to remind you about the disclaimer at the back of this presentation. Please note this also applies to the conference call and answers to your questions. I will now hand over to Thierry, who will start on slide three of the presentation. Thank you very much, Kenny. Hello, everybody, and a very warm welcome to the call. As we discussed during our Q3 market update call last month, this past quarter showed all the clear signs of a turning point in market dynamics. The past several quarters showed demand for paints and coatings outstripping the supply of raw materials. As a result, the whole channel, including ourselves, was focused on replenishment, which resulted in high levels of inflation and inventory built across various channels. As of Q2, we are seeing a sharp and fast reversal of these trends, driven by a significant drop in consumer confidence across key geographies, and an especially weak macroeconomic outlook in Europe and China, with similar signals emerging in the U.S. This causes a number of concurrent and fast-developing effects. The first one is an accelerating improvement of availability for lower-priced raw materials. The second effect is the early sign of softer demand signals, especially in Europe and China. This has triggered some defensive destocking across most channels based on these market demand concerns in those geographies. On the first effect, with regards to raw materials, we see clear and significantly accelerating signs of deflation in raw material pricing. While these falling output prices are an encouraging and a long-awaited positive development for 2023 and beyond, it is in the very near term till year-end, a headwind for us as a whole industry now first needs to work through elevated levels of costly inventory that was built up during the year. Based on current inventory levels and the time needed to work through it, we expect the margin expansion to start to have a positive impact in our numbers from early 2023 onwards. The second effect is softening demand, or rather concerns of softening demand and destocking, which means more negative pressures on our margins from weaker volumes before we start realizing the long-awaited margin expansion in 2023. The exact timing and the magnitude of that long-awaited margin expansion in the first half of 2023 is difficult to predict, given the uncertainty of macroeconomic factors like energy costs in Europe and the impact of a number of other items like the COVID lockdowns in China or interest rate increases around the world and the impact on demand and cost dynamics. Focusing on our third quarter results, our adjusted operating income, excluding the impact from retrospective hyperinflation accounting, came in at EUR 201 million, which is in line with what we communicated in our Q3 update from late September. In the third quarter, we delivered double-digit revenue growth driven by strong pricing of 13%. Our pricing initiatives more than offset raw material and freight inflation now for the third consecutive quarter. Revenue was up 19%, with double-digit revenue growth for both Paints and Coatings. Year to date, revenue for the first three quarters of 2022 was 15% higher compared to the same period of 2021, and the year to date adjusted operating income was EUR 663 million. By the end of the third quarter, we completed EUR 354 million out of our current EUR 500 million share buyback program, which we expect to complete by year-end. Around 3.3 million treasury shares, representing 4% of the share count, were canceled earlier this month. We also announced an interim dividend of EUR 0.44 per share, which is in line with our stable to rising dividend policy. Now turning to Slide four. Despite the external headwinds in the quarter, we continue to make progress delivering top-line growth for the ninth consecutive quarter. Cumulative pricing over a two-year period is now 22%. Thank you very much. Sorry for the disruption. Obviously, there was a disconnect with this call center. Let me start back on the Chart 5, that actually sees the latest demand trends for the current quarter, and which is totally in line with what we communicated in our market update call in September. In the third quarter, we saw heightened macroeconomic uncertainties in Europe and China. In Europe, ongoing geopolitical tension, rising interest rates, and high energy prices led to near historical low consumer confidence, along with a deterioration in economic outlook. This led to customers and channel partners in both Paints and Coatings proactively destocking in anticipation of what they fear will be lower market demand. In China, COVID-related lockdowns continue to persist, and extreme weather led to restrictions on power usage for industrial activities. Meanwhile, the declining real estate market and significant weakening of consumer confidence led to low market demand during the past quarter, which outweighs the benefits from our successful geographic expansion for Deco China in this quarter. We're still experiencing supply and logistics constraints in North America. While the situation is improving overall, we are still faced with unexpected incidents, such as the fire and explosion incident at Allnex, a major resin supplier for us in North America. The overall demand for Paints and Coatings in Latin America and South Asia is strong as expected, while sequential recovery continues in Marine and Protective and Automotive and Specialty Coatings. Slide 6 shows the volume progression for our Paints and Coatings businesses. The last three years have been anything but normal, with significant distortions to the paint and coatings industry, including the impact from COVID-19, supply chain disruptions of all sorts, and geopolitical tension, to name a few. As such, it is important to contextualize the volume progression compared to 2019, the last of the normal business years for this industry. Our global paint sales volumes, excluding acquisitions in the second half of 2022, are trending slightly below our 2019 levels. Sales volumes for paints EMEA are trending below 2019 levels impacted by destocking, while the overall end market demand, important to stress, is around 2019 levels still. Sales volumes for Paints Latin America and South Asia are trending above 2019 levels, while sales volumes for Paints China are trending materially below 2019 levels due to the recent macroeconomic weakness and the lower consumer confidence in China, as mentioned before. Our global Coatings sales volumes, excluding acquisitions in the second half of 2022, are trending materially below the 2019 levels. Sales volumes for Industrial and Powder Coatings are trending below 2019 levels due to significant destocking in their respective distribution channels as a result of weaker confidence on the macroeconomics and the impact of high energy price on industries such as coil in Europe. Sales volumes for Automotive and Specialty remain around 2019 levels, while sales volumes for Marine and Protective continue to improve sequentially, but not yet fully recovered to 2019 levels. It is also worth noting that the impact of exiting most of our coatings businesses in Russia during Q3 accounted for about 1% of the sales volume decline for our global coatings business versus 2019. With that, I will now hand it over to Maarten, who will share more about our financial results from slide eight onwards. Yeah. Thank you, Thierry, and good morning, everybody on the call. In the third quarter, our reported revenue was up 19% versus prior year and up 14% in constant currencies. The volumes were 5% lower, which was more than offset by pricing of 13%. The Grupo Orbis acquisition, which closed in April, added 5% to revenue and delivered a positive contribution to third quarter adjusted operating income with performance ahead of the original business plan. Adjusted operating income decreased 24% year-on-year to EUR 184 million. When excluding the negative impact of retrospective hyperinflation accounting, the underlying adjusted operating income was EUR 201 million, which is a 17% decline year-on-year. Adjusted operating income excludes the impact of identified items, which was net negative EUR 60 million for the third quarter. Now moving on to slide nine. As mentioned on the previous slide, we delivered three consecutive quarters of positive net pricing versus raw material inflation for both paints and coatings. Pricing of EUR 360 million was enough to offset EUR 279 million of raw material and freight inflation in the quarter. The decline in volumes of 5% translated into a negative EUR 53 million impact. Currencies had a positive effect of EUR 11 million, while Mix was negative EUR 6 million. Operating expenses and other one-offs were EUR 29 million higher year-on-year. The underlying operating expenses increased by EUR 35 million due to higher manufacturing supply chain and IT costs. While we are seeing clear signs of raw material costs declining, inflationary pressure on operating expenses is expected to continue. In the third quarter, we retrospectively applied hyperinflation accounting for Turkey as of January 1st, 2022. Please note that for Argentina, hyperinflation accounting has been in place since 2018. The total impact of hyperinflation accounting recognized in the third quarter was EUR 25 million, EUR 8 million related to the quarter itself, while EUR 17 million related to the first half of the year and was applied retrospectively. The third quarter adjusted operating income was EUR 184 million, and excluding the retrospective hyperinflation accounting, it was, as I said earlier, EUR 201 million. Moving now to slide 10. For the third quarter, the impact from raw material inflation and freight inflation was EUR 279 million versus the same period prior year. Combined with the EUR 278 million impact from the same quarter last year, the total cumulative inflationary impact over a two-year period was EUR 557 million. We expect the cumulative inflationary pressure to plateau during the fourth quarter, with impacts from raw material and freight inflation forecasted between EUR 210 million-EUR 240 million versus prior year. On pricing, we delivered 13% in the third quarter, which combined with the 9% pricing from the same quarter last year, represents a cumulative pricing of 22% over the two-year period. For the fourth quarter, we expect pricing to land between 9%-10% year-on-year. Over the past seven quarters, excuse me, cumulative impact from raw material and freight inflation reached EUR 1.7 billion, which we have fully offset this quarter with cumulative pricing benefit of the same magnitude. On slide 11. Having turned positive on net price and mix versus raw material and freight inflation in the first quarter of this year, we have continued to stay positive throughout this year, as shown by the red line in the graph. While we clearly see signs of raw material prices declining, cumulative raw material and freight inflation impact on our numbers is expected to plateau for the fourth quarter, as indicated on the previous slide. This is due to a lag effect based on the time needed to work through the current elevated inventory levels. As such, margin expansions is expected in 2023. Turning now to slide 12. Reported revenue for Paints was 15% higher versus the third quarter prior year, with pricing of 11% more than offsetting lower volumes of 6%, while acquisitions added 6%. Pricing of Paints stayed ahead of raw material and freight inflation for the quarter. While Europe and China were impacted by increased macroeconomic uncertainty and near historical low consumer confidence, our Paints business in Latin America and South Asia delivered strong revenue growth. Despite the strong revenue and pricing performance for Decorative Paints globally, the impact from lower volumes resulted in lower adjusted operating income of EUR 105 million. Excluding the retrospective hyperinflation accounting impact, adjusted operating income was EUR 160 million. Now moving to the Performance Coatings results on slide 13. Reported revenue for Coatings was up 21% year-over-year, driven by strong pricing of 15%, while volumes were down 4% impacted by destocking. The suspension of several businesses in Russia accounted for 1% of the year-over-year volume declines of Coatings in the third quarter. Industrial Coatings and Powder Coatings were impacted by destocking, while Marine and Protective Coatings continued to recover sequentially, and for Automotive and Specialty Coatings, volumes in Aerospace and Vehicle Refinishes improved year-over-year. Adjusted operating income was EUR 105 million and EUR 111 million, excluding the impact from retrospective hyperinflation accounting. Now moving to slide 14. Operating working capital for the third quarter continued to be impacted by higher raw material costs. Physical inventory value increased due to raw material cost inflation. This resulted in operating working capital as a percentage of revenue at 18% versus 13.6% for the same period last year. Sequentially, versus the second quarter, inventory reduction of EUR 90 million in constant currencies was outweighed by lower payables as a result of our destocking efforts. Our Focus Two initiatives have been actioned to deliver a 300 million reduction in inventory, of which around 200 million reduction is expected by year-end, with the remaining reductions to be delivered in early 2023. Free cash flow was positive EUR 61 million for the quarter, which is an improvement sequentially versus the second quarter, but as you can see, materially lower versus prior year due to the increase in working capital along with lower EBITDA for the quarter. Capital expenditures for the quarter were EUR 72 million. The net debt/EBITDA leverage ratio was 3.4 times at the end of the third quarter, which is materially higher than our long-term target leverage ratio of 1-2 times. The higher leverage ratio was mainly due to cash out for Grupo Orbis, higher working capital, and lower EBITDA. Leverage ratio is expected to stay elevated by the end of this year. Moving now to slide 15. Adjusted EBITDA was 13% lower for the third quarter, mainly due to lower volume and higher operating costs, despite delivering positive net pricing versus raw material and freight inflation. The third quarter adjusted EPS was down to EUR 0.57 per share. Delivering on our capital allocation priorities, we have repurchased EUR 354 million of shares of the current EUR 500 million share buyback program initiated in March. Combined with our previous share buyback program, the total amount of repurchases year to date was around EUR 505 million. Interim dividend is EUR 0.44, stable year-on-year in accordance with our dividend policy. Turning now to slide 16. We are executing consistently on our capital allocation priorities. We are investing in organic profitable growth with roughly 3% CapEx, and we have a stable to rising dividend policy. We're disciplined in our bolt-on acquisition strategy while executing on our current share buyback program. The leverage ratio is expected to stay elevated by the end of this year, while longer term, we remain committed to the framework with leverage ratio between one and two and retaining a strong investment credit rating. Now I'm handing back to Thierry. Thank you very much, Maarten. In summary, the macroeconomic uncertainty and the outlook in Europe and China deteriorated more than expected during the quarter. While pricing continued to more than offset the impact from raw material and freight inflation for the third consecutive quarter, the volume impact from destocking in distribution channels for Decorative Paints Europe and Performance Coatings, along with weak demand in China, resulted in an adjusted operating income of EUR 201 million, excluding the impact from retrospective hyperinflation accounting. For the fourth quarter, we expect negative volume trends to continue, with volumes down mid- to high-single-digit% versus prior year. The negative impact from raw material and freight inflation is expected to be in the range of EUR 200 million, EUR 210 million to EUR 240 million, while pricing is expected to be up 9%-10% year-over-year. As a result, we expect our fourth quarter adjusted operating income to come in below EUR 150 million. Given the current macroeconomic uncertainties and the lack of a more precise visibility into 2023, we have decided to suspend our financial targets for 2023. While we do expect significantly declining raw material costs to have a significantly favorable margin impact for 2023, there are many questions on demand trends that we do not yet know the answer to. Like, for example, what the impact will be of the COVID lockdowns in China on the consumer confidence, how the unprecedented energy crisis in Europe will have an impact on consumer spending, how interest rates in the U.S. will impact new housing starts and industrial spend. All these moving parts make it incredibly difficult to communicate a precise outlook for 2023. Even if you believe in the entitlement of the company, Greg and I have agreed it makes much more sense to provide further guidance when announcing our full year 2022 results after winter. In the meantime, we will continue to focus on our successful market share builds, our margin management, and our cost reduction initiatives. I'll now hand over to Kenny for information about upcoming events and the Q&A on slide 19. Thank you, Thierry. Before we start the Q&A session, I would like to draw your attention to some of the upcoming events shown on slide 19. The ex-dividend date of our 2022 interim dividend is on October 24th, and the record date is October 25th, followed by the payment on November 3rd. We will publish our fourth quarter reports on February 8th, 2023. This concludes the formal presentation, and we would be happy to address your questions. Please state your name and company when asking a question, and limit the number of questions to two per person so others can participate. Operator, please start the Q&A session. Certainly. We will now begin the Q&A session. For participants, if you would like to ask a question, please press star followed by the number one. Please unmute your phone and record your name slowly and clearly when prompted. Your name is required to introduce your question. To cancel the request, you may press star and then the number two. Our first question is from Gunther Zechmann of Bernstein. Your line is open. Good morning, Thierry and Maarten. Gunther Zechmann here, Bernstein. My question is, you increased your net debt/EBITDA guidance from 1-2 times, now to around 2 times. Could you explain just how much, or maybe all of it, is related to the lower earnings expectations for 2023, and how much of it you would attribute to higher net debt, if any, please? Yeah. Maarten, you wanna cover that? Yeah, Gunther, maybe to give a little bit of kind of context. What you see currently is clearly an elevated leverage ratio of 3.4, driven by, of course, the higher working capital, which is again coming from the higher or the elevated inventory levels. The recent Grupo Orbis acquisition as well as the current lower EBITDA. By the end of this year, we still expect that it will be elevated to above three. Then we expect that we will delever during 2023. I think it's also important to state that structurally we maintain our target leverage ratio of 1- 2. We indicate that we delever first to and around two level. The key for us is really the unwinding of the high level of working capital. Of course, we will see the margin expansion coming through in 2023, and that will drive the increase of the EBITDA. If I think about raw materials rolling over and working capital normalizing towards the end of 2023, is it fair to assume that if net debt stays where it is, then the implied guidance, if I just take earnings as a residual, you're guiding for EUR 1.5 billion EBITDA for 2023? We are not guiding for 2023. What we've said, Gunther, is that by our Q4, by our full year results, we will come back with further guidance. Great. Thanks, Maarten. Thank you. Our next question is from Alex Stewart of Barclays. Your line is open. Hello, good morning. I wanted to ask on the raw material guidance for the fourth quarter, which looks like it's at a similar level to the third quarter if I add up the last two years of inflation. The third quarter, at the time you talked about being unusually high levels of inflation because of the North American resin outage. To have the fourth quarter at the same level seems high to me. Could you quantify or tell me whether there was an inventory devaluation or write-down impact in that EUR 210 million-EUR 240 million guidance? And any sort of steer on how big that might be. It's obviously very material for the Q4 guidance, so be interested to know that. Any other comments around why the fourth quarter raw material guidance is as high as it is would be very useful. Thank you. Yeah. Let me maybe start, Alex Stewart, and then Maarten de Vries, you can fill in the blanks in it. First of all, on raw material, maybe good to sketch what we see. First of all, the raw materials as we are buying them right now are indeed acceleratingly dropping in price. That is in fact a good thing, and that's an encouraging thing for next year. It's dropping faster and more than we actually had expected. That's the good thing. It's a valid question, Alex Stewart, why don't we talk about it? Well, there's two things. Since the whole channel had relatively high inventory, there's some destocking happening, so hence our sellout numbers are lower. At the same time, we are also buying significantly less raw material right now because we have to work to our own inventory to get there. That means that the flow through of the, well, first of all, the acquisition of lower cost raw materials, and then the flow through into our books is actually probably gonna be at the very near end of the fourth quarter and probably more likely beginning of 2023 that you see that impact. Although the raw material is coming down, you'll not see that in before year-end. In fact, yes, there may be some revaluation of inventory. It actually may be more a flushing out of the system at the latter part of this year to then actually getting back to a much more encouraging new normal afterwards. That gives the dynamic, I would say, around the raw materials. Now, maybe Maarten, you want to fill in some of the blanks there. Yeah. To your question, in the range we've given at EUR 210 million-EUR 240 million raw material and freight inflation for the fourth quarter versus last year includes the estimated impact of stock revaluation. To be honest, it very much depends on how the slope will run during Q4. That is currently pretty volatile. We have included a double-digit million number based on our current insights how that slope will run. If I say EUR 20 million to EUR 40 million, do you think that's the right ballpark for the write-down? It's really important given the proportion of the Q4 earnings. For our current insights, I would more say it's a lower end of that range, as I mentioned earlier. Okay. Alex, it's a very dynamic environment on raw materials, to be honest. It's actually that balloon on the raw material inflation has been inflated over the last one and a half years. We knew that it was gonna deflate. It's just deflating very fast at one time. It's actually our procurement organization comes with breaking news every other day on what's happening. That's why it's a bit difficult to quantify. Very helpful. Thank you. Thank you. Our next question is from Mubasher Chaudhry of Citi. Your line is open. Hi. Thank you for taking my questions. Just the one please. You've given a little bit of guidance around the fourth quarter being less than EUR 150 million. Can you provide any thoughts around the lower end on that guidance? Could we be approaching double-digit million EUR in the fourth quarter? Thank you. Mubasher Chaudhry, thanks for your question. If we wanted to give that guidance, we would have put it in there. What we wanted to do is, in fact, lower the exuberant expectation that was out there on the quarter, to be very honest, and it's actually probably fair to sketch it. Again, I want to stress that, in fact, except for in China, based on the lockdowns, we don't necessarily see real demand drops. It is actually a pile on from destocking. It's very difficult for us to see what that is gonna bring. It's very difficult for us to see what the inventory valuation will do given the dynamics of what the downward pricing of raw materials is doing. It is also, by the way, depending on how the energy crisis evolves in Europe, because it is not unthinkable. We didn't have any information on it yet, but it's not unthinkable that some customers in the channel close shop for 2-3 weeks in December to avoid certain bills. That's why we wanted to be actually somewhat conservative, lowering the expectation for all the dynamics we have. It does not betray a negative feeling about how 2023 would be. I think in the fourth quarter, as you know, it's a small quarter for us, so if there's any adversity that comes to life, I mean, the number dips. We wanted just to make sure that the expectation was reset for the quarter on what we see. I'm not sure if we necessarily wanna comment on what would be a downward situation. We're not that negative, but frankly, it's a very volatile environment, which is somewhat out of control of the company, at least in the fourth quarter. Thank you very much. Thank you. Our next question is from Tony Jones of Redburn. Your line is open. Yes, good morning, everybody. Thanks for taking my questions. I've got two, if it's okay. Could you talk a bit about OpEx inflation in 2023 and whether you're budgeting for this to be a net negative after cost savings? I'm gonna have another go on getting to the underlying EBIT for Q4. Martin, thanks very much for talking a bit about the inventory charge. Does the EUR 150 million also include another EUR 15-20 million of hyperinflation? Thanks. Yeah, let me tackle maybe the first question on the operating expenses. The weird situation is that the external demand environment but also the raw material environment having more availability is changing very rapidly. I would say at least on the raw material availability is normalizing very rapidly. That means that we basically have to get through costs that we had in the system to handle all the uncertainties, extra things that we had to put in place to get there. That we get out of the system, all these programs are online and being executed, but again, there are social partners, et cetera, so you have to go through that to a certain speed. I think that you will see coming indeed in 2023. The question mark is probably to some extent around logistics costs, whereas sea shipping costs have normalized to a large extent. Road transportation is significantly higher cost in both the U.S. and in Europe. There we're looking at how we can handle that on the amount of shipments and service levels to customers, etc. That will be probably an ongoing situation in 2023. For the rest, I think the organization has stepped up on out-of-pocket expenses. For example, on our non-product related expenses, we are now slightly below last year, despite double-digit inflation in most of those goods and services that we acquire, so lots of activities are there. I think in 2023, it will. Again, lots of uncertainties on there, but one might expect that is also going to start getting in line. The one wildcard being what the wage bill will do, not in number of people, but what that will do on the wage increase cycle, which is probably gonna be somewhat out of the ordinary in 2023. On the underlying Q4, maybe Maarten, do you wanna comment on that? Tony, a good question. In Q3, as I mentioned, we had to retroactively account for the impact of hyperinflation. That was EUR 17 million. But the total impact of hyperinflation in Q3 was EUR 25 million, so EUR 8 million operational impact. I would say for Q4, you can take this as a proxy for the operational piece. Thanks so much. Thank you. Our next question is from Chetan Udeshi of JP Morgan. Your line is open. Yeah. Hi. Thank you. Good morning. Two questions from my side. I was curious. I was looking at the payables number on the balance sheet at the end of Q3, and it's come down by 23% from second quarter level, or I think in absolute number, it's come down by EUR 780 million. I'm just curious, how much of that is actually, you know, you guys destocking or buying less versus the impact of pricing? Because clearly balance sheet numbers are, you know, quarter end numbers, so some of the raw material deflation should be captured, hopefully, in that number as well. So just curious, any color you can give on the, let's say, purchase volume versus pricing element to the decline in payables. The second question was the guidance of mid- to high-single-digit volume decline in Q4. Are you able to give us any color on how much of that do you think is destocking, and how much of that is underlying, in terms of demand weakness? Thank you. Yeah. Thank you very much, Chetan Udeshi. Maybe let me try to take a stab at it. Good observation on the payables. If this would be a cartoon movie, you would see the car really hitting a fast brake, and everybody's hitting the front windshield in the car, because yes, I mean, we slammed the brakes on payables. Again, what we see is people destocking. That means that backs up into our own inventory. In fact, it takes one or two months sometimes for material that we've ordered to arrive in our warehouse. There is an inertia in actually resetting that, and it went very fast, to be honest, those corrections. What we indeed have done is actually really slam the brakes on buying key categories, and that will probably also happen big time in the fourth quarter. Yes, I mean, our orders to some of our suppliers have actually dropped to zero for one or two months, because we actually have enough inventory to go through, and we want desperately, as we said, to get through the expensive stuff in inventory so that we make as fast as possible room for the lower cost material, so then to flow to our P&L. There is a significant indeed hitting the brake to get our inventory back to where it needs to be. Significant progress has been made, by the way, in the volume on that, I think. We're really getting in this fast reversal of what's out there. I think we will be getting in the fourth quarter very much on top of where we need to be with our inventory. That's on the payables situation. If you then look at the mid-single-digit destocking. First of all, I just wanna remind everybody there is about one percentage point of that is Russia, where we actually stepped out of significant businesses for all the known reasons. That's of course given in those numbers. For the destocking, as far as we can see, right now, it is actually mostly destocking, except for what we see in market demand in China, where the consumer confidence, specifically in tier one and tier two cities, has made the consumers across the board pretty, I would say, pretty reluctant to go out and to spend money on anything, including renovation and including paint. If you exclude China, I think for most of it is in fact destocking, not always at our direct customers, but it's often at the customers of the customers of our customer. In the whole channel is actually destocking. That's the vast majority of it is destocking. That's clear. Does that answer your question, Chetan? Yes. Yeah. Thank you. Thank you. Our next question is from Laurent Favre of BNP. Your line is open. Yes, good morning, and thank you for taking my question. The first one, I guess is for Maarten around leverage, and I'm a bit puzzled about the comments around, you know, getting towards two, given that between the dividend of, let's say, EUR 300 million and the Kansai acquisition, I mean, a lot of the free cash flow is going to be, you know, eaten up by those two things. I was wondering, are you looking at other measures to get the leverage down, like suspending the buyback, or maybe small disposals of non-core assets? That's the first question. And then the second question is around the incentive of the new CEO. From memory, neither CEO nor CFO incentivized on the EUR 2 billion target for 2023. I was wondering if we could get an early insight on what the board is looking at for the incentive plan of the new CEO. Thank you. Well, the second question, easy answer. The incentive plan is very much the same incentive plan that was in place for the CFO and for the acting CEO. That has not changed. On the first question, Maarten, maybe Yeah. On the leverage ratio, maybe to be clear, because you mentioned the share buyback. The share buyback is running till the end of this year. As you know, we have decided earlier on in the year to accelerate the share buyback because originally it would run into next year. That is one. Secondly, I think as I mentioned earlier, it is very much driven by one, the unwinding of the very high working capital level, which will be driven by one, all the actions we take to bring the inventory levels down, which is critical also to drive the margin expansion next year. That is one. Secondly, obviously by the improved margins and therefore the improved EBITDA we will see next year. Okay. Thank you. Just to be clear, are you thinking next year could see a record free cash flow, as we saw, for instance, in 2020? I don't wanna comment on that, Laurent. As I said earlier, we will give further guidance post our Q4 results because then it's also we are in a situation to have better visibility on how 2023 will start to shape up. Okay. Thank you. Just to say, good luck and all the best to Thierry for the future. It's been quite a roller coaster over the last five years, but wishing you all the best. Thank you. Thank you. Our next question is from Charlie Webb of Morgan Stanley. Your line is open. Morning, everyone, and thank you for taking the question. Maybe just a quick follow-up on the OpEx and thinking kind of on the Grow & Deliver plan and on the Focus Two plan. As we look into next year, what is the net number? I mean, I know there's lots of moving parts. We talked about some of them, but what's the net saving we should think from those, as we kind of try and triangulate 2023 in terms of what we're trying to achieve and how you see, you know, current levels of inflation. That's kind of question number one. Question number two, just on the destocking and obviously kind of alluding to more destocking to come in Q4, which I guess makes some sense seasonally. This feels like a lot of destocking now. Just any sense on where customer inventories are at, and how, you know, that is now shaping up, as we move into next year? You know, have we kind of moved from, you know, above 2019 levels at a customer level to 2019 levels now moving below that? Just trying to get a gauge on where we stand, and how we should be thinking about that kind of destocking effect and how long it can continue. Yeah. Maybe let me take the second question then, Maarten. You can maybe tackle the 2023 OpEx question. On the destocking, we actually had expected, in all fairness, to have the inventories at customers to hover around the 2019 numbers. That seems to be largely the case too, except in some of the more impacted geographies like China, for example, where there is a bit of a reverse, the people go deeper. The one element, and that's why we want to be somewhat conservative also on the fourth quarter, is that as everybody is struggling with expensive inventory and tries to go through it, not sure how much more slamming of the brakes is gonna happen to free up some cash in the channel during the fourth quarter and before year-end. I would not be surprised if in certain parts of the channel, the inventory temporarily dips below 2019 ratios. That is a possibility. That's why we are somewhat guarded. Again, the whole story that you hear today is around an enormously fast developing situation externally, both on the raw materials, well, on the demand, fear for demand, because frankly, again, it's more fear for demand than what is actually happening, and then what impact it has on the raw materials. That is in fact directionally good news for 2023, but it all what has been built up in the last one and a half years is now all flushing out of the system in the last four or five months of the year, which are typically the low seasons for us, and that's why you see an overamplified situation. On inventories in the channel, I think they are hovering around 2019, but it, I personally would not be surprised if in parts of the channel it actually dips temporarily below 2019 numbers. Maarten, if you want to talk about OpEx. Yeah, Charlie, on the OpEx question, and Thierry mentioned already a couple of elements, but I think it's important to mention here that apart from the underlying delivery programs we have launched and we are executing on our Focus Two cost reduction programs, that's in total EUR 100 million. To be fair, the impact of Focus Two, the EUR 100 million, I think most of that will only become visible truly in 2023. For the fourth quarter, I would say OpEx will be trending more or less in line with what we've seen in the third quarter. The big challenge or the big unknown for next year is really how wage inflation will start to develop and maybe some other cost categories, which might then require further additional action. It is a little bit difficult to give now a definitive answer on your question. For sure, we will come back on this as we move along and enter 2023. Thank you very much. Let me reiterate, Laurent, and likewise, Thierry, wish you all the best, whatever it holds. Thank you very much. Thank you. Thank you. Our next question is from Peter Clark of Société Générale. Your line is open. Yes. Thank you very much. Yeah, good luck, Thierry Vanlancker. First two questions. I've got two questions. First one about the price stickiness. You've always talked about having a lot of the price stickiness in the distribution channels type focus business. And obviously, Deco and Powder immediately come to mind, where you're also pointing at the significant disruption and the destocking pressures, et cetera. Just wondering how you look at that pricing situation as we go into 2023, particularly in those two areas. The second question, obviously, the seasonality of Q4 weighs heavily on that guidance for the profitability. I accept that Q4 is probably gonna see big Christmas shutdowns. You've got more destocking on the way, might get a bit better by Q1, but Q1 again is a seasonally weaker quarter, particularly in Deco. Would I be right in thinking you are assuming, I know you don't want to give guidance on 2023, but you're assuming a very slow start to the year? Thank you. Yeah. Okay. Maybe two questions on the price stickiness. I think that confidence is unwavering. By the way, we're still increasing prices in several of the channels right now. Definitely in this distribution, there's hardly any pushback because they are able to pass it on to their customers. The pricing situation is still very, very clear. In fact, the way we manage it, that we've started doing a couple of months ago already, is actually to manage our pricing, so our margin and share. We obviously do not want to step away from share and actually manage those two things together, and that seems to be working pretty well. The price stickiness is actually there. That effect is the, as I said, behind all the stuff and the turmoil that's happening in this year-end, there's actually some directionally good news for 2023, and that so that remains the case. The focus of the company remains the same. Again, as you rightly say, the fourth quarter for us is a small quarter. Lots of these things are happening right now, so that will depress the fourth quarter. There may be indeed some other stuff where people just shut down because of energy costs in Europe, et cetera. We'll see if those announcements come out. That is why we are very guarded on the fourth quarter. The first quarter we will see. In fact, that is the reason, and maybe it's good to comment on that's the reason why it probably makes sense to suspend the target and see how everybody gets through winter. Again, the expectation is that the lower raw material cost, and therefore a variable margin expansion, given the price stickiness, will start to get into our numbers in the first quarter, but the exact timing is not necessarily that easy to predict on when it's exactly gonna hit. So I think that would be tendentially a positive, but it's anybody's guess, to be honest, what now the situation is gonna be around lockdowns in China. It's anybody's guess how Europe is gonna get through winter, and how that with energy costs, what it's gonna have as an impact. That's why underlying under all the surface of the water, there's some positive development, but it's anybody's guess when that actually is gonna kick in the beginning of the year. Now, for taking the guidance for you know 2023, suspending it's clear that until I would say beginning of the third quarter, as long as the demand signals were not impacted. It actually was an ambitious goal, but you could see the path there. To be fair, to get to the entitlement in 2023 that we have set ourselves, you have to have a little bit of help of the demand signal, at least it has to hold up. The variable margin expansion looks like that indeed may happen as we had hoped for, but the demand signal is the bigger question mark macroeconomically. That's why it makes a lot of sense with Greg now at the steering wheel for him and the team to relook how do things look like by January, February, and then basically to give much more meaningful comments on what is the 2023 or the midterm ambition for the company. Got it. Thank you. All the best again. Yep. Yep. Thank you. Our next question is from Jaideep Pandya, On Field Investment Research. Your line is open. Yeah, thanks. Just want to understand the demand picture a little bit. If we think that volumes are sort of mid-single digit below 2019 in this first half, second half 2022, I mean, volumes in 2019 and prior to two years following 2019 were negative because of, you know, trade war, et cetera. Are you saying, Thierry, that demand actually right now has gone back to sort of 2017, 2018 days? You know, what sort of explains this? Is this, like, just a complete pause in terms of buying activity? Just as sort of a follow-up to that, you know, when you think about 2023, I'd appreciate a lot of moving parts. You know, the biggest question mark, I guess, in your stock right now is, are volumes gonna be down another 6%-8% next year? I mean, just from a practical point of view, how relevant is it in the sense, you know, if COVID doesn't change in China or if Europe consumer confidence doesn't change, do you think then the mid- to high-single-digit negative for 2023 is also sort of on the table? That's my first question. A second question is around your EUR 2 billion target. I remember when we saw you after Q2, you sort of indicated that pretty much all the managers, you know, in the top 300 had this in the contract, and there was a bit of a range around that. You were confident that you were gonna be ballpark-ish around EUR 2 billion. Obviously, this is now out of the question. What is the morale in the company? Because until two quarters ago, you were telling all your managers to buy as much as they could and sell as much as they could. Now you're obviously gonna flip around and say, "Well, you know, you have to cut costs and blah, blah." I just wanna understand how is the organization sort of coping with all this, you know, craziness. I'm not gonna wish you good luck because I'm not very happy that you're leaving. Okay, I'll take that as a compliment, Jaideep. Okay. First of all, I'm not sure if I can relate to your comment on the buying and the selling, by the way. I think our people, of course, have our nose to the grindstone in the market. They see exactly what's happening. I think there's a good pride around actually not only holding share, but in many segments, in fact, incrementally building share. So that's a positive. So they're pretty realistic of what they can do and what they cannot do in the market. On what incentivizing for the top 200 of the company, I think also there, I think people have they see it every day on what's happening and what are the actions that can be taken. That, I think, is then for Greg and the team to look at, does it have to be a review on that? How do you incentivize people, et cetera? At the same time, we put targets out there, and I think they're very much aware that the macroeconomics is, of course, not acting in the favor. The ambiance in the company, okay, I don't know, the... I'm not sure if at the C-suite is the best view on that, but I think people are pretty motivated, and they understand exactly what it is and have their army fatigues on to keep fighting for the company. I'm not that concerned, and I think that's not gonna change, either. On the volumes, Jaideep. Well, Well, first of all, you go back to 2017 levels, et cetera. It's probably fair to say, and maybe we haven't stressed it enough, that if you exclude the tier one, tier two cities in China, so just put that aside. In fact, around the world, in almost any business, if you look at the end market demand, it is actually pretty much in line with 2019. We referred in our prepared notes to proactive or defensive destocking. What you see is, in fact, as we are doing, is actually people not being very confident on what 2023 is gonna bring, also seeing what might happen on their input costs and therefore trying to get through their existing inventory as soon as possible. It actually goes around the channel, and that becomes a whiplash effect that I think is even much bigger at our suppliers as a whiplash and so on. The weird situation is that the actual demand is in general not that much off. It's really just everybody preparing for what might be a tough but also an unpredictable 2023. That's why we gave the volume picture. The second half of this year is obviously everybody preparing for that, and that one is the impact in our sell-in into those channels. If, by the way, the volumes were to drop more, then there are actions we can take in our network to flex the cost. I mean, that doesn't go overnight, but we can actually flex it. Again, we don't have the fixed assets, like in chemical plants with reactors that you cannot move, and you have to fully utilize, to make money. That is not an issue. That I think will be then the situation. Again, it's the view at the beginning of next year. What is the hype? What is the fear? And what is the reality in the field at the beginning of 2023? Again, the results of the company for 2023 and the entitlement they have is really an arbitrage between our pricing in the market times the volume minus the raw material cost. Now, the pricing looks good. The raw material costs seem to go very fast in the direction we want it to have. It's actually the bigger question mark is what is the volume in 2023. Hence, I think the pause to say, "Let's look back once we have a bit more information on it." Does that answer your question, Jaideep? Yes. Yeah. If I can just add one follow-up to Martin around the net debt to EBITDA point. Just want to confirm, you said 2x in 2023. Without letting you give any guidance, would you say that it's gonna be an even split between EBITDA increase and working capital release from free cash flow that's gonna help you delever, or is it too difficult even to answer that? No, I don't want to answer at this stage. What I mentioned is, and I reiterated again that of course an important part is the working capital decrease, given where we're coming from. The other part is obviously the EBITDA improvement. Again, the focus for us at this moment in time is really working capital and getting our inventory down, because that drives not only cash flow but also drives margin improvement. And that's what we've been saying all along. By the end of this year, our inventory will be down with roughly EUR 200 million from where we came from at the end of Q2. We do expect the other EUR 100 million from the EUR 300 million target to come in early next year. I hope you keep the promise of the number two 'cause I'm a bit allergic to it in the meanwhile, and I'm not gonna trust theory. Thank you. Thank you. Once again, to ask your question, please press star one now. Our next question is from Geoff Haire of UBS. Your line is open. Good morning. Just wanted to ask two questions. First of all, I was wondering whether you'd be willing to give us some rough estimate if you were using what you're paying for raw materials today, how much lower would that be than what you're guiding to for Q4? So just to give us some idea of the quantity of the decline, the magnitude of the decline in raw materials. My second question is a slightly more philosophical one. How do you sort of decide what is destocking and what is end market demand reduction? 'Cause you've obviously commented that end market demand is still in line with where you were in 2019, but this has all been destocking. I'm just wondering how you know what the difference is. Yeah. Geoff, good questions. On the raw material, I'm not sure if I fully understand your question, but maybe it just suffice to say that the current, I would say, spot prices for the material are actually high double digits for some categories, lower all of a sudden than they were before. Maybe that's a good way to indicate that. By the way, it's interesting that procurement sees that some contract proposal contract pricing proposals start, in fact, dropping below spot price. That means that, in fact, the supplier base has lost somewhat confidence on holding prices where they are. That's probably as much as I would say because it's a fast evolving situation. As I said, I'm not exaggerating that our procurement comes up with these news flashes every two, three days around what's happening. It's obviously there are also a lot of resetting, including by the way, stress for Europe, higher energy consuming European-based suppliers who actually are stepping out, and that those places being taken pretty quickly by either those same suppliers, but from locations outside of Europe, or non-European suppliers. It's a pretty fluid situation, but all the arrows, in fact, on prices are going down quite significantly. The availability, again, in the third quarter, in the fourth quarter, we will still be hit by an explosion and a fire at a big resin supplier for us in the U.S. Besides that, in fact, the situation is normalizing very, very fast on supply and then prices going down. Probably that is the most coherent thing I can say about it. On the destocking in the end markets, how do we know that? Well, frankly, on the deco side, it's relatively easy to see that because we do have quite a good view around the world on what the sell out is. So what goes out of our do it yourself customers, what the order books are for painters, by the way, so the new projects that they get in that is on the professional side. So we have a good view, and there, in fact, not much is happening on the negative side, so that seems to be holding up well. Again, who knows where it's gonna be next year, but for the time being and for the view that we have, that is holding up well. What you definitely see is on all those channels, people just buying less material and actually bringing their inventories down. Even by the way, in the cases which is often outsourced to us, where we get the request to actually bring their their inventory levels down because otherwise they need to free up cash, et cetera. As I said, of course, if you go two, three steps down, then we get very philosophical. One is destocking or one is end use market. We do feel it's mostly destocking at least one, two steps down in the channel we can look at. That hits not only Deco, that also hits places like Powder that has a significant part of its business and distribution. You see the same thing. It hits parts of ICO. Part of the metal coating goes to distribution. Wood Coatings has a part of distribution. You see exactly the similar effects there. Secondly, on where the real drop in market is. As I indicated, China is probably the place where we see real stores basically selling less paint. Again, that is not our category. Many of those stores are multi-brand stores where multiple paint suppliers sell their stuff, and it's actually just a significant reduction in footfall. Again, mostly in tier one and tier two cities. Outside of those cities, maybe because of the whole COVID situation, that is far less impacted than we're still growing. But that's offset with a slump in our base business, which in Deco in China. Hopefully that, Geoff, answers your question to some extent. Yes, thank you very much. Also, just thank you for the last five years and making paints interesting and all the best. Yeah. Thank you, Geoff. I've been around Americans and British people long enough to understand that interesting can be anything, and that's probably correct. I was just reflecting on the fact that I started about six years ago with a profit warning, and that seems to be more or less what I did four weeks ago. Some things never change, although lots of things are changing. Believe me, it would have been much more fun to end on a high. Frankly, that is the fate of anybody in the chemical industry. These waves come in and out and you can't pick them. It is what it is. It has been an honor to lead the company over these five, six years. I have the arrogance to believe that lots of things have changed under the surface to make it a very different company than it was before. The journey is unfinished. You've heard Maarten and me saying we're halfway the journey. Therefore, it's also an honor to introduce Grégoire Poux-Guillaume to write the other half of the chapter on it. I've had the pleasure of being a Siamese twin now with Grégoire Poux-Guillaume for the last month, sitting, actually, I think, Grégoire Poux-Guillaume, almost every hour together of the last month on every single meeting. I think the company is in good hands. Maybe Grégoire Poux-Guillaume, it's good for you to say a couple of words. Thank you, Thierry. Hello, everybody. I can confirm that over the last few weeks, I've spent more time with Thierry than with anybody else, including my wife. We're very advanced in our handover process, and I've been really impressed by the passion and dedication of the people I've met at AkzoNobel over that onboarding process. It's been very insightful, and I thank Thierry for putting that together. I'm coming in at a time where the business environment is complicated, but we have significant self-help potential, as was mentioned, and I'm convinced that we have what it takes to thrive. I'm excited to lead AkzoNobel as we continue the transformation that Thierry undertook a few years ago and to build with the team on what's been achieved to date. I look forward to answering your questions, starting with the Q4 results. Thank you. Thank you, Grégoire Poux-Guillaume, and thanks, everybody. Have a good day. Thank you very much. Operator, we can close the call. Thank you, everyone. That concludes today's call. Thank you for joining. You may now disconnect.