Hello, and welcome to today's AkzoNobel Q3 2023 results call. My name is Bailey, and I'll be the moderator for today's call. If you would like to ask a question during today's call, please press Star followed by one on your telephone keypad. I'd now like to pass the conference over to Kenny Chae, Head of Investor Relations. Please go ahead. Thank you, Bailey. Good morning, and welcome everyone on call to AkzoNobel's Investor Update for the third quarter of 2023. I'm Kenny Chae, Head of Investor Relations. In today's call, our CEO, Greg Poux-Guillaume, and CFO, Maarten de Vries, will take you through our third quarter results. We'll refer to the presentation, which you can follow on screen or download from our website at akzonobel.com. A replay of this webcast will also be made available following this event. There will be a Q&A session after the presentation. For additional information, please contact our investor relations teams. Before we start, a reminder of our forward-looking statements disclaimer on slide two. Please note, this also applies to the conference call and answers to your questions. I will now hand over to Greg, who will start on slide three of the presentation. Thanks, Kenny, and good morning to everyone on the call. We'll start today's presentation with an overview of our third quarter results before moving on to talk about our industrial transformation plan. Q3 is in line with guidance and marks a strong rebound across all our key financial metrics. Revenue grew 5%, excluding the impact from currencies, mainly as a result of good pricing management. Organic volumes in the quarter remains resilient despite a soft start to the quarter. While microeconomic uncertainties persist, we are pleased with the growth of our marine and protective business and our powder businesses, with the stabilization of demand in Deco Europe and signs of demand bottoming out across several of our coatings end markets. Q3 adjusted operating income was up by 76% on a strong rebound in gross margin, driven by robust pricing and raw material tailwinds. The strong performance in price versus raws brings our year-to-date margin expansion to around EUR 400 million, which is very much in line with our improved guidance from Q2. We are also reporting on our second consecutive quarter of double-digit returns on sales at 11.8% in Q3, 12.5% in coatings, and 14.2% in paints. The strong growth in profitability, in addition to solid free cash flow of EUR 243 million, resulted in a leverage ratio of 3.2x net debt to EBITDA at quarter end. We're tracking well with our leverage target for year-end. Let's turn to slide four. Our volumes were flat organically overall in Q3. This reflects our exposure to diverse end markets, with positive developments in several end markets, offset by continued macroeconomic weakness elsewhere. Paints was overall slightly above flat from a volume perspective, and coatings, slightly worse, but mostly because our high-volume industrial coatings business, particularly wood coatings, is down with its end markets. As mentioned earlier, demand trends in decorative paints EMEA have stabilized. As for Deco China, the backdrop remains similar to the first half of the year, with market demand improving, but at a slower pace than previously anticipated. Volumes in the quarter were up high single-digit percent as we lap easier comps. LATAM, Latin America, was a bit soft, but Brazil picked up in September as it enters the high season in the fourth quarter. In coatings, powder was a bright spot. We had expected market weakness to impact this business for longer, but demand in most of our segments improved during the quarter, especially in automotive, industrial, and even architectural. In the marine and protective, the good momentum continued after a strong first half. We're pleased with the overall trajectory of this business, with market share gain, particularly in China, where our sustainability offering is resonating with our customers as we benefit from an uptick in new build market segments. In automotive and specialty coatings, we were a bit weak in Europe, but did well in North America. And in industrial coatings, we are pleased that the positive trends indicated for coil in the second quarter have carried into the third quarter, driven by both market share gains and an uptick in market activity, especially in China. Packaging demand also improved after a weak first half. Wood is tough, though, driven by depressed North American construction market, and we don't expect this to improve before mid-2024. We expect these trends to continue in the fourth quarter with a combination of easier comps and improving end market conditions across many businesses. Q4 volumes should be up low single-digit, leading to an overall flattish 2023 from a volume perspective. I now hand over to Maarten to go through the numbers on slide five. Yeah, thanks, Greg, and good morning, everybody on the call. Our reported revenue in the third quarter was up 5% in constant currencies and down 4% in reported revenue. As Greg mentioned earlier, volumes in the quarter were flat. Pricing continued to hold up well at 3%. M&A added 1% to revenue growth, reflecting a partial contribution from our acquisition of Sherwin-Williams China decorative paint business, which closed in August. FX remained a considerable headwind and continued to be primarily driven by weakening currencies in Turkey, Argentina, and China, along with the weakening euro versus the US dollar. Adjusted operating income of EUR 324 million was up 76% year-on-year, with return on sales expanding 540 basis points to 11.8%, as we finally saw a benefit of raw material tailwinds in our P&L. Having seen the P&L benefit from raw material deflation in coatings during the second quarter, we are pleased to report that paints also started to benefit from this effect in the third quarter. This drove strong margin expansion in both paints and coatings, with profits for our coatings business nearly doubling year-on-year. Raw materials should continue to be a tailwind until mid-2024. Turning to the next slide, margin expansion resulted in a higher adjusted EBITDA of EUR 414 million for the third quarter. Year-to-date, adjusted EBITDA is up by 19% to EUR 1.1 billion. The impact of lower raw material prices and our efforts to reduce inventory contributed to an improvement in working capital. Overall, as a percentage of revenue, our working capital decreased to 17% in the third quarter, and we expect to continue to make progress on returning to normalized levels into next year. Free cash flow of EUR 243 million represents an improvement of almost EUR 200 million versus prior year, benefiting from improved profitability and the gradual working capital unwinds. Based on a rebound in profits, in addition to improvements in free cash flow and working capital, net debt to EBITDA came down to 3.2x for Q3, compared to 4x in the previous quarter. Our leverage guidance remains unchanged at less than 3x net debt to EBITDA by the end of 2023, excluding the Kansai Paint Africa acquisition, which is not expected to close before year-end. I now hand over back to Greg to speak about the outlook on slide seven. Thanks, Maarten. Our third quarter results were in line with expectations. Our much improved profitability in the context of stabilizing volumes was underpinned by solid margin expansion based on pricing discipline and raw material deflation. With the seasonally stronger Q2 and Q3 period behind us, we expect to deliver Adjusted EBITDA of around EUR 1.45 billion for the full year, driven by continuingly robust margin expansion. Volumes are expected to be flattish for the full year. As Maarten noted, we are well on track to deliver a leverage ratio of less than 3x net debt to EBITDA by year-end, in line with our initial guidance, mathematically adjusted for the fact that the acquisition of Kansai Paint Africa will not close in 2023. Now that we've covered our Q3 results, let's dive into some of the detail on our industrial transformation plan. Let's move to slide eight. As you know, we've been looking at making our industrial base more efficient. We will lay out today what that entails. Our industrial transformation program aims at unlocking value in our integrated supply chain by reducing complexity, significantly improving productivity and capacity utilization, and investing in the modernization of our anchor sites. This is really an investment in our future. Looking at our industrial base today, we have bottlenecks in business-critical supply chains and underinvestments in key sites, leading to inefficient and unnecessarily labor-intensive processes in Europe and in North America. In general, productivity and asset utilization is lower than we would like. We have the opportunity to make a step change. We are convinced that we can extract EUR 250 million of recurring benefits by 2027 on top of normal continuous improvement activities. This breaks down into EUR 180 million-EUR 200 million of structural cost savings, plus EUR 50 million-EUR 70 million of efficiency gains. Our industrial transformation is a three-year program, and it is already underway. Turning to slide five. Our industrial transformation is business specific, as different AkzoNobel businesses necessitate different supply chains. Deco Europe has been our first area of focus. The plan is defined, and implementation is already underway. In recent years, we have road tested our ability to reduce the number of raw materials, formulations, and packaging variants through targeted harmonization. This generates product cost savings, but also enhances the resilience of our raw material supply chain and the transferability between manufacturing sites. We will now apply these skills to the rationalization of our industrial network. This will include incremental investments in late-stage differentiation capabilities and automation in our anchor sites. In Coatings Europe and U.S., our efforts will focus on achieving a step change in the productivity of the critical assets in our network, more than in rationalizing that network. We suffer from self-inflicted production constraints in a number of businesses, leading to a reduced ability to fulfill demand from customers, demand that exists today and that we could fulfill if we could just be more efficient. This needs to change, and it will unlock significant value. Further efficiency gains will be obtained from an optimization of the distribution model, and similarly to decorative paints, increased automation of our anchor sites. While our industrial assets in Latin America and Asia are generally performing at a higher level, we will take the best practices introduced from the initiatives in Europe and the U.S. to drive further improvements in these regions. Maarten will now take you through the financial aspects of that program. Maarten? Yes, and as Greg mentioned in a previous slide, the total benefit of EUR 250 million by 2027, compared to a 2023 baseline, will come from a combination of three focus areas. The network optimization program in Deco Europe will deliver a benefit of between EUR 65 million-EUR 85 million. The end-to-end supply chain optimization in our coatings business in Europe and the U.S. will drive the bulk of our value unlock of between EUR 115 million-EUR 135 million. Finally, the transfer of our learnings to our operations in LATAM and Asia is anticipated to add a further EUR 40 million-EUR 60 million. With a large proportion of the program aimed at driving structural improvement in asset utilization, the impact of the industrial transformation will be back-end loaded. The program is already fully underway, and we expect to see some benefits by 2024, gathering pace in year two as we build towards the full run rate in 2027. This program is expected to generate a cost of between EUR 130 million-EUR 150 million in identified items, split over three years, essentially restructuring costs. And a targeted investment into our sites mentioned by Greg represents an incremental CapEx of around EUR 150 million, also split over three years, when compared to the normative level of CapEx within our business. This will be a major transformation of our supply chain performance, and we have granular operational metrics in place to track the progress of our supply chain performance and our enabling of portfolio-related actions. We will, of course, provide you with metrics to track our progress along the way. Now back to Greg to add some closing remarks. Thanks, Maarten. In summary, our Q3 performance shows that we are on the right track and expanding margins. The industrial transformation plan, which we have laid out today, is already in flight and provides AkzoNobel with a great opportunity to make a step change and invest in its future. We are excited about our journey and look forward to keeping you updated in the coming quarters. Kenny will now close with information about upcoming events, and then we'll start the Q&A session. Kenny? Thank you, Greg. Before we start the Q&A, I would like to draw your attention to the upcoming events shown on slide 11. The ex-dividend date of our 2023 interim dividend is on October 30, and the record date is on October 31, followed by the payment on November 9. We plan to publish our fourth quarter results on February 7, 2024. This concludes the formal presentation, and we'll 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. Thank you. If you would like to ask a question, please press Star, followed by one on your telephone keypad. If for any reason you would like to remove that question, please press Star followed by two. Again, to ask a question, please press Star followed by one. As a reminder, please do ensure that you have unmuted locally. Our first question today comes from the line of Charlie Webb from Morgan Stanley. Please go ahead. Your line is now open. Morning, everyone. Thank you for taking the time for some questions. Maybe the two for me then. First, just on price/raws and how we think about that, you know, I guess, triple-digit million EUR in Q3. How do we think about that in Q4? And maybe indications on your thoughts around both pricing, but also raw material inflation into the first half of 2024 would be really helpful. And then second question, just on the cost program, just in terms of the time to realize the savings. Obviously, very, I think 50% is roughly coming in 2027, which is obviously some way away. Why does it take so long in terms of these efficiency programs? I understand, you know, probably much of the saving comes from plant, taking plants offline. But, yeah, just maybe a bit more color in terms of why it's quite a drawn-out program, in terms of delivery and when we'll see those savings come through, would be helpful. Thank you. Thanks, Charlie. We'll take both questions. I'll start with the cost program, which really is not a cost program, it's an industrial efficiency program. Then Maarten will talk about pricing and raws. In terms of our industrial transformation, it's a combination of cost measures and efficiency measures. The cost measures have the tendency to be restructuring related, they're network related. They're essentially rationalizing our footprint. If you have to look for areas where that applies more, it's particularly in Deco in Europe, and the efficiency measures have a tendency to be more on the coating side. I mean, there's a little bit of both in Deco and in coatings, but more footprint on Deco and more efficiency on coatings. The efficiency measures necessitate certain investments in terms of reinventing the way we run our business. There's automation investments, but there's also a lot of debottlenecking that has to do with either specific equipment or ways that we run our business today that we have to rethink. That takes a little bit of time to be implemented, but it actually goes faster than the restructuring. The anything that's footprint related, there's gonna be a little bit of that everywhere, but it takes time in terms of not only consultation, especially when it's in Europe, but it takes time in terms of preparation, because in the paints and coatings industry, it's really easy to you know, look like a hero and say, "I'm gonna take, you know, plants offline because I have low capacity utilization." And then you lift and shift the products that you have to other plants, and you essentially blow up these other plants by introducing complexity that these plants can't cope with. It involves anything that is network rationalization related, involves reformulations ahead of time so that the products are competitive, I'm sorry, are compatible with the receiving plants. So, the 2027 number is kind of the full year impact number. We gave an illustration of phasing on slide, what is it? Slide 10. And, we'll fine-tune that over time. We'll go as fast as we can, and the aim is to drive this aggressively, but also to protect the business as we plan to grow over the next few years, and therefore, we don't wanna compromise any of that by operational disruption. Maarten, you want to take pricing and raws? Yeah. So on the raw materials, Charlie, in fact, if you look at third quarter, it's the first quarter where we've seen really the raw material deflation coming through in our P&L. Raw material deflation was high single digits in the third quarter, and you might remember that in the second quarter it was still very immaterial. Going forward in the fourth quarter, we will see a similar level, also high single digit down in terms of raw materials, and that will also be visible in the first half of next year. So, margin expansion is very much driven by the raw material deflation this quarter, next quarter and into the first half of next year. On top of that pricing, as you saw in the third quarter, +3%, we do expect that pricing in the fourth quarter will be still slightly positive. And we will talk about pricing and how we see that going forward when we come out with the fourth quarter results. Did we answer your question, Charlie? Yes, thank you. Thank you. The next question today comes from the line of Laurent Favre from BNP Paribas. Please go ahead. Your line is now open. Yes, good morning. My first question is on the Kansai acquisition. I was wondering if you could provide us with a bit of an update on, I guess, what, what's driving the delays and to what extent, we should be assuming that you are locked in, and whatever the antitrust review yields, you will have to abide, or is there a way you could get out of, of that deal, if the antitrust review is suboptimal for you? That's question number one. And then question number two, on the EUR 250 million, I mean, we are in an inflationary environment, how much of the EUR 250 million do you think will actually yield an EBITDA improvement, if we assume that other fixed costs, I guess, creep up at, 2%-3% a year? Thank you. Thanks, Laurent. I'll take the Kansai question, and Maarten will take the EUR 250 million and the inflation question. So Kansai, this thing was always gonna go into phase II because it has, it's a combination of two businesses that are number one and number two in South Africa, and although we feel that this will not impede competition, the fact that the regulators are having a look at this is nothing that surprises anybody. In terms of the process in South Africa, it's a legal process, and the court hearings are over. They finished two, three weeks ago, and the decision of the tribunal is expected on the 21st of November. The regulator continues to be of the opinion that this is complicated from a competitive perspective, but at the end of the day, it's a decision of the courts. When you look at the other countries, we've had some of the COMESA countries that have been blocked. These are a smaller part of the overall scope, but you know, there's a number of data points that make the transaction a little bit more complicated than when it was announced. In terms of are we locked in or not locked in? The terms of the agreement with Kansai is that any remedies will have to be discussed between Kansai and AkzoNobel, and we will have to agree on the value of these remedies and the value deductions. If we can't agree on that, then we have the opportunity to mutually decide to walk away without any financial impacts. But at this point, this is not a working assumption. Our working assumption is that there will be a discussion on remedies and that we will come to an agreement. But you'll know more at the end of the year. Whatever happens, this deal is not gonna close this year and if it does close, it will close in Q1, and if it doesn't close in Q1, it's not gonna close, because anyway, there's a long stop date that's somewhere in Q1. So that's how much I can tell you. It's, Maarten is right, it's end of February long stop date. That's your first question. Maarten, the second one? Yeah, on the EUR 250 million, this is a structural benefit which we are realizing by 2027 with all the actions Greg has outlined, the investments we do in our integrated supply chain, as well as the optimization, the efficiency, and specifically also the network optimization. So a structural benefit versus baseline 2023, and on the other hand, of course, as we usually do, recurring inflation is offset by all our normal productivity actions, which we drive in our integrated supply chain. But it is really a structural reset of driving and value unlock from our integrated supply chain. Laurent, did we answer your questions? Yeah, maybe as a follow-up, I mean, as you have, I assume you've been thinking hard about what kind of volume environment you're going to be facing by 2027. I'm wondering, how did you decide on how deep the cut should be, for instance, in terms of production capacity? Are you assuming that we're going to be in a no-growth environment? Do you have, I guess, contingency plans on, on that structural improvement plan? Thank you. Thanks, Laurent. Well, I'll answer that one. I'll try to make that quick. We are not looking at cutting into the bone in the sense that we see growth for us and for the market and for AkzoNobel in the next few years. Many of our businesses are still down versus 2019, so the next years are years of volume rebound. But when you look at parts of our network, like decorative paints in Europe, where capacity utilization is in the mid-50s, you can become a lot more efficient without necessarily putting yourself at risk if the market picks up in ways that were unforeseen and would be good news. So, I don't think any of this jeopardizes our ability to grow. On the contrary, I think it'll stimulate our ability to grow because it's gonna make us a lot more cost competitive on a product perspective and a lot more reactive to our customer needs. You know, on time in full is a topic, lead times are a topic. If we take parts of our business, we miss out on orders because we're not able to deliver in time and along the lines of what is needed by our customers in a more dynamic market. This program will resolve all of that and make us a stronger company. Thanks, Laurent. Other questions? Great. Thank you. Thank you. The next question today comes from the line of Gunther Zechmann from Bernstein. Please go ahead. Your line is now open. Hi, good morning, Greg, Maarten, and Kenny. A couple of questions, strategy related. Please, the first one, Greg, you mentioned the utilization rate, especially in Europe, too low. Could you provide us with a number, what improvement in rate you expect once you've fully implemented the, the new transformation program, please, assuming, assuming the single-digit market growth? And then, secondly, could you give us a preview of any other strategic areas that you're looking into going into the February update, please? Thank you. Thanks, Gunther. I think I got most of your question. The line was not very good, but utilization rates, it really varies. I'll answer the question. On the keep in mind that on the coating side, whether it's in Europe or in the U.S., it's more about inefficiencies. We're self-constrained because there's a number of things that we don't do particularly well. Either we're too manual or our processes are too complex. Some of our equipment is inefficient. You know, we see things like, in, for similar products, in some factories, we'll end up making intermediate batches and quality checks that kind of always pass, and in other places, we'll have a much more streamlined process. There's really an opportunity to harmonize all of that and to, you know, get the best of AkzoNobel. If you want to make it simple, on, on the coating side, we're really not a very lean business, and there's an opportunity to be much leaner. On the Deco side, there's more of a capacity challenge, which is that we, like a lot of decorative paints businesses, we assembled the business through acquisitions, and you end up having different setups, different formulations, different products, different factories. If you don't make a conscious effort to tackle that, that complexity creeps in. Today, if you take Deco Europe, where we've got capacity utilization in the kind of the mid-50s, and at the end of this program, we have to be somewhere in the high 70s. We're not trying to scare ourselves by going to levels that would put growth at risk, because you have to keep in mind that AkzoNobel is a EUR 11 billion business, where fixed manufacturing costs are EUR 1 billion. So it really is not a cost-saving program, because if you're gonna do cost savings on fixed manufacturing costs and paints and coatings, you're not gonna extract that much value. It's the savings and but it's also the inefficiencies that we're tackling, and essentially it's an investment in the future. I think that was the first part of your question, and your second part was about? Any other strategic initiatives we come back in, in February. Well, we'll give you a bit more of a overview of the business and the places where we're gonna press on the accelerator in February. Bear with us a little bit, but there's quite a few areas of our business that are doing well, where we feel that we have a competitive advantage, and we feel that advantage can translate into growth in the next few years. But we'll do that with the Q4 results. Thank you [audio distortion]. Thanks, Gunther. Thank you. The next question today comes from the line of Chetan Udeshi from JP Morgan. Please go ahead. Your line is now open. Yeah, hi. Morning. I have a quick three, you know, P&L questions, maybe easy to answer, and then one just on the strategic program. The first one, I was just looking at the third quarter gross profit and gross margin versus second quarter of this year, and it's hardly changed. I mean, I would have thought the gross margins should have gone up because, like you said in your opening comments, you know, there is still a lagged benefit from lower raw material prices. I'm just curious, why did we not see a proper step up in gross margin in Q3 versus Q2? I mean, anything you can add there. Second question is, clearly the net financial expenses have been running much higher than expected throughout this year now. So, I mean, there is some hyperinflation accounting, inflation accounting impact, but, I mean, what is the right runway we should be modeling going forward on a quarterly basis, that you think is good for 2024, especially given that the leverage will also hopefully come down by end of the year, this year further. The third question, again, sorry, on P&L is just tax rate. You know, I think there is a mention of the recognition of some deferred tax assets. Does that have any implication on the structural tax rate that we should have going forward? Is mid-20s still the right number, or is it closer to 30%? So these are the quick three P&L questions. The last question on the strategic program. I'm just curious, why do we have EUR 150 million of CapEx? Because on one hand, you are talking about improving the utilization of your assets, but why does that need so much incremental CapEx? Because I would have thought you would just shut down some sites and, that shouldn't be entailing much more CapEx, but maybe I'm missing something. Thank you. Thanks, Chetan. I'll start with your last question, and then Maarten will take the P&L questions. It goes back to what I explained to Gunther. On the coating side, it's about inefficiencies, and on the Deco side, it's about footprint and capacity utilization. I mean, it's not as simple as that. There's a little bit of both on both sides, but if you try to split it, it has a tendency to be more footprint on deco and more inefficiencies on the coating side. As we resolve that, on the coating side, the inefficiencies, you resolve a lot of that through CapEx investments. There are areas in which we can get a lot more efficient. We can remove bottlenecks by either different types of equipment or different types of processes, and it involves some changes to our factories. But even in areas where we do footprint rationalization, we use that opportunity to get a lot better and a lot leaner as a business. We are still doing a lot of manual handling in Europe and the U.S., which is counterintuitive because we do more manual handling in Europe and the U.S. than we do in Asia, for example. And there's a lot of opportunities for us to also make changes that will help our ability to, for example, streamline our working capital. You know, what we call late-stage differentiation is something that we've been experimenting in for the last few years. Essentially delaying to the last minute the moment where you either color or finalize or label the product so that you can lower inventories and be more reactive to the markets, and that also involves a little bit of investment. So it's EUR 150 million over three years. It's spread out on top of our normative CapEx. Our normative CapEx is not a very high level. I think it's you see that AkzoNobel as a company is reasonably conservative, and that EUR 150 million is a good investment for the future. So that's the explanation. Maarten, you want to take the P&L points? Yeah. So, a few questions from your side. Let's start with the gross margin. Actually, I mean, it's important to mention, if you look at the third quarter versus the third quarter of last year, you see an improvement of 7%. And I think that shows the margin expansion we are driving in the business. And you see also a sequential improvement of the gross margin of roughly 1%. So, I mean, the fact that margin expansion is coming through is clearly visible in the P&L. Financial expenses, I would say, yes, your point is absolutely right. The current run rate is higher and is driven by the higher interest cost on our short-term loans, as well as impact from hyperinflation. I would say for next year, the current run rate is still valid, although, of course, as the leverage ratio is coming down, we will start to repay some of the short-term loans, and the short-term loans obviously have a higher, relatively higher interest rates. As you know, our bonds have a rate of just over 1.9% which is a very favorable financing construction for AkzoNobel. Last but not least, tax rate, absolutely a valid question. Year-to-date, the tax rate is the effective tax rate is 36%, very much driven by the limitations on interest deductibility. We are addressing that as we speak. And to your question, going forward, the guidance remains the 27%. Obviously, this year we will be higher, but going forward, we reconfirm the 27% ETR. Is that. That's great. Thank you. Yeah. Thanks [audio distortion]. The next question today comes from the line of Peter Clark from Société Générale. Please go ahead. Your line is now open. Yes, good morning, everyone. I just want to come back on the price against the raw situation, because on my calculation, it looks like your price stack against 2020 is only off marginally, so sequentially off marginally. Obviously, you've now got some index-linked effects, but you're probably offsetting that with business selective pricing. I just want to comment on that. And then the second question is about the transformation program again. It'd be nice to have just a sort of feel for some of the things you're doing. I mean, we used to be given the target of size. I know it's not the be all, end all, the number of plants you have around the world, but a hundred was one of the targets we were given. Obviously, it's a part of the program. Just if, if there's any sort of numbers like that, that help give a feel for how you're progressing on this. Thank you. Thanks, Peter. I'll take the transformation question, and Maarten will take the price question. On the transformation side, we're we'll give you more information as we progress. What we try to do today is to explain to you where it's gonna happen, why it's gonna happen, to quantify the impact, to quantify the cost and the investment, and explain what's behind it. The harder KPIs, you know, if you're looking for, you know, where is the money gonna go specifically or which sites, you have to bear with us a little bit. I mean, on the CapEx side, we could probably break that down. I'm not sure you'd gain a whole lot of knowledge by knowing where we're gonna spend the CapEx, but we certainly have that visibility. On the rationalization side, as you can imagine, it involves a lot of work up front, and it involves a lot of discussions with our social partners. So that you'll, you'll have to bear with us a little bit. We'll, we'll make sure we give you more data points and milestones around, along the way, but it's a little bit premature for the rationalization aspect of it for, for obvious reasons. Maarten? Yeah, and on the pricing, because you were asking about the cumulative stack, what you see in the third quarter, we are cumulative at 25%. Last quarter, we were at 25.5%, so you see a slight decline, which is reflected by negative pricing in the industrial coatings business unit, where we've earlier already indicated that as and when raw material would go down, we have some soft indexes, and there are some contractual discussions where pricing is going down. So that is one area. The second area I would mention is in Asia, Deco China, and somewhat also in Southeast Asia, where there is more competitive pressure, competitive price pressure, I would say. So it is an, it's a slight decline of the cumulative stack. And to be clear, maybe I can add to that. On the industrial coating side, you know, packaging, for example, the people that we're competing with are PPG and Sherwin-Williams. I mean, packaging, I think if you take Akzo, Sherwin, and PPG together, you've got 80% of the supply. So this is not like there's anybody that's lacking discipline or lacks understanding of pricing and suddenly taking a dive for volumes. I mean, you know, price cuts will not drive volume significantly in the long term in these businesses. It's really more of a question of the contractual structure of these segments, and that contractual structure applies to everybody, including our two U.S. competitors. So we're all experiencing the same thing, and it's part of, you know, contractual structures that protected us on the way down, on the way up, I'm sorry, and that are, essentially, restoring, part of the balance on the way down. But you can still have conversations about what the real impacts are, but you can't, you know, you can't ignore contracts over the long term. And this is why when we talked about pricing a while back, we said we can hold pricing in about 50% of our revenue, and we said that in the 50% that where we'll have to make concessions, half of that, so 25% of the overall, is linked to index contracts. A lot of it is in metal coatings and that metal coatings you find a lot of that in industrial coatings, be it in packaging and in coil. Other questions? Yeah, no, no, I was trying to infer it was a good performance. I'm not going it was a bad performance, but, thank you. I'm sorry, you know, these calls, you get so used to defending your position, that sometimes you don't even listen to compliments. I thank you. Thank you. Thank you. Thank you. The next question today comes from the line of Matthew Yates from Bank of America. Please go ahead, Matthew. Your line is now open. Hey, good morning, everyone. A couple of questions, and mainly around the transformation plan. Greg, you said that the, the industrial or the coatings business had some unfilled demand. I'm struggling a bit to understand that, given your volumes are cumulatively down, something like 20% since 2015. I would have thought that means you have a lot of excess or spare capacity. So is, is that the wrong type of capacity compared to where you, you saw that demand that you couldn't fill? And then my second question, you may have to go back into defense mode a little bit, Greg, I'm afraid. But forgive my naivety about what happens in, in the real world of transforming a company, but I think it was Charlie alluded to this earlier. It's a bit surprising that we don't see half of the benefit until 2027, given it felt like a lot of these measures were already identified in the Grow and Deliver plan. Maarten's welcome to correct me if that impression is wrong. But why hasn't the organization therefore used the last 18 months to do more prep work and hit the ground running, so to speak? Greg, did you put a lot of things on hold when you took charge, and it's taken time to review that? Just trying to understand here the timeline and why this is seemingly so sort of back-end loaded. Matthew, you're asking whether it's all my fault, and as the new CEO, I put everything on hold? No, of course I didn't. This is about continuity. It's the programs that you're referring to as part of of you know, 15 by 20 and Grow and Deliver, where I don't even remember whether we named them officially on the outside world, but essentially, we're talking about product rationalization, formulation rationalization, raw materials, Late-Stage Differentiation, all these things. These programs, as I mentioned to earlier, I think it was to maybe to Charlie's question. These are the enablers of what we're doing on the industrial transformation. But mostly to date, these have been used to extract the continuous improvement savings that are actually underpinning the EUR 200 million of savings that we're generating to offset inflation, for example, in 2023. So if you take that EUR 200 million of savings, there's a chunk of that that is value engineering, where essentially we're reformulating products to simplify them and to extract savings. So that's been ongoing, but that's been contributing to that EUR 200 million of inflation mitigation, and it will continue to contribute to mitigating inflation going forward. Because as Maarten said to one of the earlier questions, the industrial transformation is on top. It's not something that is essentially backfilling our need to mitigate inflation. So when you take specifically the industrial transformation and these programs that already existed in the past, what we're doing is we're beyond the normal value engineering stuff that's generating savings. We are targeting these measures towards essentially being able to transfer products, for example, being able to reformulate, so that if we have sites that are uncompetitive or underutilized, that there's a possibility to transfer production so that we can make anchor sites stronger and we can de-emphasize and potentially close some of the sites that are less competitive or less efficient. That part is new in the sense that in order to define that, you have to have a view as to what your target footprint is. I don't think I mean, it's clear that that is not something that we had explicated in the past, but now we have a much better view, and therefore, we are able to make that happen through these programs that already exist. But these programs will continue to contribute in parallel to inflation mitigation. That is, that is not going away. Your question on volumes and 2015, I kind of have to kind of extract, you know, my time machine, but, when I look at Q3 volumes versus 2015, 2019, I'm sorry, I mean, 2019, I'm, we're AkzoNobel is a mid-single digit down, Paints is a low single digit down, and coatings is high single digit down. So if you compare 2019, 'cause, I mean, you have to keep in mind that Akzo is not necessarily the same business that it was in 2015. So I could try to get those numbers to see what we're talking about. But 2019, which is the last really normal year before COVID, before these big fluctuations, you're talking about an Akzo, which overall is about, is down in volumes in the single digits. And therefore, you know, it's not as drastic a gap as what you're talking about. Beyond that, the volumes, the capacity thing, the questions about the inefficiencies and business that we could claim if we were able to deliver, despite the fact that in some areas we have low capacity utilization, we still struggle for efficiency reasons, for agility reasons, to deliver products on time. We miss out in Europe, we miss out significant volumes every month because we are not able to react through, I don't know, promotions by certain retailers, because we are not able to balance our load, to juggle our production in ways that allow us to free up capacity in certain areas, because our business is not set up to transfer volume from one place to the next. So as we enable that, we'll be able to claim those volumes, even as we're reducing capacity overall. On the coating side, as I said, it's more about inefficiencies than it is about, capacity or footprint reduction. If I take our Marine and Protective business, which is a business that's doing really well right now from a volume perspective. We're still missing out on significant volumes, significant business, because we can't get the product out in time. And I can explain what these inefficiencies are. Sometimes they're in our supply chain, sometimes they're in our manufacturing process. The example I gave earlier about the fact that we are not harmonized and we're not lean, and sometimes we make intermediary batches that are not necessary, and that generates additional complexity, longer lead times, and that makes us less competitive. There's a lot of things that we can do, but if I can give you two businesses that are w ell, I'll give you three, what the hell? Three businesses that are actually growing today, where we are missing out on volumes that are rightfully ours, in the sense that customers are asking us first, and that we can't deliver. We have that in Marine Protective, particularly in the U.S. We have that in Powder Coatings, but everywhere, and we have that in Vehicle Refinish, where we are not capturing the full commercial potential that we have even today. Yeah, and maybe to add to what Greg said, is that if you take a step back, all these issues have, of course, come above the water during the COVID, and specifically after COVID time, with all the raw material issues. And it is all about creating much more agility in the supply chain and also transferability in the integrated supply chain. And that's what talks to all the actions we are taking to address this in terms of driving efficiencies, but also driving the optimization actions through the investments we are making for the coming years in the integrated supply chain. We'll stop bouncing off each other and take other questions. But really, if I reframe this for a second, because I'm starting to wonder whether we're positioning the message in the right way. We are talking about this industrial transformation because we think it's a significant value unlock. We get your point that faster is better, and we agree to that. It's a significant value unlock, and it's a significant differentiator over time to AkzoNobel's ability to win in the market. But we could have done it differently and said, you know, at the end of the day, it's an investment plan. We're investing EUR 150 million. We could have told you CapEx is gonna go from EUR 300 million a year to EUR 350 million a year, euros a year for the next three years. And, as we, as we upgrade some of our factories, I think that that would have been a non-event because we would have explained in parallel that we're still mitigating inflation with other measures. The reason why we're packaging this, packaging it this way is that it's a value unlock, it's an efficiency unlock, it's a commercial differentiator over time. And because it comes on top, we think it's interesting for you guys to essentially monitor progress and see how we implement that and how we extract that value. But it's, it's, it's an accelerated differentiation program, essentially, where we know where we need to get to, and we wanna get to that in the next three years so that we can stop talking about industrial inefficiency as an AkzoNobel. That's what we're trying to do. We'll take other questions. Thank you, Greg. Appreciate the insights. Thank you. The next question today comes from the line of Geoff Haire from UBS. Please go ahead. Your line is now open. Yeah, good morning. I've just got two very quick questions. First of all, on the industrial transformation program, how are you going to be incentivized, and how are you going to incentivize the senior managers to achieve this specifically? And then just on the, obviously, the closure or potential closure of sites, will all the sites be closed, or are you considering, selling them to other, other players in the industry? So, anything that ends up being closed in the paints and coatings industry usually ends up becoming a data warehouse or, you know, or like an Amazon center, because paints and coatings is not an industry that is struggling for capacity. Usually, these are older plants. They might not be the most competitive plants, otherwise, we wouldn't consider, you know, going in a different direction. So I think it's highly unlikely that any of these plants, if and when we're able to be more explicit, will stay Paints and Coatings plants. But, you know, the weird thing about this industry is that because these are historical businesses and because cities have grown over the years, you find that a lot of these older plants are actually sitting on really valuable real estate because they end up being in cities or in the outskirts of cities, or on something that used to be the outskirt and is now no longer the outskirt. I mean, you guys saw that we closed the Offenbach this year, and I don't know if Maarten allows me to give the number, but we sold the site, I think, for, like, EUR 35 million. Is that the right number, Maarten? More. I think you see in the cash flow statement that basically the acquisition of the Sherwin-Williams business was offset by the cash inflow from the sale of the site of Offenbach, which was more in the EUR +50 million. Yeah. So, all that to say that Offenbach, a site that was no longer competitive, but, you know, EUR 50 million of real estate. And my example is actually a valid one. It's been bought to be a data center, which is also creating jobs locally. And I think at the end of the day, although these are painful measures, they i n that case, it works out. So unlikely to be paints and coatings, very likely to be sold. A lot of that real estate is valuable. The incentives? T he incentives question, we will be incentivized clearly on the industrial transformation. This is the part of what we're doing with you guys, where we're giving you, you know, key performance indicators so that you can follow progress. We haven't quantified them to you yet, but, there's a list on the last page of the presentation of the things that we'll be following. You can imagine that we've got numbers for all of that, and you can imagine that our, our, our favorite supervisory board is, very eager to bake that into our compensation. We've got, on an STI perspective, we've got 30% of our compensation, which is on, on personal objectives, essentially free form. And I think you'll find, you'll find that a lot of that will be populated by, by the KPIs of the industrial transformation. It might even be baked into the long-term incentives over time, but that's more complicated because you have to have a shareholder vote in the Netherlands because it's a change of the compensation program. But in the short-term incentives and the bonus, very clearly, that's gonna be part of it. Not in place yet because we are talking about something that starts clicking in next year, but it will be by the beginning of next year. Geoff, other questions, or Okay. Did we answer? That's fine. Thank you. That's fine. Thanks. Thank you. The next question today comes from the line of Jaideep Pandya from On Field Research. Please go ahead. Your line is now open. Thanks. I know you probably don't wanna venture into this, but just from a 2024 point of view, some of your early thoughts. I mean, if you're doing flattish volume in H2 this year, and most of your end markets seem to be improving, is it unfair to think that, you know, sort of base case, flat volumes next year? And then from what you've done, price versus raw materials in H2 this year, is it unfair to think that should replicate in first half 2024? So consensus expectation of EUR 200 million growth next year, you know, any comments, any early thoughts on that, you know, considering what you're doing in the second half this year? That's my first question. And the second question goes back to sort of marine and protective. I mean, sales wise, you're basically back to some of the old peaks of 2014, 2015, of, you know, between EUR 1.5 billion and EUR 1.6 billion. But you've alluded to weaker margins and also inefficiencies now. So when do you actually think that, you know, margins will go back? 'Cause one of your key peers is actually targeting aftermarket. They don't want to go after a new build, highlighting competitive issues in new build, and you guys are talking about new build. So just a bit confused about what is going on with marine protective and how do we go back to sort of mid-teen margins here. Do we need both aftermarket and new build, or is there a pruning process that is supposed to be done? That's my second question. Hey, Jaideep. Jaideep, the marine protective question, you know, don't tell our competitor, okay? This is between you and I. But, the reason why we got ourselves in difficulties in marine protective, we used to be the market leader. We're no longer the market leader. The reason we got ourselves into trouble is that five years ago, we decided that new build was lower margin, and we should de-emphasize that, and that we could just focus on the dry docking, essentially, the refurbishments. Turns out that in this industry, 70% of the dry dockings are captured by the guy who did the OEM paint. And the moment you start not being a new build, the dry docking stuff is taken away from you. It doesn't happen right away because usually your order book is full and there's the plannings are set, but it happens within three years, and then you fall off a cliff. So, you know, we've paid to experience that. I'm not exactly sure which strategy firm sold in that strategy, but probably the same ones that convinced us five years ago, and I wish them luck. By the way, Kenny used to be the CFO of the marine protective business when it was doing really well. So if you wanted to have an off-site, an offline discussion with Kenny on that, he can tell you all about it. Your other question was next year, you were kinda having, trying to have a pre-guidance for next year. What I'd say, without getting myself in trouble with Kenny and Maarten, is that we, we believe that we'll grow volumes next year. We believe that raw material will continue to be a tailwind, at least until the middle of the year, and beyond that, it really depends on a bunch of geopolitical things that I can't forecast. Pricing, we go back to a more normal kind of business environment in a world that has inflation, which is that we have annual price increases, where we have discussions about the level of inflation with our customers and how much price we're, they're willing to accept. These are not easy discussions as you come off a phase of significant price increases, but inflation will continue. We have to mitigate it. Pricing is not gonna be, you know, a tailwind next year because you're essentially trying to mitigate inflation, but raw materials will be. Can I still make one comment, Jaideep, on NPY? Because you know that last year we've commented on that we were more or less in a low single-digit profitability in NPY. NPY business this year is very much tracking in line with our plans, which means that we are making a step change in profitability this year, and that will also continue into next year. So we really see a strong recovery of the NPY business, and we are very pleased with that. You no longer have to ask these questions. Maarten and I keep bouncing off each other, but if you can even quantify it, if we don't have to be shy, we were low single digit in NPY in Marine and Protective last year, profitability. We're gonna be high single digit this year, and we're gonna be double digit next year. And historically, we were hovering around the mid-teens, and that's the target to get back to that. We've probably over answered your question, but are we okay to? Just one small comment on the golden slide of EBITDA bridge. I know you guys are negotiating pricing heavily. Probably that's why you've taken it away. But, obviously, it's a very, very well loved slide, so would love to have it back from next quarter onwards once the pricing discussions are over. Thanks a lot. We're following the best practice of our U.S. competitors that have all taken those slides away kind of a few quarters ago. And as you said, we're getting back to a world which is less about managing pricing for inflation, and therefore, we're coming back to our more usual KPIs, or at least the more usual KPIs for the industry as I look at what our friends across the pond are reporting. But you know, we understand why this is a useful slide, but it probably has run its course. Thanks a lot. We'll move to the next question before you complain about that slide, 'cause I do understand your point. Next question. Thank you. The last question today comes from the line of Aron Ceccarelli from Berenberg. Please go ahead. Your line is now open. Hi, good morning. Thanks for taking my question. I have a quick one on powder coating, which was a very solid performance. It looks like competition from some of your peers in the U.S. also is heating up. I would like to understand a little bit better if you can explain on the competitive environment of powder coatings and how you think about profitability and the growth rate for this business going forward. Thank you. Okay, Powder Coatings. Powder Coatings is a business on which AkzoNobel bet a while back. We, we love the trends because we believe that Powder Coatings have they have all sorts of properties that make them really interesting in the markets we're heading towards. And, I mean, there's the historical stuff, like you have less waste. You know, the spray over is recoverable, and you can reuse it, so it's more sustainable from that perspective. It has better physical properties than a lot of the liquid coatings, and increasingly, if you take the world of electric vehicles, for example, it has insulation properties that are interesting for that market. So, you, you'll see, you'll see a liquid to powder shift in the industry over the decades to come. You've got automotive OEMs today that are wondering whether they should be, you know, painting their cars, even the bodywork, or coating their cars, you know, powder coating their cars. So lots of interesting applications to emerge. And as we expand the reach of powder coatings through our low, low-cure technology, you know, essentially curing the powder at a lower temperature, then you start expanding the application possibilities to different substrates, like wood or plastics, and that makes it even more interesting. So it's a market that we believe in. It's true that you see that some of our U.S. competitors have stepped up their efforts recently. I think they were less interested in this field than we were historically, and they are trying to catch up. If you take the global markets, AkzoNobel has something like twice the market share. If you take the global market overall, we've got something like twice the market share of the number two player in powder coatings worldwide. If you take regional market shares, it's a bit different. It's a bit more of an even race in the U.S., so we have a much bigger advantage in Europe. It's a more fragmented competitor base in Asia, and it's a very fragmented and sometimes a low technology market in China because these are for fairly basic applications with big volumes that we choose not to play in because this is not where our technology is most valuable. So, business that we love, we'll continue to invest in. What else can I say, Maarten, or should I stop there? And very solid margins. So, we like the growth, and we like the margins, and it's an highly sustainable business as well. So, yes, absolutely. Aron, anything else? Thank you very much, guys. Yes. No, I'm fine. Thank you. Thanks a lot. Thank you. Do we have other question? This concludes today's question and answer session, so I'd like to pass it back to Kenny Chae for any closing remarks. Thank you, operator. This concludes the Q&A session in our Q3 2023 investor update. Greg, I think you maybe a final closing remark. Yeah. Thanks for your time today. We're on our plan. It's understandable that we're ahead today and some things go faster, like the industrial transformation, but we are executing on our plan. We've given guidance this year, and we've hit the guidance in the quarters that we've had so far, and we'll do that for the full year. And essentially, it's building a trajectory that inspires confidence in the company by being explicit as to what we're trying to do and actually delivering on that. So, we thank you again for your interest, and we look forward to talking again to you soon. Thanks. Thank you. Operator, please close the call. This concludes today's conference call. Thank you all for your participation. You may now disconnect your lines.