Hello, everyone, and welcome to the AkzoNobel Q2 2024 Results conference call. My name is Chach, and I'll be coordinating your call today. During the presentation, you can register to ask a question by pressing star followed by one on your telephone keypad, and if you change your mind, please press star followed by two. I'd now like to hand over to Kenny Chae, Head of Investor Relations, to begin. Kenny, please go ahead. Hi. Good morning, and welcome to AkzoNobel's Investor Update for the Q2 of 2024. I'm Kenny Tse, Head of Investor Relations. Today, our CEO, Greg Poux-Guillaume, and CFO, Maarten de Vries, will take you through our results. We'll refer to the presentation, which you can follow by webcast or download from our website at akzonobel.com. A replay of the webcast will also be made available following the event. There will be a Q&A session after the presentation. For additional information, please contact our investor relations team. On slide 2, before we start, a reminder of our forward-looking statements disclaimer. 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 3 of the presentation. Thanks, Kenny. Good morning to everyone on the call. Our performance for Q2 showed continued growth in our underlying businesses. Organic sales growth of 2% was driven by a third consecutive quarter of volume growth against a mixed market backdrop. Margin expansion continued at gross profit level. Gross margin was up 160 basis points in Q2, year-on-year, on an adjusted level and before hyperinflation accounting, and 270 points for the half year. But adjusted EBITDA growth in the quarter was muted by higher than expected operating costs. Q2 adjusted EBITDA before hyperinflation accounting was EUR 411 million, keeping EBITDA as a percentage flat compared to the prior year. Additional measures to mitigate inflationary pressure on OpEx are ongoing and will accelerate through the current quarter. We'll touch more on this later in the presentation. We finished the quarter with a net debt to EBITDA ratio of 2.9 times, slightly higher than the 2.7 times we saw at the end of Q1, reflecting usual seasonality. Finally, at 13.7%, we are making good progress towards bringing return on investment within our midterm guidance range of 16% to 19%. Moving on to slide four. Let's look at our Q2-adjusted EBITDA and the elements that drove a EUR 30 million impact compared to the midpoint of our expectations. Volumes continued to grow in Q2, but 1% less than anticipated. This was mainly due to Deco EMEA, where growth was held back by unfavorable weather conditions, which led to a weak June. July seems to be back on track. This cost us about EUR 10 million of EBITDA. Price mix was flattish compared to the prior year and in line with our plans. We anticipate an improvement through targeted price increases in the second half of the year. Raw material benefits were in line with our expectations, providing a high single-digit tailwind in our P&L, and the trend is in line with our earlier assumptions as we enter Q3. As I touched upon in the previous slide, the main deviation from our expectations was driven by a buildup in OpEx. Even though we had signposted Q2 as an inflationary quarter, particularly due to wage inflation, we ended up EUR 20 million higher than anticipated, in part due to cost inefficiencies, which we are now mitigating. The combination of higher OpEx and softer growth resulted in a EUR 30 million impact. While this is frustrating, after five successive quarters... Successive, I'm sorry. Five successive quarters of absolute EBITDA expansion, the underlying businesses are healthy from both the volume and gross margin perspective, and we are in the process of reeling in our OpEx. That, combined with our plans on pricing actions, will yield positive results in the second half of the year. Let's now turn to slide 5. Organic volumes in the first half were up 1%, with 2% growth in coatings and flat performance in Deco. Let's look at our businesses one by one. In Deco EMEA, volumes were flat, largely due to adverse weather in the Q2 that delayed the start of the exterior painting season. However, we still forecast a multi-year progressive rebound and anticipate 1% volume growth for the full year. In Deco Latin America, continued solid performance in Brazil was offset by weaker demand in Colombia and Argentina. As for Deco South, Southeast Asia, Q2 trends largely reflected the trends we saw in Q1, with India and Indonesia as the standout performers. Overall, we expect the combination of these two regions, so Latin America and Southeast Asia, to deliver mid-single-digit volume growth for the full year. The market backdrop for Deco China in the first half of the year remained lackluster. With the market recovery pushed out and easier comps into the second half, we anticipate a low single-digit volume performance for the full year. In our coating businesses, the momentum was robust. Geographically, our businesses are doing particularly well in North America and Asia, including China, where most of our coating businesses grew double digits. Despite flat markets, our Powder business delivered a robust mid-single-digit performance, including growth, across all segments. In marine and protective, our commercial successes and technical new build continued. Our full-year outlook for these combined businesses is unchanged at mid-single-digit.... In automotive and specialty coatings, vehicle refinishes was flat, excluding the impact of weaker demand in Turkey post-election. In aerospace, we were held back by production delays at our aerospace OEM customers. This was offset by strength in our aircraft maintenance business. In industrial coatings, packaging continued to grow, while volumes in coil and wood stabilized sequentially. Overall, we expect the combination of these businesses to deliver low single-digit growth for 2024. In summary, despite an incrementally tougher market backdrop, our growth momentum supports our full-year projection for low single-digit growth. And while markets are not providing a tailwind, we are encouraged by the progress of our initiatives to improve execution across our businesses. More on that on the next slide. So moving on to slide 6. On this slide, you will find details of some KPIs delivered to date as we accelerate our industrial efficiency actions across the portfolio. Back in May, we announced the closure of 3 Deco EMEA sites. The progress made in transferring volumes away from those sites means that we are on track to complete the closures before the end of the year. It also means that we can move up the next closures that we have earmarked. They'll be announced in due course. I'm particularly pleased with the progress we're making on improving the efficiency of our operations, measured through OTIF, On Time In Full. You can see that we're making great headway across a number of our businesses, both in Europe and in the US This improvement in supply chain performance is especially important in sites where production constraints have reduced our ability to fulfill customer demand. Our industrial transformation is indeed underway, setting the stage for enhanced operational performance and helping us achieve our midterm growth ambitions. Maarten will cover what this means from a financial perspective in the next slide. Maarten? Yeah, thanks, Greg, and good morning, everybody on the call. We expect a number of the operational improvements outlined in the previous slides to accelerate throughout the remainder of this year and beyond. This means we are on track to achieve a benefit of above EUR 25 million for 2024. And for 2025, we now expect to see an incremental benefit of around EUR 70 million, which is skewed towards cost savings. The early success of the actions outlined by Greg give us the confidence in our ability to unlock value from our industrial base. Our learnings to date have also opened the potential to drive these recurring benefits beyond the EUR 250 million ambition. We'll keep you posted on this in the coming quarters. In parallel to these efforts, we are also working on measures to combat the inflationary pressure in our OpEx. Corrective actions include corporate overhead reduction and removing costs related to service level issues that have now been fixed. We expect these measures to allow us to course correct by the end of this year. To be clear, these measures are above and beyond the industrial efficiency program. Moving on to slide 8. Organic sales in the Q2 were up by 2%, and reported revenue was up by the same amount. Q2 sales volumes for Deco were 1% lower, while coatings volumes were 2% higher compared to the previous year. Price mix contributed 1% to organic sales, although underlying price mix, excluding Turkey and Argentina, was flattish. The impact from these countries was notably higher in the quarter. The 1% positive revenue contribution for M&A in our Deco business is primarily related to the Huarun acquisition in China, which completed in Q3 last year. Currencies remained a headwind, reducing group revenue by 1 percentage point. Adjusted EBITDA, after the impact from hyperinflation accounting, was EUR 400 million. This result is marginally higher than last year, as the high single-digit raw material tailwind in our P&L was offset by higher OpEx and impact from hyperinflation accounting. Our overall EBITDA margin was stable year-on-year. In contrast to our performance in paints, we saw continued margin expansion in coatings, thanks to a positive contribution from both volume growth and an increase in gross margins. Turning now to slide 9. Our return on investment showed a solid expansion to 13.7% and puts us in a good position towards our midterm ambition range of 16% to 19%. Working capital as a percentage of revenue was 17.3% in the quarter, an improvement versus Q1, reflecting the typical seasonal pattern in our business. We are continuing our efforts to reduce inventory to normalized levels beyond this year. Our free cash flow was EUR 77 million, which showed a return to normal level compared to higher prior year comps. Now I'll hand over to Greg to cover our outlook on the next slide. Thanks, Maarten. So slide 10. In summary, we're pleased with our ability to deliver top-line growth and continued gross margin expansion against the mixed market backdrop in Q2. As with previous years, we expect our Q3 profit to land broadly in line with Q2. The profit delivered for the first half of the year, as well as our actions to mitigate inflationary OpEx and the additional pricing actions launched for the second half of the year, means we expect to deliver full-year profit in line with market expectations at the lower end of our guidance range. I'll now hand over to Kenny, who will close with information about the coming events, and then we'll start the Q&A session. Kenny? Thank you, Greg. Turning to slide 11, before we conclude the formal presentation, I would like to highlight the date of our Q3 results announcement, which will take place on October 23rd. We are now pleased to open the floor to your questions. Please state your name and company when asking a question, and limit the number of questions to two per person so that others can participate. Operator, please start the Q&A session. Thank you. If you'd like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question today comes from Peter Clark from Bernstein Société Générale Group. Please go ahead. Yes, good morning, everyone. I've got, two questions. One is a joint one I have with Deco. EMEA Deco, you pointed out, obviously, exterior paint was delayed because of the weather. I understand it's quite high margin. Just wondering, confidence you catch that back, 'cause I think that's in your guidance. And then in China, in terms of the double-digit decline you saw on organic sales, just a feel for how much is volume, 'cause I know it's very competitive on pricing. And then the second question, just to be clear, on the labor inflation in the Q2, how much higher than expectation was that out of the EUR 20 million that you sounded out for the Q2 number? Thank you. Thanks, Peter. I'll take the first two, and Maarten will take the third. So Deco EMEA, you're fully correct. The exterior paint is higher margin than the rest of the portfolio. It's a professionally driven sector because... well, as the season opens, that's really when the professionals start buying these products and the market really kicks into gear. We were actually doing well in Deco EMEA for the first two months of the quarter, April and May, and June was really bad. And I say that very openly, because July is back on track, so it's-- we're not worried about anything structural in the European Deco market. But, if we want to be able to catch up on the exterior season, at some point, you have to have decent weather. So as long as it doesn't, you know, rain all summer, then, we'll end up catching up because what ends up happening is that the professionals will focus on interior work and, when it's raining, and then we'll switch to exterior afterwards. It's just that if it rains for too long, then there's a moment you run out of runway because there's only so many professionals, and then you run out of tradespeople. But that's never really happened before in a significant manner, so we're confident that we'll catch up. Once again, July is looking okay. China, you know, your question on China is really a Deco question. I'll point out once again that in China, Coatings were up double digits in kind of low teens in terms of volumes in our Coatings businesses. In our Deco businesses, we're down, and we're down, you know, in sort of the mid-single digit volume range. It's a market where volumes are under pressure, but as you said, pricing is under pressure, too. So, what do we expect on volumes? We expect that the second half of the year... I mean, we have easier comps, and we're seeing a little bit of momentum, so we expect the second half of the year to be better. We also expect that pricing will stabilize soon. And, who knows if we're, we can even hope that it'll pick up a little bit because the raw material cycle thing has played out. You know, China is an unusual market in the sense that most of the raw material benefit has been given back to consumers. And, at this point, the people that are pricing down in China are eating into their profitability, and I think that, it's, it's gonna stop at some point. So, not an easy market, but a market in which we see a little bit of upside in the second half of the year, both from a volume perspective, for sure, and, maybe pricing, but at least we expect the drop to stop. Maarten, labor? Yeah. So, as we said, OpEx in Q2 was EUR 20 million higher versus what we planned for the quarter. Ten million is coming from inefficiencies, and that's really extra costs we have made. In fact, originally, we planned for higher growth in the quarter. So, we were on a higher cost run rate, including inefficiencies to support the OTIF, the on time in full delivery to our customers, which, by the way, have been fixed right now. And the other component is indeed a higher wage inflation. So the EUR 20 million is basically the inefficiencies and the higher wage inflation. And also, if you look at the total OpEx in the quarter, as we said in the presentation, it's the wage inflation component of EUR 40 million and the inefficiencies of EUR 10 million. I hope that answers the question. Yep. Thank you. ... Thank you. The next question is from Matthew Yates, from Bank of America, Merrill Lynch. Please go ahead. Hey, good morning, gentlemen. A couple of questions, please. The first one is for Maarten. Just on the working capital development, I recall at Q1, you flagged the timing of Easter had an unfavorable impact on your receivables. I'm guessing you've acknowledged that demand was a bit weaker than expected, which perhaps leaves you with higher inventories. But that free cash flow of EUR -134 million for the first half, is that disappointing? Is there any timing or strategic issue that's been driving that? Or, I guess put another way, where would you expect us to land when all is said and done at the end of the year? And then the second question may be more for Greg. Just on the, industrial transformation acceleration, if I compare your slide seven on the timing with what you previously published, it does look like some savings have been pulled forward, out of 2027 and more into 2025 and 2026. Can you just elaborate a little bit on how you were able to achieve that? 'Cause I do recall a conversation when the plan was initially announced, that it was surprising the savings were so long dated. So I guess it's a pleasant surprise now that you've been able to accelerate that versus the original plan. Thank you. Yeah, Matthew, on the first question, I mean, if you look at the free cash flow development, it really follows the normal seasonal pattern, and most of our free cash flow is really unleashed in the second half of the year. To your point on the working capital and Q1 end of the quarter, in fact, we had exactly the same this end of the quarter. So, the Friday was on the... I think it was on the 29th. So, the quarter end was in the weekend, which is always unfavorable from a cash collection perspective. But overall, working capital-wise, we ended at 17.3%. We said that we will end at the year-end at 14% or just below 14%. So, that is, of course, driven by further actions to reduce our inventories. And, as I said, the unleash of free cash flow will be mostly driven in the second half, as we usually see. I'll take the second question on the industrial transformation, Matthew. Yeah, there is a pull forward, and we said that we'd try to execute as fast as possible. The effects that lead to this pull forward are, the first one is that, if you take the three closures that we've announced, they're actually proceeding quite well. Two of them are in Europe. Consultations are usually complicated and, you know, socially sensitive, but there's also a more active European job market currently. And we're also, we've done a lot of work upstream with the announcement in terms of getting ready to ship the products. So as we look at the timing, we're able to actually close earlier than what we thought, which then frees us up to kind of pull more closures forward. Because at the end of the day, we have to manage the integrity of our delivery network in Europe, and there's only so many of these closures that we can manage in parallel. So all of it is kind of shifting forward, which is positive news, and we'll continue putting pressure on the timing so that only amplifies. And then the second point is that, you know, as part of these, the EUR 250 million benefits, there's significant cost savings, but there's also what we're calling benefits, which is the debottlenecking, for example, of our existing plants, where mostly on the coating side, where you by replacing certain pieces of equipment or changing the processes, you manage to squeeze more capacity into existing assets. And as we do that, that suddenly makes actually more rationalization possible, because as we get more efficient in our existing plants, as Maarten pointed out, as we fix our OTIF issues, which we've largely done at this point, then we realize that there are assets that we can do without, and then we can add those to the list. So that not only brings things forward, but that also increases the quantum, which is something that we expect to be communicating on as this thing progresses. Anything else, Matthew? No, that's all good. Thank you, guys. Thanks. Thank you. Our next question is from Chetan Udeshi, from JPMorgan. Please go ahead. Yeah, hi, thanks, and morning all. Two questions. First, I think you're guiding to Q3 EBITDA broadly in line with Q2, which means to get to the consensus full-year EBITDA, it sort of implies, you know, we don't see that seasonal drop to the same extent that we normally see. So can you sort of help bridge that gap versus normal seasonality? What drives that better Q4, if you will, versus what you typically see versus Q3? And the second question, just coming back to the working capital point again. I'm just curious, you know, because we've known Akzo has had a bit more inventory and working capital than normal for the last two years. So I think our expectations have been that this should be on a downward trajectory. So it's a bit... surprising to see even inventory tracking a bit higher than normal. Now, if I look at your guidance of 2.3 times by end of the year, it suggests that, you know, your working, or rather your free cash flow in H2 will be more than EUR 700 million. So just tying all the things together here, I'm just curious why, why we've not seen even, let's say, stronger progress already on working capital in, in H1? Any, any comments there? Thank you. Yeah. So maybe start on your Q4 EBITDA question. A few points to mention. I think, first of all, if you compare to last year Q4, last year Q4, we had a massive hit, a hyperinflation hit of EUR 23 million. I think it's good to remind us of that topic. That's one. Secondly, if you look at our view for Q4 this year, then, as we mentioned, we are driving a number of targeted price increases, which will become visible in Q4, as well as the course correction of our OpEx, which also will start to be visible in Q4. So a number of actions are ongoing to drive these Q4 numbers. Then you can compare Q4 more with a Q1 plus, I would say. That is on that topic. On your question on working capital and inventory, it's recognized that inventory still needs to be normalized. It's not yet normalized where we want it to be. We've also indicated that from a working capital perspective, at the end of the year, we are more or less at the 14% or just below the 14%, but ultimately, we've said that normalized working capital should be more at the 13% or even just below the 13%. So we are still in a trajectory of normalizing our inventory levels. Your conclusion that the free cash flow needs to be unleashed in the second half is a correct conclusion, absolutely. Can I follow up? Where exactly are you targeting price increases? Have you already announced some price increases in any of your businesses, just for knowledge? Yeah, we have. If you take, Deco EMEA, for example, 25% of our business, the way that market works is that you notify the price increases two months before they happen. So, we notified in, let's see, June. We notified at the end of April, and the cost increases come into effect in, July. So that's already been done, and, and therefore, that's already starting to be reflected in, in, in our business. If you take the same, Deco business in Latin America, we notified, price increases in our Deco business. Then if you take the coatings businesses, it's a mixed bag, you know, industrial coatings is still a lot of index contracts, so there's only so much you can do, but there are areas in which we have pricing opportunities, and we've taken those. In marine and protective, there's also some opportunities. So this is more kind of value-based pricing and also looking at the health of our portfolio and highlighting areas where we might be underpricing versus our potential. But long story short is that all the price increases that we're talking about, I mean, the vast majority of the price increases that we're talking about are already in the pipe, and a lot of them are already in effect. That's clear. Thank you. Thanks. Thank you. Our next question is from Jeff Heard from UBS. Please go ahead. Hi, good morning, everybody. My questions have already all been answered, and I don't have any more, so I'll let somebody else have an opportunity. Thank you. Thanks, Jeff. The next question is from Christian Faitz from Kepler Cheuvreux. Please go ahead. Yes, thank you, and good morning, everybody. Two questions, please. First of all, what is your current order book visibility? And if there are stock differences between Deco and Performance Coatings, would you mind pointing to the differences? And second question would be, is there anything new on the Australian pipeline litigation situation? Thanks very much. Thanks. Order book visibility, paints and coatings is not really kind of a backlog business. It's a transactional business. So, businesses that have an order book are, for example, marine and protective, where you sign multi-year delivery contracts, and therefore, if you take the marine protective business, where we're guiding for mid-single-digit growth, that growth is essentially already in our order book for the next two years, pretty much. So, but that's exceptional because it's the structure of that industry. Most of our other businesses, it's you know, orders equals revenue. So then there isn't that notion of visibility as you would have in more projects businesses. It's just the thing in Australia, nothing new. The court proceedings have started. We'll report if there's anything material to report, but we're not expecting anything substantial before the end of the year. Thanks, Greg. Thank you. The next question is from Alex Stewart from Barclays. Please go ahead. Hi there, good morning. Just wanted to probe a little bit on this hyperinflationary expense in the Q2. Were you expecting to book a cost in Q2? Or were you expecting that to be flat, and the EUR 11 million came as a bit of a surprise? In the Q3, when you talk about flat EBITDA, should we assume the hyperinflationary charge disappears again? In other words, are we looking at EUR 411 million as the base, or are we looking at EUR 400 million as the base? Just in context around that, because it's been very difficult for us to predict that number in the past. Thanks. Yeah, Alex, on the hyperinflation, in fact, in Q1, the hyperinflation was lower. So, to your point, hyperinflation in Q2 was higher versus what we expected. If you now look forward to Q3, I mean, the assumptions around Q3, and it's good to look at it sequentially, are very much similar assumptions as coming out of Q2, and that is how we look at Q3. So sorry, just to be clear, so you're expecting roughly low double-digit charge again in the Q3? You mean from a hyperinflation perspective? Yes, we- Yeah. - Look at more or less assumptions. Okay, thank you. The next question is from Aron Ceccarelli from Berenberg. Please go ahead. Hello. Hi, good morning. My first question is on aerospace. Would like to understand a little bit the different moving parts here, please, because one of your key competitor in the US reported based on performance last week with record backlog and would like seem to try to understand the main differences, as there are no many aerospace OEMs out there. The second one would be really on vehicle refinish. So the performance was still quite resilient. I would like to understand, you know, does anything has changed compared to previous trends? My last question, if I can, is on your freight costs, and I would like to understand when do you guys normally reprice these contracts, and was there any kind of headwind already on your OpEx coming from logistics and freight costs? Thank you. Well, is the question. The last question is on logistics- Freight, freight costs. Freight costs. Okay. Mm-hmm. All right. Well, let me take the first two, and Maarten will address freight costs. Aerospace, you're referring to the comments by PPG, might as well call them out by name. They were more buoyant than we were in terms of the aerospace comment. The difference between us and PPG is we're actually the market leader in aerospace. So, they're a niche player, and they're strong in defense and general aviation, and if I recall their comments, they point out to defense and general aviation as markets that are doing well, and actually, those are the markets they have strong positions in. But these markets are a small part of the aerospace market. The larger part of the aerospace market is the structural and MRO market. Essentially, it's the market for the plane OEMs. And MRO, your maintenance and repairs, is going well, but structural, you know, the stuff that you sell to the Boeings and Airbuses of this world, is slower for the reasons that Airbuses and Boeing have communicated on. You know, Boeing has the issues that everybody knows and has slowed down its production rates significantly, or at least did that in Q2. And Airbus also recently announced that it had some challenges with certain suppliers and was also slowing down to some extent. So we're just a reflection of what Boeing and Airbus say, because actually at both of them, we have high market share. So that, that's really all it is. We're leading that sector, and you know what our competitor is calling backlog is... It's, maybe it's also a slightly misleading term, because it's not like you're - It's not like marine protective or you're signing multi-year contracts. The backlog is more the reflection of, these are orders that you have, that you haven't delivered for whatever reason. And, if Boeing slows down production, then our backlog goes up because we've got stuff in which we have commitments that we're not delivering. But it's not necessarily a healthy thing, you know? So, I'll wrap up on aerospace by saying it's a really good market to be in for years to come because order books are full at plane OEMs. But if you have high exposure to Boeing, as we do, currently, it's a more challenging market in terms of growth because we can only go as fast as our customers are able to go. So that was the aerospace question. Vehicle refinish, there was a slowdown to some extent in Europe and also in the US. There isn't anything that has us particularly worried, but yes, the market was less dynamic towards the end of Q2 than it was at the beginning of the year. Well, I don't really have anything tremendously insightful directionally to tell you. There's no particular reason why that market should... should not be doing well, but we did slow down, and the market did slow down in the second half of the Q2. Maarten? Yeah, on your question on freight cost, I think it's important to think about it in two ways. You have the inbound freight and the outbound freight. The inbound freight is as part of our total raw material basket, so it comes into our contribution margin. Indeed, from an inbound perspective, we've seen freight costs going up, and that is then also translated in how we price in the market. The outbound freight, in fact, the inflation we've seen in outbound freight is very much in line with what we planned for this year. So the challenges are more in the inbound freight levels. Thank you. Thanks, Aaron. The next question is from J.D. Pandya from On Field Investment Research. Please go ahead. Thanks. I have a few questions. So firstly, if I may ask around... Sorry to ask you again, Greg, on aerospace, but I'm gonna be a bit direct here. PPG claims they are number one, and they claim that their sales is well north of $1 billion. So could you give us some more meat on the bone if you claim you're number one? Because they also have sealants. And I want to refer- Yeah ... to Q1, where you had some supply chain issues. So are those issues solved? And is this just a comp issue, or is this the fact that Boeing has slowed, or is this that there is some lingering supply chain effect that is holding you back? Because they're making a lot of noise that they're winning share. So just wanna, you know, put to bed this debate. That's my question number one. Sure. Second question is really. And second and the third question are really tied together, but the second question is really around, you know, where does Akzo go, really? Because your leverage is around 2.3 times at the end of the year, if I go by your guide. Last time you did a share buyback program, your leverage was sub 1.5. So are we ruling out a share buyback for the next one year or so, especially, given the fact that your share price is sub EUR 60? And if I compare the period of 2008 to 2014 or 2015, before PPG came, the average share price was 55. So you're basically back to, you know, post ICI, pre-PPG days. So really, you should be buying your shares, but I just want to understand what's the appetite from your side. The last question, sorry for this, is on the OpEx. You know, when you go back to the beginning of the year and you did your budget, you know, how disappointed are you that you couldn't handle what, in my opinion, at least, is an internal KPI? Thanks a lot. Thanks. Thank you. I'll take the first two, and Maarten will take the disappointing question, which, you know, I don't think is as disappointing, but certainly it's something that we have to tackle aggressively, and we are. But Maarten will get to that in a second. Your aerospace question. PPG is a great company, and I have a lot of respect for Tim, their CEO. You know, this is not, you know, this is not a, this is not a pissing contest. It's a... We're number one in aerospace in paints and coatings, and that is demonstrable. PPG has a much wider portfolio that they sell to aerospace, and therefore, overall, in aerospace, they do more business than we do. So yes, they do sealants and adhesives, and we only do coatings. So on what we do, which is coatings, we're the market leader, but on the full kind of aerospace accounts, they have a lot more arrows in their quiver, and therefore, they do more business. Supply chain issues, we had some supply chain constraints in Q1. Those are resolved. There's nothing holding us back whatsoever. Any slowdown in aerospace is really just a reflection of the slowdown of rates at the OEMs. We have high market share with both of the big ones, and right now, they're struggling with the various issues that I'm sure will get resolved, but it is slowing us down, too. And that's just, you know, we need to go with the flow from that one. But in on the flip side, the MRO market continues to be active, and we're pushing in other areas of aerospace, which, which I think will serve us well over the longer term. Your share buyback question, I mean, the comparison on the share price, you know, pre-PPG and Elliott and post-ICI is kind of it's apple and oranges because you had specialty, you had specialty chemicals. We returned a bunch of billion EUR to the to our shareholders. What's the exact number, Kenny? More than EUR 12 billion. We returned more than EUR 12 billion to our shareholders. But your overall point remains valid. I'm not trying to distract from that overall point, which is that our share price is low by, certainly by my expectations and most people's expectations. And the question is, is our leverage ratio a constraint to our considering share buybacks? And the answer to that is that we are prioritizing shareholder returns, and therefore, we are de-emphasizing M&A. We haven't made a deal since we bought that Sherwin China Deco business, which was a small acquisition. But essentially in my tenure, we haven't done a deal, apart from that Huarun deal, and we actually ended up walking away from Kansai. So, we're restoring the health of our balance sheet, but we're also a really cash-generative business, and therefore, it's a capital allocation discussion. And I will end this answer by saying that when we're trading at 9 or 10x EBITDA and acquisitions usually go for a higher multiple, it's hard for us to defend not buying our own shares when we have capital to deploy. So it's not a 2024 issue, because in 2024, we're focused on getting to that 2.3 that's in our guidance. But as we look into next year, clearly share buybacks is something that we'll seriously consider, and that will be part of our capital allocation. Maarten? Yeah, yeah, Deep, on your OpEx question. Now, first of all, we acknowledge that we clearly need to course correct in terms of our OpEx development, that is one, and actions are in place to make sure that we do that, and that by the end of, basically by the end of Q4, we are again at normal run rates, which are part of our plans. I think it's also important to realize that going into the year, we planned with higher volumes, and we have been ramping up also costs to support the growth. And on top of that, as I said earlier, to support our service levels, we had also inefficiencies in our cost in terms of overtime, extra shifts, et cetera, et cetera, which we're taking out. Costs are too high, actions are in place, and they will be visible for sure by the end of this year. Thanks a lot. The next question is from Georgina Fraser, from Goldman Sachs. Please go ahead. Hi there. Hi, Greg, hi, Maarten, hi, Kenny, and team. Thank you for taking my questions. My first question is on China Deco, and please correct me if I'm wrong, I might have misunderstood. Did you say that you expect the volumes in China Deco to be better in the second half of this year because there's an easier comparable base? And if that's the case, could you talk about any other market indicators that you're tracking that are giving you confidence that the market has bottomed? And then my second question, it's very clear AkzoNobel's business model from a production and sales standpoint is very local for local. Could you talk about your raw material procurement model? I would particularly like to hear about your geographical split in terms of where you're buying your raw materials from and whether that matches your sales split. That would be very helpful. Greg, just picking up on a comment that you made in reference to the share buybacks. You said when you're trading on 9-10x EBITDA share buybacks are something that you might consider. On consensus estimates for 2025, you're trading on 8.4x. So I was just wondering if we should read something into your estimates for 2025 at the moment. Thank you. Oh, I'll end with your last. I'll start with your last question, Georgina. No, you shouldn't read anything into that. I don't look at the consensus on a day-to-day basis, especially for 2025. My point was limited to saying that we are not trading at a very high multiple, and historically, acquisitions in this space have been at a higher multiple, and therefore, the differential of buying something we know really well, which is our own shares at a lower multiple, versus buying something on which we have to do due diligence and on which we have execution risk at a higher multiple, which is external acquisitions, is, you know... I mean, that trade-off is not very hard to analyze currently. That's all I meant by it. I'm not, I'm not trying to guide for 2025 yet, but we'll, we'll do that. We'll do that in due time. Going back to your questions, your local for local question is a good question. The raw material procurement model. Procurement at AkzoNobel is a global function, so we don't procure from within the businesses. We have a global procurement strategy, as most businesses of our type do. I think it kind of ties into some of the questions you were asking in some of your recent publications, which is that we're in a world where there's an increasing appetite for tariffs, TiO2 from China and Europe, Epoxy in the US, and you've raised valid questions as to how big an effect are these things. If I take the example of TiO2, Chinese TiO2 into Europe, to try to give you a precise answer, I think the exact number of our TiO2 coming from China for the European market is 18% of our TiO2 needs, 18. So essentially, if you've got a tariff, you got a 40% tariff on TiO2 coming from China, then your question becomes: Well, what is the impact on that 18% of my European used TiO2 procured from China? And if you take just that 18%, that's like a EUR 5 million impact. Now, if you say, well, all the other European suppliers are gonna raise their prices because they're taking advantage of this tariff, then that becomes for all our TiO2 needs for Europe aligned to an increased price level, that becomes a EUR 20 million impact. So I'm giving you numbers to tell you that we look at these things, we've diversified our exposure, so we never put all our eggs in the same basket. I think I commented in the past that we could have gone for more China supply in the past, but we didn't, because we felt that we had to not only protect our European suppliers but also protect that geographical balance, which in a world of macroeconomic uncertainty, it's better to be agile than to be optimized. And then beyond that, you know, there's no Chinese TiO2 tariffs for going into the UK, for example, or going to Turkey. So, it's more agility, more flexibility than what you may have in mind, and we have been careful not to put all our eggs in the same basket. That made us maybe less competitive at a point in time, but that makes us more resilient and also more agile at this point in time. And then your last question on China Deco. China Deco is sequentially improving, so we're seeing higher volumes. And we also had easier comps in the second half of the year. Now, in terms of the market health, there isn't really any great indicator of consumer spending in China, picking up for home renovations. It's actually quite depressed currently. So we're not, we're not banking on anything tremendous. But when we look at our numbers, we do see volumes going up. There was an element of destocking too, because I think everybody in China got caught out by the fact that the market is soft. And we saw inventories in the channels going up in Q1, and we saw those inventories in the channel being worked down in Q2. There's probably still a little bit of that ongoing, but essentially our volumes are sequentially going up. Did I answer your questions, Georgina? I think there was a third one, or w- No, the third one was- No, you answered. Oh, the third one- You got them all beautifully. I killed it. Thank you. All right. Thanks a lot. Appreciate it. Thank you. As a reminder, to ask a question, please press star followed by one on your telephone keypad now. The next question is from Laurent Favre from BNP Paribas. Please go ahead. Good morning, guys. I've got a two-part question around the fixed cost. The first one on the wage side. From memory this year, you had to catch up on multi-year agreements, where in the prior years you hadn't had any inflation on wage, in particular in Holland. When we think about 2025, 2026, I mean, should we assume that you have already set those multi-year agreements, or is there a renegotiation to take place into 2025? And the second part to that, you're already guiding to EUR 70 million impact from the simplification plan. Maarten, you've talked about excess savings on top of the simplification plan. So should we, should we be assuming that in 2025 you have a clearly positive outcome on net fixed costs? Thank you. Now, Laurent, on the wage bill, it's absolutely correct that this year is a pivot point as we have been in negotiations with the unions, which all led to a catch-up of inflation coming into this year. Our wage inflation is really high, high single digits, this year. What we have done is, in the agreements, we have made them short agreements, so till the end of this year, because we know that inflation would come down to make sure that 2025 comes back to kind of much more normalized wage inflation. So that is the focus. I mean, at this moment, no promises, but that is... That has been the rationale behind the way we have set up the negotiations. So, that is on wage inflation. As you said, for next year, we are looking at EUR 70 million of benefits from our industrial efficiency program, as well as getting back to a normalized OpEx level with the actions we are currently taking. Above and beyond, there are also a number of other actions, as we laid out, in terms of looking at our OpEx, looking at our overheads, looking at our productivity, et cetera. But these topics, I think will come back when we give guidance for 2025. Clearly there are a number of areas where we're looking at driving more productivity. Okay. Thank you. We have a follow-up question from J.D. Pandya on On Field Investment Research. Please go ahead. Thank you so much for taking the follow-up. Greg, it's a question for you, and I apologize for, you know, being a bit philosophical here, but, you know, you've come from the outside into the coatings industry, and, you know, there are only two companies, if I may say so, yourselves and PPG, who have a, say, global presence in the Deco market, where you're present in, almost all continents. And the market leaders and successful franchises, i.e., Sherwin-Williams or Asian Paints or whatever, they choose not to participate in this strategy. So do you think that maybe it's time to reevaluate the Deco strategy and become maybe a regional champion and shed assets in areas where you don't have a critical market share or critical mass or a cost disadvantage? Thanks a lot. JD, it's a fair question. There's different models that prevail out there. Indisputable is that... you don't have to be in Latin America to be strong in Deco in Europe. You don't have to be strong in China to be strong in Vietnam or Indonesia. So, there's an element of regionality and sometimes even really just a local element. So, what we're, what we're convinced of is that we have a stronghold in Europe, we have good businesses elsewhere, but nothing is, nothing is, is cast in stone. The markets are evolving, and there's always opportunities to either double down in certain areas or to potentially exit in some others. We're we look at the portfolio dynamically, and we are not, we are not defending the global integrity of the Deco portfolio by arguing on synergies that that do not exist. You do have some brand power and some brand neutralization at global level. We use some of the marketing campaigns that we adapt from one place to the next, and that actually works quite well. There's procurement synergies that you can realize in different ways. You know, you can also realize that by having a large coatings business or by being stronger in a given market in Deco. So there's a lot of ways to get to the scale effects that are favorable to our business. But yes, I agree with you that we don't have to be on every single continent. Now, if you take an area like Europe, it's one market with one supply chain, and therefore, you can afford, and actually, it's actually beneficial to be in multiple countries, even in countries where you might not have a number one or a number two position, because essentially, you're piggybacking off the infrastructure that you're using for these countries, for the other countries in which you're the market leader. But in, you know, Asia or Latin America, the supply chain is very much local for local, including the manufacturing, and therefore, your point is valid. But, I'd conclude by saying that you point to two models as the kind of the virtuous models, which is the Sherwin-Williams model and the Asian Paints model. And I think you're correct, these are two wonderful businesses, but as you're seeing currently with Asian Paints in India, Asian Paints is feeling the heat of Grasim muscling into that market. And that is a very concentrated exposure for Asian Paints into the Indian market. So it has a lot of virtues, but also it has some downsides. And if you look at Asian Paints' recent communication, they're feeling the heat, and they are very much a single market entity. But once again, you can leave competitiveness in different ways, so your point is valid. Go ahead, team. Yes, I was just trying to follow up and ask, you know, your point about, you know, your own valuation and also the fact that you've paused M&A on the buying side. Isn't it a good time for Akzo to be a seller of some of the non-critical assets, especially if your valuation, as per the financial markets, is, you know, call it 9 times? I'm just trying to understand, is there an appetite from strategic buyers for some of these periphery assets, you know, for 12, 13, 14 times? Well- I'm just throwing numbers out there, sorry for that. I get your question, but you also know that the M&A market was completely dead until recently, and certainly well into the beginning of this year. And if you look at M&A in paints and coatings, there's been pretty much nothing. So, you guys are all sitting on these calls with my peers, and you're all asking the same questions about deleveraging and share buybacks. So, you know, you have to have buyers and sellers, and right now, there aren't a lot of external signs that it's a great time to realize maximum value. But I think that as the debt markets are reopened up and people are getting closer to their leverage corridor, and I think that's gonna resume. Thanks a lot. Thank you. We currently have no further questions, so I'd like to hand back to Greg for closing remarks. All right. Well, thank you very much for your time and your questions today. The Q2 was a mixed bag. We're happy with the top line. We're happy that we're continuing to grow, that we're delivering growth for the Q3 in a row, and we're doing that at the volume level, but also at our organic sales level. And we're happy that we're continuing to realize gross margin expansion, the 160 basis points that we talked about, pre-hyperinflation and adjusted. But what we're not happy with is that we went out on a little bit of a limb, betting on higher volumes, and the volumes are a bit lower than what we expected. But that gives us an opportunity to take significant cost out and to get that part of the P&L back in shape. As we do that, then the virtuous elements that you're seeing in the top line and the gross margin will make their way down to the bottom line. That's the plan going forward, and we look forward to executing it and sharing the results with you. Thank you again, and have a great day. Thank you. Thank you. This concludes the AkzoNobel Q2 Results 2024 conference call. Thank you for joining. You may now disconnect your lines.