Earnings Call: Q1 2021

May 5, 2021

Welcome to Solvay's Q1 2021 Results Conference Call for analysts and investors. Solvay team, the floor is yours. Good afternoon and welcome to our first quarter 2021 earnings call. My name is Jody Allen. I am the head of investor relations, and I am joined virtually by our CEO, Ilham Kadri, and our CFO, Karim Hajjar. Today's call is being recorded and will be made available for replay on the investor relations section of our website. I would like to remind all participants that the presentation includes forward-looking statements, which are subject to risks and uncertainties. You may refer to the slides related to today's broadcast, which are available on our website. With that, I will turn the call over to Ilham. Thank you, Jody, and hello, everyone. I will begin my remarks today with a health and safety overview shown on slide 3. Today, we have 124 colleagues who are infected with COVID-19, which is a similar level versus last month, and 121 employees in quarantine. We wish them all a quick recovery. At this time, we continue to follow our remote working routine globally to ensure high levels of safety. We are also utilizing our Solvay Solidarity Fund to show our support in the communities in which we operate, especially in India and in Brazil, and we sincerely hope that the critical situation starts to improve anytime soon. Moving to results on slide 4. As most of you know, the chemical industry is in fact a good barometer for economic activity, and it is logical that our Q1 performance clearly reflects the recovery in many of the markets we serve. For Solvay, it is in fact about some triple Rs here: resilience, recovery, and now reinvestments to prepare for the rebound in 2022. The more resilient markets that weathered the storm well in 2020 continue to deliver good volume growth in Q1. These markets include home and personal care, coatings, agro and food industries, and healthcare. Second, other markets that began to recover in the fourth quarter, such as automotive, electronics, and building industries, showed an accelerated growth from quarter 4 into quarter 1, delivering double-digit growth. Three, we are also highly encouraged by the beginning of the recovery in other markets, including the mining industry, as well as some of our commodities going into industrial markets. Altogether, this improvement in activity levels supported year-on-year top-line growth in almost 90% of our portfolio, and you won't be surprised that our civil aero, oil and gas, and to a lesser extent, a portion of our soda ash business, continued to face challenges. However, it's important to know that even these challenged areas began to show improvement in Q1 sequentially versus Q4. Moving to slide 5. In fact, our group sales, excluding composites and oil and gas, grew by 8.6% organically year-on-year and grew by 7% sequentially versus Q4. This was despite the Texas winter storm conditions that impacted the raw materials availability and logistics, resulting in force majeures across the industry. We estimate the total impact for these storms at about EUR 25 million of sales in the quarter, and indeed, Novecare was most affected. Notwithstanding the improved momentum, which saw sales progress to nearly 2% relative to Q1 2020, they were still around 2% below Q1 2019 levels organically. Regionally, we saw double-digit sales growth in Asia-Pacific and Latin America, with China domestic sales growing by 30% year-on-year and signaling superior growth relative to the general economy. The U.S. is still down by double digits versus last year, as you can imagine, mainly due to higher exposure to civil aero and oil and gas industries for our businesses. But it's up by 4% sequentially. Europe is roughly flat versus Q1 last year, but up 8% sequentially. But in fact, the recovery is only part of the delivery. The broader range of measures tackling costs and cash that we initiated back in 2019, remember when we launched our growth strategy, were deepened and accelerated during the crisis in 2020, and this is enabling us to deliver strong bottom-line results reflected in the improved quality of earnings. Our cost actions remain on track, and we delivered an additional EUR 80 million of structural cost savings in the first quarter as we continue to accelerate momentum, and this delivery compares to EUR 45 million of structural savings in Q4. These structural cost actions, combined with the recovery in certain markets, supported our delivery of 10% organic EBITDA growth and a new record EBITDA margin of 24.6%. This is 1.6 percentage points higher than Q1 2020 and 2.4 percentage points higher than Q1 2019. Moving to cash, the organization has continued its disciplined approach, and we again achieved solid results in Q1, delivering EUR 282 million of free cash flow. This is 40% higher than Q1 last year and is clear evidence of our progress toward improved and sustainable cash generation. Moving to slide 6. We are focused on the rebound, and we have taken decisive actions to reinvest in several key projects whilst maintaining strong rigor and discipline. Many of these reinvestments are not new to you, and they are related to customer partnerships where we have established firm commitment to supply future growth. These investments are directly aligned with our growth strategy and growth platforms and will be key contributors to our organic growth in the years ahead. These include investments in capacity expansions and in research and innovation. Let me share with you some of these investments. First, we are again investing in PVDF for EV batteries. By 2022, we will have more than doubled our capacity in France and China. Second, we are expanding our Tecnoflon fluoroelastomers production in Italy by more than 25% and 15% in China. This technology is in strong demand in the automotive and electronic markets. Third, we have various high technological polymers like PVDC and sulfone polymers that are used in healthcare, which was proven resilient during the crisis and remain a growth area for us. In France, we are expanding by more than 30% and in India by 5%. We are again expanding our high purity H2O2 or peroxides grades for electronics in China by about 35%, so basically doubling since 2 years ago. Last, we are investing in our bio-based ingredients used in hair and skincare products in France by more than 15%, and we have more than doubled our capacity of bio-based products in Brazil for consumer and food industries. Another type of investment is our investment in Solvay One Planet. Today is a big day for us and for soda ash team. We are announcing the full phase-out of coal at our Rheinberg plant in Germany, which will be the first soda ash plant in the world to be powered primarily by renewable energy using biomass or scrub waste wood chips. This will reduce Solvay's greenhouse gas emissions by 4% and will establish a new reference as the lowest emitting soda ash plant in the world. It is also an important moment to celebrate today. Three of our businesses, namely Specialty Polymers, Kynar, and Aroma Performance businesses, are now 100% sourced by solar electricity in the U.S. Let me now move to innovations. Today, we are also celebrating the official launch of our non-fluoro surfactant technologies, which will be in full production at our West Deptford, New Jersey site by June. At that point, Solvay will no longer use fluoro-surfactant process aid in West Deptford or anywhere in the U.S. I am very proud of our research team, who fast-tracked this important innovation. I am also very proud of our sales team for collaborating closely with our customers to qualify the new products in a record time. It is a powerful example of our innovation at work and aligned with our sustainability drivers. I will share one more example of innovation, this one related to the composite material business. I like this one very much because this business has faced significant headwinds in the civil aero market, as everyone knows. Yet the defense and space markets have remained resilient and a source of innovations for us. Two examples of this are the Vega rocket and the Vulcan launcher, which both utilize critical composite materials from Solvay. In fact, we do not often speak about the space industry, but it is part of our rich history, and I bet you may know or you did not know that Solvay Materials were on board the Apollo 11 mission that sent humans to the moon for the first time in 1969. We continue to provide innovative solutions to solve the future needs of the space exploration. Let me tell you, the most important is our investments, which go beyond capacity and innovation. They are also about our best assets, our people. Of course, these investments are not nearly the same magnitude, but they are included in our plan. Our frontline sales force, global key account managers, are developing winning strategies. We ask them to increase share of wallet, to value price our solutions, and drive innovations that make our customers win and make us win with them. We have changed our sales incentives plan to align with this principle. Finally, we are also investing in more digitizing Solvay. I believe digitalization will transform the industry and certainly our company. This is going from customer data mining to manufacturing, to research and innovation, to back office automation using AI and robotization, or in cybersecurity, of course, making our operations safe and resilient. Karim Hajjar will review in more detail the group segments and financial performance. Thank you, Ilham Kadri. Good morning, good afternoon, everybody. Before I dive into the segments, I would like to remind you that we indicated in February a full year EBITDA impact of scope and currency that we estimated at EUR 120 million. You can see today that Q1 includes EUR 41 million of impact, mainly from currencies and to a lesser extent, scope impact as 5 businesses were divested during the course of the first quarter, and the last one, in fact, just closed at the end of April. I will refer you to slide number 7, which provides a view of our market exposures by the group and each of the segments, as this may help you to better appreciate the significance of some of the commentary. In addition, we have disclosed for the first time the regional sales for each business segment, which I am really hoping gives you more helpful insights into our global businesses. I will start with an overview of the 3 business segments, and I will refer to all figures on an organic basis, by which I mean constant scope and currency. Starting with materials on slide 8. Net sales in the quarter, in the first quarter, were down only 7.5% organically versus last year, which is actually quite remarkable given the fact that demand in civil aero was still strong in Q1 2020. The overall achievement reflects strong performance in our Specialty Polymers business, with robust demand across various markets, driving 10% organic sales growth in polymers. This was driven by 19% organic growth in automotive, once again, outperforming the market. As you heard Ilham Kadri say, we are investing again in this important platform to support rapidly growing demand. As a reminder, you can find Solvay's polymers in many areas of a vehicle in demanding, really challenging under the hood applications and in many applications within and surrounding electric vehicle batteries. Our leadership position supplying PVDF to batteries continues to forge ahead. Sales growth of 80%, 8, 0, in the first quarter, year over year. As a reminder, our polymer solutions for electric vehicles are agnostic to the type of battery. The combination of our global infrastructure and local geographic positions is particularly valued by our customers, and we continue to win new business. The electronics market also gained momentum following a strong fourth quarter, with polymer sales growth in electronics of 14%, driven by semiconductor and smart device applications. The team continues to win new customers. A recent example being Atlas Copco, where we just won a multimillion EUR contract in semicon fabs. We have more examples of new business wins where we are replacing metal with our polymer solutions to address the most demanding performance requirements. The composites team continues to do a great job in our view, mitigating the headwinds in the civil aero market. As I indicated, sales in this business were down 42% on last year. More importantly, and for the first time since the second quarter last year, the business delivered sequential sales growth of 8.6% versus Q4. The signs of modest improvement in single-aisle aircraft are there, yet the road to full recovery, as we know, will be a long one. I will also remind you that composites delivered record EBITDA levels in Q1 2020 as its cost reduction programs overcame, at that point, volume reductions related to the 737 MAX. As you know, our swift cost reduction actions helped to improve operating leverage and resulted in a strong sequential profit increase, which is evident when you compare our results with others in that market. I will also highlight one other achievement, in that the composites business has in the meantime, also successfully implemented SAP, continuing to serve customers without fail. These projects are complex. They should never be taken for granted, and we are really proud that our team managed to carry this project out on time and on budget with everything else that they had to contend with. To wrap up materials, segment EBITDA in the first quarter was contained to only a 4.7% decline year-on-year, despite a 7.5% decline in sales. It increased sequentially by 35% thanks to higher volumes, sustained pricing, and of course, deep cost reductions, especially in the composites business. Moving to chemicals. On slide 9, you see that first quarter sales in the segment are up 6.1% organically. Soda ash continued to improve sequentially, up 2.2% in the quarter, driven by volumes. They remain 3% lower than Q1 2020 due to lower contract prices, which we had all expected. We see continuing recovery in building and construction, with support to growth in flat glass, whereas demand for container glass, which is used in hospitality or restaurant catering industry, remained weak, of course, due to the continued lockdowns in many countries. We are also encouraged by the recent export price increase announcements in the market, which will help to restore a more sustainable price level as we capture new volume opportunities. Sales increased 8% in our bicarbonate product line, which incidentally represents about 25% of the soda ash sales. The growth was driven mainly by our SOLVAir technology, which is used as flue gas treatment for cleaner air. This product reduces emissions of gases caused by highly polluting facilities such as power plants, waste incinerators, and indeed even ships. In fact, we are making a small investment with attractive economic returns due to the continuing strong demand and our leadership positions. Peroxide sales were down 4.7% organically compared to Q1 2020, reflecting lower volumes in the pulp and paper market in North America and Europe, which are down about 20% due to the declining graphic paper market. Market conditions remain strong in HPPO, and this is used to produce polyurethane foams for industries including automotive and building. This part of the business delivered continued strong growth. Turning to silica. Sales were again strong, up about 8%, thanks to the continued recovery in the automotive segment and market share gain, including with key customers driven by interest in our recently launched innovations. Our recent partnership with Bridgestone and Lanxess is drawing a lot of attention as demand for more sustainable solutions is increasing rapidly from tire manufacturers. These wins and strengthened partnerships are helping us to outperform and to further reinforce our silica's business leading position as a sustainable innovator in the tire industry. Coatis had a record quarter, with sales up 55% due to strong volume growth and significant progression in prices, clearly in favorable market conditions. Volume increase includes both winning new customers and achieving share gains at existing customers. Over the past year, this business has taken strong action to optimize its cost structure in line with the strategy, and it is a good example of how this has helped to support the improved margins. Coatis is expected to continue to perform well, but we are mindful about also the recent resurgence of COVID cases in Brazil. Just one to watch. Overall, the EBITDA of the Chemical segment was up 8.7% compared to Q1 2020 and increased sequentially by 15%, mainly driven by strong results in Coatis and in Silica, as well as our RusVinyl joint venture, driven by strong demand and high prices of PVC. The combined performance resulted in an underlying EBITDA margin of 30.4% for the segment in Q1. Next, I turn to slide 10, where you can see that the Solutions segment delivered volume growth, sales growth of 6.4%. Beginning with Novecare, sales excluding the oil and gas market increased by 13% versus Q1 2020, with continued growth in coatings, in home and personal care, and in agro markets. Actually, Novecare results would have been even higher had it not been for the loss of around EUR 20 million in sales related to the winter storms in the U.S. and the subsequent disruption it had on supply chains and on the availability of raw material. We continue to see high demand in the hygiene market, with natural and sustainable ingredients being clear drivers of long-term growth, and we are well-positioned. We have also seen activity levels improve in the oil and gas sector, which grew 11% against the fourth quarter of last year, yet sales were still down 31% year-on-year. Special Chem had another good quarter with sales up 8.6% against last year. Both the automotive and the electronic sectors, which today represent about 60% of the sales at Special Chem, were very, very strong in Q1. While demand from the semiconductor market is expected to stay strong in the upcoming quarters, we started to see an adverse impact related to the chip shortages around quarter end, and this could result in a temporary dampening of sales in the auto market in the second quarter. In Technology Solutions, Q1 marked a strong rebound in the mining industry, with sales up 14.5% in the quarter. Growth was driven by mine reopenings, particularly in copper, as COVID-19 disruptions were overcome, and these were supported also by higher copper prices, leading to robust demand for our specialty extraction solutions. The business also enjoyed share gains in Latin America. In Aroma, sales were down slightly by 1.6% in the quarter after a number of quarters of sustained strong growth. The core business, which relate to hydroquinone inhibitors and vanillin, is resilient while we are developing further our natural vanillin activity. Wrapping up Solutions, the segment enjoyed EBITDA growth of 21% against Q1 2020, reflecting the strong and continued recovery across most of the markets we serve. Focused cost reduction measures also supported the EBITDA margin expansion up to 19.4% against, you remember, 17% just two years ago. This improvement reflects a combination of volume growth and disciplined cost reduction, consistent actually with the optimization mandates that we announced to you with our G.R.O.W. strategy back in November 2019. Moving to costs, shown on slide 11. We continued to make excellent progress towards our targets, and we achieved EUR 80 million of new structural savings in the first quarter, nearly doubling the EUR 45 million achieved in Q4. The main areas of delivery included restructuring. Reduction in labor cost contributed EUR 32 million, EUR 20 million of which in general and administrative functions and EUR 12 million in industrial functions. About half of these restructuring savings were driven primarily in the composites business. Indirect cost reductions of EUR 40 million were delivered as the transversal programs build momentum and bear fruit. Productivity efficiencies continue to deliver on our site, and they totaled EUR 9 million in the quarter, and these, in fact, are variable costs. The EUR 80 million compares with the full year indication of EUR 150 million that you will recall we announced at the beginning of the year. Some of the delivery represents continued acceleration and is therefore more of a phasing nature. That said, I can advise that we now expect to deliver around EUR 200 million, not EUR 150, in structural cost savings this year, which would bring the expected cost reduction delivery across both 2020 and 2021 to EUR 375 million once we get to the end of the year. The cost reductions that we achieved in Q1, together with the volume growth, supported EUR 583 million of EBITDA, a 10% increase versus Q1 2020. It's actually also worth noting that the EBITDA was around 7% stronger than in Q1 2019, and that's despite the fact that sales were down 3% on an organic basis over that same period. Next, I'll turn to slide 12 and we'll talk about cash. Our performance again was strong, with free cash flow generation of EUR 282 million. As a reminder, Q1 last year benefited from EUR 65 million in one-off taxes, cash taxes. Taking that into account, we essentially doubled our cash delivery from Q1 2020 to Q1 2021. Our strong EBITDA performance clearly supported that. But in addition, what we see is a EUR 63 million improvement in working capital. The evolution of working capital needs reflect the market conditions as they continue to improve. From an operational point of view, we are setting new internal records. For example, overdues, which were a record at the end of last year, progressed even further and now stand at 1.5%, a significant improvement on prior historic levels, which were in the mid to high single digits. So really, really strong, 1.5%. Our working capital to sales ratio stood at 12% at the end of the first quarter, and that compares to 16% in Q1 2020. This reflects the structural improvements that we've been sharing with you as we drive, but also it reflects the fact that inventory levels are very low. As we look forward, we will maintain the strong discipline, which is now fully embedded everywhere. But we will also not hesitate to invest wisely in inventories, in working capital to serve our customers as they grow as well. We also benefited in Q1 from a EUR 63 million improvement simply from the timing, the phasing of our CapEx, which were lower in Q1 this year, mainly to industry delays and disruptions related to the weather and logistics. Now projects have begun. Spend rates will increase this year as we invest to keep up with the growing demand in some key markets, as Ilham described to you earlier. The other drivers of free cash flow include our pension cash-outs, and you can see the benefit from the actions we've been taking in the last 18 months. This quarter, EUR 14 million alone in lower pension cash costs compared to Q1 2020, which again was lower than prior years. Just a few comments on our net debt. At the end of March, honored debt was slightly down compared to the end of 2020. Remember, we paid EUR 155 million of interim dividends in January. Take note of the fact that we made an additional voluntary pension contribution of EUR 102 million in our Belgian plans, which brings the cumulative voluntary contributions to pensions to a total of EUR 768 million. You'll recall this time last year that Moody's revised its credit rating outlook to negative about a year ago on Solvay, and actually to a large number of companies as well, as we were entering this period of uncertainty last year. We were very appreciative of the fact that on March 7, 2021, Moody's recognized our progress with its announcement that stabilized our rating at Baa2, making us amongst the first companies to return to rating stability after the wave of sector-wide negative rating actions taken last year. With that, I'll hand you back to Ilham, who will provide our outlook for the remainder of the year. Ilham? Thank you, Karim. As we emerge from the crisis, it is evident that our results denote resilience, which can be seen in our improved operating leverage, which by the way, is in the top quartile of our peer group, and by the continued strengthening of our balance sheet evidenced by strongly reduced leverage levels. I now turn some comments on the outlook for the remainder of 2021, shown on slide 13. As we look ahead, our outlook assumes the current conditions in our key markets will continue into the second quarter, where we already have good visibility into our order books. Top-line trends have continued into April, so we estimate sales performance in Q2 could reach similar levels, though profitability is likely to be impacted by an expected escalation of raw materials, energy, and logistic costs. Our current estimate of additional cost is between EUR 150 million and EUR 200 million for the full year after hedging and pass-throughs. To put this in context, this represents about 3%-5% of the total variable expenses. As you can expect, we have plans to mitigate these inflationary headwinds by raising prices and leveraging our procurement capability, and we have integrated these expectations into our outlook. Looking further ahead, I've highlighted that there is limited visibility and there is uncertainty, notwithstanding the encouraging progress in vaccine rollout in parts of the world. Given these factors, we estimate our full year EBITDA to be in the range of EUR 2 billion-EUR 2.2 billion, representing a 10%-20% growth on an organic basis. To put that range into context, our EBITDA in 2019 on a comparable basis, including exchange rate and scope changes, amounts to EUR 2.1 billion. In fact, this implies that we have a good chance to be back to 2019 EBITDA levels by the end of this year, which would mean that our cumulative structural cost reduction actions will overcome the lag of 10% of our portfolio that will take longer to recover. We expect also our full year free cash flow to be around EUR 650 million at the top end of our prior range, between EUR 600 million and EUR 650 million, as this enables us to continue to invest with discipline in CapEx and working capital and fund higher restructuring costs. You will also remember that the company pays employee bonuses and financial charges in the second quarter, and so you can expect the second quarter cash generation to be seasonally impacted. To finish with, I'm very proud of Solvay people achievements. From the mobilization of our teams to the spirit of solidarity throughout the organization. Also, I know that the 6,500 people who were helped by the Solvay Solidarity Fund would join me in expressing their appreciation and deep gratitude for the generosity of our shareholders and directors, and for Solvay's top leaders who donated 15% of their salaries last year. Our results clearly demonstrate that our strategy is also having a real impact, not only culturally, but also on the bottom line. I firmly believe that we are emerging stronger. We are reinvesting in some exciting areas, which will fuel our growth for the years ahead, and we will continue our transformation to a simpler, leaner, more specialized organization. Thank you very much. With that, Karim and I will now take your questions. We will now be moving to the Q&A part of the call. I ask that you kindly limit yourselves to one question per person, please, so that we can address as many people as possible today. Moderator, I pass it over to you. Okay. Thank you. Ladies and gentlemen, we will now begin our question and answer session. If you wish to ask a question, please dial 0 and 1 on your telephone keypad and you will enter a queue. After you are announced, please ask your question. Once again, please dial 0 and 1 on your telephone keypad to ask a question. Thank you, Karim. I will now address your question. The first one is from Lisa De Neve from Morgan Stanley. Please go ahead. Good afternoon, everyone. Thank you for taking my question and really congratulations on your very strong performance to date. I just have one question. Could you provide us with some granularity on your free cash flow guidance? You have essentially lifted your free cash flow guidance to the top end of the range, while you have pointed to EUR 50 million of accelerated structural savings this year, EUR 50 million net working capital saved. Is your free cash flow guidance as conservative, or is some of your structural saves offset by your raw material guidance or some of the bonus payments we will see in the second half? Any granularity on the bridge here this year would be very helpful. Thank you. Thank you very much, Lisa, for your words. Much appreciated. Karim, would you like to take the free cash flow and I can complete if you want? Of course. With pleasure. Lisa, you recall that last year we highlighted a number of non-repeat items in our cash flow. I am just going to take you through a bit of a reminder. We delivered EUR 963 million last year. As a reference, one needs to make a few adjustments. We highlighted non-repeat in relation to working capital and tax, but also recognized that scope and foreign exchange also have their impact. The combination of those two, and we said that in February, in fact, was that the reference point against which to look forward at 2021 is EUR 650 million last year. We have mentioned a few things, then we are going to take you through the key building blocks. We also said that we are going to be increasing our restructuring costs, our cash spend. Last year, we spent EUR 90 million. As we accelerate the momentum, we said we are going to increase that to EUR 150 million. That is a EUR 60 million increase. We also said that we are going to reinvest for growth. With the guidance we gave of EUR 700 million to EUR 750 million, which is not changing, means an additional investment of EUR 90 million to EUR 140 million 2021 compared to 2020. Against that, we will absolutely benefit from all the actions on deleveraging, and that is worth EUR 90 million on the other side. If that was all that was happening, there is no other activity change, profits, whatever, you can do the maths. Clearly, we are in growth mode, and you can see the first quarter results. The outlook gives you an indication what that would look like. Higher profits will require an investment in working capital to support the growth of our customers. As we said, we will maintain the discipline. These are the key elements that we believe will absolutely get us to what we now believe is at the top end of the range we gave previously of EUR 650 million. I would not call it prudent. I would consider it to be realistic, given all the moving parts that I have highlighted. In brief, Lisa, it is rebuilding the working capital, and it is good problem to have. We are here to take orders, build them, and if the activity is as strong as we have seen, we will do what it takes. Discipline CapEx, and you have seen us since 2019 centralizing the allocation of resources. We will be highly disciplined with the right IRR and aligned with our growth strategy. We do not derail from that. Number three, you know that we have higher restructuring costs. I think it is EUR 150 million, right, Karim, we provisioned? Correct. This is EUR 60 million year-on-year. Exactly. More than 2020, to give you an idea. All in all, I think this is realistic. Obviously, we want to do right for the year, one eye on the microscope, but one eye on the telescope to ensure that we are reinvesting for the rebound in 2022. Back to you. Thank you. That is very helpful. We have another question from Alex Stewart from Barclays. Please go ahead. Sorry, it is a question from Martin Roediger from Kepler Cheuvreux. Please go ahead, sir. Thank you. Good afternoon. Regarding the additional costs of EUR 150 million-EUR 200 million you guide for 2021 from raw materials and energy, can you talk about the phasing of that figure? How much has already booked in Q1, how much is to expect in Q2, and so on. Is there a time delay in passing on higher input costs to customers? The reason I am asking is because you mentioned that the earnings level in Q2 will be probably on the same level as in Q1. Normally, there is a seasonality that Q2 should be better than Q1. Is it right to understand that the margin squeeze from raw materials will be the highest in Q2 and then ease then in the quarters to come because then you do the actions and you raise selling price and things like that? Martin, right? Hi, Martin. It is a great question. I will start high level, and then Karim, you can deep dive probably. Well, listen, Martin, we may surprise you. In our case, and we elected to be very transparent with you in term of our estimates, this is all estimates. In our case, we did not see much of raw material inflation in Q1. They were in the teens million. We do expect because of our good contracts, et cetera. That is good news. We did expect actually, we entered the year already expecting inflation. Not at the level it is today. So we expect increases to be relevant in Q2. You are right? What will happen in H2, frankly, I do not have a crystal ball, and I know that many people are looking at H2 being less inflationary, others more inflationary. I think you know me by now and you know us, we do not put hope in a plan. We plan for the worst, and we act on it. So we are, as we speak, driving price initiatives to meet for the strong demand. Karim can give you a bit of details around the raw material, obviously logistics and energy bills. Let me just tell you the mitigation, what we are doing about it is three things. First is pricing and pricing, and pricing. You may know that more than half of our business is contracted with mechanical pass-through, so this has to happen, although this year we are going to review our formulas and our contracts for the next year. The rest is there to be negotiated, and we are increasing prices as we speak whenever we can. We have a good track record of price power, right? In the company, I would like us to become really a leader in pricing wherever we have unique specialized products, and we bring value to our customers in the value chain. The second piece is our leveraging the procurements and the relationship with our suppliers. You may remember in 2019, and I am not sure it resonated with all of you at that time, when we created the W of G.R.O.W. was winning as Solvay One, we created a global procurement group which is now led by a new Chief Procurement Officer who joined us a year ago. Leveraging the procurement across Solvay is just an amazing opportunity for us to leverage our relationship with our customers. We are doing e-auctions for the first time in our lives, turning it from anecdotes to really materially impacting the bottom line. The last, but not the least, is innovations. What I believe is that innovations are either cannibalizing your existing products and bring in higher margin or, at the minimum, the same, but also and more delivering new businesses at higher margin. Therefore, in the long run, we should not only defend today's margins, but also extend them. Maybe, Karim, you can give to the audience some color on the spending. Sure. Let me start by confirming that Q1, we only had something like just under EUR 15 million of inflation we spend on these variable costs. Now, again, rather than just talk in very general terms, if I look at logistics, not everything's going up. Sea transportation is going up, let's say, near 18%, if we look at current freight rates today, but rail and road are near 2% and 5%. If I look at some of the minerals that we purchase for our products, palladium, silica, we're looking at 5%-10% type of cost increases. A number of the commodities derived from cumene, ethylene oxide, phenol, all of these are important to us. We're seeing double-digit growth there. So fundamentally, what we are doing, exactly as Ilham said, is mitigating on two fronts, pricing and cost mitigation. So there's a lot of effort going into doing that. Now, the question on phasing is really important. Even where we have contractual arrangements that enable us to pass through cost increases, there is a time lag, and it really is almost contract by contract. Minimum, you can expect 1 month to 2 months, but it can take 4, 5 months as well. So it is absolutely reasonable to assume there will be some margin compression in some businesses to some extent, only to the extent we can't compensate. So we can't really give you more color beyond that other than to say that this is what we see today. The environment clearly changes quite fast. It's an inflation environment that everybody's impacted by, no doubt as you're hearing from others in other industries as well, incidentally. And what we intend to do is to overcome. Yeah, definitely. To finish with, just to tell you, this is not a normal inflationary environment only because there are a lot of force majeures now. You've seen them after the Texas winter crisis, et cetera, and scarcity of logistics. So, when there are special times, you have special measures, and that's also what we are adopting as we speak. Back to you, operator. Thank you. Yes. Thank you. We have another question from Geoff Haire from UBS. Go ahead. Yeah. Good afternoon, and thank you for the opportunity to ask a question. I think, Karim, you said that due to chip shortages that you would expect some dampening of the sales growth in Special Chem in Q2. Is that the only business where you see the impact of chip shortages? I was thinking particularly about Specialty Polymers, given the auto exposure, and that seems to be a big, obviously, talking point at the moment. Yeah. I'll kick off. You're right. I highlighted it because we have direct sales into that, but the indirect impacts into auto are clearly very significant. Maybe, Ilham, you want to Shall I talk about that? Would you take it? I think, who is that? Is that Geoff? Yeah. It is Geoff, yeah. Geoff Haire. Geoff. I am not sure what we said. We need to check it. We do not see that. In semiconductor market, as you know, there is major investment by our customers. I think I mentioned one investment or highly purified H2O2, which goes exactly to the electronic segment. Frankly, I am very excited about that. We have unique technology. We are by far a leader, not only in peroxide, but actually downstream into highly purified, and we do it with agility, and we can localize and customize it to our customers and more to come in the future. On the auto, obviously, indeed, auto has been very strong. Quarter 4, quarter 1, and we grew about 20% versus Q1 last year. It is a recovery, but as you can read the press and hear the OEMs, it is impacted by the semiconductor shortages here and there. You have seen many operations and many OEMs assembly plants closing down because of the semiconductors. LMC did not change their forecast so far. Maybe it is not going to hit the double-digit growth. I think we all believe, including researchers who deviate from LMC, that Q2 will be still strong in term of filling the value chain, which was much depleted, which is the case for our products in summer last time. Now the H2 next year, I can also see that some people forecast a slower maybe growth rate in the auto industry due to the semiconductor shortages. All in all, I think our order book in April is high record all time. So it has been still extremely strong for the next three months. We have three months visibility beyond that. It is a bit far away, but we are discussing with our customers. We are close to all our OEMs more than ever because they are all switching to EV. Most of them have announced 100% even EV vehicles, hybrid or pure electric by 2035. We are very connected with our customers to discuss future investments in batteries and PVDF. I take the opportunity personally with our Presidents in Specialty Polymers as well to discuss about how they see the year and getting more clarity on their order book to ensure that we plan accordingly. The last point for Specialty Polymers, which you've seen, has done a great job in double-digits growth, and I am so excited to see Specialty Polymers for 2 quarters in a row growing and really excited about that. That crown jewel is going to continue delivering. We also lighten a car, so we penetrate in an automobile. We do not just sell what exists. The core competency of our business is to replace metal at lower total cost of ownership. You consume less fuel, you emit less CO2. It means cleaner mobility. Back to you. Thank you. We have another question from Matthew Yates from Bank of America. Go ahead. Hey, afternoon, everyone. I would like to ask about the soda ash business. There are a few parts here. Firstly, on the announcement today about the biomass project, can you just clarify the 4% group CO2 saving that is across both the first and the second phase of this project? Yes. More broadly about the business, Karim Hajjar, can I find anywhere the disclosure on your CO2 position and the hedges you have looking forward? Also, I see the environmental provisions at the group level, I think it was just over EUR 600 million at the end of the quarter. Can you give any indication how much of that specifically resides to the soda ash business? For your first question, this is Matthew, yeah? Matthew, yeah. The first question is, it is both boilers. So 1 and 2, obviously, 4% is a big deal. This project, the emissions at Rheinberg soda ash will be less 65% relative to 2018. The question about the provisions. What was another question, Karim? Around CO2? CO2. Yeah. There is, and I will ask the team to give me the reference in the annual report as to the disclosures on CO2. So we will come back to you on that a bit later on. Let me just maybe address one or two things. On the environmental provisions, we have not disclosed provisions by business or territory or anything else. What we did do is give more color. Again, for the benefit of everybody, it is in our annual report, and I will give you the specific reference in a few moments. We have shown you, for example, regional breakdown. So it is not quite a business, but again, our desire is to genuinely give you much more clarity as to the approach on things like environmental liabilities. So I will come back to specific references in our annual report. But I will say to you, I will confirm that we don't disclose specifics on a particular business. On the hedging, what we have indicated previously, and I can confirm, is that we are substantially hedged in terms of the group's CO2 emissions, certainly through to the period of 2025 in a very complete level, and we're also extending that to 2030. We don't give the details of the quantum or the value because as you'll appreciate, this is competitively- Sensitive Yeah, sensitive. Yeah. Actually, I think it's a good story for us, Matthew, because since 2019, I remember when I joined the company, CO2 pricing was low 20s. It's now probably more 50, right? We have really pursued very aggressive hedging policies. Actually, since 2019, our internal carbon pricing was 50, believe it or not. And we stress test all the projects coming to the executive committee and I at 75 already. Now obviously we are raising the bar internally. At that time, some were wondering if we are not just killing some good projects. But I think with time it has proven to be right because the hedging and being almost fully hedged by 2025, and we are even doing more post-2025, is a competitive advantage. Thank you, Matthew. Thank you both. We have another question from Chetan Udeshi from JP Morgan. Go ahead. Yeah. Hi. Excuse me. I just had a question on your PVDF where I think there is a mention in the report about 80% growth in the battery materials market. Can you help us understand how big the business is today on a run rate basis in terms of sales? How is the margin in this business relative to the overall Specialty Polymers or Advanced Materials market? What I'm trying to get to is this a business which comes at high growth but with a lower margin, just because maybe there is a bit more competition in this industry? Thank you. Yeah, it's a great question, Chetan. Obviously, you've seen since 2019, we launched the EV battery, and I always believe that this is strategic for Solvay and for materials. Not only because of the batteries. I always ask a business, which is your core competency, yeah? Our competency, like I mentioned, that we replace metal for lightweight, we also separate, in general. That's our core competency, technical competency, and we do it in material, in mining, et cetera. So PVDF is a membrane. You find it in several applications. It goes to, obviously, automotive as you know, but also to reverse osmosis in water, which was one of my previous roles in life, and other applications. It's another technology to hemodialysis in healthcare. So yeah, we are double-downing. We believe that the market CAGR till 2030 will be around 30% minimum. We've seen a major growth in the past years, and what has been a bit of a hype and a question mark, it's now confirmed, that this growth is sticky. Talking to OEM just early this week, because of the shortages, obviously, of PVDF as well, have actually supported my conviction that is the right thing to do. On margins, this is higher margins than other products we have. To give you an example, Chetan, in this very tight supply-demand, because we are almost sold out. In this, we have to prune the portfolio, which we did. So everything below 75% contribution margin in that line is out. So we had to cut it with long-term commitments on businesses. Yeah. I know that you know this value chain, basically, and obviously, the question is, where is the money? We are not assembling batteries, and we are not playing in the cathodes, in the anodes, et cetera. We are really circling the batteries from the ingredient perspective, and extracting the right value for our business with the right economics. The other thing I would like to mention here is that we are agnostic to technology, as much as it can appear a bit surprising. Whatever you talk about, including LFP, and there have been a lot of press and news about the lithium iron phosphate, is one known cathode material used primarily in China for buses and in stationary. It has advantages and disadvantages. Advantages being cost and safety, and disadvantages, lower energy density. It has been declining option maybe even 2 years ago when I joined the company, and now it's surging again as a viable option to produce maybe low-cost cars and facilitate customer acceptance. So we are not impacted like cathode manufacturers at all. At Solvay, we develop binders for all type of cathodes. Moreover, actually, the good news is that the consumption of binders for LFP is higher than for competing cathode chemistry like NMC, the nickel manganese cobalt. So it's just good news. We didn't disclose, Chetan, the numbers, obviously, for competitive reason, but yeah, it's growing extremely fast. We doubled our capacity since 2019. Last year, we did a line for Tavaux in France, which started January this year. The second line is Changshu, which will start in Q1 2022, and we are studying the business case, location to be confirmed and determined in Europe, and more soon. Back to you. Before we go to the next question, I'd like to maybe just revert to Matthew Yates's question in terms of CO2 and environmental disclosures. Just to make it easier, the references to the two questions are shown on pages 119 and 230 of the annual report. 119 is the beginnings of the extensive disclosures on CO2, and 230 is also the beginnings of in relation to our environmental liabilities. Thank you. Operator, back to you. I'm sorry. This is now the question from Alex Stewart from Barclays. Please, you have the floor. Hi there. Good afternoon. Can I just circle back to soda ash again, and talk about the pricing a bit? We know that the annual contract price settled down in soda ash this year, as reported earlier in the year. Your pricing for the chemical division overall is positive, too. Could you talk about how much impact lower price has had on EBITDA in the first quarter? I'm also interested about the ANSAC announcement that they're going to start raising contract prices because the markets are tightening. To what extent would such a move affect you in terms of your exposure to quarterly pricing or monthly pricing compared to annual? Any sense around the impact of those would be really helpful. Thank you. Yeah. Thank you. Great question. On soda ash, I'll take it, Karim. You will remember that a big part of our businesses is contracted, obviously, at soda ash at the fall for the year after. You will remember that a good public proxy is the IHS price index, right? This is an average of the prices available in the market, but you can imagine, and you probably know that Solvay is usually on the high end of this index, and far better than average. For most regions, IHS publishes yearly indexes, and those have not changed. They rarely change, and display significant price decrease in 2021 versus 2020. This is how we entered the year by memory, minus EUR 11 ton in E.U., minus EUR 35 in LATAM, EUR 13 Asia, and EUR 5 in the U.S. Again, we don't expect those indexes to change. On average, we aim at better than IHS prices in Europe and NAFTA. Most of our prices, not all of them, are locked for the year by contract. We have quarterly or semestral prices only in APAC, LATAM, limited in other regions. Obviously, you talked about ANSAC. We read the same thing. They announced in March, $25 U.S., I believe, percent price or 10% increase on their open volume. Note as well that the sea freight cost increases are mostly in the E.U. outbound flows. ANSAC is probably less impacted because they operate their own vessel fleet. We are encouraged by those pricing announcements. Our business will continue to strive for better performance. You know that we have a great track record of outperforming the industry. Obviously, the price decrease year-on-year has impacted the bottom line of soda ash. But at the same time, soda ash is a great business run by top-notch leaders who know how to manage commodities and supply demand. You have seen it probably when the Turkish capacity came on stream, before my time. I saw it firsthand since 2 years. We started the year already with our cost-saving program, which is well underway. They are doing what it takes. Thanks to those prices increase and us, like we did last year, we applied the same strategy. There are some volumes we did not take. We did it in 2020. I think I was very public about that. We took the same stance. We have, obviously, our key customer strategic, et cetera. We have some volumes very open, which now we are negotiating at higher prices. Those are the open volumes. We are very picky. But we continue driving and striving for excellence in cost and productivity. Obviously, you see it in energy transition, not only cutting the CO2, but being competitive because the thing I did not, but you will see it in the PR, is that Rheinberg not only is the lowest CO2 emitter in the world, and it is building precedents and global benchmark, including versus natural, but it will be competitive versus landed natural in Europe. So that is our call it in our own old jargon, "La Renaissance of Synthetic" in Europe. It is something I am very proud of the team who works very hard on this. So yeah, we have the same observations. We are working on that, on managing our pricing and pushing them. Back to you. Can I push you to give some idea or some sense of what the earnings impact was in the first quarter? Any sort of indication on that would be really helpful. On the bottom line on soda ash? Yeah. Yeah. I think that would represent a new precedent, which we don't want to go there. I did say that the impact on the segment was, I think, minus 3% from memory. I have to revisit my notes. That is predominantly soda ash. As you also know, we have a little exposure to the spot market, so the announcements that you quote correctly will give us a tiny bit of tailwind. We are well-positioned as leaders in this business. Really helpful. Thank you. Thank you. Thank you very much. We have another question from Sebastian Bray from Berenberg Bank. Please go ahead. Yes. Hello, good afternoon, and thank you for taking my question. It comes back to the theme that Chetan mentioned earlier on electric vehicle exposure at Solvay. Ilham, I believe you've got on the record or at least mentioned in the past that the PVDF sales were approaching EUR 100 million back in 2020. I'm trying to understand where this is located, because the press release and the presentation of Solvay both make reference to strong sales of electric vehicle-related products within Specialty Polymers. I thought originally that PVDF is primarily focused around the Special Chem segment. Can you give an idea of the main products from both of these that flow into electric vehicles? An idea of magnitude, which is the bigger absolute exposure in sales, Special Chem or Specialty Polymers? How exactly these products differ from each other. Thank you. Thank you, Sebastian. If I say it, my apologies to Chetan. Actually, it's much higher than that. Anyway, moving to where it is. PVDF is part of materials, Sebastian, so it has never been part of Special Chem. Special Chem is more on the catalysis part and on the ICE, by the way, internal combustion engine, and rare earth type of separation. It's a membrane. Our customers, they produce a membrane, but it's part of the material segment, part of Specialty Polymers. Where we produce, this is great news, we produce in all continents. We are capable of producing in Europe, in the U.S., and in China for Asia. This is extremely key for our customers. It's extremely key. You know that Europe is putting a lot of money and stimulus into building the value chain after the Airbus of batteries. They are keen to have the value chain and more than just having the batteries assembly. We are working with all the battery players. These are traditional customers, you know them, from the LG Chem, Samsung, the Chinese CATL, and Panasonic, and you name them, but also the emerging Europeans. From the Nordics to the French to the German, et cetera. We have seen the Koreans investing in Eastern Europe heavily, Germany as well. It is a big investment. France went for a national alliance called Saft, and we are working with them. All of this, it is real. Obviously, if you look at quarter 1, Stephan, you will see that if you look at hybrids and even electric, you see that China production is leading the world production, followed by Western Europe, and the last one is the U.S. approaching 100% quarter to quarter. We are at that. We are really following the market and even outperforming as we can bundle several technologies and sell it together to the same OEM for lightweight and electrification. By the way, both go together. Because if you may remember a few years back, more than a few years, probably 6, 7 years, half of the cost of an EV car was battery. Now it is probably 30%, 20%. Talking to the OEM, they want it smaller, safer, cheaper, and better technology. This is our generation 2, which we produce all over the world. We are working on generation 3 to 5 being the solid. The solid is 2025 plus. But the solid will be a fabulous technology breakthrough because it is pure safety and the most condensed battery you can imagine technologically-wise. We are working on all of those. We have now three hubs in the world. The Biden administration is investing in charging station, which is extremely important because that is often the problem. It is not technology, OEM's willingness, it is that there are not enough charging stations along the roads. Biden has announced a bill or a plan to do so. We expect that they will be also probably lesser than in Europe or China, an increase in EV also in the United States. Just to clarify on this, Ilham, could I just make sure I get the points here that are currently confirmed by Solvay? My understanding is that the sales within Specialty Polymers segment, largely of PVDF to electric vehicles, are substantially over EUR 100 million per annum, and the main applications are cathode binder and use in membranes. Is that correct, or have I got it wrong? Again, the number is much more than that. It represents a significant amount of Specialty Polymers growth. We are in the separator, Stephan, so between the cathode and the anode. You had also PVDF into the compartment. Then we are in other things from Specialty Polymers or thermoplastic composites. It is a specialty product. Would you feel more? Does that answer your question, Stephan? Yes. Would you feel more comfortable with a figure of EUR 200 million, or am I pushing my luck with that guess? Well, I said no to Chip and Stephan, I do not want to create issues. We will share in due time, and I think we are growing nicely. It is a competitive advantage. There is much capacity being discussed. It is really unique and differentiating because it is not only about making PVDF, by the way, it is vertical integration on raw material to produce PVDF. That is something which is also very unique to Solvay. And we are very excited about this and about our ability to innovate, again, with lower cost technology, to lower total cost of ownership and agnostic technology to the type of batteries, which I think it is a remarkable way of innovating in these segments. Thank you. Thank you for taking my question. Thank you very much. Operator, I think we have time for at least one more question, maybe two, depending on if there is no follow-up. Okay, no problem. The next question is from Laurent Favre from Exane BNP Paribas. Go ahead. Yes. Hi, everybody, and thanks for squeezing me in. Karim, I am going back to your comments on cost savings, on permanent cost savings of EUR 80 million in Q1. Given the run rate over the quarters last year, it does not seem that the comps are getting tougher for that number. So I am a bit surprised that from EUR 80 million, you would assume that we come down to EUR 200 million. So are you factoring in the reversal of the temporary savings, or should we assume that there are more costs coming in, including on resources, R&D, et cetera? No, it is an interesting comment that you make. Fundamentally, what we are saying is this. We delivered EUR 175 million last year, and you can see the buildup of that momentum coming in, EUR 45 million delivered last year. All I really said is, forget about temporary cost savings, et cetera, which I will get to in a minute. But what we really said is this. We have delivered structural, incremental, additional cost savings of EUR 80 million. If I compare it to what we were expecting in our budgets, it is higher. There is an element of acceleration. That is why I referred to the phasing component. But it is also deeper than what we were expecting, which is one of the reasons we said, "You know what? We can do more. We will repeat. Let us raise the bar and go from EUR 150 million to EUR 200 million." If I take your question differently and just look at 2021, clearly we are backing against inflation. That is there to erode some of the savings, but that is tiny in relation to the EUR 80 million delivered. You are looking at near EUR 10 million-EUR 15 million of inflation recourse effort impact, fixed cost impact at this point. Last year, where you are absolutely correct, is that we had just over EUR 150 million of temporary cost savings, which we are not going to see repeated. In fact, the philosophy is also changing because what we are saying is every single thing that has been delivered will be continued, will be sustained. That is almost like the step change in gear that is happening right now on the cost agenda. What I did say is you can't just extrapolate to multiply by four the figure of EUR 80 million precisely for the reasons I've expected. Also, to your point, the comps will get tougher because clearly the programs have built momentum during the course of last year, and you can't maintain the same rate of momentum growth as you go forward as you'd expect. Excellent. Thanks, Karim. If I push my luck on RusVinyl. Ilham, can you remind us whether this for you is a stake that you intend to keep or whether you're looking for the right moment to get out? I'm just wondering why you took the call option on the EBRD stake. Thank you. Thank you. Good question. Well, listen, the call option, sorry, exercised by the European Bank for Reconstruction and Development, called EBRD. You saw it in Q1 is related to 52, right, Karim? 50, 52? Whatever. Fifty-two. Capital investment with Solvay in the JV. This happened in 2011. We also had in place put and call option arrangements with EBRD, and as a consequence, the contribution to the capital was accounted for as a debt in the group's accounts, and this is in line with IFRS, obviously, rather than equity or minority interest. First of all, at the end of the day, the rationale for doing it now, that's your question one is the option value is close to the floor now and is expected to increase in the future with the deleveraging of RusVinyl, and we like it, right? I mean, financially, you've seen that frankly, we didn't extract much dividends from this for many, many years. I was lucky when I joined the company. We started really collecting some fruits. The second is that the EBRD, and you know their mission, support and influence in Russia is not considered as essential anymore. That is it. I think that is the only reason why we did it now. It makes sense economically. Okay. Thank you. Okay. We have a last question. Yeah. Okay. Yeah. From Andreas Heine from Stifel. Please go ahead. I keep it very brief. The one is, as you said, you have closed all the divestments. Maybe you can share what the net proceeds were for all of them. Secondly, on Coatis, looking into Q2 after this outstanding Q1, will Q2 be as good as Q1 before it might start to normalize? Sorry, what was the second question? Could you repeat your second question please? The question was on Coatis, which had an outstanding Q1. Yeah. Okay. Would you like to talk about divestments? No, sure. We will absolutely not hesitate to give you color and quantum on significant divestments. But tiny, small divestments, or for that matter, acquisitions, we typically, as a normal practice, we won't quite do so. What I can highlight is that the total revenues that we expect to be divesting is of the order of EUR 0.3 billion on an annualized basis. You're not going to necessarily see all of that in this year, but annualized, that is exactly what you'd expect to see. And that's also one of the reasons we said scope and effects. We're talking about those half dozen small divestments. Your second question on Coatis was around our expectation for the evolution of that business into the second quarter. Is that correct? That's correct. Yeah. That is correct. Okay. Okay. Well, you have seen, and I am very proud of the Coatis team. We have done +55% in Q1, and it is mainly driven by obviously volumes and pricing. They did really a great job. Really proud of them. They leverage on short market opportunities, as other competitors were on force majeures, basically, including the Texas weather challenges. Meanwhile, the raw material cost was still low and fixed cost under control. By the way, Coatis, since last year, we completely turned it around in term of cost structure. This is behind us. It is not part of the new program. I think our President, Daniela, did a great job with her team. So we had, first of all, very positive dynamic, a tailwind from Texas freeze. Ports still need to resume operation, raw material shortages, low inventories. They faced high freight impacted, passed directly on our customers. I think the freight cost between China and Brazil was just insane. So we just played what good businessman and woman can do. A woman, by the way, in this case. Also strong performance beyond the good market dynamics. The team had a good ability to respond promptly to demand while leveraging the price power. The last, before I answer the sustainability of it, is the innovation and the strength of it, because we have biosourced ingredients. This is our line called Augeo products, which is sold out, by the way. We are, as I mentioned in my speaking notes, that we are investing and double downing because it goes to consumer goods and food applications, and it is coming from glycerin. So it is highly wanted by our customers. Listen, the situation is still tight so far. So we will continue enjoying what we will enjoy. Meanwhile, we are not really sleeping on our laurels. I think the team not only is sweating the assets but is also improving the cost position. Wherever we can, we also negotiate longer-term contract in this favorable environment. So we will share with you in the coming quarter how things evolve for Coatis. Very proud of them and happy that they are under the light during this quarter. Thank you. Well, I think, Jody. Thank you, Imene. Thank you very much. Maybe it is the right to close the call if there are no more questions. Well, listen, thank you very much. I think, I said it, probably three key things we would like you to remember from us is the resilience. We have proven it last year, and we still continue. We are at the rendezvous of the recovery, and we are just all decentralized, focused, and obsessed by customers, and one eye on the telescope. We are reinvesting as we prepare the rebound for 2022, and that is what we are doing. Thank you for your attention and question. Thank you. Have a good evening. Goodbye. Thank you everyone for joining our call today. As a reminder, you can always reach out to the IR team with questions, but we hope spending some extra time with you today was worthwhile. Thank you so much. Thank you, ladies and gentlemen. This concludes today's conference call. Thank you all for your participation. You may now disconnect.