Thank you very much, and good morning here from our side to our Q2 call. With me, as usual, are Christian Coleman, our CEO and Utevol, CFO, and I will hand over directly, to Christian for the opening remarks
Thanks a lot, Tim, and also very warm welcome from my side, and thanks for being with us today. I hope you're all in good health. And successfully managing all the challenges the current situation is demanding from us in personal and in business I'm sure you had hundreds of virtual meetings and calls during the last month and are more than used to today's format. So having said this, let's get right, started and away with it. The highlights of the quarter, all in all, We have been managing the trials successfully so far.
The second quarter was the 1st and hopefully last quarter with the full Corona impact. Back in May, it was hard to predict how things would turn out, but we tried to give you as much guidance as possible. Today, I can say we have again delivered on what we promised. And even come out better than expected in the second quarter, while Performance Materials was hit hard. Our growth segments have held up quite well during the crisis.
But to be clear on this, the performance in the second quarter is not result of emergency measures of panic fueled cost savings. It is a result of all the changes we have implemented over the last year. We strengthened our portfolio and executed our efficiency programs early enough. So we were well prepared to address the challenges of the crisis. We did not have to cut too deep into our organization.
Our teams could focus on managing the crisis and keeping our operations and supply chains up and running. Nevertheless It wasn't still is a huge task to be solved. And we had to find quick and pragmatic solutions. And this is, and this is something we will carry forward best practices and solution oriented approaches to make this organization even better to make it faster and more efficient in the future. Now a quick update on our crisis management.
The health and safety of our employees remained our top priority. We stick to our global pandemic plans and carefully decide where gradual easing is possible. Operationally, we've proven that we are a reliable partner for our customers, even in these difficult terms. We are able to deliver at all times throughout the crisis. Our liquidity remains very strong We paid the 1st tranche of our dividend in early June, and we refinanced the bond maturing in 2021 with sufficient foresight.
But despite all the short term crisis management, We have not lost sight of the long term. By administering the right doses of crisis management, we will master the current situation and emerge even stronger. With regard to costs, we did our homework early during the second half of twenty nineteen and with a long term view. So we are benefiting now from what we implemented well ahead of the crisis. CapEx reduction, the salary freeze for the non tariff employees, the reduced sponsoring for our Bosea dartmont, just to name a few, and the ongoing execution of our SG and A program anyway.
On the other hand, we have contributed to implement structural changes that will fuel our growth out of the crisis. Our new divisional structure is effective since 1st July, and we've reorganized our research and development activities. In the new research development and innovation function, we are pooling our expertise and technologies and creating a company wide research, development and innovation unit. This makes it easier for us, to share our knowledge, leverage synergies over to you, Util, for the financial perspective on the quarter.
Thank you, Christian, and welcome from me as well. Let's start with a top down view on business performance and this becomes more visible in the current pandemic crisis. Our growth segments have demonstrated resilience. Profit margins were broadly stable and above 20%. Nutrition And Care has even grown earnings in the 1st 6 months.
In resource efficiency, areas applying the auto industry are clearly impacted by low demand, but other businesses are performing quite well. Some businesses were even contributing with higher earnings year on year. The latest acquisitions of Huber Silica for toothpaste and peroxychem for hygienic solutions are further improving the portfolio quality with their stabilizing nature. In Performance Materials, the first half was heavily impacted by the lower NAFSA price that declined steadily from March onwards. Not surprisingly, earnings dropped significantly compared to 2019.
Or in other words, 2 thirds of the drop in the earnings at group level are attributable to Performance Materials alone. The first half was also strong in terms of cash generation. Despite a 1,000,000 lower EBIT, free cash flow is up year on year by more than EUR 100,000,000. And so far, this is not driven by destocking on the networking capital side. In the first half, we focused on supply security to serve our customers properly.
This came along with some inventory buildup for those safety reasons. Now since For the second half, we will manage our net working capital more actively and not from a vital perspective only. On CapEx, we are sticking to our tight budget, which we already lowered before the crisis. To summarize, free cash flow benefited from the high cash awareness and strict cost management from the lower bonus payments compared to last year, and from tax reimbursements relating to other periods. The deeper look into the segments shows that Resource Efficiency experienced the expected Corona impact, especially driven by lower volumes from the auto industry.
High Performance Polymers and silica for tires were hit most strongly, but the sustainable margin level above 20% demonstrates the full year resilience, pricing power and high cost awareness. These characteristics also lead to stable to slightly higher earnings in areas such like frostingers, active oxygen and catalysts. Additionally, the oral care and specialty applications in Simika demonstrated good resilience. Nutrition And Care delivered year on year as well as quarter on quarter, higher earnings and a much improved margin. This is a strong signal while maneuvering through the crisis.
The less cyclical end markets as well as our factory efficiency measures and care solutions or animal nutrition are serving as a solid basis. As one can expect, a PU foam additives for auto and white goods suffered from lower demand and baby care is on the anticipated lower level compared to last year. However, this was more than compensated by the positive development in animal nutrition and the resilience in care businesses. Care Solutions recovered nicely after a weaker start into the year, especially in Asia. Healthcare continued to deliver earnings growth also in the 2nd quarter.
Performance Materials efforts from the drastic oil price decline and their formula prices based on LAFSA. In combination with lower demand for tire rubber and fuel additives, this led to the sharp earnings decline. With that, back to Christian Power.
Thanks a lot, Ute. For the year 2020, we confirm our EBITDA outlook range from 1,000,000,000 to 1,000,000,000. Based on the solid second quarter numbers and the outlook For the remaining 2 quarters, our expectations and assumptions for the year remain largely unchanged. So the middle of the range at EUR 1,900,000,000 remains well underpinned. In terms of quarterly phasing, the 2nd quarter was a tough quarter, although in the end, somewhat better than initially expected.
The recovery pass from here might be somewhat longer stretched, but we have laid a very solid foundation in the first half of this year. The resilience in many of our businesses, as proven in the first half, will continue into the second half. We're seeing a slow recovery in the auto and white goods businesses and also performance materials is slowly improving from the low levels. Our structural efficiency measures will continue to give support. And by applying best practices and learnings from the crisis, We will make our organization even more efficient in the future.
So overall, in a still challenging environment, there's fair chance to generate sequentially higher earnings in third quarter. As you know, from third quarter onwards, we will start to report in our new divisional structure. That needs higher transparency for you, but unfortunately, comes at the cost of having to rebuild your models. To make your life a little bit easier, we have provided you with the quarterly financials as well as guidance in the divisional structure. And ladies and gentlemen, we are happy to discuss the trends by division in the quarter and answer session.
But before that, maybe last but not least, the word in our upgraded free cash flow outlook for the full year. We have delivered strong cash flow in the 1st 6 months. And for the second half of the year, Ute already explained our approach to working capital. After supply security in the first half, will now manage our net working capital more actively. Additionally, our unchanged cost and CapEx discipline that provide good support.
Based on this, we now see the cash conversion rate at least on prior year's level. From the midpoint of our EBITDA guidance range, this gives you a free cash flow of around 1,000,000 maybe with some further upside potential. Thanks a lot for your attention so far.
Hello. We would be ready for the Q And A session.
Thank you. First question is from the line of Mr. Charlie Webb from Morgan Stanley.
Brilliant. Good morning, everyone. Good morning, Christian. Good morning, Peter. Thank you.
I have a couple of questions, please. So first off, you kind of alluded to it that you might provide some more color, but just around Q3, clearly you helped us ahead of Q2 kind of guiding around CHF 400,000,000 As we think about Q3, perhaps you can give us some sense of the kind of volume run rates you're seeing kind of through July how you think that sequential recovery looks like relative to what you delivered in Q2, just so you can get a better sense on that and maybe some additional details kind of through the divisions of how that varies? And then second question, just on the cash flow, obviously, citing improvements in net working capital in the second half. Maybe you can just help us with the various pillars, how much working capital do you think you can release in the second half, I guess, normally seasonally, but also kind of putting the strings a little bit tighter that you didn't maybe do in the first half? Just understanding what kind of magnitude that that working capital release will be as we look in second half.
And just a reminder, to us, any changes on CapEx guidance, or any more you can do there, or whether it looks like it's going to broadly be line with your expectations before this, but just double checking on that would be great.
Okay, thanks for the question. I will check first one, and about the monthly patterns throughout the second quarter and something about start into the third quarter. And then, I would hand over to Ute. She will give you a precise picture about the next questions. So let's get right started.
Talking about the performance in the second quarter, it was that we've not seeing huge differences in sales and volumes throughout the single months of the quarter. As you know, the April 1st month was clearly lower volumes year on year whereas May volumes were down a little bit further. But on June, we have seen some volume recovery. So maybe in a nutshell, the overall of the second quarter was something like a mixed picture many businesses have shown, pretty good stability throughout the whole quarter. For example, like health and care, our additives for agro, for example, the smart materials for high genes, personal care, and our environmental applications too.
And yes, some businesses have seen in, in June, something like volume pickup, for example, the, puforms for, all our coating additives too. On the other side, the automotive related business, here we have seen similarly low volumes throughout the whole quarter. That holds true, for example, for high performance polymath and higher silica. If we look now ahead into June, we will see some further recovery for example, in our auto and white good related businesses, which is pretty nice. Additionally, I guess it is just too it is too early to call this something like broad based and quick recovery straight back to the precrisis levels, but nevertheless, there is a further recovery what we see.
Now maybe look to the into the 3rd quarter, yes, We will see further resilience of course in our, as described and mentioned, stable businesses. And maybe a steady looks like a little bit longer stretch recovery in the has given to you more impacted businesses. I guess that is maybe as a starter for you. And now I hand over to Ute.
Yes, Christian, thank you very much. I'll give you some more details on the divisions and the new structure. Starting with a specialty additives. So what do we have in there? Additives for agrochemicals, packaging, and textiles here, we see an ongoing robust development and that's, I think, a fair assumption as well for Q3 and Q4.
We have some additives for composites, for composites, for instance, for wind, energy solutions in China, So here, we see ongoing healthy trends. We also can expect a certain recovery for Coating Additives and PEO foam additives which has been 1st visible, sometimes visible in the at the end of Q2, basically driven by the Chinese markets. Auto and Mobility related activities might have seen some improvement in June But I think they will also remain on subdued levels for Q3 and potentially also Q4 depending how the auto industry picks up. So in general, specialty additives will see another solid third quarter with attractive margin levels And, I see, I think from the timing, a slightly delayed recovery phasing more towards the end of Q3 as they are later in the cycle positioned with their or later on the value chain. The positioning of that product.
Nutrition And Care, I think that's maybe the most visible one these days unchanged, positive performance in our health and care businesses, care solutions assets, stabilized in Q2 recovery in Asia here, especially after a weaker start in Q1, Rhines off and disinfectants, very strong positive development in active ingredients, health care, they have had a strong pipeline all the years. So I think that continues here and there. They have maybe a small tailwind from the actual situation, but it's really more driven by the new projects. The business has acquired and won in the last years. So from that point of view, Q2 was all already well above Q1.
And of course, we see further sequential upside for the next quarters. But again, that's more a function of the pipeline. Than a function of the overall economy. Animal Nutrition, very strong first half, especially on the volume side. For Q3, we expect a calmer quarter, both in terms of point prices.
So volume growth still very intact for the full year, but prices, subsequently lower volumes in Q3 as we had this strong volume development in the first half. Smart Materials, we see ongoing resilience in organics, disinfectants here, especially active oxygen, oral care, as mentioned, they continue to benefit from the crisis. Silica for tires, here we see some first signs of improvement The polymers, high performance polymers. Here, we have a more pronounced volume decline, white goods here, we see some recovery, but in automotive, very slow signs of improvement So here it remains to be seen how that will develop in Q3 and Q4. On an individual basis, had a maintenance shutdown in Q2 in high performance polymers that is now finished.
That will of course not reoccur in Q3. So overall, in that division, sequential recovery in Q3 is a fair sign. Performance Materials the situation remains really challenging and we see very, very little signs of insurance It has been gradually increasing not the prices. This is beneficial for the C4 Billion. So within Q2, things have become a little bit better here.
But on the sales side, butadiene remains challenging. Demand for MTV is somewhat improving, so we have more driven miles that helps. We have an unplanned maintenance in the C4 chain that will affect a little bit Q3 with a single digit million amount. Baby Care, which also now then belongs to performance materials. Low volume and price environment that will persist throughout the year.
So on low levels, I think they are doing the best they can but not much improvement to be expected in the second half. So overall, PM within the next quarters, sequentially higher earnings, but overall, of course, very low levels. Free cash flow, you asked about the networking capital. We had an inventory buildup of more than CHF 100,000,000 in the first half. So I think that's the main task to drive that down again and bring inventory levels now to more normalized normalized amount or basis.
And that is a very strong driver for the free cash flow, of course, taxes will normalize, but we all have that here in our forecast. So if you take an isolated view that's the inventory management on the other side, lower costs also helps the cash flow lower payouts for restructuring that are all qualitative elements which helped the cash flow generation, but they have been in our forecast all the time and are now as well in our forecast.
Brilliant. Just one quick follow-up on the quarterly on the guidance you gave there in terms of the segments. When you say sequential recovery, should we be taking that off the base of a kind of 4.75% so the number excluding the turnaround in the polyamide business excluding the kind of higher environmental provisions. Are we seeing a sequential improvement on that, on that 4.75% or we are seeing a improvement on the 450, just to be clear.
I think as we have an unplanned maintenance NPMs on group level, I think maybe there is not a big network effect. But if you just take high performance polymers on an isolated basis, Then I would say if you take out the maintenance, maybe there is a small improvement, of course, with the maintenance of the bigger one.
Thank you. The next question is from the line of Gunther Zechmann from Bernstein.
From Christian, Uda and Tim. Thanks for taking my question. It's on raw materials, please. You mentioned earlier that you haven't seen a significant benefit lower raw material costs yet. So can you give some guidance please on when you expect that and how much?
And if you could Please also split that out what you see on the costs of goods sold. And then with regards to working capital, what benefit we might see on inventories over the next year? Thank you.
Yes. Thank you for the question. So I think the effect are different within the different divisions. Of course, in Performance Materials, on an isolated basis, we have much lower raw material costs, but on the other side, of course, that's more or less one to one translates into lower selling prices, plus we had the distortions in the respective markets. So overall, the effect from the oil price drop was negative in Performance Materials, very clearly negative.
Nutrition And Care And Resource Efficiency where they have oil based raw materials, there is some positive effect, but it does not really it's not the biggest driver for their margin developments overall for the growth segments it's a slightly positive effect for Performance Materials. It was a clear distortion for Q2. In the coming quarter, we see a slight increase, for some of the materials acetone properly or even methanol. If we look at the inorganics, here we expect a more flattish environment environment. So overall, the risks from raw material prices are limited and should be limited.
But again, if you take a division by division, of course, the effects can be very, very different. If you look at the net working capital, of course, lower raw material prices, on one hand, lead to lower value of inventories. On the other hand, you have a lower amount of payables So that is then also a negative effect. So I think more or less it compensates to a certain extent this effect then in the cash flow statement.
Thank you. Our next question is from Matthew Yates from Bank of America.
Hey, good morning. Just a couple of questions. Maybe direct to Ute, just the first one is in foreign exchange. Say your guidance is based on 1 spot $10. I think that's slightly down from what it was prior was obviously the spot rates are moving up towards 120.
So can I say, is the FX budgeting not kind of mark to market each quarter or is it protected by some sort of hedges you have in place? The second question is around the pension, where you've taken the discount rate down a bit sequentially. I was just curious that BSF for using 1 spot 1 for their discount rate and you're at 1.4. Can you just remind me how the discount rate is set? Does it depend on the composition of your pension scheme or do you have some discretion Thank you.
Yes. Thank you for the question. FX, we have a rolling hedging scheme 15 months ahead. So this year is hedged for a longer time. You are right.
The 1.10 in our document seems a little bit outdated, but the dollar really has moved within the last days. So We cannot really change that on a daily basis. We have some formalities to go through here. And so if the dollar jumps around like this, our files cannot reflect every daily movement. But overall, FX is hedged 15 months rolling forward.
So when we do the budget for the next year and when we give the outlook the market, that rate is well known and fixed. Of course, there is a small amount still open, but that does not move the needle for the whole group too much. Pensions discount rate depends very heavily on the duration and the tenure of the underlying pension promises. And as we have a relatively long duration, normally that's the main explanation for higher rates for higher discount rates compared to other companies.
Thanks. Thanks a lot of sense. Thank you, Tim.
Thank you. Our next question is from Andreas Hain from MainFirst Bank.
On your comments on Animal Nutrition, there's a normalization in volume. So volume indeed was very strong in the first half. Do we have to think about falling volumes or just lower growth if you could specify on that? Specialty additives, sales were down double digit and the margin was even slightly up. Is that a mix effect or raw material effect how do we think about this?
If it is a mix effect, then is that something where we can be even more hopeful on
second question, Chris.
Sorry. On the capital market, my understanding is that there has side on specialty additives margin. Maybe you can clarify this. Thanks.
Thanks a lot for the question. I'll take the first one, about methionine. Generally, in the first half of the year, we have seen strong volumes, well above the long term average And we do expect a normalization of those volumes during the third quarter before we see the usual and that is what we do definitely expect. We before we will see the usual seasonal pickup of demand in the fourth quarter. I guess this was about your first question.
And then I hand over to Otter.
Yes. The margin in Specialty Additives of course, the raw materials help a little bit. So that is an influencer factor. Then we have the ongoing cost efficiency programs. They also help the margin there.
Going forward, it will also be a function of mix here and there, we have mix effects. If we look at quoting editors, they had quite a good development in Q2. So there is a mix of effects, which kept the margin at these good levels and also give some margin potential for the future.
Ma'am Andreas, please forgive me. It is not because of intonating, the answer of the price development about methionine. I've just forgotten. Please forgive me. So talking about the price side, we do believe that we are pretty well covered for the third quarter already.
And it's fair to assume that the average contracted price levels will be more or less the same as on the second quarter.
Thank you. The next question would be a Mubasher Chulte.
For taking my questions. I just have 2 quick ones, please. On the free cash flow, I think the 1Q guidance was 4th for it to be, for the full year 2020 free cash flow to be higher than 2019. And based on your quick numbers, you said it's about 1,000,000 of free cash flow for 2020. I just wanted to check whether that guidance as of 1Q is still relevant or not.
And then the second question is related to that. With the strong cash generation and the better than expected performance that you've seen in the business, but we expect Evonik to execute on bolt ons within 2020, or are you remaining cautious and of favoring balance sheet strength at the moment? Thank you.
Could you repeat the second question because the line somehow is overloaded?
Sorry, the second question is around the strong cash generation of the business. And given the resilient performance, could we expect Evonik to execute on bolt ons within 2020?
All on what's the word that was followed. Okay.
Progressive.
Yes. Cash con, we said now we will have the cash conversion rate minimum of last year. So that's the guidance. Of course, that then applies to the EBITDA amount So from that point of view, of course, that does not automatically mean that free cash flow this year is higher than last year. Don't know if I got that question correct, but that's how it sounded to me.
Then on the development of the portfolio, we had, use of cash or application of capital, allocation of capital. We have always said, of course, organic growth is an important part for the development of the group, but also bolt on acquisitions. Of course, in a crisis scenario, it is somewhat more difficult to really get the right view on operating performance of potential targets, find the right valuation levels and so on and so forth. So we will, of course, look at such opportunities very, very diligently like we did in the past. On the other side, of course, Christ also bears some chances.
So it would also be not prudent or wise to exclude it fundamentally. But again, it's the question of analyzing the target, getting an adequate valuation is a strategic fit. And of course, in that moment of decision to be sure we have the financing ready. But as of today, we have quite some reserve. We have cash on bank.
And so from that point of view, there is room both financially and strategically, but it really is has to make sense and it has to be also prudent against the background of the economic development we are in.
Just coming back to the first one, sorry. My question is more around the guidance that was provided for the full year 2020 at the 1Q results. Which stated that the 2020 free cash flow is expected to be higher than 2019. So I was just wondering whether that's still relevant?
We have always focused on cash conversion. So I'm not sure if really higher is written in text, but we'll look at we can look it up, but what was always meant cash conversion at at least at 30%. And now we changed that to at least last year's level in cash conversion rate.
Our next question is from the line of Hans Sedan Udeshi from JP Morgan.
Couple of questions. From memory, I remember in Q4 last year, you had roughly 1,000,000 of licensing income in the Resource Efficiency business. I mean, what is the outlook for licensing contribution in second half of this year? If you can give us some color there, that would be useful. And second question was just a clarification on the performance materials numbers in 2nd quarter, the the price decline of 20% seems much lower than the declines we've seen in prices for butadiene and MTBE.
So Can you maybe help us understand the difference there in terms of dynamics between the some of the product pricing versus you want it due to pricing in performance materials?
Okay. I take the first one about the licensees. As of today, we do not expect to sell a license from during this year. But with an expected recovery of the economy during the next year, there might be a good chance, to sell some licenses and to have one as the economy will recover next year. So in a nutshell, We do not expect it for this year, but there's a good chance, to have one next year.
Yes. And on the volumes in PM, I think we had especially a volume drop in Dutadione. I think that was the most, prominent one MTBE volumes have recovered in the course of Q2 also in summer, of course, there is a higher content of MTBE and also the plasticizers developed relatively well So one butane remained relatively solid throughout the crisis and maybe that explains the observation you mentioned. Thank you.
Our next question is from the line of Michael Treiber from Commerzbank.
We provided already with the new segment reporting, looking into the 2nd quarter, the segment you reported once 68, are you 1,000,000 quarter over quarter increase in EBITDA compared to basically flattish sales for the for the segment and this holds true for both animal attrition and health and care. So I want to get better understanding, basically what was the key driver basically for the quarter over quarter and what of this is sort of to expect it or heading into the second half as being sustainable. You already alluded on the pricing side. And volumes slowing down, but there must be potentially something else to push this one. This would be my my first question.
And the second is on the also related to the health and care segment. You reported on let's say stable and robust developments, but nevertheless sales have been down 2% in the first half. So when they shed some more light into the performance of the second half, should we see those pipeline, this pipeline you talked about in health, basically to become more as a driver for the second half? Or how should we think about the performance of this sub basically looking into the second half? Thank you.
Yeah, Michael, thank you for that a new look on our segments. So, I hope I can answer everything to your satisfaction. Sales in Healthcare is maybe at least, maybe not the only indicator to look at because they have their projects that they do and maybe the sales number also volume development might look not so great, but then the contribution margin And the profit might look very good. So from that point of view, I think there is some caution, if you only look at sales in Health And Care, so as a general role's remark, Overall, of course, we had better pricing in animal nutrition. So that helps, of course, both sales And the earnings, we had if we compare to Q1, lower volumes as Q1 had a very strong volume growth specially in animal nutrition.
And also on lysine, we had some slightly higher prices or again, here some lower volumes. And I think that's more or less the explanation to what you have seen there.
Can you elaborate on the cost side of things? So how much does this change basically from quarter to quarter? Was there any meaningful contribution in any relief there?
We have ongoing cost efficiency programs in animal nutrition sold on a continued basis. They are executing their, adjust 2020 program. So they have the 2nd wave now. Care Solutions also started, severe program in looking at their product portfolio, looking at the product mix. So that also hurts the sales and the volume development in the first hand but helps in the overall profitability.
So they are taking out costs quarter by quarter. That's an ongoing program that will go on. We described the program several times and that's what they do. And there is no big push spend in Q2 compared to other quarters that is coming more or less on a continuous basis. In the past and in the next couple of quarters as well.
Thank you. Our next question is from Georgina Iwamoto from GS.
Oh, hi, hi, Ute, and hi, Kristine. Thanks for taking my question. It's actually, just happens to be a bit of a follow-up to the previous question from Michael. I was wondering, has the full ramp up of the Singapore plant in methionine being supporting profitability in Nutrition And Care. And now that you have experience of that plant being up and running, at higher utilization rates, do you have confidence to consolidate the rest of your assets in methionine as volumes normalize?
Thanks.
One second. I'm going to
have a technical issue here.
Hi. About your methionine question, as you know, we are the market leader and as you know, We are really keen on in bettering our cost positions, taking any kind of measures which we which are in our hands. And that is an ongoing process and in the future, that is, therefore, what you could expect that we will further extend our cost leadership and therefore, step to ideas of optimizing our global production footprint and we see and see to it, that is key that we have to optimize on supply that we have to improve our fixed costs here and that we will have some higher plant utilization. And the backbone of our methionine capacity is in the long run, will be our 3 global world scale hubs. And I guess that is what I and how I could comment on this out of today.
Our next question is from Thomas Swoboda from Societe Generale.
I have just one question left. And it is on growth CapEx. Concerning's opinion seems to be that the demand recovery from the auto sector will be very long lasting. And my question is regarding your growth projects, for example, PA12, do you see any need to trim this timing wise? Is is there a need to postpone some of the CapEx Growth projects, to as a response to the COVID-nineteen COVID-nineteen crisis?
Generally, all projects that are in construction, it makes also financially more sense to really finish them, to complete them, because if you just delay a project, normally it gets much more extensive and then you have technical difficulties So our PA 12 project is fully on track and will be, constructed and built in time. So that is no question. But of course, if you look further down the road. If growth is lower and this year, we have negative growth. Of course, that determines then the need for new growth projects.
This is something we will analyze. We are already analyzing, especially now in the second half. Think towards the end of the year, we have maybe some better view on how really the pandemic crisis influences the overall economic growth patterns And then we can decide what is then for the next year or even the next 2 years, the right framework for growth CapEx, again, as we had volume declines in some of our business, that leaves capacity in the existing in the existing facilities, plus there is especially where there is a batch production. There are projects underway how to utilize existing capacity better and smarter. So that all is taken as carried out and will then influence growth CapEx for the next year over the next 2 years.
So ladies and gentlemen, we've really enjoyed having had you during this call. I guess it is a proof that you're wanting to stamp and steam through this crisis. Having said this, that closes today's call and from the bottom of our hearts. We wish you good health and take care and hope to hear or to see you soon. Good bye.