Thank you very much, good morning, and as usual, welcome to our quarterly earnings call. With me are Christian, our CEO, and Ute, our CFO. With that, I hand over directly to Christian for the short presentation.
Thanks, Tim, and also a very warm welcome from my side, and thanks for being with us today. Let's start right away with our short presentation. Ute and I will guide you through the first four slides of our quarterly presentation. In quarter 3, the difficult macro environment continued on a similar level as seen in quarter 2. There was no support from the micro side. Against that backdrop, our growth segments are holding up quite well. Nutrition & Care, as well as Resource Efficiency, have delivered sequentially more or less stable earnings. On top of the challenging macro situation, we have to deal with another burden. Ongoing production constraints and Performance Materials weigh on quarter 3 as well as on quarter 4 earnings. Both situations, an ongoing challenging macro situation, as well as own production constraints, force us to react quickly. We did.
We further accelerated and intensified our cost-saving measures. That is why we can confirm our EBITDA guidance for 2019. Delivery on our promises is important for us to expand our track record that we have started to build over the last two years. More details on our cost discipline on the next chart. Faster progress in our SG&A program and additional contingency measures will provide EUR 40 million support in the second half. This is already visible in quarter 3, mainly in the Corporate segment, where the numbers are clearly lower compared to quarter 2. Consequently, we also lowered our full-year guidance for the Corporate segment, which is now expected to be below the prior year level. Where else does this come from? Our SG&A program is progressing well. The measures in headcount reduction are actually ahead of schedule. This results in EUR 20 million higher savings already for this year.
On top, we have implemented additional contingency measures since the middle of this year. This goes across the board in corporate and in all operating segments, in travel expenses, maintenance costs, and personnel expenses. The high internal cost awareness and strict cost discipline on all levels is another proof of the cultural change at Evonik. With this short introduction, let me hand over to Ute for the next two slides.
Thank you, Christian, and welcome from me as well. Chart five shows you a more detailed earnings bridge for Q4. I am sure you have done the modeling already this morning with our IR team, so let me just give you the main messages. Our usual Q4 seasonality structurally improved after the M&A pipeline. Additionally, this year's earnings seasonality will be mitigated by the following effects. First, Performance Materials should have resolved their production constraints in the course of Q4. We expect a license fee in our active oxygen business in Q4. In Animal Nutrition, Q4 traditionally is a seasonally strong quarter. Last but not least, the mentioned cost savings are further ramping up. This will bring Q4 to a level of around EUR 500 million, and with this full year earnings to be confirmed stable guidance level.
Overall, Q4 will be well supported by the just-mentioned effects and our intensified cost discipline. I want to stress that this is not a one-time effort, but rather the implementation of a new mindset that Christian just described. You can expect more to come in 2020. Let me also spend some more on the current trading in our segments. In Nutrition & Care, we see the back-end loaded earnings development and Health Care to materialize as expected. Care Solutions continue to benefit from efficiency measures and the portfolio shift to more specialty products. In Animal Nutrition, the picture is rather unchanged. On the one hand, strong volume growth, even above average, supported by the African swine fever. On the other hand, a still negative but easing price effect. It was EUR 30 million in Q3 year-on-year after EUR 40 million in Q2.
In Resource Efficiency, the challenging environment in auto and coatings end market continues. This is visible especially in industry linked silica applications and in the coating businesses. The majority of our businesses is holding up quite well, like unchanged, strong PA 12 businesses in industrial and consumer goods and strong demand for crosslinkers from the wind industry. In Performance Materials, stable or even slightly improving spreads for MTBE and INA are currently not enough to compensate for year-on-year lower butadiene prices. Additionally, the production constraints are leaving traces, but with that effect easing in Q4, earnings should be on a comparable level like seen in Q3. Finally, free cash flow on chart six. We do confirm not only our earnings but also our free cash flow guidance. We guided for a significantly higher free cash flow and further specified that today to a level of around EUR 700 million.
Despite the challenging market environment, we have made good structural progress this year. The pension reimbursement gives us around EUR 100 million support. A high discipline on net working capital and CapEx results in combined more than EUR 200 million less cash out. For CapEx, we have already revised our guidance from EUR 950 million to EUR 900 million with our Q2 reporting. We will manage our CapEx budget very tightly until year-end. Let's see how it finally turns out, but from today's point of view, we might even come out slightly below the EUR 900 million. We are confident to reach the EUR 700 million for free cash flow, which is good progress and covers our dividend, also in this more challenging macro environment. This is what we have promised at the beginning of the year and what we will deliver.
In 2020, tight net working capital management will continue, and we will have a significantly lower cash out from bonus payments. Based on that, we see further room for improvement and additional upside in cash generation and cash conversion. That closes our brief presentation. Thank you for your attention so far, and we are now happy to discuss your questions.
Thank you. Ladies and gentlemen, if you wish to ask a question, please press star one on your telephone keypad and wait for your name to be announced. Once again, it is star one to ask a question. The first question comes from the line of Andreas Haug from MainFirst. Please ask your question.
Yes, good morning. Three, if I may. The first you already outlined a little bit, what you see in Q4 trends. Maybe you can, or I at least try, give some indications what you expect at least at the beginning of 2020 and how you see that year progressing. Secondly, conversion rate into 2020. You outlined the net working capital and CapEx discipline. Is that the main driver or do you see also room from the operating business, for improvement? It is more the technical issue of CapEx being strict and net working capital being strict or are other factors driving this as well? Last but not least, on the balance sheet. Looking on the increased pensions and the proceeds you have gathered from the MMA disposal, net debt to EBITDA is now including pension at 3x and therefore the balance sheet is not overly strong.
However, EUR 1.5 billion cash are sitting on the balance sheet at negative interest rates. Can you please outline in this context what the room for additional return from the MMA proceeds might be? Thank you.
Good morning, Andreas. I think we should share answering your questions, Ute and myself. I will start. Of course, everybody seems to be or is still interested in what kind of beef we are bringing to the table next year. Let me start with this. 2019 was, let me say, a year which is coined by market environment, which is still difficult and challenging. We do believe, we do think, we do expect as of today that this will stay put in 2022. It is that we do not see, let me say, a high level of certainty instead of saying that there is low visibility. Nobody would be surprised that I cannot give you a precise outlook for 2020.
Maybe we could go through our assumptions for the next year, and then in the second step, Ute will complete the picture on a group level. Saying this, maybe let's start with Nutrition & Care. Here, four out of our six business lines have really delivered year on year, showing higher earnings in this year. That is what we do believe, that is what demonstrates a good and a more resilient end market on the one side. On the other side, that is paying off by our own efficiency programs. We compensated, let's follow with Health Care. We compensated in Health Care for the end of a large contract and kept the earnings stable. Next year, we do see that Health Care is really set for good growth again based on a proper healthy project pipeline. Touching Care Solutions, that business line is benefiting from our efficiency measures.
By the way, the new business line Care Solutions which is really doing great here and particularly in this respect. Moreover, the portfolio shift this year towards more specialty products is really good, paying off. In 2020, this will continue, and we will see here another candidate for good growth. Baby Care, as you know, we have seen some recovery of volumes this year, and this is supported by our restructuring measures. We do believe that we will here see in 2020 even some, let me say, upside. Animal Nutrition, we will see in 2020 the first material earnings contributions from our joint venture with Feike Sijbesma, CEO of DSM. Here we have a joint venture called Veramaris, and this is quite well developing and progressing. Finishing the segment with another attractive and profitable product, Gutcare.
We cannot today predict Visane in price until the end of next year. Let me say it like this. Fact is, the market will continue, and that is what we are sure about, will continue to grow strongly in 2020. In respect of prices, they are on a 20-year low, and if you have a look on the market environment, you could see that, for example, some of our competitors have already canceled projects and closing sites. Talking about Evonik, that means we'll continue. We'll continue to execute our efficiency program in Animal Nutrition, and that is, and I dare say it is worth to mention, that is really paying off. Good paying off.
One thing is, let me underpin it, for Evonik, it's given, it's crystal clear, if the prices would even decline further, we are still prepared to intensify our efficiency measures and to optimize our global cost structure. There is enough room for good improvement in this respect. Maybe that is, in a nutshell, an overview of our assumptions talking about next year. Coming to Resource Efficiency. Here, I would say that we have delivered a year-on-year stable earnings level in this year, in a challenging macroeconomic environment, especially in coatings and in automotive. Despite this, that is demonstrating the strength and the resilience of the segment. For next year, for 2020, from today's point of view, we are not seeing further changes in any of our businesses. Of course, in respect of automotive and of coatings, 2020 will remain challenging.
On the other side of the coin, the majority of the segments, like for example, PA 12, or the very strong silica business, they will continue to benefit from our strong customer relationship and from our tailor-made solutions in those businesses. Maybe one thing to add. You should take in mind that next year, in the course of 2020, we will have the ramp-ups of our new silica plants in Antwerp and in Charleston. Taking a look to Performance Materials. In the current weaker environment, we would not assume a recovery of volumes and of spreads in the next year. On the other side, and there's always another side, with a negative impact from limited raw material supply and outages in this year, this segment should be in 2020 at least on a stable level.
Maybe this is our view in respect of what we do expect, what we assume, and what we see for the next year. With this, I want to hand over to Ute.
Thank you, Christian. Some more technical comments from my side. Pension service costs will be higher as the pension interest rate is low. That could be another EUR 30 million-EUR 50 million negative effect. On the other hand, FX rates are better. More or less, it could be then compensated by that. We will not have one-offs like ramp-up costs for ME6 or for Veramaris. Other plants that we also wait on the profitability of this year. Andreas, as you were asking, is there also an operational improvement? That's clearly a qualitative improvement. The startup of Veramaris, much better profitability also like before. I think there is also step-by-step qualitative improvement in our earnings also in next year. We have the license fees and Active Oxygen this year.
They might not reappear at the same level, it is part of the strategy, license out the HPPO process instead of investing ourselves. That was a clear strategic decision we took some two years ago. There also will be license income next year, maybe not exactly at the level of this year. I think in relation to the overall EBITDA level for Resource Efficiency, that should be not the biggest effect. We will also continue to execute our cost programs like we did in this year. Our SG&A program will deliver additional EUR 80 million in gross savings with a high retention rate. Plus we have the running programs in the different business lines like Animal Nutrition, Baby Care or Care Solutions. Beyond that, there still remains of course, some level of uncertainty and low visibility.
We have started early to prepare different scenarios for next year and define measures which are necessary also in a more doom scenario so that we really are prepared on the cost side. If the macro environment stays difficult, we have to cut costs further, and we will do that and this is what we prepare since a couple of weeks already here internally. The measures are defined and ready to implement. Some already have been started to be implemented, and they will come on top of our SG&A savings. Overall, in 2020, you can expect a stabilizing effect from the contingencies and cost saving initiatives like you have seen that in this year as well. For the free cash flow, I think that was the second question.
Of course, that depends a little bit also on the precise EBITDA outlook, which we do not have today, but I can give you some structural improvements that we expect for 2020. We will have an unchanged benefit from the pension reimbursement, so that's more or less no change year-over-year. We will have substantially lower bonus payments in 2020. The positive effect can be roughly EUR 100 million, as the cash out this year was extraordinarily high. Next year, we will not have a 100% payout ratio as, of course, the year was rather challenging. We will implement further network and capital discipline, so no big outflow expected for next year. That helps also in the qualitative structure of the cash flow. Of course, we'll have a tight CapEx regime.
On the other hand, if macro environment is somewhat in a slower growth scenario, then we do not need maybe so much growth CapEx size we thought some years ago. That overall, I think, supports the cash flow for next year, and it is our clear intention to improve the cash conversion ratio as well. We were at 25% last year. This year, we will be above 30%, which is more or less in line with the average. For 2020, we strive for further improvement in our cash conversion rate, both with structural things, but also with a higher quality in earnings step-by-step via things Christian and I described. The third question was on balance sheet leverage. Yes, we have a negative interest on the cash we received for the M&A disposal.
On the other side, we will have a bond repayment next year, so that is a rather short-term view. The priority for the employment of the funds is more or less unchanged. It's first of all reinvestment, be it in organic or also other M&A projects. Also share buybacks are on the list, have been on the list the whole time. Just keep in mind that we need certain preconditions to really have a reasonable process here. It is on the list as it has been all the time.
Andreas, maybe one more sentence to sum it up. If it would start raining bricks next year, we would be prepared. We would be prepared because of our sustainable cost-cutting measures, and there's more to come. Maybe tiny story. When I have taken helm in summer 2017, I've asked my management team and the representatives of co-determination to start to create a cost-cutting program. A lot of guys have asked me, Oh, Christian, what are you up to? Is it really useful? The wheat is standing high, and the sun is shining. Nobody is asking those questions anymore. In other words, the transformation program we have started in summer 2017, there was some slight, let me say, headwind because of this. Now. Don't get me wrong. The macroeconomic situation, I guess, is something like a booster for the cultural change and for the transformation program of Evonik.
Therefore, it is a chance which is really helping us to accelerate even some more painful measures to make sure that we will see in 2020, a year where we are able to set the pace and to deliver, once again, what we will announce to you.
Oh, yeah. Thank you very much. It was more detailed than I expected. Thanks a lot for that.
We're taking the chance.
Thank you. The next question comes from the line of Alexandra Slate from Morgan Stanley. Please ask your question.
Hi. Thank you for that very detailed response. Just two clarifications on next year. Do you still expect to see some synergies in 2020 from previous acquisitions? If you could help quantify the one-off that we've had this year as well, the negative one-off, that is. My second question was just on CapEx. Obviously, you've been quite disciplined and reduced your CapEx for this year. How much of that is just deferring CapEx into next year? Could we actually see an uplift in that scenario? As just final question, as it relates to your Singapore plant in methionine. If we see chicken prices continue as they have and forecast, and see double-digit chicken production growth next year, could you actually ramp up that Singapore plant quicker and do that without pressuring prices further?
Thanks a lot for your question, Alexandra. I may take the first one, and then I will hand over to Ute. The first one, let me give you some more color about the CapEx level in next year. First of all, the CapEx level depends on which macro scenario becomes reality in the next year. If you look to this, we have proven a tight CapEx management, and we've cut our CapEx budget in the first step from EUR 950 million to EUR 900 million. Now it might come out even slightly below EUR 900 million this year. If we look to the next year, yes, we will continue with the tight CapEx management. I do assume that if a further weak environment will stay put, that you can expect that our CapEx will start with an H in 2020. Once more, tight CapEx management will continue.
In this year, in the first step, we've reduced the CapEx budget from EUR 950 to EUR 900. It could come out even slightly below EUR 900 in this year. For next year, if this stays put, you can expect that the CapEx budget will start with an H as first number. With this, I will hand over to Ute.
To your question on the synergies, there is still a smaller portion of synergies next year, like EUR 10 million-EUR 20 million. No integration costs anymore, of course, as the integration lies largely behind us. The one-offs in 2019 are ramp-up costs for ME6 plant, for our Veramaris plant, and partially also for our silica plant. On the other hand, the earnings effect from the raw material constraints in C4 businesses, which appeared at the beginning of the year and also now in Q3. That could sum up to EUR 40 million over the whole year, just to give you a rough indication. The ME6 ramp-up, we have always said we will ramp up the plant according to market needs and market growth.
The facility is technically ready, technically running very smoothly, very well, and really very flexible to drive utilization as we need it for production and delivery into the market. As demand is currently very strong as you said that, of course, we are fully flexible and also happy to ramp up here the plant maybe somewhat quicker than originally thought.
Understood. Thank you very much.
Thank you. The next question comes from the line of Chetan Udeshi from JPMorgan. Please ask your question.
Hi. Thanks. I was just looking at that slide where you showed the acceleration in terms of cost savings on SG&A, and I'm just trying to figure out, if I look at the first three quarters of this year and see the change in SG&A, actually it's down only EUR 24 million. I'm assuming there's some benefit from lower bonus accruals, maybe, I don't know, IFRS 16 benefits. I'm just trying to understand, is there some offset on the selling expenses line, which is probably offsetting any of the benefit you have in terms of cost cutting, or is it more reflected in some of the other lines maybe? I don't know. I've just calculated for SG&A, but maybe if you can help us in terms of how much you can see on P&L. That would be useful.
The second question was just a clarification because I think, Ute, you probably mentioned it already, but your pension provisions have risen because of the lower discount rate. Can you remind us now what is the coverage ratio? I think at the end of last year it was probably around 17% or so. Whether that has deteriorated significantly or there is a small change overall from that level? Thank you.
Yeah. Chetan, thank you for the questions. For the pension funding ratio, that fluctuates always a little, a couple of percentages. It also depends, of course, on the development of the assets. I would say we are between 65% and 70%, and that's the range where we want to be. Then regarding the cost savings, the bonus doesn't play so much in the other segment as the biggest portion of our employees is in the services and of course, in the operating segment. From that point of view, the bonus has a relatively small effect here. The cost savings are not only to be seen in Corporate Others, it's also internal services like IT, procurement, HR, which then translate into the cost lines of a business segment. From that point of view, you only see part of that in the corporate segment.
Of course, our program does not only tackle admin, but also marketing and sales. If you look at the overall P&L, you also see that our sales expenses have gone down. Of course, there is a little bit of a volume effect in that as well, but also a clear fixed cost cut effect in that. On the other side, we have some factor cost increase here and there that works against it. This is how the overall SG&A savings distribute in the segments of the group.
Can I just follow up on the previous comment around the ramp-up costs? Did you say EUR 40 million was the total of ramp-up costs and the raw materials?
No, that was the effect from the raw material constraints from a C4 chemistry, which had been appearing at the beginning of the year already. You might remember in Q1. We now also have some in Q3.
What would be the ramp-up cost you might have had for the full year, you think, for all the different projects? I think litigation was EUR 15 million each in Q1 and Q2, but I don't know if that's the right number, but anything material on top from other projects you might have had?
Roughly EUR 30 million, I think is a fair assumption. Of course, for Veramaris and silica, it's much lower as these are smaller facilities, smaller sites. We say up to 10% of invest costs. I think that's a good guidance for ramp-up costs.
Understood. Thank you.
Thank you. The next question comes from the line of Michael Schäfer from Commerzbank. Please ask your question.
Yeah, thanks for taking my two questions basically. First one is sticking to Veramaris. In your opening remarks, you said that you're basically the progress as well, and I just wonder whether you can update us on what should we expect basically on the ramp-up side in the upcoming quarters. Maybe you can help us also already modeling some of the sales you're expecting, and also maybe the kind of earnings contribution you're expecting from this one heading into 2020 and 2021. This would be my first question. The second is coming back to Performance Materials. Ute, you mentioned the EUR 40 million burden as we should account for in 2019. I really want to get a better understanding of what really drives this, let's say, regular type of either availability issues, outages, raw material constraints, et cetera.
Is this something which is structurally from your point of view? Is this entirely related to suppliers? What should we expect in the years to come? Are there significant CapEx need from your point in order to tackle this one? This would be my second question. Thank you.
Michael, thank you for the questions. I start with the second question, Christian will elaborate on Veramaris. For the C4 chain, we've had limited raw material availability in the beginning of the year. This was due to outages at our supplier. Of course, we only have limited influence on that. There were shutdowns and also unplanned outages or unexpected turnarounds at our suppliers. In the current quarter, we've had a planned outage, which then brought some more technical difficulties so that we had also an unplanned work to do in some of our facilities. That has nothing to do with CapEx levels of the last years. It's just if you have such a big maintenance overhaul, things can always happen, and then you have some individual things that happen on top, and this is what we have experienced.
As we said, the business is working very consistently to tackle all these technical issues so that they should be back on track in the next couple of days or weeks. That is more or less what we have seen this year. It's isolated incidents on suppliers level and our level, which can happen here and there. The total effect for this year is around EUR 40 million, as we said it.
Just a couple of weeks before, Michael has dropped me a line. We've talked about Veramaris. We, he and I, both of us, are really confident. I'm convinced that this is a great investment in the future. For 2020, for the next year, we do expect, in respect of the earnings contribution, an amount of a low double-digit, already of a low double-digit amount in respect of the earnings contribution. Target for next year will be to expand the customer space, which is already on a good level. We are, in this respect, very hopeful that we could, ramping up this business, we could earn sales potentials of roughly EUR 200 million for the JV. That would be split up 50/50. This is the actual story, the current story about Veramaris.
Okay. Thank you.
Thank you. The next question comes from the line of Gunther Zechmann from Bernstein. Please ask your question.
Good morning, Ute, Christian, and Tim. Pretty good carpet bombing on Andreas' question at the beginning. Maybe I can just follow up with some precision bombing on a couple of follow-up questions. Firstly, how will we further progress on the contingency measures, the Adjust 2020, depending on the macro environment as well? What are the key levers that you have at your disposal for incremental progress over 2019 next year? Combined with that's more on a fixed cost. Also, secondly, what do you see on the variable cost going into 2020? That's question one, A, one, B. Second question is on the license income in Active Oxygens. How big could that business be for Evonik in the long term, please?
Good morning, Gunther. Thanks a lot for your question. Let me start with the cost savings, the potential of cost savings in next year. First of all, we do expect EUR 80 million from the SG&A program. Besides this, moreover, we do expect EUR 30 million from the Adjust 2020 program, plus the restructuring programs we have initiated in the Baby Care business and in the Care Solutions business. This amount of, in total, EUR 100 million, we do see as given, because all the activities in respect of cost cutting, restructuring, reshuffling, bettering the efficiency of the company are spelt letter by letter to the word, being sustainable. This is what you could definitely rely on, because we have shown that what we have announced since 2017 in this respect, we have strongly and definitely delivered.
This is about the SG&A program and about the cost-cutting programs in those business lines I've mentioned. Moreover, we have implemented a toolbox which we have developed through the SG&A program. That is what we could make use of for more activities in this respect. I cannot give you, for today, the exact level of this additional amount, because we have to see how strong the macro environment headwinds will blow in next year. One thing is, that is what you can take really for granted, that we are prepared to activate those additional cost-cutting positions.
Okay. On the variable cost, which is more or less raw material, we expect overall raw material markets to be longer in 2020, leading to rather stable raw material prices. Of course, factors like political tensions or strict environmental regulations can always have pressure on some selected raw materials. Of course, this is something we are used to monitor closely and tackle when it pops up. If we look at the petrochemicals markets, they are also expected to be longer in 2020 as demand remains relatively weak. In the U.S., there is good investment levels and additional capacity. In Asia, this will lead to more material availability. For the major synthetic organic products, like acetone, ethylene oxide or propylene oxide, we expect longer market and in general, good material availability and rather stable prices here.
For oleochemicals, the supply situation is also expected to be good and to continue on high inventory levels. Higher demand for biodiesel, food, and feed applications can here and there might not be fully matched by increasing productivity. A slight increase in prices is expected in general, although it's on historically relatively low levels. In the inorganics markets, we also see a generally more friendly environment where lower prices for commodities and flat prices for specialties are expected. Demand and industrial applications weaken and inventories are high, while consumer market and non-cyclical business are still stable. That is more or less the picture we see there. Your question towards the licenses, I think a level of $20 million-$30 million is a good proxy. Again, it's really not the main driver of the overall Resource Efficiency segment.
What comes on top is, of course, catalyst sales then as follow-up, which is then an ongoing effect in our catalyst business line.
Thanks. Just on the last question, I think what you gave, the $20 million-$30 million, I understand more is a run rate of licenses, sort of one, maybe two licenses per year. I am just wondering how big that business can be overall to you.
That license might not appear every single year, so we changed our strategy here some years ago, that we do not invest ourselves, but rather go down the route of licensing. That's also, of course, a CapEx consideration, or was a CapEx consideration at the time. Yearly license fees can be around $20, sometimes might be somewhat higher. That fluctuates from year to year. If you really take that fluctuation in comparison to the overall EBITDA of Resource Efficiency, I think that should not be the biggest point of concern. For the catalyst business, of course, that is then an ongoing business to deliver the catalyst into the facilities of our customers.
Thank you.
Thank you. The next question comes from the line of Georgina Fraser from Goldman Sachs. Please ask your question.
Hi. Good morning, Ute. Good morning, Christian. Thanks for taking my questions. I've got three. The first one is just, I noticed that you didn't pay any cash taxes this quarter versus a cash out of EUR 100 million last year. I was just wondering if you could elaborate on why that was and what to expect for 4Q next year. A question just to follow up on the Active Oxygens licenses. Can you just remind us what the kind of structure of those licenses is? Is it a one-off payment? How long is the kind of lifespan? Is it something that we would expect customers to renew at some stage? My final question is a bit longer term looking. We've been through so far, a difficult 2019, another year of kind of lower profitability and weaker volumes.
I was just wondering if you could think sort of two to three years ahead, how do you think Evonik's going to kind of work towards reaching its group margin targets and ambitions to grow volumes above GDP? Thanks.
Okay, Georgina. I'll start with the cash taxes. Of course, when earnings are a little bit lower than cash prepayments, tax prepayments, and this is what you see in the cash taxes as well, is lower from that point of view in that given quarter. I think for the full year, of course, cash taxes are there, is then lower than last year. Overall, we see some cash taxes for the full year, like EUR 250 million around that level, give or take, of course, some fluctuations here. Next year, I think it could be on a similar level, depending on how, of course, the earnings then grow. On the Active Oxygens licenses, it's mainly an upfront payment, and then there are some smaller payments later. But again, really, it does not really drive the overall Resource Efficiency earnings too much.
That's why I think we've given you some indications here, and I think that should be it in discussion of the licenses.
Good morning, Georgina. You've asked what do we see for the long-term future, in the long-term future to make Evonik a better company. First of all, we will focus on our four growth engines. As you know, Animal Nutrition, Health and Care, Smart Materials, and Specialty Additives. These are the businesses we will exclusively invest in respect of organic growth and in respect of decent and disciplined M&A. Second, that is of high relevance for the whole company, that we're focused on very disciplined cost-cutting activities, which we will further implement and go on with this in a very sustainable way. Those are the core pillars. Let me convey it like this. These are the core pillars to make Evonik a better company, and this is what we are totally convinced will be paid off over the next years.
I guess just as a bit of a follow-up then, if you could kind of look at the portfolio management from a kind of disposal candidate potential, if you could just remind us which parts of the portfolio you would be less committed to in the long term, which are non-core, and if there are any areas of the business where volumes have been disappointing and might not contribute to the strategy that you see in the long run. Thanks.
First of all, it's a brilliant question, and I could get that everybody's really keen on getting some more information out of it. Given that everything outside our growth engines is what we have to look to in this respect. I do really think that you would agree with me and everybody who's on the line would agree with me, that it would be, from my point of view, not very prudent to comment on this in detail now. Please forgive me.
Okay, thanks very much.
Thank you.
The next question comes from the line of Thomas from Société Générale. Please ask your question.
Yes. Hello, everybody. I just have one small question left, and it is regarding the raw materials supply in Performance Materials. Can you expect any kind of reimbursement for the lost earnings in 2019 from your supplier and any kind of insurance or whatever you can expect in 2020? Thank you.
Thomas, there are very clear rules when there is a force majeure or not, we have no reimbursement here. That stays in our, or goes out of our pocket.
Yep, perfectly clear. Thank you.
Thank you. The next questions come from the line of Mubashir Chaudhry from Citi. Please ask away.
Hi. Thank you for taking my question. I was just wondering if you can provide some color on how the corporate costs are likely to develop going into next year. I.e., should we be thinking of the levels that we are in 2019 as the new base going forward? My second question is around how you're thinking about M&A, given the situation with PeroxyChem. Are you on hold until things are resolved from that side from a further bolt-ons and additional M&A? If not, how is that pipeline looking? Thank you.
Okay, Thomas. Thank you very much for the question. Corporate costs, I think we've reached a good level, so that should be then also the ambition going forward. Of course, over time, with some more improvement potential. On the question of M&A, for PeroxyChem, of course, the court case has started some weeks ago, so it will take a couple of weeks or months until we see the decision there. We expect the decision early 2020. From that point of view, we have to see how that is in the end decided. We are monitoring also smaller M&A possibilities and opportunities all the time. I think Christian also laid out in his speech that we are very disciplined on M&A. We focus on our growth engines, and if we have suitable opportunities there, we're here and there, do an acquisition.
Far, that had been smaller acquisitions, and I think that perfectly describes our approach.
Thank you.
Thank you. This was our last question. I'm now handing the call over back to Tim Lange, Head of Investor Relations. Please go ahead, sir.
Thank you, I'm handing everything over to Christian for the final words of the day.
Yes.
Ladies and gentlemen, please allow me a final reference to our Capital Markets Day, which will take place on the 1st of April in London next year. No, that is no April Fools. The Evonik management board with Ute, Harald, Thomas, and me will come over to London and we will act on what we have already achieved over the last two years and, maybe more important for you, look ahead on what still lies ahead of us. Please already pencil the date into your diary. Further information on the event will follow in due course. That closes today's call, and I'm really thankful for your attention. Wish you a good day, and goodbye.