Status Update

Jun 24, 2021

Slides

Yes, please stay connected. This is the right event. It's not the Paris Fashion Show, it's the second Division Spotlight series event. Welcome to Evonik, welcome to Essen, to all of you out at the screens. These fancy shoes that you've just seen are only one of many examples of smart solutions, smart products that you will get to know today, and my colleagues will give you all the details in a second on the shoes and the other highlights of today. It's about two months that we have hosted the first part of our Division Spotlight on Nutrition & Care, and since then, the division has executed on their strategy, as promised. They have ramped up the lipid nanoparticle production in Hanau in Germany in record time and started delivering to BioNTech. They have signed an agreement with Stanford University on polymer-based messenger RNA delivery technology. Recently, they have acquired Infinitec active ingredients for cosmetic applications. These are the next steps for the division in executing their strategy. With that, we switch to a division which is not less exciting for sure, that's Smart Materials for today. I have the three members of the management team with me. That's Claus Rettig, the President of the division. That is Ralf Düssel, the head of the High Performance Polymers business line, and Gerd Löhden, the R&D head of the division. They will introduce themselves at the start of their presentation in a minute. After the presentation, we will start the Q&A session. You can already now post the questions in the questions section of your browser. We'll try to answer, obviously, all the questions if time allows. We are targeting about 1.5 hours for this event, so it's scheduled to last until around 4:30 P.M. With that, I hand over to Claus to kick off our today's Division Spotlight on Smart Materials. Yeah. Thank you, Tim. Thank you to all of you joining us online today, hopefully for the last time before we can come back to a physical meeting, which would be, of course, much nicer for all of us. Let us briefly introduce ourselves. I am Claus Rettig. I am a chemist by education and with Evonik for more than 30 years now. More than a quarter of this time, I was working and living in South Africa and Japan and working for the predecessor companies of what is Evonik today. I came back to Germany in the year 2003 when I joined the executive board of the former Goldschmidt AG, and for the last 18 months, I am leading now the division Smart Materials. Before, I was heading the segment Resource Efficiency. Ralf, do you want to continue? Thank you, Claus. Welcome. My name is Ralf Düssel. I'm roughly 25 years with the company. After functions in engineering, production, R&D, controlling abroad and in different sites in Germany, I'm the last 15 years handling different businesses of Evonik, currently the High Performance business line, and in the past, the business line Oil Additives. Gerd. Thanks, Ralf. Yeah, Gerd Löhden. I'm heading the R&D group for Smart Materials and as well for Evonik R&D for Asia. I'm since 1996 with the company, starting classically as a polymer chemist in R&D. With increasing responsibility, heading different technology groups, both in R&D and also in applied technology for different businesses. Parallel to what Claus had said, I'm on the job now for 18 months for the division Smart Materials and have done the same or a similar job before for the segment Resource Efficiency. By that, I give back to Claus. Very good. Very well. Let us start with an overview of Smart Materials, which you hopefully can see on your screens now. I'm sure that you know that Smart Materials is roughly two-thirds of the former segment Resource Efficiency, but the new structure brought clearer and better focus. Today in Smart Materials, we are focusing on smart engineered materials, which are based on our two technology platforms, inorganics and polymers. A big part of what we do, what we are targeting, we can summarize under strong growth via future mobility and eco solutions. You also see on this page our financials for the year 2020. However, they certainly do not reflect the capability and the power of our division. That's why I would like to move to the next page to show you some historical figures. Here on this page, you see our financial track record from 2015 until 2020, so for the last 6 years. What you see here is that we, over this period, at least from 2015 until 2019, showed a continuous sales growth and a continuous EBITDA growth. As a matter of fact, we even improved our EBITDA margin in this period of time by 200 basic points. What you also can see here on this page is that our volume growth is lower than our sales growth. We had an average sales growth of 3.5% per year from 2015 until 2019, and the volume growth was below. That's just a word of caution. In our division, you cannot take the volume growth as the real measure for our growth, because we have a very complex portfolio, and we had a lot of shifts inside this portfolio over this time period. As our strategy is clear that we also, over this time, from 2015, had the clear goal to shift from volume products to more specialized products. We replaced within our existing capacity, these volume products, or some of them, with more specialty products, with higher prices and higher margins, of course. I think it's clear that this is resulting in a lower volume by higher sales and EBITDA growth. The improvement of 200 basis points in the EBITDA margin was also supported by our continuous efficiency measures. In the year 2020, unfortunately, we see a drop in our numbers. This is, of course, due to the economic situation the world faced in 2020, and we could not really totally escape this development. Of course, we would have liked to have better results in 2020. However, I have to say, from my point of view, under the given circumstances, we performed pretty well. In 2021, we are already back on track. We'll hear more of this later in the presentation. Good. Let's move to the next page. Here, I would like to talk a little bit about our competitive strengths and the advantages of Evonik Smart Materials. What do we offer in smart materials? What is a smart material? In smart materials, we are solving complex customer requirements with tailor-made products, materials, and services. We call our product smart or material smart because they are often tailor-made to specific customer needs, really fitting exactly the customer requirement and offering our customers differentiation. Often, we supply together with the materials, special application know-how and technical services. This makes our material, and you want to call it as we call it, smart. Let me touch on 3 fundamentals of our business model, which is, number 1, innovation. We constantly develop innovative solutions or modify innovative solutions via innovation. This is a continuous process. Second, we offer, like I said before, tailor-made solutions for our customer needs. You can see this, and it's proven when you look into our portfolio. We have a high number of different products and grades, this shows that we are capable of handling this in a very good way. It becomes even more important in the future to create individualized products, at least in certain areas. One example you have seen when Tim entered the room was his fancy shoes. These fancy shoes, I have also some here, are made, at least the shoe sole, made via 3D printing from our tailor-made polymers, just as one example. Last but not least, the third fundamental, which makes us strong, which is a real competitive advantage, is that we offer also individual know-how and services in many areas. Just to illustrate this, maybe I can give you one example on the food processing side. When we offer food disinfection products, we of course make a tailor-made product for the task on hand in terms of purity, in terms of concentration, but we also offer the dosing equipment and the dosing know-how and the dosing guidelines, just to show what we mean by additional services. Let us move on now to some customer statements, but very quickly browse through them. We added them actually for your reading pleasure. You see also what customers telling you about us in these statements. Because I want to focus now a little bit on our strategy and explain a little bit what is all our strategy about. Our strategy is based on three strategic pillars, which you can see here, which is growth, excellence, and leadership. We have all what we do, in the center of all what we do are our customers. You also see in this picture here, sustainability and innovation. This is what we regard as part of our DNA. We will focus in the further slides very much on growth and excellence and not on leadership. However, I just want to point it out, this is not because it is less important. Of course, focus on our people will be even stronger in the future because smart materials, of course, depend on smart people. In the next slides to come, we want to go a little bit deeper into these elements of our strategy. Let me start with one part of what I call our DNA, the sustainability part of our DNA, before I hand over to Gerd for the innovation part of our DNA. Sustainability, of course, we as Evonik, we take responsibility for our footprint. This is out of question. On this page, that also our handprint is very important. You see here that our handprint, especially in our sustainability focus areas, which you see on the page here, is of high important to our business and of course, offers a lot of growth opportunities for us. I will not go into more details here because they are numerous, and we will see some of them later in the presentations. I can tell you, 45% of our portfolio today is made up of products that offer superior sustainability benefits over competitive products. With having said this, I hand over to Gerd to tell us about our innovation DNA piece. Thanks, Claus. First, 1 short remark. It's actually a perfect transition coming from sustainability to innovation because these 2 topics really go hand in hand in Smart Materials. Let me now talk a little bit about our principles in R&D, about our focus fields, and also about our setup, and starting with 1 very important principle. Claus talked about our customers, customizing products for them. I would even go 1 step further. High number of our customers are not only customers, but they are really partners, developing partners that we need. If we talk really about complex solutions and the demand or the complexity of these solutions actually rise over time. Often we can't solve them by ourselves, the same for our customers. You see here 5 customers, and I maybe only pick a few 1s out. Dow, you might know, we work very closely with our HPPG technology together. Linde, Ralf will stress on that later on in our membranes field. HP Inc. was already mentioned also in testimonials in 3D printing, and Henkel is for us a very important partner in the adhesives field. This list is not exhaustive, and as we have already seen with the series of testimonials, we have a high number also of other customers with the same category. Why is it so important? It's really about differentiation, and it's really also about openness with our customers, working together, sharing knowledge, and at the same time also create win-win situation. On the topic side, I would like to mention here additive manufacturing and membranes out of 2 reasons, actually. 1 of the reasons is these are 2 of the 6 innovation growth fields of Evonik. You might have heard already of these fields. They were defined in 2015, with a clear target to generate sales of EUR 1 billion. I forgot to say we defined overall six innovation growth fields, and this combined target sales is EUR 1 billion, and by 2025. We have the responsibility here for two of them, and I think we can also claim, I think Ralf can also confirm that we are on track with our sales promise. These fields grow over proportionally. You will also see it later on in the presentation. Another topic that I would like to stress is our setup. You see here our high share of people working in technology, namely 840, and you see also our number of R&D sites. This pure number is a little bit misleading. We have to, or I have to admit that our focus, our footprint in Europe is actually over proportionally. We gained actually a lot of size via our acquisitions, not only Porocel and PeroxyChem, but also Huber in the U.S. We have to work on our setup, on our strength in Asia. I would like to underline this with the statements that I said in the beginning, how crucial partnerships are for our success, for our growth, and having the right footprint in Asia will be very critical because we expect the majority of the growth in Asia. This might give you a rough overview about our R&D setup, about our focus topics, and also our basic approach. By that, actually, I would like to lead over to one of our strategic pillars. The first strategic pillar that Claus also mentioned is excellence. It might be a little bit surprising that now R&D comes with the topic excellence. Especially in the context of speed. I can assure you, speed is what counts also in R&D. Not being fast enough meaning being second is not the company that will win. Speed is for us of supercritical importance for R&D. What I would like to share here today is actually a project and initiative that we started in 2019 together with IBM. I think after this current status of this tool, we can really claim we will reinvent R&D by this tool. What we do here is actually use artificial intelligence to speed up our innovation efforts. A rough overview about what we are doing there to give you a feeling how complex and also how intense work it was to generate this tool. In the first step, we more or less digitalized every information, every data out of the polyamide 12 compounding area. To give you a number, we digested 1.5 million data points, information pieces into 1 system, brought them into context, brought together what belongs together, what has relation to each other, and have now, in the first step, available all this historical knowledge on a fingertip. What do we do with that? Actually, this tool is capable to provide you information how a certain composition will perform in terms of properties. The other way around, this tool is also capable to, for a given set of properties, to provide you a suggestion what composition you should choose to fulfill it. This actually closes the loop. Also what Claus said before, by that we can actually generate the customized solutions or tailored solutions our customers are looking for. Again, summarizing, by this we gain or cut our development speed by 20% to 40%. I should mention this tool is self-learning, meaning the more we use it, the smarter it gets, and also the shorter development cycles are. We think we have a one of a kind tool here in hand, which will actually also differentiate us from our customers or from our competitors, I have to say. Sorry for that. By that, I hand back to Claus. Yeah, very good. Thank you, Gerd. I am really happy to hear that with a good combination of artificial intelligence and human intelligence, and of course, with your nice running shoes, you are going to be even faster in the future by developing very innovative solutions. Yeah, excellence and artificial intelligence, of course, important in many areas of our business. We use AI, artificial intelligence, also to become better in our supply chains. It is our goal, as Evonik, but also as Smart Materials, to become the leader in our industry in supply chain management. We brought one example with us here, showing the deployment of AI to optimize our silica network. We operate 18 precipitated silica plants globally and across all the regions. You could say it is the biggest silica network on Earth. We use AI today to optimize it in many dimensions. By doing this, we improve the lead times and supply security for our customers at optimum cost. How do we do this? With the help of AI, we calculate the optimal product portfolio for each plant. We calculate the best combination of customer, production site, and transportation. By doing this, in the end, we improve the customer satisfaction and, at the same time, our profitability, our asset utilization, and sustainability. I want to leave now this DNA part and go to our growth pillars, the one that is here also in the focus today, the growth pillar of growth, or let's call it extraordinary growth. We, in Smart Materials, we have, of course, developed a lot of growth plans for the different areas of our business. We want to create or get accelerated growth by continuing to increase the share of specialty products, specialty applications in our portfolio. We want to do this by 2 means. One is continue with targeted acquisitions like we did in the past with acquisition of PeroxyChem, a very good one, by the way, and Porocel, also a good one. Going to continue with M&A, and of course, also do it organically by our own developments and also by our own R&D. Increase the share of these specialty applications like I mentioned a couple of times before. Where do we want to do this? You can see it on the next page. Of course, we want to do this in attractive markets where we can deliver smart solutions, obviously. We have quite a few of these markets. I have to say we have a lot of these markets that qualify for this definition. These are markets we are already in, but these are also new markets. To make it easier, we group these markets, and it's actually pretty good to do, into what we call two growth fields for us. One is the growth fields of future mobility, the other one we call eco solutions. Future mobility is driven by lightweight, is driven by electrification, and of course, geared towards the overall goal to reduce emissions. Eco solutions is geared towards resource efficiency, use less resources, use recycled resources, create less waste, and is pushed by regulation today in many areas of the world. These are the two core growth fields for us, for Smart Materials. Now we want to actually go into a little bit deeper dive into these two fields. I see Ralf has already his diving equipment ready, and we will start the first dive. Thank you, Claus. Future mobility, as you see on the picture, if you go back one slide, it's far small than automotive. You see also the future there, for example, with our high-performance foams in those applications. Nevertheless, automotive today is the largest part in future mobility. Today, roughly 20% of the division sales are in the automotive area. In 2021, so in this year, we will achieve roughly EUR 750 million sales, which is already beating the pre-crisis level of 2019. We see great growth opportunities in the future in this field. In the conventional combustion car, we see more or less a GDP of roughly 4%. In hybrid cars, we see a potential of growth rates of 25%, in electric cars even more. This will add up in the next six years to roughly sales of EUR 1.1 billion or a CAGR of 7%, or roughly EUR 350 million more sales. Our competitive position in automotive is based on our advanced technology, our innovative spirit, and our close cooperation with our customers. By focusing on future trends and movements, be it sustainable transportation and resource efficiency, we stand behind our OEMs to tackle their challenges on future mobility. We have a great variety of products in a conventional car already today, be it with applications under the hood, be it different lines, fuel lines, cooling lines. We have silica as additives to achieve low resistance tires. With composite materials, we are inside and outside of the car, and with additives and components for adhesive and sealants, we are all over in a car. As Evonik, we can say we have nearly for every component in a car, a solution. If you look at Smart Materials specifically, we estimate roughly a value of EUR 30 in a car, be it in this way a conventional combustion car. There's way more to come. With our innovative solution, we will shape the future of electric and hybrid cars. You see here some examples. For example, I mentioned already the cooling lines. For modern batteries, we have very complex cooling, way longer lines, and high demand, which we can fulfill. We have solutions also for batteries, in this specific case for the connecting of batteries, so-called power busbars. Besides silica, we have also other additives to even optimize the low rolling resistance, be it liquid polybutadiene called POLYVEST. Also in normal lead batteries, we have fumed silicas. Here in those modern cars or new technology cars, we have lithium-ion batteries where you need metal oxides in the battery. Overall, you see really new ideas and already solutions existing in those cars which end up in significant numbers. We can, if we look at a hybrid car, increase the amount of material or the value of material by 50% to EUR 45. For an electric car, we can even more than double the value in a car to EUR 70. This doesn't even count future innovations to come. Now coming to polyamide 12, PA 12, which is close to my heart as it's part of the High Performance Polymers. First, I would like to say there is not one PA 12. PA 12 is a compound, a formulation made of a lot of different additives, components, and it's tailor-made to achieve a specific target of an application or a customer. We are selling today roughly 300 compounds, all tailor-made. PA 12 has excellent properties, be it for example chemical resistance, be it easy processability, or be it a broad temperature range like in a car from -40 to +80. To mention some examples briefly here, this cooling line Seems simple, but it has, as I mentioned in the battery, really difficult tasks to fulfill, lightweight. Also the next one you see in the middle, those connectors replace brass, significantly lighter for the lightweight and also easy to connect. Then that's a typical Power busbar. Power busbar connect battery cells. In here is polyamide 12 with great electrical insulation, easy processability, and flame resistance. You see we have great advantages of PA 12, and we estimate in a hybrid or electric car, more than 50% more value of PA 12 as today in a conventional car. Therefore, we are really happy that our new PA 12 plant in Marl will come on stream in the second half of this year, as this material is in high demand and we are totally sold out. More on the details of batteries from Gerd. First of all, not only polyamide 12 is close to my heart, but also other materials. Before I start with explaining what we have today already in batteries, I would like to start with a general statement, to put some things into perspective. Evonik won't become a company which will supply a full battery. Neither we will produce cells anymore. We won't even supply high volume materials to this market. Our game is specialties. Klaus named us Smart Materials, I think this is the perfect fit, especially also to this market. We are in the specialty game, we are not in the high volume game, also in this application field. Here, roughly an overview about what we are already doing today in batteries. Most of the applications that you see here are actually in the environment, in the outside of the cell. The only example that is given here is number one, our specialty oxide application for SEPARION®. I think we can claim every Tesla is driving around with specialty oxide from Evonik. A very special application, but strongly growing. The other next 2 examples Ralf already explained, I don't want to repeat. These are polyamide 12 application and the lower 2 ones are application from our sister division, Specialty Additives, that I think he has the chance to talk next week, too. Overall, our today's business is in the low double-digit million EUR category, but we think we can significantly grow this to a solid EUR 100 million upwards business. How do we want to do that? Actually, for that, our inorganic platform is perfect. We talk here about specialties, about additives, about materials to be used inside of the cell. Before I go into the two examples, I would like to explain the overarching theme. We improve performance. We make battery safer. We make them longer lasting. These two examples are not, again, exhaustive, but we have around 10 R&D projects clearly targeted, not only for the classical lithium-ion battery technology, but also for solid-state batteries and solid-state battery lithium metal batteries, where we also work with key innovators globally. Quickly to the two examples that you have or get a feeling what we are doing. The first one is actually a project which already yielded into a product which we call Siridion Black. It's a specialty design, silicon-carbon composite material that is used to dope anodes to increase lithium capacity of the anode, and by that, also overall battery capacity. We target here first the consumer electronic markets, not the automotive market yet. What we should also mention at this point, we can produce this material already on commercial scale. The second example is a really high-tech material from our silica business. It's a special oxide particle concept where it's about high lithium-ion conductivity to protect cathode, anode, and also separator. Again, here it's about durability, by that also capacity retention. The picture that you see here is also a good example to highlight one other aspect, because what we also have to consider here is simplicity, how to get our materials into the customer systems. This example shows that by simple dry mixing, we can actually fulfill the properties we are looking for. We are very confident that this initiative will grow us to above EUR 100 million by 2027. What does this mean for our setup? It's pretty simple. We will go to Asia, we will go to China, more specifically. Maybe I even don't need to explain it, because this market is driven from there. All major battery cell producers are Asian, primarily Korean and Chinese, and you have to be present there to be able to cooperate with them, and this is the example I referred to in the beginning. Again, we hear talking about one of our key factors, partnering, creating joint solutions, and you have to do it close to your customer. Yes, we also maintain a scientific network to stay up to date with all major technology developments, but it is crucial for us to be there to also take advantage of the speed the Chinese market or the Asian market overall offers to us. By that, we move actually on to our second growth field, and it's called eco solutions. It's the only one where I have to read from my notes, because I would like to give you the definition what we understand as eco solutions. The eco solutions are defined for us, just a second, as superior solutions which are saving resources and enable environmental-friendly processes. Considering this definition, we expect in 2021, actually roughly in turnover of EUR 550 million by this, and grow it by 2027 to EUR 900 million. I think that's an average growth rate of annually 9%. What is in this growth drive or in this growth category? We have the first three fields, Active Oxygens specialties, membranes, and special catalysts. We will have separate slides on separate information. I would like to maybe comment quickly also on those three on this occasion. Two of them are heavily driven and boosted by our acquisition, PeroxyChem and Porocel. The membranes actually show here an annual growth rate of 25%, which also maybe illustrate what expectations we have for an Evonik growth field, where we even expect a higher growth rate than from the other topics here. I would simply or quickly comment on the other field, which is mainly driven by our business line, silica, thermal insulation materials, and wind turbine additives from adhesives. Yeah, that is roughly the category. We currently have roughly EUR 50 million turnover in this group. The majority really comes from the first three ones. Let's look into those three subtopics. Active Oxygens specialties. Active Oxygens is, from the outside, maybe a very easy-looking chemistry, but the beauty is really also here, this simplicity. We have here hydrogen peroxide and peracetic acid as main products. Both, if you look at them, can be done with 100% renewable raw materials or resources, I should better say, if you consider electricity and not as a resource, as a raw material. The next really beauty about this product category is in use. They are oxidants, they produce, or the byproducts are either water or acetic acid. Extremely harmless byproducts, environmentally friendly. It's no surprise that we actually hear them benefit also from environmental regulations because our products, we've a prime example of environmental-friendly oxidants here. It's not only the environmental aspect that makes this product group, or especially specialty group, so attractive, it's also the growth rate and also the margin, which differs from the volume business in hydrogen peroxide. We usually have 3%-5% higher margins, depending also on application in this field. By the next slide, we would really like to go then into 3 applications. The first one is ultra-high purity hydrogen peroxide for wafer clean. It's an application and also, let's say, a product category that we got with the acquisition of PeroxyChem. We inherited a global setup, we inherited facilities that are capable to produce this ultra-high purity, which sounds more complicated than it might be in the beginning. The growth rate here is even higher than the 9% that we saw for the overall category. This application will further growth, driven by smaller geometries, which require more process steps and also then more cleaning steps, which then again is feeding into our growth plans here. Second application is peracetic acid and also hydrogen peroxide for water waste disinfection. It is really also here a prime example that we do more than just chemistry. I think Claus mentioned before the third example as in, where we also position ourselves as a solution provider. It is the same here. We not only supply the material, meaning hydrogen peroxide or peracetic acid, we supply the dosing equipment, we train our customers' employees, and in some cases, we even run the facilities for our customers. This is really leading beyond chemistry and not just selling products. The third category, actually, Claus already lined out. This is our application in food processing, disinfectant of poultry and similar, and also aseptic disinfectant, where we work with market leaders like Krones. Again here, also driven by long-term trends, which should also underline the trust that we have here in this growth of this category. By that, I hand over to Ralf to explain to you our membranes business and also our membranes vision. Pleasure. Membranes, exciting area. It's one of the six growth fields of Evonik, as Gerd pointed out. Membranes are highly efficient gas separation tools. They produce less waste, use less energy. They don't need additional materials, so really efficient. They can be easily set up and the module built could be easily expanded on the volume which is needed to be separated, and they have high yield and low maintenance. For us, why we are in membranes, we are polymer experts. You see on the upper part there, so really the material production, the module production starting at the polymer. We design the polymer to achieve a specific separation task. We can really tailor-make that polymer to achieve it. What is the membrane? I brought a membrane with me, a module, which you see here. A lot of we call it spaghettis. We also brought you a little video, which explains what is happening in such a membrane, in such a module. If you can start the video, we picked here SEPURAN Green, which is a biogas separation. Those spaghettis are hollow fibers. You see here we are selling really the module, the separation task to the customer, and we are looking inside now here. What you see here, that the thousands of those fibers are in one module to do the separation. Let's look inside. The gas is fed on one side into the holes, into the bores. The retentate stays within the holes and the permeate goes through. Now look in one specific one of those fibers. What's going on there? In biogas, is consisting of CO2, H2O, and methane. Methane stays within, the rest goes outside, and then afterwards we have the pure methane. We are not selling just those fibers or modules, we are even selling concepts. We patented this flow concept here, which allows the customer to really reduce energy consumption and achieve a high yield. The advantage of those membranes also, we can have this modular setup like in a container, then you can add modules if you need more flow or more separation if necessary. We are working globally with a lot of different OEMs, which supply those solutions at the end to the customer. I hope that gave you a little insight what's going on in such a membrane, in those spaghettis. Leading beyond chemistry. We are really believing designing the polymer and at the end, delivering the module is the path going forward. You see here where we are coming from. We started with this biogas, the green, SEPURAN Green, and we have already globally 500 plants equipped with our membranes to separate biogas. We expanded over helium, nitrogen, organic solvent, nanofiltration, very specific tasks, then the big volume on natural gas and helium, and now also VOC, volatile organic components, for tank recoveries to get the gas back. Globally, with the entire portfolio, we have now 800 plants worldwide running, and we see even future potential in hydrogen. Let me touch on hydrogen briefly. You see on that slide here, the future from our perspective on green and hydrogen economy. Number 1, the green one, the biogas I touched earlier. Let's look at number 2 in the bottom there. That's the electrolytic conversion, so that we can enable Power-to-X. By using hydrogen and CO2, we can create methane or synthetic biogas. That's one opportunity of the future. The other one, which you see in the middle with the pipeline there. In Germany, for example, we have more than 500,000 km of installed natural gas pipeline. We can enable that hydrogen is produced where cheap or green energy is available, be it solar, be it wind. It's fed into the existing pipeline in small amounts, and we can then separate the hydrogen where it's needed at a different location. You don't need to build a new network. We are working here with our partner, Linde. We have a pilot plant running. That's proven technology and really available today. Then number 3 here, the future. For electrolytic production of hydrogen, you need today membranes, and you will need them also in the future. Today, those membranes are so-called proton exchange membranes. They have the disadvantage that they need high acidic environment, and they are thick. We have now with our anion exchange membrane, AEM, first of all, thinner membranes, and we can reduce then the CapEx by roughly 30% and the OpEx by 10%. You see, membranes have a great past, but even brighter future. We estimate that until 2027, we can grow this business year by year by 25%, starting already today from a high double-digit million EUR sales. Back to catalysts. Thanks, Ralf. The third pillar in our eco solution growth field is actually special catalysts. Here you see a general description about catalysts. I hope that I don't need to explain into too detail because I think catalysts are known to be saving energy, to lower energy consumption, to also lower byproducts and similar. By nature, it is a technology with high sustainability. If you watch actually Evonik's catalyst business, maybe global market share might not be the best measure to look at it, but rather look at where we are active and see our leading positions. That you see on the right side. Today, actually, I would like to talk a little bit about the refining catalyst and also give you an outlook or a glimpse of what we are doing in R&D to further shift the portfolio of catalysts to more sustainable solutions. Here you see it. How do we shift the portfolio for catalysts? The 2 left examples are coming from our Porocel acquisition, and the left one is set from R&D. Quickly, absorbent technologies, refinery catalysts, we still believe that there will be a place also for combustion engine, in the foreseeable future. Not everything will be electrified, and there will be streams coming from crude oil or from bio-based alternatives. What will actually come also to this market is more stringent regulations. Actually, we benefit from these regulations by our special catalyst, but as well also from our absorbent technology. Second is the Excel® Rejuvenation technology. I think with this scheme, you can see the functional used catalyst gets actually renewed and has 95% at least activity is then being achieved. I don't want to explain the technology here in too much detail again, but rather like to mention that already 10 major refinery companies have approved this technology and is successfully used already for more than 30 different catalyst types. The future also here, Carbon2Chem. We talk here about synthesis gas, but when you talk about synthesis gas, you might have something different in mind. We talk here about streams of carbon monoxide, hydrogen, and carbon dioxide, and they don't come classically out of the syngas reactor, but one option could be pyrolysis gas from plastic recycling. It could be off gas from steel mills. Usually waste things, hard to handle. What we are doing here is work with these streams and close the loops. Close the loops for circular economy. I can at least share to that extent that we developed patented processes, patented catalysts that will yield in very cost competitive building blocks like higher alcohols and other things. By that, I give back to Claus. Thank you, Gerd. That brings us almost to the end. I think we showed you some of the key elements of our strategy and also shared with you some of the growth opportunities within the two important growth fields of future mobility and eco solutions. We believe these two growth fields will deliver or add about EUR 700 million of growth to our business until the year 2027. We, of course, have also other besides growth targets, I have to say ambitious targets. Of course, we focus on people. Like I said in the beginning, here we strive to become more international and more diverse in our top management and senior management. We are focusing, of course, on the planet. We have the clear goal that next generation solutions should account for more than 50% of our portfolio. Of course, last but not least, we have also financial targets, challenging ones or ambitious ones. Volume growth, maybe what you see here is not that ambitious, but it's above 3% volume growth we are targeting. EBITDA margin target is 20% and the ROCE, return on capital employed, we target to be above 11%. I can tell you, I'm pretty confident that we'll achieve these financial targets also already within the next couple of years. That brings us to the end and to the Q&A, right, Tim? Absolutely. Thank you very much for the interesting insights and the interesting presentations. With that, we have a good further 30 minutes for the Q&A, and I've already received a couple of questions. Let us start with the first one, and I can hand over directly to you, Claus Rettig. There's a couple of questions on the silica business, on our silica business, and about the market situation at the moment and our strategy going forward in our silica business. Yes. Okay. That was something we also expected to come, I have to say, because there was not much about silica in our presentation, but this was on purpose because we wanted to show you facts that are maybe not so well known to the capital markets community. It does not mean at all that silica is becoming less important. Silica remains to be a very important business for us. We believe we are the best silica player in the market. We have the broadest portfolio, the most specialized portfolio, and we have, like you have seen in the presentation, also the broadest global network. The growth fields we have presented also are important for silica. One example certainly is eco solutions or in future mobility. Of course, future mobility with cars will require different type of tires. Rolling resistance, fuel economy is important for green cars, for electric cars as well. Additional component in electric cars is abrasion. An electric car has a much higher abrasion. We are developing new tires where the abrasion resistance is also higher. We have a very promising development in the pipeline. We touched on this in many of the investor calls before, where we make the green tire available for trucks as well, and I think that's not far from realization. Silica is used in batteries. Cut a long story short, of course, silica remains to be an important part of our strategy and will also contribute to the growth of the division Smart Materials. Yeah, thank you very much. Next question, also here a couple of questions on our Polyamide 12 exposure, Polyamide 12 investment, and also the market situation. On the one hand, what is the expected and intended ramp-up for our new Polyamide 12 plant in Marl, and how do you see the market and also the competitive situation going forward? PA 12. As you know, we are building in Marl the largest worldwide complex to produce PA 12, and I'm happy to report that it will start up in the second half of this year. We are 3 months roughly behind our initial plan schedule. We had our groundbreaking September 2019. Considering all the challenges we had with the virus situation, be it different hygiene situation, be it material problems to get them on site, be it also having people in quarantine, I'm really happy that the delay is only those 3 months. As I said before, we need that material really urgently. We are spending roughly half a billion EUR to expand that capacity by more than 50%. We are planning to ramp up the plant then at the second half. We don't expect a significant EBITDA impact this year, but definitely a contribution next year. Also the profitability then in the long run will be above the Smart Materials goal of 20%. Touching on the competitive situation, we did an in-depth analysis, of course, before we invested the situation, considering the competitive environment. We are observing the two new plants coming, PA 11 in Singapore and PA 12 potentially in China. We see, as I explained, really a growth of that specific materials. We are finding new applications. We are very confident even with those competitors coming on stream or expanding their capacity, which we have roughly 12 months advantage over them, which we will utilize. Also in the long run, this business will strong grow. We expect with our plant to have then a three-digit million euro sales in the foreseeable future. Yeah, thank you very much. Third block of questions we have received is on the hydrogen opportunity we mentioned during the presentation. Again, I think this goes best to you. What is the potential you see there in hydrogen? What is the future benefit? What role will Evonik take in this broad and attractive growth market? Maybe first to understand the question correctly, we are not talking about our own use of hydrogen, because Evonik is also quite a big hydrogen user. I think this is now about producing and also maybe distributing green hydrogen. Ralf mentioned already a few applications for us. I would like to add one or the other, and then also maybe add it up to a potential. First, hydrogen production. This is electrolysis, this is AEM, but not only AEM membrane, but also a catalyst for the electrodes. Here, we can also take advantage of our combined technology, both in polymer and in inorganics. For AEM, Ralf, I think we estimate EUR 100 million upwards potential. Then the second, for catalyst is actually pretty tough already to estimate. For distribution, Ralf also described hydrogen extraction from natural gas pipelines. We see a high double-digit EUR million potential. There are also some minor applications in pipes and containers and similar, which I would actually rather, I wouldn't say ignore, but if we add up the potential there, won't play that much of a role for us. It's a potential, I would say, something around EUR 100 million-EUR 200 million. We have to say on a timescale, this is not next year. This is also only realistic once green hydrogen becomes cost competitive, where we also need support from regulation to make that happen. Yeah. Thank you very much. Next couple of questions were more a clarification question on the financial targets and the timeframe on the targets given. The 20% EBITDA margin, also the ROCE target. Claus, is this short-term? Is this mid-term? Is this long-term? How ambitious are you for your division? That's very short answer. We calculate two to three years. That was a quick one. We come to the next one, where the answer might be probably a bit longer. That is on our strategy in PEEK and our role in PEEK, how we see that role in the portfolio going forward and our position in that market. I think, Ralf, that goes to you. Yeah. PEEK, a very special polymer where we are in the top three globally. It plays an important role in our portfolio. It gives us access also in addition to PA 12. We have nice growth, especially in the medical area, where we are strong. We see also nice potential in the composite area, especially in aviation going forward. You ask specifically also on volume, if we have any expansion plans. Can tell you, we have enough capacity right now. We grew nicely over the last years. We want to continue doing that and focusing it. We have a special team on PEEK set up globally, which is focusing on promoting, developing that specific polymer. Yeah. Thank you. Next couple of questions from Martin Roediger, for example, from Georgina Iwamoto, goes to some of the growth rates, ambitious growth rates we show in the presentation in our markets, in our growth fields, future mobility and eco solutions, and comparing that to the volume growth target for the division of more than 3%. Claus, the question is this not ambitious enough if you compare that to the growth markets? Are we conservative here, or do we see other businesses even shrinking? What's your aspiration level there in terms of growth in your markets, growth for the division? Yeah. Like I already touched on earlier, the 3% has a greater S sign in front. Of course, we target more than 3%. It's clear when you see the number I've given of EUR 600 million for the 2 growth fields, this alone would be 3%. We have, of course, different growth rates in the different businesses, and we have also quite a range. I also pointed out earlier that we have also still the strategy and that remains in place to replace volume business by specialty business as much as we can, also to save CapEx, obviously. That's why we have maybe here been a little bit on the lower end. I can tell you our, let's say, plans for volume growth are much higher. Of course, we put down here more than 3% because we have a lot of things to consider, like CapEx availability, the strength of exchanging volume versus specialty. That's why it's more on the lower side, I would agree. I can really say that we here in the Smart Materials division really want to be at a much higher level That's good to hear. Maybe there's some more potential then in the next years to go. We have another question from Charlie Wedmore, a clarification question again. How much of the growth in future mobility we are targeting until 2027 relates to PA 12 or to the PA 12 expansion we are doing, Ralf? Yeah, I'm happy to get that PA 12 is so attractive like it is to me. Today, roughly 25% of the PA 12 sales are into the automotive area. I showed that with hybrid and electric cars, we have more than 50% more value in those new technology cars. We expect in that time period you asked for more around 30% of sales in the automotive area. Okay, thank you very much. Next, I would say two related questions are around battery materials in general, I would say, from Geoff Haire and from Gunter Zechmann. On the one hand, I think, Gerd, probably goes best to you. The first question from Gunter is, can you discuss why Evonik is not targeting silicon anodes for autos yet? What's holding you back given high growth rates in EVs? The second related question from Geoff Haire is, our Siridion® Black, our silicon anode material, is it being used in batteries, in 3C battery systems yet? How much improvement do we get in energy density versus 100% graphite anode? Actually, I start with the second because I think it has also influence on the first one. We are in qualification at customers to be that it is being used in consumer electronics batteries. It's not realized yet. This partly also is an answer to the automotive. Consumer electronic qualification is much faster. Automotive takes long to be qualified, and we would really first test this market and then overthink if we should go into automotive or not. All silicon anode additive providers go this route because the consumer electronic market is the easier market to penetrate. Energy density is actually not easy to answer because it depends on the formulation of the customer. We can achieve 20%-30% easily, but again, be very careful, you can't only take a look at this one when it comes to capacity. The overall system has to provide that. Maybe this rough number gives you already a feeling about what extent we are talking. Okay, thank you very much. Next question, Ralf, again on polyamide 12, a very prominent topic today. The research comes from Chetan from JP Morgan. It's about the recyclability profile of Evonik's polymer products. What happens to our PA 12-based plastic at the end of the lifetime? Can they be recycled? Is there a process to recycle them already? Yeah. Thank you very much for that question. Circularity is very important to us. Today, PA 12 is used really in technical application, long-lasting more than 10 years, and really the end of lifetime is really long time. Also we don't have any PA 12 in consumer goods really big time or in material which is not used in a short period. For us, sustainability is holistic. We are looking at mechanical recycling. We are looking at chemical recycling. We are working with partners in 3D, for example, to recycle material mechanically. We are working on a chemical recycling possibility for PA 12. For us, that topic is getting, of course, more and more important, and we are paying attention to that and also developing solutions. Okay, thank you very much. The next question is more a complaint, I would say, and that despite we have all these nice shoes here on the table and on my feet. Sebastian from Berenberg complains that we didn't mention 3D printing in more detail in the presentation. Is that something that Evonik will focus and be able to price up in the future or to downstream to customers taking our polymer products here? I don't know who wants to take it. Ralf, Gerd? Yeah. Ralf had so many questions already, maybe you can share it. Cool. Of course, we are happy to have 3D. Gerd pointed out, Evonik has 6 growth fields. 1 was the membranes we touched on in detail, and the other 1 is definitely 3D printing. It's 1 of the top 6 fields of Evonik to grow in the future. We are today the market leader in powders for 3D printing. You see here on the screen 3 important global partners we have today. We are expanding that. Powder bed fusion is for us a key. That is powder material. We are also investing in photopolymers. I will leave that to Gerd to touch on. We are working really to develop large scale production with our partners to really develop. Additive manufacturing more from a prototyping to really industrial production. Maybe you want to touch on photopolymers, Gerd? Yeah, I'll add to it. I think we expect similar growth rate as we have for the membrane side. Just maybe to give you a feeling how important it is for us, photopolymer is very simple. If you see the market, actually, powder and photopolymers are the technologies, at least for the plastic piece, which look like they will win, and they will cover different areas of the application space. In photopolymers, actually, we have a nice position because we are very well back integrated also with our sister division Smart Materials, also business lines, where we can provide also here key raw material uniquely for us. Ralf explained it on the occasion of the membranes, how important also polymer design, we design on a molecular level for some applications is, and this is also true for the photopolymer field. Very important. Okay. Next question comes from, let me see, can't find it at the moment. Again, relating to the membrane opportunity in biogas and hydrogen and so on. Is this more a domestic opportunity or are we also targeting markets abroad, U.S. and other markets in Asia and so on? Yeah. For us, clearly, that's a global business. We have a global responsible person and we have a global team set up. We are working with, like I mentioned, OEMs globally, and each country has different, first of all, regulations, like in biogas, are there any subsidies? Each country is a little bit different in that specific one. You have natural gas in different regions of the world in different volumes. Each area has different priorities. For us, the membranes is a global business, clearly, and opportunity. Okay. Next question is on the silica network optimization. We have described in the presentation, and the question here from Jordan is, aside from cost synergies and service improvement targets, are we favoring a shift to a particular segment or a global region in silica with the project as such and as a consequence of the project? Claus Rettig, I think this goes to you. Yeah. Let's see. On the silica side, I have to say there is a shift, certainly in the business. However, it does not come from our network optimization. We actually figured it out even without the help of artificial intelligence. You know that we invested in a plant some time ago in Chester into a new precipitated silica plant for the tire industry, which actually is exactly there at the right time because the U.S. market is really taking off. This is a big growth area for us, and an even bigger one, and that's also, I think, important and in line with, I think, expectations, is Asia. Here we are also well, let's say, positioned on the silica side. Here is also the fumed silica. We have a joint venture with the Chinese company, Wynca, where we will soon take a new planting operation in China. There is a shift, or let's say there is bigger growth outside of Europe, in silica. Again, it's not part of the project. When you look to the project, we have done the network optimization project, of course, this is, let's say, verified by the system, but we did it in time and we will have the plants ready also in time. The one in U.S. is already operational. Here, we even think about expanding this already. The one in China is coming soon. Okay, thank you very much. We are slowly already running out of questions. I think we have discussed most of the fields that are mentioned in the question. Maybe last opportunity here and there for an additional question, if we have one. Just looking. No. There's some more questions also on the. Another question on the Porocel acquisition from Nicola from Exane. Do you see further acquisition opportunities in catalysts beyond the Porocel acquisition? Can you discuss? That's the first part of the question. The second one on competitive landscape and active oxygen, we do afterwards. First one on acquisition opportunities in catalyst and maybe also beyond that, for the general division, Klaus, before we then go to hydrogen peroxide. Okay. Yeah. Of course, we are a small catalyst player. The Porocel really was an attractive piece we could acquire also at the time, I have to say, for an attractive price. This will actually boost our business. We are on our way to really leverage the synergies on the Porocel side. We would like to acquire more on the catalyst side, and we certainly will be looking, but it's also an area where there is not much on the market. From that point of view, I can only give a generic answer. Certainly, we will be somebody in the market that looks to increase our exposure in catalysts. It's a really good business to have, and so we will be screening the market, and when an opportunity arises, we certainly will look into it. This so far for the process side, and the same is true for the entire division. We are one of the growth divisions, so the company is willing to invest in us. We also constantly look for bolt-on acquisitions. That means acquisitions of a smaller dimension, like the ones we have done here in the recent past. That's, of course, also supported by the very good experience we have had with our acquisitions. The PeroxyChem acquisition, some of you in the capital markets were some time ago surprised that we did this acquisition, but I can tell you it shows and proves it's a specialty business we have acquired. Even in the last year, in the downturn, this business did not go down in its performance. We have seen some of the growth areas, like food safety, electronics, huge growth opportunities there. We have good history here. The company is willing to give us money. Again, we will look out for what makes sense and where we can create value. In the end, it's all about value creation. Okay, second question from Nicola was on Active Oxygens, competitive landscape, and maybe also our position in the market, our position towards specialty more, how we are seeing this market and our strategy in that market. Yeah. Active Oxygens is a very fundamental piece of our business. Yes, we have still in the portfolio more standard business for paper bleaching. This is still the case, it's also one of these areas I was talking about earlier, where we are shifting towards specialty. Our portfolio has shifted substantially already in the last years in electronics, in food safety, but also in many other areas. Hydrogen peroxide, also under sustainability viewpoint, is a very clean chemical because it's only, when applied, oxygen and water. On the footprint, we are working on reducing the footprint very heavily. We have quite a few ideas in the pipeline. Looking to our competitive positioning, I think we are very well-positioned in this market, especially on the specialty side. We are the clear leader in the industry, and this is something we are going to build on. Not to talk about all the potential we have in Asia with this business. You will also see that we build up more on our license business, which is a side stream of the business we have, where we give licenses for our propylene oxide technology, which is using hydrogen peroxide as a raw material and catalyst from us. All in all, it's certainly a very core piece of our business. That answers the question? I think so. That I think brings us closer to the end of our second division spotlight on Smart Materials today. Thank you very much to all of you out there for actively participating and sending us questions. We hope we could give you some insight into the division, into some of our interesting growth opportunities. Claus, I hand over to you, if you like, for some closing remarks summarizing what we heard today. Yeah. Okay. Yeah. Certainly, Tim. Sorry that we, again, cannot see each other in person. Would be much easier. Hopefully, even without the missing direct interaction, we could bring across here together the beauty of our business, the potential of our business, which I believe is huge, and also our competitive positioning, because we are really well-positioned in, I have to say, almost all the areas we are active in. The position is very good. We have a very good competitive advantage in many areas. We are well-positioned in these fields of future mobility and eco solutions, you know that these are certainly areas that are very much driven by the whole structural movement into this direction. Hopefully, we could bring across this a little bit to you, that we are looking for a really good future. Yeah, I hope to see you soon in person so that we can maybe go a little bit deeper and also on the question side. Okay. That was it for today. Thank you very much, Gerd, Ralf, Claus, for participating today. If you like, we already see and speak each other again, virtually obviously, next Thursday, so in exactly a week, same time, on the third of our growth divisions on Specialty Additives. We're looking forward to that event and hope to see you then again. Thank you very much, goodbye.