Earnings Call: Q1 2018

May 4, 2018

Ladies and gentlemen, thank you for standing by. My name is Emma, your Chorus Call operator. Welcome and thanks for joining First Quarter 2018 Results Conference Call. I would like to turn the conference over to and the Simone, Head of Investor Relations. Please go ahead, sir. Thank you very much, Emma, and a warm welcome to everybody on the phone to our Q1 conference call from my end as well. I'm very happy to have, as always, our CEO, Matias Sarhad, and our CFO, Michael Ponton with me. Before I hand over, please take notice of our Safe Harbor statement. With that, I'm happy to hand over to Matthias Dachert for a brief presentation and afterwards as always the Q and a warm welcome from my side to the start of the year. And I will enter into the presentation on page 4. Key messages, overall strong performance operationally, noteworthy improvements in Specialty Additives start to materialize. This has been compared to the last few quarters, the strongest EBITDA contribution from the new division's facility additives we indicated to you last year, that was the year where we integrated Kontoora and now for the next 2 years, we would like to deliver according We had a tremendous strong volume base Q1 2017. I know there's some cheddar in the markets why volumes have been stable, but please take note of the fact in some segments last year, we saw significant pre buying due to the dramatic increase in raw materials 2017 Q1. So there was pre buying in a significant nature, not only in Anang's CEO, but selectively also in some other segments. And based on this, of course, volumes have been benign in Q1 twenty eighteen, and we were able to make the strong base of 2017 happen again. On the lowlights, clearly, Performance Chemicals. When you look into the bridge on price volume currencies, you see Performance Chemicals are the hardest hit, suffering not only from the South African rents, but dollar dollar dollar is definitely a tough one. And this is something that is visible across the industry. I strongly alluded to this 6 weeks ago in the March conference call that that will be seen in Q1 for European Chemicals and for us and asking for model adjustments. And I think now you all see that this is a theme that over the last few days, weeks, has been reported by the European cans. 2nd point on the lowlights definitely business unit leather here, Chrome is still in tough territories. We saw versus previous year. A more modest chrome or price. Again, this doesn't rock the needle substantially, but it left pricing decline in the books. And on the volume side, as we closed Sarat last year, of course, a lot of the volume has been now loaded into the South African sites but some volume, you do lose when you switch from South America to South Africa. With this ladies and gentlemen, I would like to move to page number 5. And here on the left hand side, you see group numbers. Noteworthy, 14% increase versus previously on EBITDA, increase further on EBITDA margin. EPS pre, 32% increase speaks for itself. On the financial debt side, again, seasonality of last year, we have built up in Q1 and we'll also build up in Q2 working capital. And that corresponding correspondingly led to an increase in financial debts. And that will again be a theme for and then you will see the deleveraging in Q3, Q4, same pattern as the years before. As far as new lengths is concerned on the right hand side. We've split the divisions now in a separate way for new lenses on the next two pages, but spot numbers for new lenses are reflected here. For transparency sake. So sales increased to 1.800000000024percent increase EBITDA wise versus last year, 40%. But of course, in Q1 last year, we were not recording the chemtura contribution. So therefore, this 40% increase is a nice one. But even if you would add a quarter of Contura into the numbers last year operationally, it would still be very, very strong despite U. S. Dollar weakness. EBITDA margin increased 15% for new lenses as far as overall margin is concerned. I think we step by step go into the direction where we want this group to be in a few years from now. I now move on to page number 6. We have now based on Q1 numbers, also divided the new segments of new Linksys and of course, historic segments of Anankseo This includes the allocation and the split up of recon correspondingly. So here, these are unaudited numbers indicative only, but with a very, very high precision. So if it's 95% or 99%, let's basically give indication. It is very high level of accuracy, but of course, unaudited, this will follow from Q2 onwards. The message I would like to convey, 1st of all, commenting amongst CEO, it was not a bad quarter. If you look at the trajectory over the last few years, Q1 2017 was simply outstanding with a high volatility that we saw in roles, and therefore leading to, somewhat over strong EBITDA Q1 2017. Q1 2018, despite the trophy markets, came in well. And I think you would see a different pattern this year in the quarter EBITDA of Anancio compared to previous year. What you also see in these numbers is that, there is a higher volatility always has been in the EBITDA Arling's CEO. And overall, we keep profitability at reasonable level despite tough market environments. As regards to new lenses, the most important element here I would like to make is the development. We grew organically. We grew through cost savings. We grew through acquisition. And you see that now the new Linksys has basically 85% of the EBITDA of the group, the 50% of rubber make less than 15% of our group EBITDA. 2nd, if you look at New LANXESS trajectory, you see what we have done over the last few years. And that is our goal as indicated to you last year in our Capital Markets Day events we would like to And that's what makes us enthusiastic. And that's what makes me so enthusiastic to be able to do Thank you, Matthias. Warm welcome as well from my side. Looking into the segments, you recognize what Matthias just said. We recorded some nice operational performance throughout all segments. Starting with Advanced Intermediates, Advance Intermediates having a very strong first quarter. We saw nice price development in both business units. We were able to On the other hand, we were posting a decline in volume at business units Saltigo, which we addressed earlier in the year. And we told you that AC market is still weak and we expect only in the second half of the year an improvement. But nevertheless, despite the weak UGG market and despite the currency headwinds which we were facing, we were able to not only operationally, but in total increase EBITDA further and are posting now a number north of 1,000,000 for that segment. Next to Advanced Intermediates is Specialty Additive. Specialty Additive is posting the strongest quarter in the new setup. We were not able to improve EBITDA in absolute terms, but as well on a sequential basis, EBITDA margin. Cantura integration is fully on track. We were able to pass on price developments we were able to Nevertheless, posting an EBITDA of 1,000,000 is record to this segment. Page number 8, you'll find Performance Chemicals And Engineer Materials. Performance Chemicals was to some extent driven by the currency because we had tremendous currency headwinds and the highest exposure on the new LANXESS segments. On the other hand, we saw next to business unit leather, good price and volume development. But in leather, we were mainly reflecting price declines, driven by the decline of chrome oil prices which had an effect on pricing and an effect on EBITDA. Volume, we were able to further improve an LPT and MPP And in leather, again, we're posting a decline, but that was related to the closure of our Argentinian asset back at the end of last But if we compare on an operational basis, we would have seen an improvement in EBITDA as well in Performance Chemical. Last but not least, engineering materials. Engineering Materials is posting a very good first quarter. Raw material prices were passed through. We further improved the already very good volume development we had in q11 2017, which was earmarked through pre buying activities and was growing by 9% But next to the volume growth, we as well improve the mix and we further keep on improving the mix selling less CAPPro and PA6 and more and more compounds, which does as well help and support EBITDA and margin. And next to the operational HPM performance, we as well reported some very nice development of the Urethane system business, which we acquired from Contura as well. So all in all, we saw a very nice operational and absolute performance for new LANXS in the first quarter and Matthias is now giving you a heads up what we expect for the remainder of the year. Thanks, Michael. I turn my attention to page number 9. Overall, we see the growth in all regions intact. And as far as the ARGO market is concerned, please take note that the second half of twenty seventeen was very, very tough. We expect that second half of twenty eighteen will be slightly better than second half of the previous year, whilst the agro markets and total most likely will only turn more positive in 2019. All of us are I think watching Twitter, television, and journals every day to see what is the latest status on trade tariffs and so on. Of course, this always has an impact to change global growth expectations going forward. And that's basically what we would like to flag on the macroeconomic scenery. As far as lengths is concerned, we assume that raw material price trends will continue upwards. We do see ongoing FX headwinds. However, implications in the second half will not be as severe as in the first half. Notably, Q1 was the toughest for the European chemicals and for us, As the reference rates Q1 2017 was around 106, 107 cross rates. So this is, of course, therefore, the biggest gap compared to the other quarters assuming current cost rates is maintained. After Q1 this year, with a very tough volume based Q1 last year, we do assume that for the remainder, volume momentum will improve. And as far as full year guidance is concerned, please take note with Q1. We always give quantitative guidance never before. And like last year, when we gave a hard guidance and kept it for the entire year, but narrowed the bandwidth, we would like to follow the same practice this year. This is our hard guidance We want to improve our by 5 to 10 percentage points, and we feel good about it. With this ladies and gentlemen, I would like to turn the conference call to a Q And A session. Please go ahead. Thank you. You. First question comes from the line of Patrick Cafes with UBS. Please go ahead. First, in specialty additives, can you talk a bit more specifically about brominate the product how you're seeing that business coming out of the Chinese New Year now? And then secondly, pricing, especially in in Additives And Engineering Materials was very strong. Now you also mentioned ongoing raw materials inflation you think that, that can continue or would you expect that to level off as the comparison base gets tough for you as well in the coming quarters? And then the last question on new LANXESS EBITDA, the indication you gave 40% increase you said new LANXESS was strong even without the consolidation impact. Can you be more specific here? How big the consolidation impact was and how the underlying business performed with the currencies adjusted for? Good evening, and Patrick Thank you for your questions. I would take them line by line. So as far as Specialty Additives is concerned, of course, you have the seasonality on Bromes. So Q1 is stronger on brom pricing and Q4. Whilst Q2, Q3, you don't really have the as China is coming into the market. Overall, however, we see that, Brom pricing, which is only a small chunk of our business. Please recall that the significant amount of brom is captive and we are making our margins on the derivatives and not on Brom per se. But you've asked for Brom, so here prices I indicated the seasonality over the year, 0.1.2, pricing compared to previous year, is positive. And what we indicated in course of, the Q4 roadshow and also in our conference calls last year that the brom market per se has gradually improved as there are less competitors, which is a positive surprise to us compared to when we bought chemtura. Now as far as pricing is concerned. If you look into Specialty Additives, please take note of the fact that the price volume variances are still artificial because in the Q1 numbers last year, it's basically the former Ranchemi business by and large. Whilst the portfolio of Kaltura is shown under portfolio. That would change from Q2 onwards when we were more factored into the numbers, the operational development on a comparable basis versus previous year. What we have had to do in Q1 was to adjust prices on the entire portfolio. And of course what we are in the process of doing is also to go out with focused price increases in the 2nd quarter, somewhere announced already for that there was some pre buying also in the Performance Chemicals Facility Additives division. So we needed to go out with price increases in order to mitigate the rising raw material costs. But all of, all of that I think is normal operational doing normal operational business. We have a differentiated portfolio in new lenses and with a differentiated portfolio, you have to roll over a price increases in the raw material, account. So that is something which is operational excellence. Now as far as your last question is concerned on new LANXESS developments, I think we've communicated through Investor Relations, in with Q4 numbers, the unaudited pro form a numbers for new lenses Q1, where we indicated that EBITDA was at 1,000,000. So with this, you can see, we came out at 270 versus 240 despite headwinds from dollar, you can see the underlying operational improvement, which was also rock solid. And I think with this, all questions have been answered. You're most welcome. Next question, please. Your next question is from the line of Andreas Heine with MainFirst. Please go ahead. Yes, two questions if I may. The first is Advanced Intermediates. Sometimes the raw material and price fluctuations give some variations from one to the other quarter if it comes to earnings. It was a very strong quarter in the 1st quarter. The full year guidance you have given in the annual report was on flat earnings. Could you describe a little bit how you see this specific segment after the strong quarter going forward? And maybe only in the housekeeping question if it comes to the others line. Did you say that new lenses was 105 and that brings me to others line for new lengths as being at minus 38. Is that a good guideline for the upcoming quarters for our estimates, so about $40,000,000 a quarter. So, Michael would take the second questions, even though the $105,000,000 where Alang's CEO, including recon, so but Michael will take it, I will address AII. So in Q4, or with Q4 numbers, if you look at the transcripts, of fourth quarter conference call, I think there was one question on AII margin was low and I indicated no worries. This is the quarterly lag effect since, AII will will again make up for that in Q1. And here we are. It's the same that happened over the last few years. That I see that some people, are following it. Others don't follow it. In Q1, we cashed up for already raw materials moving up in Q4. And here we are back with strong margin, back with strong contribution. This is simply the advanced industrial intermediates business model, the business itself is rock solid. Point 1 of your first question, point 2 of your first question. It's a strong business and we think that despite tailwinds from no, it's the headwind, I think. Headwind, right? Ah, Oliver tells me it's headwinds. Despite headwind of currencies, AII would do strong this year. We also see that we more and more get our hands on the organometallics business And therefore, that is part, the performance of AII in Q1 gives us full trust that this business will develop further in the years to come. You saw or you see in the appendix of our conference call today that we have put on track a few nice, projects, CapEx projects. And with the long last thing, understanding you have on our company, Andreas, you would see that the investments that we have done are pretty focused strong investments, which takes some time to be executed, but once they come, they will be goodies and therefore, we feel good for ARI for 2018, but also for the years to come. Michael. Andreas, with regard to the expectation on our reconciliation segment, we remain and stick to the guidance, which we gave previously, which is around 1,000,000. And given the number which you saw in the quarter, I think that number still is true. We do have some fluctuation in that number on a quarterly basis why we stick to the roughly 150 on an annual basis. Thanks. Next question please. Your next question is from the line of Georgia Harris with Bank of America. Please go ahead. Hi, thanks for taking my questions. And just firstly, on the guidance, I'm trying to understand, so full year results, you guided to slightly better earnings which you said at the time was 1% to 5%. Can you give us a bit more color on what has changed since then? Why you now see potential for 10% growth? And secondly, on the Engineering Materials business, how much further capacity is there to continue to improve the mix in that business through producing compounds? Thanks. Yes, let me take questions 1 by 1. On the guidance, I would like again to be very clear, and I stressed that in Q4 conference call. Our Q4 when we do give a guidance with full year numbers, we only guide in a qualitative way. And I was forced in last March's conference call to describe if it's the BASF guidance slightly. And I said, we are not BASF, we are Linksys and our words are qualitative in nature. And then it was forced on me to instantly give a quantitative indication and I said slightly for me is rather 1% to 5%. But again, this is not a quantitative guidance. And that's all I would like to say with, on the guidance we've provided in Q4. It was a qualitative guidance. It remains a qualitative guidance. What has been made out of it is up to the market. That's your call. The tonality of Q4 conference call was a strong one for 2018. I acted like that on roadshows we were very transparent that 2018 should be another step in the transformation of our company. And we will execute this quarter on quarter. Despite challenges that all of us face on currencies, global geopolitical issues, we execute our transformation process. And I would like to stress again, when we gave our quantitative guidance last year, we stuck to it throughout the year, but of course, we narrowed the bandwidth and this is how we should interpret our guidance Q1 2018 as well. Now on the engineering materials, we step further into the, balancing of our value chain We are not there yet. I've indicated 2 years ago that the goal is to have a more balanced value chain by 2020. At the same point in time, I would clearly like to look to the fact there are some structural changes currently happening in the polyamide market that will that will still unfold going forward and which I consider to be positive for our business because the market is regrouping. Consolidations have happened. And therefore, structurally, the market seems to be in a more benign setup. This is the positive. The concern I would still like to put on the table you've seen a very strong development in our value chain, everything is going right. And therefore, I simply would like to keep expectations in the right corridor emerging engineering materials is doing well. We see that our compounds or technology compounds are strong hitters we get more and more, momentum from lightweight in automotive sector. We've shown that in last year's Capital Markets Day event when a customer presented how strong he sees our end compounds that differentiated So we feel positive about our high performance materials segment business units, but at the same point in time, please keep expectations in a reasonable corridor. Next question please. The next question comes from the line of Thomas Wugglesworth with Citi. Please go ahead. Good afternoon, gentlemen. Thank you very much for taking my two questions. I'm sorry to focus on the guidance. Again, but obviously, I'm just intrigued to explore that a little further in terms of the price volume and synergy mix. Obviously of the kind of 1,000,000 to 1,000,000 that you've indicated that you might deliver in 2017, you've indicated you've done about half of that in this quarter. But of that bit outstanding, could you just divulge a little bit further on on is it price volume and synergies, noting that there could be more synergies to come? And second question, if I may, just on the, obviously, Cantura sitting in the portfolio effect. But again, if you could help us better understand, did the price and volume elements look the same for the Chemtura business? Or were there, was there more price or volume effect or one or the other in that business relative to the new LANXS? Tom, thanks a lot for your questions. Let me take the guidance first. So we guided for the Kaltura integration all in all 1,000,000. And we reported 6 weeks ago that 30 of them had been in the bank already 2017. So million are remaining out of which we target for this year 1000000. So that's what we would like to deliver on in 2018. As far as pricing is but on cost savings, at the same point in time, I would like to make it clear We are also on the personal cost side in an inflationary environment. And if you followed the news, unfortunately, the German union is pushing hard stronger than in previous years on making wage inflationary adjustments. They went out a few weeks ago asking 6 percentage points. This tariff discussion is most likely being sorted out in summer. And then it will kick in in the second half of the year. So we always indicate, this in transparency to all of you. It will be a bigger increase than in previous years. But the guidance we are making, is not factoring in everything, but we think that we can make our the numbers, even though, of course, not with a 6%, but with a reasonable increase that most likely will be asked for. As far as pricing is concerned, pricing is there to mitigate raw material costs and we see inflationary environment. So we need to go out with price increases, volumes should be a positive. And therefore, this will contribute to our EBITDA. Improvement. On Kaltura, we are not guiding for selective Kaltura businesses. I can only tell you that Eurothanes did operationally well, but whilst volumes grew, of course, Eurothanes has dollar headwinds And here, the biggest, products of course being produced in just on year. So here, the business stays dollar headwinds and also MDI TDI supply is still tight and will remain like this most likely for the 1st, second, and potentially even third quarter. Brominated flame retardants business, we like. Organometallics, I made my indication that this is was a stranded business, but we think we can improve it. And we've also shown that in Q1, numbers and last but not least, LEAP is the LEAP business or the lubricants Additives business. I indicated this is part of our Additives division. Additives division did well. And also lab contributed to this development. With this, I think I've gave even qualitative guidance that's, that confirms also what we said at the March conference call. Integration is going well, more to come because we are not there where we want to be. And we are on a strong footing to deliver what we've promised. Next question, please. You're most welcome. Looking forward to seeing you and welcome to the chemicals research teams. Fantastic sector. And the next question comes from the line of Martin Roediger with Kepler Cheuvreux. Please go ahead. Yes, good afternoon. I have three questions, sorry to come back to the guidance. You mentioned 5% to 10% EBITDA growth. With Q1 in the books and assuming EBITDA of the core activities in Q2, Q3 and Q4 being flat year over year, your EBITDA would land at 1,000,000,000 or slightly more than that, which is 8% year over year growth. Do you want to convey that your EBITDA will be really flat year over year on average in the rest of the year because of the high comparison base in, for example, engineering materials in Q2, as well as in performance chemicals in Q2 and Q3, plus your concern about wage inflation. But how does that fit to your bullish tone about accelerating volumes in the course of the year, your bullish tone on AII, further mix improvement in compounds, further synergies to come, cost savings to come and the gradual improvement in agro, and for the and the softening effect from the dollar. The second question is on so called pricing power, when I look at your chart on page 11, there we see that there is a positive delta between selling prices and raw material costs. And when I use a ruler, then I can calculate a roughly 30,000,000 effect on earnings. Is that the long awaited catch up effect on those Kaltura activities where you have been squeezed last year? Or is there any mix effect also including in the price element? And the final question is on tax rate. Officially it was 33% in Q1. However, according to my calculations, the tax rate excluding ALCO was at 27% in Q1. Can you explain to me why it was that low in Q1? And why do you expect the tax rate for your core business to increase sequentially in the next couple of quarters because you guide for the full year tax rate to be in the low 30s? Thank you. Well, Martin, all valid, but very technical questions that nobody can answer as best as our CFO, Michael? Martin, with regards to the guidance, If you do your math, you're basically with the midpoint of our guidance. The midpoint of our guidance is around 1,000,000,000. It's 1,000,000,000. And as you know, the midpoint of the guidance used to be the best point you should assume. If you take the increase in our EBITDA in the first quarter and you added back to the remainder of the 9 month of 2017, you basically come to that point. Even though we might see a positive relative trend in FX, we still will record a tremendous decline coming from the currency. We told you that for new lenses, a deviation of $0.01 equals to 1,000,000 of EBITDA. We recorded now a good portion because relative Q1 is expected to be, or was in 2017 the quarter with the strongest U. S. Dollar. Nevertheless, there is still a change in the currency, which will weigh on our results to a larger spent. And obviously this extent is in a position to offset positive elements like volume growth or synergies. You were referring to inflationary tendencies. Yes, that is the case. If you take a look at our overall cost spill, if you take a look on the personnel cost, if you see the discussion materials was mentioning, we have with the unions here in Germany, There are inflationary tendency, which we have to swallow and which we have to fight as well through not only price increases, but as well improvement on our productivity. The same is true for the pricing power. The pricing power is always a function of the input cost changes overall for the group, it was relatively stable, but if you distinguish, you will recognize that we improve prices on new Linksys in an environment of increasing raw material prices. The opposite was true for Alanko. In Alanko, we were facing tremendous raw material price declines, which were then carried over to our customers, why in a lung sale, we recorded a huge decline on prices and therefore on top line. And with regards to the tax rates, at this point in time, I must say I cannot truly follow-up on your calculation. My calculation is that the tax fit is rather at 31%, 32%, but we can take it up at the later stage to discuss your calculation because what we said earlier, the overall tax rate for new lenses is rather expected at the lower end of the corridor and the corridor is 30% to 35%. Next question comes from the line of Chetan Udeshi with JP Morgan. Please go ahead. Yeah, hi. Thanks for taking my question. You know, one question just generic question, if you've seen from when you gave or reported full year results to now, any changes to to demand that you might have seen in any of your end markets. So more generally question. And second was just the clarification on new guidance, have you assumed a specific FX in the new guidance for full year 2018? Well, on the guidance that we are providing is basically with we last time we stated, FX cross rates around 120 And on this basis, we are guiding with 120 as well, where dollar euro stands these days. And therefore, that is something you should factor in for your models, please, as well. Any other points Umeshi? No, that's clear. Anything on end markets? Any other end markets? Well, end markets, we think that automotive is, in the U. S. At this point in time, okay. Asia growing, Europe stable to growth. Let them more pronounced, a positive. Agro market, I think I made my comments. Generally, we look at regions all in all positive, with Europe being mild but positive, Asia being strongest growing region from the big two regions, North America and Asia. In Asia, definitely, India being visible, China being visible, North America, we do assume that volume momentum throughout the quarters is going to gradually improve having however a little delayed positive impact for chemicals because we first of all have to see our end industries moving upwards, but we see reasons for upwards trends. So this could spill over then more visibly in the final quarters of the year within more impetus also for 2019. And as Latin America is concerned, I mean, definitely more volatile a region. But we see good momentum, improvements, still versus a low base Brazil. And at the end of the day, Latin America is Brazil, Brazil, Brazil, hopefully not in football. However, you are betting on a different team. And with this, I think your question has been answered. Also a strong welcome from my side to you, and It's a fantastic industry, and I'm sure you will find that out as well. The next question comes from the line of Thomas Swoboda with Societe Generale. Please go ahead. Yes. Good afternoon gentlemen. Only one question left. And it's a follow-up on engineering materials. Thank you very much for your comments on the changing market dynamics. I'm still wondering given the very strong results in Q1, whether there is eventually a nonrecurring tailwind or a temporary tailwind, is probably a better wording I read a lot about bias of Polyamet6 6, considering switching to polyamide 6, that could have been benefiting you or could be benefiting you currently. And you're still selling some merchant capital, Latam, could you comment is what we saw in Q1, the new run rate or is it eventually a little bit overstated? Well, Thomas, very solid question. And as a matter of fact, explaining the entire value chain, I would love to allude to our previous presentations we have given over the last few years. Under ending the polyamide value chain and the polyamide market is, is not that easy. However, the overall fundamental strategic change we have decided upon a few years ago is to make it a very powerful value chain where at the end of the day, you only see the profitability of the engineering technology compounds, which eventually foster lightweights in the automotive industry, faster, smarter devices, in the electric industry and so on and so on. So, that being said, you would still have in this business volatility in earnings, because sometimes you have to absorb in your entire value chain, raw material price increases that can occur and then you digest them. It takes a few quarters and then you are back to your desired profitability. So here, what I'm trying to lose right now, the entire value chain in 2018 first quarter is running strong and therefore margins are strong. On a trajectory of this business, you see, however, that we did many, many things over the last few years, we took out visibly costs We more balanced our value chain. We are not finished that. We will proceed. And of course, we introduced new technology, great examples we have given over the last 12 months, which are all positive. At the same point in time, things need to be put into perspective and not get over excited with Q1 margin. Now specifically to your question, 66 versus 6, I would like to make 2 comments. 1st, the industry end players have consolidated, especially in Europe to consolidation moves have happened. And, I think this structurally is positive for the polyamide producers, 0.1.0.2. If you look at the value chain 66 versus 6, we see that the value chain 6 in the midterm might be more competitive due to the raw materials whilst 66 might have a tighter raw material markets And that might And that is something that we, of course, can more explain through investor relations. I alluded to this already 2 years ago on a conference call, but of course, this gets very chemical and we are prepared to answer questions here. This is already very helpful. Thank you. We always try to do our best. Next question please. Next question comes from the line of Martin Evans with HSBC. Please go ahead. Just one brief question on the portfolio, Matish, you referred to the value chain and the fact you're not finished yet. And I obviously appreciate you're extremely focused and busy with the existing structure. Of integration and so on of Kentura amongst others. But in your chemistry set or in an ideal chemistry set, apart from the broad term specialty chemicals, which particular maybe new areas of manufacture might you be interested in at some point to acquire if, if opportunities came up through the cycle? Hey, Martin. Welcome back. Question you're addressing, I can only tell to you, I'm a strong believer that in the chemical industry, you were always well advised to basically think about product life cycles all the time technology cycles all the time and you have to be faster in analyzing this and executing on this. And of course upgrading, if you buy something at a reasonable price where you can lift synergies where you can consolidate structures and get a better footprint in the markets for good price, reasonable price that you create value. If you cannot extract value out of the business, and you think that somebody is the better home, you should also consider this. And if you adopt this philosophy, I think long term it generates value to customers, value to employees, but also clear value to shareholders. And it's simply something where you should always think out of the box and, not stick to something that's worked well in history because it might not well work well in the future. You have to be agile and we call that energizing chemistry. No further questions. At this time, I would like to pass back to Mr. Taha for closing comments. Well, ladies and gentlemen, thank you very much for your interest participation, we started the year. Please follow us as we go ahead and looking forward to seeing you on the roads this quarter, next quarter, or in the quarters to come. Ladies and gentlemen, this concludes LANXESS conference call. Thank you for joining and have a pleasant day. Goodbye.