Earnings Call: Q2 2020

Jul 30, 2020

Ladies and gentlemen, welcome to the conference call of Akashini AD. At our customer's request, this conference will be recorded. As a reminder, all participants will be in listen only mode. After the presentation, there will be an opportunity to ask If any participant has difficulty in more conference, please press star key followed by 0 on your telephone for creative assistance. May I now hand you over to your customer, Head of Investor Relations, who will lead you through this conference. Please go ahead. Thank you, operator. Welcome to the Wacker Kimi AG conference call on our Q2 2020 results. Doctor. Rudolf Stahligel, our CEO and Doctor. Tobias Ola, our CFO, will take you through our prepared slides in a minute. The presentation is available on our web page another caption investor relations. But before we begin, allow me to point you to a safe harbor statement, which you'll find at the beginning of the slide deck. Mr. Staudigl. Ladies and gentlemen, welcome to our conference call in the second quarter and half year twenty the results. Q2 was an unprecedented quarter for us just as for everybody. The full effects of the pandemic hit the world. Our sales came in at 1,100,000,000 which was 15% below last year and 10% lower than in Q1. Volume declines in the wake of the pandemic and lower prices for solar polysilicon and standard silicones contributed to this. EBITDA was down sequentially and compared to last year for the same reasons. Lower volumes due to the pandemic Our pricing for solar polysilicon and standard silicones was lower too. Overall, it FDA in Q2 was EUR 105,000,000, about half of what we earned in Q2 last year and about 40% lower than in Q1. Yes. Despite these headwinds, we generated a net cash flow of €137,000,000, substantially up from last year. The pandemic has affected businesses around the globe, triggering a global recession As a supplier in a broad range of industries, we will severely hit accordingly. The chart on the top left corner on page 3 shows how volumes develop in our previous businesses. Bio Solutions saw a little impact from the pandemic. Silicones saw significantly lower volumes in May and a steady recovery in June. At polymers, the contraction was more severe in May, but the improvement was more dynamic as construction demand reached prior year levels. Silicones benefited from this construction demand in our silicones and hybrid sealants business and polymers in our disposable powders business. On another bright side, we saw good demand for products involved in medical or hygiene applications. Our solar polysilicon business remains challenging in Q2. As the pandemic slowed installations, demand for polysilicon was lower. Also, pricing for solar polysilicon declined even further, challenging our competitors and us. Semiconductor grade polysilicon on the other hand saw continued strong demand. Over the last months, we focused on protecting our employees and customers' health while keeping our business going. Across the entire company, we have, of course, implemented hygiene and distancing rules. We also adjusted our guidelines on business travel and the use of home offices pragmatically to the developing situation. In selected parts of our business, we used short time work arrangements to meet lower demand. Strict cost controls helped reduce SG and A and R and D costs and also supported costs of goods sold. We focused on generating cash and improving our liquidity. We implemented detailed programs to address all parts of working capital. At the same time, we have adjusted our CapEx plans for this year down to below EUR 250,000,000. The pandemic highlights the need to continue with our efficiency program shape the future. This program, which started already in November last year, aims to save costs by about EUR 250,000,000 annually by 2022. We see good progress. We currently discuss our plans with the and are looking to resolve the negotiations soon. While we do not expect major personnel cost savings in 2020 yet, cost savings and indirect spending should yield already EUR 50,000,000 this year. In this area, we have identified over a 1000 actions. Looking across our businesses, it seems like we hit a low point in May. Since then, operations recovered in June to varying degrees. Tobias will walk you through our trading updates and performance reviews in a moment. Given how much uncertainty we face over the coming months, we don't believe that it would be helpful to guide for a year. At this time, it is unclear to what degree and how fast our businesses will recover or rather potential second wave of infections triggers new shutdowns. Please understand that in light of all of this, we do not provide detailed full year guidance. What we can say though is that we expect sales and EBITDA margin in 2020 lower than last year. On the other hand, We expect cash flow to come in higher than last year. Tobias? Thank you, Rudy. Welcome. I will now take you through the presentation and provide you with a current trading update for each segment. Please note that I will comment on Q2 performance and not on year to date results. I will begin on Page 4. As expected, Q2 sales declined year over year. Cross profit contracted to EUR 135,000,000, falling lower fixed costs at Pulpq as well as price declines in solar polysilicon and standard silicones. You will recall that we announced short term work for some of our businesses. While this lowest personnel cost, it does not address fixed cost coverage of equipment and infrastructure. Polysilicon, for instance, reduced a third of its capacity in Germany since May. Our SG and A benefited from strict cost controls. Quarterly SG and A and R and D were down 7% sequentially and about 13% under last year. Other operating result was slightly negative as last year's Other operating income saw a positive contribution from settlements. Earnings per share came in at for the quarter. Benefits from deferred taxes. I am now moving on to Page 5, the balance sheet. We continue to manage the business for financial stability. Net debts decreased to EUR 573,000,000. During the second quarter, we issued €300,000,000 in Sunshine loans, replacing $130,000,000 of higher interest debt. We remain solidly financed with cash and securities of about EUR 850,000,000 and an additional EUR 600,000,000 of undrawn credit lines. Interest rates declined again at the end of the quarter and with lower plan assets this led to an increase in our pension liability under IFRS. Adjusting for the deferred tax asset, We now record pension liabilities of about EUR 1,900,000,000. As we move on to the segments, Please note that we are only providing a trading update today. As Rudy already explained, it is still not possible to give an accurate forecast for 2020. As indicated, when we last spoke the second quarter became much more challenging than Q1. Many of our markets dried out. Lower raw materials and first benefits from cost reductions as well as measures like short time work, helped our results. Still, they were not sufficient to compensate for lower volumes and price pressure in some large businesses. Sales at silicones on page 6 declined by 18% over last year and about 10% sequentially. After a slump in May, we saw silicone sales recovering slightly in June. In silicone standards, prices recovered somewhat towards the end of the quarter. Specialties in China grew year over year, while other markets were trailing. During the second quarter, we put forward scheduled maintenance and had some units adjusting output for weak volumes. Automobile and textiles remained soft, However, markets like release coatings, deformers, and industrial coatings showed resilience. Q2 EBITDA in silicones was EUR 68,000,000, a significant contraction versus last year and prior quarter. Key factors here where lower volumes with lower fixed cost absorption Scheduled maintenance work as well as price declines in standards. Updating current trading silicones We saw markets picking up somewhat in June and now essentially moving sideways to slightly up. Orders in Germany and China are flat versus prior year, while other markets are still weak, such as Brazil or India. So recovery is there, but not strong. At polymers on page 7. Sales declined by 16% year over year and about 10% versus Q1. Pandemic effect led to an initial reduction in volumes. Like in silicones, May was the weakest month of the quarter with a severe contraction of shipments. By June, however, volume for construction applications, we are already almost back to prior year levels. All our units report significantly in full utilization rates at the end of the quarter. Q2 EBITDA came in at 1,000,000. EBITDA benefited from cost discipline and firm prices. Looking at the current trading in polymers. We see continued positive development in sales to the construction and renovation industries. Biosolutions on page 8 saw strong demand for its biopharma and cyclodextrin business. Sales increased by 3% over last year and stayed at the Q1 level despite a weaker gum business. Higher volumes and positive mix effects supported in the Q2. Also, Q2 benefited from a special item in a customer project of about EUR 4,000,000. Looking at the current trading in biosolutions, we continue to see high demand in cycled vaccines and have a growing project pipeline in biopharma. This development should support further sales growth. Although in Q3, there should be an impact from sequentially lower product mix. On Page 9, polysilicon We saw weak volumes and prices in Q2. The pandemic led to a grinding halt of solar installations in most global markets putting the solar industry under severe strain. Demand for semiconductor materials, though, remains strong. Mostly driven by strong demand for C and S no meter wafers. Q2 sales came in at €153,000,000, 10% below Q2 last year. Sales declined month by month as prices and volume shrank for June. Consequently, EBITDA in Q2 came in at a disappointing negative EUR 35,000,000. Inventory evaluation effects and lower fixed cost absorption accounted for the majority of the loss. Current trading and policy can provide a very different picture. Beginning in early July, we saw volumes pick up substantially. The demand surge reflects new policies in China and the high level of compact business of solar power generation as markets come out of their shutdowns. The ongoing technology shift towards higher efficiency mono puts certain grades of polysilicon into higher demand than before. The competitors planned, excellent, and some capacity closures have tightened supply just as the market began to take off. Price NEC for polysilicon have reacted to this. Prices increased substantially from their low point in the second quarter, but still by far do not capture the value of the material yet. You would run our plants in Germany stepwise depending on further price development and COVID 19 uncertainties. We are now looking at cash flow and net financial debt on Page 10. Gross cash flow in the 2nd quarter increased to 1,000,000 more than twice the amount we generated in Q1. Our efforts to reduce costs and optimized working capital are paying off. Net cash flow for the quarter was EUR 137,000,000. Cash flow from investing in the 2nd quarter was down over 50% to EUR 47,000,000. We tightly controlled spending on new projects. So full year CapEx is now expected even below 1,000,000 just enough to cover maintenance in our most promising new ventures. Our net financial debt declined to EUR 573,000,000 by the end of June putting us in a very solid financial position. While the outlook remains uncertain and the potential for a second wave of the pandemic looms, all our segments are seeing progress in their cost position. The center work on innovation continues and project work with customers is now increasingly executed online. At this cost, all our segments are recovering or improving as we speak. Some are seeing faster more dynamic improvement and others are lagging just because of the sheer breadth of their market portfolios. We now believe there's Ladies and gentlemen, as Tobias just said, current trading provides some encouraging signs. Although probably a bit too early to call, it looks like all our segments are seeing underlying improvements. The recent news in polysilicon does not change our view on what needs to be done to become more profitable. We continue to work hard on our aggressive cost reductions and are not letting up. The current speed of innovation in solar is breathtaking. Many suppliers are now offering modules producing 500 or even 600 watts. These substantial technological improvements remind me of the early days of the Semiconductor industry. To achieve ever better performance, the quality of every ingredient needs to get better and better. A migration towards more and more advanced solar cells is intact. These advanced cells will be made on bigger wafer sizes with appropriate stope. In order to produce the necessary crystals, there will be more and more polysilicon needed in specifications close to semiconductor type quality. This is where and when our material in the semiconductor periods we have will be of high value and will be appreciated. City counts with its wide market portfolio and broad regional profile experienced slower recoveries and polymers with a more narrow market focus. Silicones sees a series of capacity announcements with some uncertainty as to what eventually gets built. But the message is clear, commodity products stay under competitive pressure. Therefore, our focus on growing the specialties business is the right move. We have the proper setup, the right products and the right market access to succeed further, and we will. In polymers, we experienced strong growth in volumes as emerging markets are transitioning into advanced building materials. Successful cost initiatives, large, competitive, capacities and the right level of market support solidify our market leading position there. And last but not least, BioSolutions begins to deliver on BioPharma. We have the right toolbox to participate in the CDMO market and are scoring important customer wins. Expect us to nurture this business further. One of the recent developments that I'm particularly optimistic about is the EU new green deal. The European Union is determined to become the world's 1st climate neutral continent by 2050. Every industry sector will have to contribute drawing on record sums of public and private sector funding. The green deal will bring about a step change in the amount of CapEx deployed to reduce carbon dioxide emissions. Most likely, you have read about this, but what you may not know is how the deal is a major catalyst for carbon dioxide abatement technologies enabled by Wacker. Our technologies help reduce emissions in the sectors that are responsible for about 75% of the EU total emissions. With our broad exposure to diversified end markets, Waka has meaningful exposure to this long term trend. As a result, we stand to benefit from higher investments in our markets over the decades to come. Ladies and gentlemen, Q2 was a difficult quarter Things appeared to become brighter as we move on. To me, it was impressive to see how throughout the company, Employees took the initiative during this difficult time. Using online tools and pragmatic approaches, we kept the business going kept supporting our customers despite lockdowns. These actions show the spirit of record despite hardships, making things possible for the customer, delivering a tremendous cash generation and staying on course for the important projects that will enable us to perform on a higher level in We will now begin with the Q And A If you find your question is answered before this year attempt to speak, you can dial 0 2 to answer your question. If you are using speaker equipment today, And the first question is from Andreas Heine of MainFirst. Your line is now open. A question around the comment you, made about cruise sweeping, you know, and it's higher than Q1. Now I would like to, understand where that is coming from. I guess that it includes to quite an extent, improvement in fully silicone with the reversal of the write downs here I've done now neutralized by writing the math again. That's the first question. The second also on polysilicon, you refer to having reduced the operation rate to 70% in the germ plants by having a very strong, order income as of beginning of July, all times now back on full utilization rate. And then one question on timing when you see these higher prices in polysilicon, affecting your sales and former. Yes, it was, as you were referring that it takes 6 to 8 weeks to transfer volume from Europe to China. But, now you have client, a lot of inventory buildup in China. So I would expect that you immediately would benefit from the higher prices we have seen in Japan. Thanks. Please start my questions. Tobias, may I start with your first question on Q3 performance. There's a couple of reasons. I think the first is we do not expect or assume the May, which was the low point to repeat. That's number 1. And the second, I think we see different, dynamics for the improvement. And I think the most market definitely is in polysilicon. So this should support Q3 result, as you mentioned, I do not want to quantify potential reversal in inventory evaluation because those very much depend on then on the average prices achieved. It's not valued at at spot prices at the end of the quarter. So, and we we do not have a number on that anyhow. On the, let's say, the customer support, that, is necessary right now. Of course, it helps a lot to have inventory in certain hubs in Asia. And, so we can deliver material much faster than in the past. I mean, if you would need to deliver from Germany. And of course, it takes some time. And, but so this is certainly, a benefit for our customers. No question. And, you know, as as we watch how the market develops, we certainly would be able to increase our output, accordingly, but, you know, we really watch the development of the markets very, very precisely before we make the wrong actions. So you basically, have not increased the production from the country level. So still out the 70% of the German. Capacity? Yeah. I mean, basically, that's, that's what I was trying to say that, We are. We are very careful there. Mhmm. Thanks. The next question is from Charlie Webb, Morgan Stanley. Your line is now open. Afternoon, gentlemen. Thank you very much for the time this afternoon. 2 for me, and and apologies if I if I missed anything on the call that I took a note, they'll they'll try to get on. The silicone's turnarounds. Just just can you help us understand it sounded like you had some maintenance or you've pushed forward a turnaround into the second quarter. Can you help us understand maybe, you know, what was the impact on on EBITDA or what was the impact on volumes as a consequence of those those turnarounds? So just so we can understand where the real kind of demand, and volumes, would it be, or what the earnings would have been, and margins would have been. And then just on, on the poly inventory, again, I'll answer maybe you can't give forward looking comments in terms of what the implications were, but just can you help us quantify what the negative effect was in Q2? That that would be very helpful. Sorry. On the first question on Sterling Collins, you noticed that, EBITDA was, markedly below, prior year and prior quarter. And I think the most significant effect came from lower utilization and fixed cost absorption. And those that goes hand in hand with some scheduled maintenance work, which we've deliberately extended. So you have, the lower fixed cost absorption plus additional cost that type of situation. And in addition to that, also standard prices were lower So, but that is the sequence, of the effects, if you rank them by, attitude. The second question on poly inventory, there was a significant effect if you take the minus 1,000,000 negative EBITDA in the quarter. It's a significant effect from inventory write downs and we do not quantify that, but it's a significant portion. The next question is you. First one is on on polysilicon. Now that prices have recovered a bit and you may end up in positive EBITDA territory in the near term. Do you see a risk that the planned layoffs in a polysilicon may not lead to some challenges on the workers' council side in the future? And then the second question is on your silicones margins. I was a bit surprised, but in low margins in the quarter despite a quarter by and also to help from lower raw mats, was this impact only driven by lower volumes and standard pricing, or do you also see price pressure in your specialties. So I'm wondering if we should assume a return to 16% to 18% or so margins in the 3rd quarter if volume returns or do you see significant pressure on margins also in the third quarter? I on your first question on on the polysilicon, and I do not quite know what what you mean. I mean, we have no issues with the records counter and the project shape the future where we, want to reduce redundancies has no impact on the polysilicon capacity. There's no connection with that at all. Okay. But then if you may have if you may end up in positive territory, you may not you don't see any challenges, on that side that you, there would be some Yeah. No. No. No. No. Not at all. Not at all. Because, the project then shapes the future goes across the whole company. Okay. Got it. And that focus more on, let's say, administrative areas rather than production. I mean, what the effect of this program will be the total reduction of our cost level in the company across all all divisions, all administrative areas. This is not because polysilicon. Okay. And your question on the silicones margin, I think everybody should bear in mind that, the second quarter 2020 was a very special quarter for everybody. It was a COVID nineteen quarter with a new drop in volumes. And that's why to extrapolate margins from that is, I think, not possible. And as I mentioned before, we did everything to control cost. The biggest impact on profitability came from the fixed cost absorption and and maintenance. And then also there was an impact from lower standard prices. But short time work, I mean, it helps to reduce personnel costs, but it doesn't dilute the fixed cost of the infrastructure and equipment. So going forward, it very much depends on, how volumes recover with our end markets that we serve. And then I think we are very much back to the question and how does the overall economy recover over the next couple of quarters. I think that's it. Okay, thank you. And then do you see any price pressure on the specialty side or increased price pressure on specialty side? There's no discussion about prices and specialties. It's more about the volume that needs to recover. And so that is not an issue. Okay, great. Thank you. The next question is from Markus Mayer Banca Bank. Your line is now open. Hey. Good afternoon. It's Ajman. Too many questions from my side. Firstly, again, I'm fully silicon. Can you give us a kind sensitivity analyzes, on the price change or potentially for the price change versus, then you're running there in the new cost structure after your efficiency measures. And the second question would be, on the CDMO segment or end market given now currently the the strong demand there, do you still want to, go there organically and by acquisition or is this acquisition window currently closed? On your first question, of course, the sensitivity is, of course, it's high. I mean, every every additional dollar Euro RMB you get polysilicon goes or improves directly the results. So, you know, it's certainly positive, to see these price increases, but let me add here at this point. I mean, we of course, do not know exactly what happened there in our competitive sites in the Ginger and Province. Because they have a different understanding of transparency compared to us, but that's fine. We just hope that none of their employees have to invest, because the pictures we saw that were on the internet for a few hours did not look nice. And, I really want to make that point. We really feel that, with the people there and their families. So, it's, Yes, we always have that in the back of our mind. On the CBN Pro, of course, I mean, I think we are very well underway growing this business organically. On the other hand, just like in the past, if opportunities open up, we are ready to make acquisitions, but not, to a degree that, you know, would be, outrageous pricing or something like that, especially in these times, you have to be careful about that. I remember a time when the everybody was investing in specialty chemicals, and, prices called for for companies were just enormous and many acquirers suffered, quite severely by paying 2 high prices. So we are not entering into any adventure there, not at all. But if good opportunities to come up, we certainly have the means to, to participate in that business. Just like we did in the past, and we acquired AENA, Hale and Amsterdam facility. Yes, Tobias again, I just want to clarify because I actually might have spoken something, in one of the answers before. There was a question about potentially better performance Q3 than Q2. And I explained the drivers for that. Number 1 was we do not expect the May to repeat and then, we expect policy to improve and, and then I must have said that, q 3 could be better than q 1. That's not what I meant. Q3 could be better than Q2. So just to clarify that. And sorry for the confusion Thanks. I think we can move on to the operator. Next question. Yes. Sure. To it is from Yes. Good afternoon, gentlemen. I have two questions, if I may. First, already a follow-up on what you just set the discussion on how Q3 could be against Q2. In an earlier question, you were discussing your assumptions for polysilicon. I just wanna make it make clear, or could you just make clear whether you bake in a positive reevaluation of of inventories in, in polysilicon in your comments for Q3, or this is not considered in your comments about a better performance in polysilicon in Q3 versus Q2. So that was the first question. The second question is on silicones, if I may. Mr. Staudigl, you have you have mentioned about this new capacities that, that are planned, I think you you meant in the new siloks and capacities which are flying around already since since why. I I'm just wondering if if you could give us your, your thoughts about how do you think those new siloxane capacities would impact the specialty segments. I think the commodity segment is pretty much clear for for most of us. But how do how do you think additional siloks and capacities to to effect the specialties business, going going forward. Well, the way we think about it is the following. First of all, I think it's very important to know that Our siloxine facilities certainly have well benchmark cost positions. Even against potential newcomers and big plants in China. And so this is, it's a really important thing. So as you know, we are still to a certain degree, also in the Standards business because we have more as a locked in capacity that our specialties, is up. You know, we can sort of use more of our Zaloxone or, I mean, if somebody comes up with a lower cost side of things than we have, then of course, we would be happy to use theirs and expand our specialist business there. And, yeah, I mean, people, of course, will try to move more and more into the specialties business as well. But I mean, that's the task for the future to really be innovative and and develop the specialist business faster than anybody else. And, so, you know, I think There is no reason for pessimism on that side. Thomas, to your question on improvement in the first quarter over the second quarter in polysilicon. Now one is we start in the same quarter with minus 1,000,000. So a very bad quarter, so to say. And then we see that volumes improve in July and prices also, but throughout July. So not from the very beginning of July. And, you should bear in mind that also our output is not at full speed in July. And so it depends your question to inventory and and I don't have a number for that. That will depend on the average price that we achieved in the quarter. And then on the actual level of inventory that we will have the quarter. So there's many moving parts. And, although I would definitely see an improvement I do not quantify today what would be the effect on the inventory valuation. So hope you understand. Yes, that's fair enough. Thank you. Thank you both. The next question is from Patrick Rafaisz with UBS. Your line is now open. Thank you, and good afternoon, everyone. And three questions, please. The first one would be on your new CapEx guidance. And can you explain to us where exactly that you cost and what should we pencil in for 2021 and beyond? And the second question would be around short term working streams that you mentioned and other temporary cost savings, versus the additional costs of of bringing forward maintenance in silicones. What was the net effect here in in the second quarter? And then the last question would be on BioSolutions and you sound very positive about the outlook here. Also for the CDMO business. The question is, how long do you think you can grow at the current rate before you need to put more significant CapEx in the ground, to maintain the growth. Thanks. Okay. On the new CapEx guidance, I think the original CapEx that we we wanted to spend was around 350 to 380. So we cut it by let's say, around 150,000,000 this year. It's, you know, it's across the board. We we assumed, and I think we are right in this, that, you know, many capacities of of, you know, certain, certain products, will need to be available simply later because the COVID nineteen certainly has a delaying effect on on economic growth. And so we made some, certainly tough decisions here and there to delay capacities. And, but we We watch the development of, of the demand very carefully. I think we have, an excellent, engineering group in place in, in all different, divisions. That can get, up to speed, very fast with, with the projects We we still do a lot of, let's say, detailed planning on projects so that we can, once the situation improves, we can get, yeah, up to to speed extremely fast. That's that's the key. Yeah. So, you know, maybe we have to play catch up, here or there but I think it's certainly the right way to manage through a crisis like this. But we do not expect any, let's say, loss of market share or whatever. Because of because of this. I think it gives us a lot of security on on the cash side or on the balance sheet side. And and this was planned, and I think as you can see from the cash flow, we are achieving that. On your question, on the balancing effect of cost savings and utilization on profitability, for sure, we did everything to cost as much as possible. So discretionary spending is significantly below prior year, also maintenance prior year, and short term short time work arrangements do help to say it personally got. So there's a tremendous effort to control costs, but the lower utilization outweighs that with the, deteriorated fixed cost absorption when you have, limited state demand. And for that reason, your a negative effect on overall results in the situation of the 2nd quarter. And on on CapEx And BioSolutions, we just announced a a major, additional project for for the Amsterdam side, that, sort of restructure the whole facility on the one side. On the other hand, also gives us a new capacity there. And we have even more ideas now or lesser plans, to to expand that site, even further. And, through efficiency gains, etcetera, etcetera, we can continue growing in that business. And of course, we are looking at all kinds of, let's say, additional options to to increase our capacity. Alright. Thank you. The next question is from Sebastian Bray, Berenberg. So I'd have 2 sets, please. The first is on the silicone's margins. Previously Vasquez has pre emphasis on the advantages of the silicone for bund that there is a synergy between production of polysilicon and silicones. I'm wondering if the reduction in polysilicon capacity effective reduction had any impact on the silicone of margins. And as a follow-up to that question, what exactly was the effect of mix in the quarter? And in particular, I'm thinking of customers in harder times trading down from specialties into commodities because lower Is this are available? Was this a factor? How did the volumes of specialty and commodity develop? My last question, I'll leave, once these two are done. Thank you. Well, there is certainly a quite synergy between the polysilicon production and silicon. But, of course, the key is when you're working in a second, like that, when you reduce the capacity on one side, it should not impact the capacity or the operation on the other side. And so there is no, no negative impact on silicone on silicones from reducing the capacity in in polysilicon. And on the question of, specialties versus standards. And is there a trading down towards standards? The clear answer is no. If you look at the volumes, volumes were down for both specialties and standards in Q2 against prior year. But even lower in standard, than than in specials. So if you then consider, that standard prices were below prior year while specialty prices, hold up very well. The the product mix in sales is the stronger than compared to last year. Thank you. The last question I had was on the sustainability of the margins in Polymers. The last time we had a raw material price collapse, there was a good year's worth of other earning, before margins reverted back down to a lower level. I am I working to say that the pricing negotiations typically take place in Q4 for this And what is your sense for the likely directionality of margins moving into 2021? And so first of all, we not only have annual contracts. We also have quarterly contracts. We have half year contracts. So we tried to maintain prices as, as good as possible. And the overall target is to keep profitability as high as possible and profitability is and will remain a function of how much volume can we achieve, how's our cost position and what's the price for our products So we will continue to do our homework and we will, try to, develop that business as successfully as as possible. Your last question is from chetan Udeshi JP Morgan. Your line is now open. Yeah. Hi. Thanks. I just wanted to see if there was any update on your, bio solutions business as regards to what you are doing, for potential COVID-nineteen vaccine. And second question was just, I think I heard at the beginning of the call, a mention about the mix in polymers, being weaker in third quarter versus second quarter. Is that going to have a material impact, or is it small? Anything about What was the last question to you then? Was it on polymers or on biopsy? I mean, I might have misheard, but I I think, I heard a comment from you saying that the mix in polymers is going to be less favorable in third quarter 2nd quarter. Maybe I missed that. I just want I think that was Biosolutions. We highlighted Biosolutions having a negative mix effect in Q3. Again, Q2. So essentially, Q3 will not repeat Q2. That's what I want to say. Okay. Okay. Okay. And on, on biosolutions, yeah, I mean, as you probably know, there are many, many different routes to a potential vaccine against the coronavirus. And the the, RNA route or the RNA route. I have to say various various routes. Or in DNA routes, which are a precondition for the RNA routes. Are manifold. And this is not a technology we are really very experienced in. Of course, we have excellent, biologist and chemists and biotechnologies, and these technologies to produce these substances are not not magic. I mean, the people and the equipment, certainly can do something that, but, yeah, we certainly do not have, a lot of experience there. On the other hand, as you can imagine, we are looking into that, what it takes, And, we are interested in, in potential projects, but this is not something that, we'll let our sales explode in this year. Understood. And maybe last Hi, Anna. I just want to I just want to maybe round that up, a little bit. But, in you know, the the the future of biotechnology is just beginning. And, and the RNA and DNA technology is are extremely important for the future. And this is why we really started looking into that. And did, some R and D on on that already. So our people know exactly what it means to be able to produce, these products. So this certainly can be a very important part of our biotechnology business in the future. Understood. Just one follow-up is Any guidance or color on how should we think about cash taxes this year, and next year? On in cash flow? I mean, this year, we had in the first half, we take very little taxes. You have a cash return in the first quarter. So there will be little taxes in 2020. And for 'twenty one, we do not have any guidance so far. Thank you, everybody. Thank you for joining us today and for your interest in Baca Community. We're looking forward to further discussions with you as a quarter progresses. Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.