Good afternoon, ladies and gentlemen, and welcome to the Wacker Chemie AG conference call regarding the third quarter results 2016. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Mr. Joerg Hoffmann.
Thank you, operator. Welcome to the Wacker Chemie AG Q3 2016 conference call. My name is Joerg Hoffmann. I am the Head of Investor Relations at Wacker. With me are Dr. Rudolf Staudigl, our CEO, and Dr. Tobias Ohler, our CFO, who will take you through our presentations in a minute. The presentation is available on our webpage under www.wacker.com under the caption Investor Relations. Before they begin, allow me to point you to our safe harbor statement, which you will find at the beginning of the deck. With this, let me hand you now over to Dr. Staudigl, our CEO. Dr. Staudigl.
Thank you, Joerg. Ladies and gentlemen, also welcome to our Q3 2016 conference call. Let me walk you through our presentation, starting on page two with the Q3 highlights. We reported a good quarter in Q3. Our chemicals businesses continued their strong operations, supported by efficiency gains and good volumes. Polysilicon saw a split quarter, with two good months in July and August and weak volumes in September. Sales came in at €1.35 billion, slightly below both last year and last quarter. Supported by volume gains and a good cost performance, EBITDA reached €301 million, representing a 22.4% margin. Excluding special income, EBITDA was even 22% better than last year. Good volumes and efficiency gains continue to drive chemicals EBITDA. Siltronic saw higher sales in a firmer demand environment. At Polysilicon, we have completed the technical ramp-up of our Tennessee plant.
The plant has demonstrated its capacity and has now started to work on productivity, process optimization, and cost reductions. Therefore, we do not see the need to report on ramp costs anymore. There was also no special income in the quarter. The market environment in polysilicon was volatile in Q3. With July and August rather uneventful, September saw very weak volumes. With the Chinese end market halting at the end of July, customers had inventory for a much higher run rate of production and reduced orders as a result. Many of our peers went into maintenance mode or chose to add to inventory in this time. Some of you have described this as an air pocket, and I think that is a good description of how it felt. We used this opportunity to optimize our logistics, given the long distance to our main markets from Germany to Asia.
Since mid-October, however, the market has rebounded. Orders and volumes have increased substantially. We have concluded our eighth Capital Market Day earlier this month in Burghausen. You will find the Capital Market Day presentations on our website. In our main Capital Market Day presentation, called Growth and Cash, we presented five targets for the next year. These are shown on page three of today's slides. First, we intend to extend our leverage phase to 2020, at least. As you know, we have described our investment program over the last decade with development stages. With the Tennessee investment now behind us, we have definitely concluded the create phase of this model. Now we are looking to a leverage phase into 2020, during which we expect to benefit from our strong upstream position.
We plan to keep CapEx below depreciation and to focus on local investments in bottlenecking and smaller projects that take us closer to the customer and increase value creation. Secondly, we look to continue to grow faster than global chemical production. Our good product positions and access to markets will enable us to get there. Market transformation, innovation, and regional expansion are key drivers for this growth. Thirdly, we continue to focus on sustainability. With our so-called Verbund integrated production system, we already have an optimized structure in place that looks at waste streams as valuable inputs for other businesses. Our processing and product strategy supports this. From enabling solar growth to water-based paints and leading insulation material, Wacker's portfolio has a clear focus on sustainable business development and growth.
Fourth, with target EBITDA margins in chemicals of over 16% and in polysilicon of more than 30%, we should generate significant free cash flows going forward. Our businesses should be able to sustain attractive margins throughout the economic cycle. Fifth, for the leverage phase, we have now defined a new target level for dividends, looking to pay out around 50% of our net income to shareholders going forward. Our previous target was to pay out a minimum of 25% of net income. This year, we have concluded the largest investment in our history. With the Tennessee plant now in operation, our CapEx comes down significantly compared to last year. We expect to spend about EUR 400 million less this year than in 2015, and the reduction has not slowed our growth in chemicals.
Looking into the fourth quarter, we expect the usual seasonal behavior in our chemicals business, our businesses, with high utilization in Siltronic and a livelier Q4 business than in September in polysilicon. Hence, our guidance for the full year remains unchanged. We continue to expect a slight increase in sales in the full-year EBITDA, excluding special income to come in at the upper end of our projected 5%-10% increase over last year. Let me now hand over to Tobias for more details on our financials.
Thank you, Rudi. Let me start with our P&L on page five. We reported an EBITDA of EUR 301 million, 14% over last year and at the level of Q2. The resulting group-level EBITDA margin was 22.4%, while Q3 last year saw some EUR 80 million in special income, we reported none in this quarter. As the Tennessee plant reached technical completion during the quarter and demonstrated its capacity, we essentially had no more ramp costs. You can see these effects in the year-over-year comparison of the other operating income and expenses. The interest result is lower than last year as we had to capitalize interest during the construction period in 2015. Our nine-month tax rate decreased faster than expected to the target rate of close to 30%, following special tax effects overseas. We expect a tax rate close to 30% now for the full year and for 2017.
Our balance sheet is discussed on page six. Prepayments at the end of the quarter were down to EUR 322 million, in line with guidance. Working capital stood at EUR 1.3 billion, following a combination of slightly higher inventories and lower payables. Following lower bond rates, the discount factor for pension declined to 1.38% from 1.60% at the end of last quarter, resulting in an increase in pension liabilities from EUR 2.42 billion to EUR 2.57 billion. The pension-related deferred tax asset now stands at about EUR 440 million. These pension liabilities relate to defined benefit plans that were closed to new entries over 12 years ago. Since then, new employees are on defined contribution schemes. We discussed this at our Capital Markets Day, you will find slides on this in the presentation. Let's move on to our segments from page seven.
The chemical businesses all saw some price pressure and solid volumes while benefiting from high plant loading. Our chemicals businesses contributed almost two-thirds of EBITDA in Q3. Silicones reported sales at the level of prior year and slightly below the last quarter, following good volumes, negative currency effects, and some price pressure in selected product groups. Good plant loading, a good cost performance, and mix effects supported an EBITDA margin of 20% in the quarter. Sales in Polymers were below prior year and last quarter, as strong volumes in dispersions did not fully offset price declines in various product groups. Year-over-year, EBITDA benefited from volumes and high plant loading, leading to a good cost performance. Absolute EBITDA was lower than in Q2, following lower sales and some raw material cost inflation.
Looking into the full year, we confirm our guidance for the chemical segment at single-digit growth, with full-year EBITDA margins at 17% for Silicones and about 20% for Polymers. At our Capital Markets Day, we communicated an over 16% margin target for our chemicals businesses. We plan to sustain margins over 16% in chemicals via operational excellence and with an increasing share of specialty applications. As Rudi said, polysilicon saw weak September volumes. As a result, sales in the quarter fell behind last year and Q2. At EUR 82 million, EBITDA was only slightly ahead of reported Q2 as ramp costs faded. EBITA was over 10% better than last year when adjusting for special income. We have seen some market recovery since mid-October. We continue to operate at full loading and to focus on cost reduction.
Our market growth projections for this year look into 2016 global installations of between 60 and 70 gigawatts, after about 56 gigawatts in 2015. For 2017, we now see installations between 65 to 80 gigawatts. Siltronic reported today Q3 sales of EUR 237 million and an EBITDA of EUR 37 million, both slightly better than Q2 and EBITDA better than last year following lower FX charges. Operating at full capacity in Q3 in 300 and 200 millimeter, Siltronic shipped wafers out of inventory to meet the strong demand. With firm demand for wafers, Siltronic sees tight market conditions in 300 and 200 millimeter in the fourth quarter. Our net financial debt decreased to EUR 698 million following a strong cash flow generation in Q3.
Net cash flow in Q3 came in at EUR 229 million, over 80% better than in Q2, and more than six times better than in Q3 last year. CapEx in the quarter was at EUR 99 million, at less than half of the amount spent in Q3 last year, and only slightly higher than in Q2. Let me hand you back to Rudi.
Thank you, Tobias. Before we go into Q&A, let's have a quick look at current trading conditions. In the fourth quarter, we expect the usual seasonal effects in chemicals, resulting in lower sales and EBITDA. Especially in polymers, we expect effects from some raw material appreciation as ethylene costs have gone up. From today's point of view, however, some of the seasonal effects in silicones may be cushioned by silicon metal price decreases. Polysilicon reports increased activity with strong shipments resumed by about mid-October. Siltronic reports market tightness in 200 and 300 millimeter, with operations at very high utilization rates in the industry. We remain confident about our performance for the full year and expect to reach the upper end of the range of our guidance for EBITDA, excluding special income, effectively targeting an EBITDA for the full year of about EUR 1 billion.
As we said last time, if everything goes well, we could slightly exceed it. This concludes the presentation so far, ladies and gentlemen. Thank you for attention. We will now be happy to answer your questions. Operator?
Ladies and gentlemen, if you would like to ask a question, please press nine star on your telephone keypad. In case you wish to cancel your question, press nine star again. Please press nine star now to state your question.
Operator, the first question is from Mr. Andreas Heine from MainFirst.
Hello, can you hear me? Good afternoon.
Yes, Andreas.
I'd like to ask on polysilicon. If I look on your comments that the volume was sequentially significantly down from Q2 to Q3, looking on your sales, basically the impact on prices was very limited. I have expected here a different trend. Could you elaborate a little bit why this was? I do understand there is some mix effect, but nevertheless, prices have fallen down throughout the quarter, there was not materially anything seen at your side. Going into Q4, if volume is picking up and you haven't seen anything on the price side, what does that mean for Q4? In that light, your guidance still looks a little bit cautious.
Well, as I explained, we had volume shortfall in sales in September. We continued to produce at full load, sort of filling the logistics pipeline to Asia. We used that time period simply to the advantage of the customers in the future.
That's what I-
Yeah, go ahead.
I do understand what you said about the volume and the inventory increase you have done in various reasons to be able to act more flexible. Looking on the sales decline, if I try to figure out how much volume it was down in this particular quarter, and look on the sales development, then it looks like that there wasn't a price decline. Your average price was probably Q on Q, not much down. What I have seen on the market was a little bit different. Maybe you haven't participated on very low prices. Then I would like to know how I have to read in the market at prices being still very low, and whether you are at all affected by this in Q4.
As I would say, one of the significant market leaders, we always think about our responsibility not to follow the lowest prices in the industry. We certainly did not business that we thought was ridiculously low. That's just as a general statement, but without talking about individual prices, of course. Of course, if the total price trend is going down, this also has certainly an effect on us. I mean, there's no question.
I think we had a question on Q4. As we said, we saw orders picking up in the second half of October, and I think that's a positive momentum for the rest of the quarter.
It's still that you do not make too many compromises on the price side.
Well we are certainly one of the players in the whole field that is trying to keep the prices up as possible. As I said before, if there is the general trend,
Yeah, of course
have to follow. We are certainly, in terms of reducing prices if necessary, we are certainly not a leader.
Understood. Thanks a lot.
Operator, the next question is from Mr. Jean-François Gimondi.
Hello. Good afternoon. My first question is going to be on CapEx. If I remember well, at your Capital Markets Day, you say EUR 400 million to EUR 450 million or EUR 450 million, EUR 400 million, EUR 450 million CapEx for next year. If I look at your ongoing CapEx now in polysilicon, I more get to the level of EUR 300 million, which means I'm missing EUR 100 million to EUR 150 million that I should put on chemicals. Therefore, looking at your expanding only downstream, that should mean that you have something penciled in for the pyrogenic silica in your guidance. Is that correct, or is there anything abnormal about your CapEx? The second one, going back to polysilicon, how should we think about volume development for the overall for this year? Let's say, will the sales jump in the second half of October make up for the slow volumes in the first half of October? Thank you.
On the CapEx. Yeah, I think we gave you the right indication during the Capital Markets Day. I think if you, let's say, model next year with EUR 450 million, it's certainly in the right range. I do not expect for it to be more than that. Your conclusion is right. Certainly, the investment in polysilicon is significantly down. That means there might be some projects in chemicals. That's right. All in the-
Since you put it in your guidance, can you share with us what's behind your guidance?
Well, let me put it this way. It's certainly in line, or it ought to be in line with what we said, that we want to improve our position in downstream chemicals. There are certainly some projects in there that are very interesting. As we said, for Tennessee, a pyrogenic silica plant would be the next logical step. There are no decisions on that and no timelines. That's why I cannot confirm your conclusion that it will be in the plan for 2017.
Okay.
In other words, we do not disclose yet what the major project of 2017 will be or potentially will be.
Let me reverse. Without big projects, would we be around the 300 mark?
No. We are pursuing the strategy of investments in downstream in order to even improve our chemicals business even further. That's how you have to look at it.
Operator, the next question.
On the volumes.
Sorry
Your question on the volumes. I think we gave sort of an indication once that we want to sell this year somewhat close to 70,000 tons. Of course, with the drop in sales in September, this might be a little bit ambitious volume target. As we said, we want to take the time to improve our logistic chain to Asia. In other words, this is not a worrisome development. I think it plays well into our hands of improving the service to our customers.
Would 65,000 tons be a better proxy or too low?
We do not forecast that.
Okay.
Yeah.
Great. The next question is from Mr. Peter Spengler, DZ Bank.
Good afternoon. Thank you for taking my questions. On the poly market situation, how long do you expect the current situation will last? What are the main drivers? Is it more like overcapacity or the demand in China? What are the parallels to the last situation with price pressure where you gained market share? My second question is on the Siltronic. Do you consider to sell, or what's your exit strategy? Can you update us on this? Do you consider to sell several blocks or do you have a minimum price which you would like to have? Do you see a cyclical upside, which could increase the share price near term?
In polysilicon, Tobias, in his speech and also in the slide deck, you see our assumption on the market. The solar markets are still continuing to grow. There might be fluctuations of demand like we had in the past, but overall, as I said, we see growth in the market, and that's important. It's very difficult to predict these, let's say mini cycles that we see sometimes seasonally. Solar is and will remain a very important development and important business for energy demand or providing enough energy for the world. That's why. Polysilicon will be the basis for that for a very long time. On Siltronic, there's no change to what we said in the Capital Market Day.
At some point in time, we are looking at selling off our ownership in Siltronic, whether that will be in one portion or in several portions, we cannot say, and there's no special preference there. It really depends on the market. On the other hand, there is no need. There's no urgency behind that. Siltronic is an excellently positioned company, excellently managed company. We will find the right timing for that.
Thank you very much.
Yeah.
Operator, the next question is from Mr. Gopi Guchral at Macquarie.
Hi, guys. I've got three questions, if I may. Firstly, how much of the operating expense in Q3 2015, the EUR 74.2 million is ramp-up costs? Can you remind me of that? My second question is on China demand. If the proposed feed-in tariff cuts proposed by the government is implemented, how will that impact demand, do you think, in 2017, as per your forecast in slide 11? Finally, my third question is around the chemicals business. You're obviously approaching very high utilization right now of the 90%. What's the scope there in terms of increasing nameplate capacity, perhaps through debottlenecking? Thanks very much.
Maybe on the tariffs in China. Of course, there is no final decision made yet. I think it's expected by mid of November, if we have the right information. Of course, China has surprised us in the past, and especially this year. I think there are still cost cuts possible as well in the whole value chain. We are not too worried about the growth in China. As you can see at our estimates on page 11. It should be in 2017, again, in the range of 16 to 23 gigawatts.
Is that forecast assuming a certain scenario in terms of that proposed change to feed-in tariffs?
Well, we certainly have some underlying estimates on the feed-in tariffs. I think they are within the range that are in discussion right now.
Okay.
With respect to the pre-operational cost in 2015, we said that the full year impact of that was some EUR 90 million, and we didn't give any specifics on the quarter. As we approached the ramp, we had more costs pre-ops in the second half of the year. If you try to model that along that slope, I think you would get a fair number.
Okay.
Actually, the first part, we really did not understand acoustically. If you could repeat that.
Sure. I was just wondering what the scope is in terms of increasing the nameplate capacity of your chemicals business. You're obviously reaching very high utilization. Can you provide us some color as to the possibilities of increasing the overall capacity of the Silicones and Polymers business?
It's a challenge to look into the future and give you a precise number for the next years. We certainly have opportunity to debottleneck. We have some material in the Capital Market Day presentation for two key products, the siloxane for Silicones and the Dispersions for Polymers, where you can see that we typically have the opportunity to go far beyond the nameplate capacity. I would suggest to look at that page. That gives you an indication.
Okay, great. Thank you.
For the raw material of silicone, siloxane. Of course, we have enough capacity. We have opportunities to debottleneck at very low cost. We certainly will not put a lot of money in the upstream capacities. Not at all. In silicones, we also have the opportunity to turn material that is used more on the commodity side or standard side onto a product in the specialty side. We have these two variabilities that we can use to grow definitely with the demand of our customers. There is no restriction on capacity there.
Okay. Thank you.
Operator, the next question is from Ms. Tanja Markloff at Commerzbank.
Good afternoon. Would it be possible to have an indication on your US dollar sensitivity on next year in terms of revenue and costs, taking into account the new plant in Tennessee?
Yes. I would go for the 2016 numbers. We don't have a plan for next year yet, I wouldn't assume big changes. If you take a EUR 0.01 change, that gives you roughly a EUR 10 million safe change in chemicals and a EUR 2 million change in EBITDA because we have some quite substantial natural hedging in chemicals. In Siltronic, that EUR 0.01 change in exchange rate would mean some EUR 5 million in sales and some EUR 3 million in EBITDA for Siltronic. Typically, we do some 50% hedging. The numbers that I said for EBITDA impact is typically 50% when assuming a hedge rate of 50%.
Thank you very much.
Operator, the next question is from Mr. Andrew Heap at Berenberg.
Hi. Could I just ask about inventory levels? We've had a step up of about EUR 80 million, if you exclude Siltronic, and I think we can fairly safely assume that's pretty much all down to polysilicon. Do you see the current level with the extra logistics as a sustainable level, or would you like to reduce that back down and reduce the inventories you built up either in Q4 or in 2017? Secondly, could I just ask what pricing pressure you're feeling in polymers from recent capacity additions from competitors in Asia?
In terms of polysilicon volumes that we have increased in inventory. We do not see a reduction of that. We really want to keep that in order to improve our service capability for the customers.
Okay.
The second question on polymers. Could you repeat it again?
Just how much pricing pressure you're feeling?
Okay.
from the likes of Celanese in Singapore?
Okay. We see price decreases at a similar magnitude over the quarters against prior years. There's no fundamental change. If you're asking about the regional split, yes, there's more pricing pressure in Asia. That's right. It's no trend that this is increasing against last year.
Okay.
Operator, the next question is from Mr. Peter Mackie at BNP Paribas.
Good afternoon, all. Yes, I have just one simple question or very naive question remaining. If I look at the polysilicon division, if I just do a very simple sales minus EBITDA and adjust for the ramp-up costs you guided to in the first couple of quarters. Those sort of cash costs have actually been declining quarter on quarter for the last three quarters. That's despite the ramp-up of Tennessee. I assume that an element of that is you'll have capitalized some costs into inventory in the third quarter. I just wonder if you could sort of talk a little bit about the fixed cost base, in light of Tennessee ramping up and how we should think about the fourth quarter, please.
Oh, that's a very intelligent question, I would say.
I'm not sure about intelligent.
You're right. We had the ramp cost in the first half, some EUR 30 million and EUR 18 million in Q1 and Q2, which are very much cash cost. We're talking about EBITDA cost.
Yeah.
That is due to the ramp. Ramping up such a plant, you need to prepare for the processes for all the loops, and that is additional cost, which is, yeah, not recurring. But on the other hand, if you are starting a plant like Tennessee, you get very close to the level of the fixed cost already early on, as soon as you start. Because it's fixed cost. We do not detail that, but it's a function of the two elements.
Right. Okay. In the third quarter particularly, you'll have capitalized a chunk of the fixed cost, presumably.
Yeah. That's typically accounting. If you have an inventory increase that we talked about-
Yeah
you have that capitalization of the fixed cost. That's right, yes.
Understood. Thank you.
Operator, the next question is from Mr. Carsten Ilgen at Bank of America.
Yes. Hello, thanks. I'm just curious. You mentioned that polysilicon demand improved substantially or improved in October, and I'd love to quantify this. I'm sure you would not want to give numbers. Are you still building inventory as of today? Is your production still outstripping demand?
Well, as I said, we purposely built inventory.
In September, I guess, and October.
Yeah, in October as well, by far less than in September. If we wanted, we could sell inventory, at a price level that we are not interested in.
Just now going into November. As of today, are you still building inventory, or is it now sort of in balance, production and demand?
We do not forecast that. As Tobias said, the momentum that we are seeing in an increase in orders looks promising.
Do you see competitors re-ramping capacity already again, or are they still shutting down?
Some of them had regular maintenance shutdowns, just as we have sometimes. They did it really at the right time, just as we had maintenance at the right time in the third quarter. I assume that they will ramp up capacity very soon. I don't know the details of it.
Mm-hmm. One last question. On Tennessee production volume, should we model full volumes for Q4 already, or should we wait until Q1 for that?
I would say it's very close to full capacity. With such a new plant, I think the ramp-up was beautiful for such a big addition on the green field. You have to consider that. The ramp-up basically was very similar to what we had in Nünchritz was brownfield. There was already an existing chemical plant with experienced operators, et cetera. Tennessee basically did almost the same. After nine months of ramp up being very close to full capacity, I think is something our people can be proud of.
Yes, definitely. All we need is the market to take the volume. That's great. Thank you.
Operator, the next question is from Mr. Thomas Schwab at Societe Generale.
Yes. Good afternoon, gentlemen. I have only one question left. It is on chemicals and especially on the price pressure you mentioned in both silicones and polymers. I am still a little bit intrigued. You at the same time said the utilization rates in Q3 reached above 90%, which is quite good. Could you take us through the areas where you see the price pressure, and what is driving it, and what should we think about the next couple of quarters? Thank you.
I take the question, Thomas. The price pressure definitely comes from also our raw material input prices. We have some areas where we have formula pricing that is one-to-one pass-through. Overall, given the situation on our input side, our net pricing is still positive. Net pricing means the pricing of our products against the pricing of raw materials. It's depending on product by product and also region. There's no clear picture, and it's been very similar over the quarter. It's a year-over-year comparison. Q1, Q2, Q3 look very similar and with respect to price development.
May I ask a little bit differently? Are your customers asking you actively for a pass-through on the raw materials, or would that be going too far?
Customers ask for pass-through of raw material prices when raw material prices are going down, and they forget it when the prices are going up. With many customers, we have annual, semiannual contracts. Every time we go into the discussion with the customers, of course, there is a discussion about pricing. That's standard. It's not unusual that customers are asking for lower prices. We just have to convince them that they get so much additional value from our material that we can resist this wish.
Perfect. Understood. Thank you very much.
Thank you.
Sure. Thank you.
Operator, do we have more questions?
At the moment, there seem to be no further questions. Ladies and gentlemen, if you would like to ask a question, please press nine and star on your telephone keypad.
Operator, we have one question from Mr. Markus Mayer at Baader.
Yeah. Good afternoon, gentlemen. Actually, two questions. One is on the slight price decline in WACKER BIOSOLUTIONS. Is this coming from the gum products or from your fine chemical productions? Secondly, can you give us an update on the process of your large maintenance work in Burghausen? Is this running well?
You probably mean the shutdown of the canal-
Exactly
to produce hydroelectric energy?
Yeah.
That actually has been restarted today. Hydroelectric energy is produced again today. The whole project went extremely well. It was finished almost two weeks earlier than originally planned and about 10% under budget.
Very good.
With respect to pricing in BIOSOLUTIONS, that is mainly indeed gum, as you assumed. That's a perfect example for raw material pass-through from formula pricing.
Okay.
Pricing our input material is lower than last year.
Yeah. Okay, thanks.
Operator, we have a question from Mr. Martin Jung from .
Yes. Hi. Thanks for taking my question. Just a few questions on polysilicon to follow up. Do you expect volumes in the fourth quarter to recover to levels seen in the first or second quarter this year? Will it be less or more volume? In terms of demand, is it just China that was weak in September? Is it also other regions? Lastly, on the cost performance, do you expect further production cost improvement for polysilicon, especially in Germany?
Well, we never made forecasts on polysilicon volumes, specifically for a quarter. As I mentioned before, it's very difficult to do that at this point because, we select whether we put material in inventory or whether we are going to sell it. Overall, I would say, momentum is good. It's very difficult, except for long-term contracts, but on short-term contracts, it's hard to say what will happen in December. At this point in time, we have no reason to assume that we see something like in September.
Okay.
With respect to polysilicon cost reduction, we communicated that this is a strong focus of all our businesses. There's a clear cost roadmap for all plants, all polysilicon plants, and that definitely includes the two German plants, and that also includes now Tennessee. We do not give the details on that, but, there's something baked into our future.
Thanks.
With respect to the end markets, it is just China that has slowed. There was so much discussion about that very strong first half of the year and then the slowdown in the third quarter. Yes, it was very much China.
Okay, thanks.
Thank you all for joining us today and for your interest in Wacker Chemie. We're looking forward to further discussions with you as the quarter progresses. We expect to publish our full year preliminary results at the end of January or in early February next year. Stay tuned. We'll be back again with a conference call on March 14th with our full year results in 2017. Goodbye.