Covestro AG (FRA:1COV)

Investor Day 2021

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Sep 28, 2021

Welcome to our virtual investor event. My name is Ronald Kohler, and I have the pleasure to guide you through today's event. We will start with the presentation given by Markus Steilemann, our CEO, followed by a presentation from Thomas Tuckfer, our CFO. And we will update you on our vision to become fully circular and on our new way of working. The presentation is available at the Investor Relations webpage for downloading. Afterwards, we will have plenty of time for questions. If you want to ask a question, you can either that into the Teams chat function or you can send an email to the Investor Relations department. We will read the question out and answer it afterwards. Before we go to the presentation, I actually want to show you our new campus building, which very well represents our new spirit and our new way of working. A warm welcome to our virtual investor conference. Thank you for tuning in to experience Covestro's transformation toward a successful future. As Ronald said in his introduction, today is about our vision. We become fully circular. Let us explore today where we are on the way of implementing our strategy sustainable future. As always, we trust you have read our safe harbor statement that you can also download from our website. Before we start into the presentation of today. Let me start with the big picture of Covestro. As human society, we face universal challenges. These global challenges include scarce resources for a growing population, increasing pollution and climate change, an economic crisis and the impact of the coronavirus pandemic and last but not least, deglobalization and trade disputes. Covestro's purpose and vision address these key challenges. So why are we here? We want to make the world a brighter place, and our vision is to become fully circular. The new Covestro strategy, Sustainable Future, was introduced with the full year 2020 earnings call in February this year. Our strategy is about how we set the path for tomorrow. So long term, We want to become fully circular. What does that mean? It means fossil free polymer production. It means switching to renewable energy. It means managing end of life materials and create with our partners joint solution. On our path to circularity, We drive sustainable growth with our strategy. So it's all about developing sustainable products and solutions, invest in long term attractive and sustainable markets, build assets faster and cheaper. The acquisition of the RFM business is also part of this. Through the combination of businesses, we are building a leading sustainable coatings resins player. To achieve all this, we need a strong basis by becoming the best of who we are. So essentially, executing on our transformation program, LEAP. Along the way, we foster digitalization to become a digital leader in chemistry, and we further develop our We Are 1 culture. These topics also represents today's conference agenda. I will talk about becoming fully circular and sustainable growth. Thomas will cover becoming the best of who we are, complemented by a financial update. So let me first talk about culture because part of how we want to execute our new strategy is our culture. We call it We Are 1. Firstly, acting responsibly. During recent quarters after coronavirus pandemic. I was impressed by how serious the global Covestro team has been about taking care of ourselves and others. Not putting at risk the health of coworkers and business partners truly showed what acting responsibly really means. Secondly, wanting better. Having embarked on our path to a circular economy, I see mind blowing transformational innovation in our labs, plants and the entire organization each and every day. Thirdly, winning together. Recent times of constrained supply puts a lot of stress on our customers. But those times also revealed with a high level of passion about customer needs that our sales, production and supply chain teams show every day. And 4th, leading forward. Finally, we have set a future direction towards circularity, and we will lead our industries towards that vision. So if you look at the strategic objectives that substantiate our strategy and what we intend to achieve, to take a look at the slide at hand. Pursuing these long term goals will truly transform Covestro. The chapter becoming fully circular is all about investing in circular economy projects almost 1,000,000,000 CapEx over the next 10 years, producing 100% of our products from alternative raw materials long term and transform polymer research through increasing investments in digital research and development. The next chapter is driving sustainable growth. We grow by long term average CapEx slightly above DNA. At the same time, we complete an MDI world scale expansion by 2026. And we pursue options for bolt on acquisitions in Solutions and Specialty segments. The chapter become the best of who we are is about raising the mid cycle EBITDA from roughly $2,200,000,000 to $2,800,000,000 in 2024, maintaining our fixed cost unchanged until 2023 based on the year 2020, improving the EBITDA margin of Solutions and Specialties segment to 17% in 2024. And during today's presentation, we are going to elaborate on each of these objectives. So let's dive into the first part of today's agenda, Becoming Fully Circular. We have a long history of innovation that is inspired by sustainability. At the lower part of this admittedly very busy chart. You see on the timeline how products and processes related to innovation were inspired by sustainability. Let me pick one example. In 2011, we introduced our energy efficient oxygen depletion cathode technology for chlorine production at our Oedingen, Germany site. The ODC technology consumes about 30% less electricity than the conventional process and will be employed in world scale at our new chlorine plant in Tarragona, Spain. The startup is expected during late 2022. At the upper part of the timeline, you see sustainability milestones on a corporate level. And here, I would like to also pick 1, a recent one. Our new vision was introduced in 2020. And at the beginning of this year, we introduced a carbon dioxide reduction related component in our long term bonus system. Today, a significant share of Covestro products positively impact sustainability in our daily lives. Based on 2020 sales, more than 30% of sales are generated in applications that positively impact sustainability. Polyurethane materials, for example, increase energy efficiency of buildings and along the cool chain as MDI based rigid foams are excellent insulins. Engineering plastics on the other hand enable e mobility as lightweight, impact resistant material options for battery car manufacturers. Polycarbonate blends are also material of choice for electric vehicle charging stations. From our differentiated solutions and specialties products, waterborne coating and adhesive systems replace solvent based systems or bio based raw materials replace fossil based feedstock, all enhancing the ecological footprint off coated objects. This chart, though being incredibly busy, demonstrates Covestro's understanding to a circular economy. Chemolysis is the most promising approach to end of life solutions, and I'm going to explain to you why. The gray, pink, purple bubbles in center is our value chain as of today. Each extra processing step on the x axis requires additional conversion energy on the y axis. Hence, moving up, Circular end of life solutions aim now to maintain the carbon once extracted from fossil or alternative source in the production loop as long as possible. So conceptually, the smaller the loop, the more attractive for two reasons. Number 1, the smaller the loop, the later the reentry point as circular feedstock. And second, the smaller the loop, the less energy needs to convert into a circular feedstock. Importantly, any circular loop requires energy to feed carbon back into the value chain. Firstly, obtaining energies from renewable sources. If fossil sources remain the source, the climate effect of circularity might even be negative. Secondly, it is important in this context that producing our products from alternative, that means non fossil resources. Thirdly, we and the entire value chains, we work and will need to define completely new end of life solutions. If mechanical recycling, chemical recycling like chemolysis, pyrolysis, end of life or energy recovery is the best option that will depend on specific product and industry as well as the infrastructure and many other factors. And lastly, we strongly believe this task can only be mastered in cross industry collaboration. So on this basis, let's start now with the first of our focus areas. The long term goal is to obtain all of our electricity from renewable sources. Besides electricity, our required energy also includes heat as well as steam. As of today, 3 deals on renewable energy are in place. More deals to follow. The first power purchase agreement or PPA was signed with Erstat already back in 2019. Electricity will come from offshore wind park that will be newly built in the North Sea. Starting in 2025, Oersted will provide us with electricity equivalent to approximately 10% of electricity consumed by Covestro in Germany. The second PPI was signed with ENGIE in early 2021, supplying electricity from 15 newly constructed wind turbines. So since April of this year, about 45% of our site's electricity demand in Antwerp, Belgium is covered by renewable energy, saving about 39 kilotons off carbon dioxide emissions annually. And the latest PPA was signed recently with the Chinese company Datang Wuzhong New Energy Corporation for power from solar farms in China's northwest region Ningxia. This agreement covers the equivalent of roughly 10% of our site's annual electricity demand in Shanghai. The second focus area on our way to circularity is all about alternative raw materials. The long term goal here is to obtain 100% of products from alternative raw materials. Given the different nature of products, applications and end of life options. We pursue various routes, 3 routes show here shown here covering some 45 different products that have been commercial for some time and about 90 ongoing research and development projects. Since 2016, we commercially use carbon dioxide from industrial waste streams. Carbon dioxide replaces here up to 20% of crude oil based feedstock of polyols. Under the product brand Cardion, these products are marketed, for example, to formers like Recticell for foam mattresses. In contrast to polyurethane based foams, Polycarbonate can also be mechanically recycled. So here in 2019, we launched our 1st polycarbonate grades from post consumer recycled PCR content. These PCR grades have a significantly reduced carbon footprint and are applied in various consumer electronics applications for a second life. Yet another route is pursued for our coatings raw materials. As coatings and adhesives bond to their substrates, separation at end of life is difficult or impossible. Hence, we explore bio based feedstock. 1 of our hardeners for automotive coatings contains up to 70% of its carbon basis from renewable raw materials. We work in close collaboration, for example, with the automotive group Audi and the coating experts SBSF Coatings. Another very interesting option in that context is to use certified sustainable feedstock in order to lower the carbon dioxide footprint of our products. And it is important to take a more detailed look into this concept. The principle of the so called mass balance approach is shown on this chart with the example of our raw material for rigid foams, MDI. Fossile and alternative feedstock are mixed in production, but separated in bookkeeping. This way. Alternative raw materials are tracked through the value chains and they are attributed to selected end products. The ISCC standard is applied to all stages of the value chain and is recognized for mass balance worldwide. We are all familiar with this concept from electricity. Coal plants, nuclear power stations, wind turbines, solar panels, all sources feed in electricity into the same grid. If a user chooses a 100% renewables tariff, the utility separates the bookkeeping while the actual electricity is always a mix. So the mass balance approach has 3 main advantages. The first one is alternative raw materials are introduced into value chain as drop in solutions. 2nd is this method uses the existing chemical infrastructure with its high efficiency and economies of scale. And thirdly, the quality and properties of products remain the same. So the concept of using certified sustainable feedstock as a drop in solution was a key motivation to enter 1st supply agreements for mass balanced feedstock in the past 12 months. So in the next couple of slides, I would just like to show you the way how it works and how it can be commercialized. We received the first delivery of 1,000 tonnes of certified mass balanced phenol in October last year. The Finnish company Neste produces certified bio based hydrocarbons from renewable raw materials such as waste or residual oils and fats. Borealis in Austria then converts hydrocarbons from Neste into certified phenol and acetone. We received now the first delivery of 2,000 tonnes of certified mass balanced benzene from Total Energies in January of this year. So for both product groups, these deliveries only mark the beginning. We will expand offer of mass balanced products in line with customer demand. In order to apply this chain of custody method also to our plants, we also received ISCC CC plus certification for colestral sites, for polycarbonate made in Antwerp, Belgium and in Shanghai, China, and for MDI, met in Erningen, Germany and Shanghai, China. So I'm pleased to report in this context about an agreement that Covestro entered with a customer, H. B. Fuller, in July of this year. This is a multiyear supply agreement with attractive terms for both parties. If customers see value in sustainable products, their sale can be as profitable as the sale of conventional products. HP Fuller is to become the 1st customer for adhesive application with a mass balanced MDI. Our joint mission to replace about 60% of fossil raw materials in MDI by renewable precursor and thus significantly improve carbon footprint of product. The challenge is to use existing manufacturing processes without technical conversions and to deliver mass balanced products with no inferior quality compared to conventional alternative. The solution is that Covestro supplies mass balanced ISCC Plus certified sustainable MDI as adhesive raw material. HP Fuller uses certified MDI for DARE reactive hold, hot melt, adhesives, mainly used in automotive, wood, composite and, for example, the textile industries. So HP Fuller intends to expand the use of this solution into other products end areas of production. So the key question for you might be, Do we have to supply certified do we have to invest to supply certified sustainable MDI? This process chart for MDI production illustrates certified sustainable MDI, even with a high mass balance of non fossil raw materials is possible with current technology and existing production assets. The dotted green lines indicates non fossil alternatives for each conversion step. On the right side, we list the various feedstock and intermediates we use along our MDI train. Alternative raw materials as potential drop in solutions are already commercial or precommercial. Covestro is developing bio based aniline as an alternative precursor. This bioaniline will be made from industrial sugar. The project is still in an early R and D and if successfully commercialized will be our proprietary technology. Another essential question for you might be, what happens if customer demand shifts by large extent to sustainable MDI? Will we be out of business with our existing WorldSky production asset? The answer, due to globally available drop in solutions for non fossil MDI raw materials, We see no risk of stranded MDI assets in the foreseeable future. The same that I just explained in principle applies to that question for TDI. Do we have to invest to supply certified sustainable TDI? The list on the right side indicates once again for the various feedstock intermediates we use along our TDI train, Alternative raw materials as potential drop in solutions are all commercial. Like an MDI, due to a globally available drop in solution for non fossil TDI raw materials, we see no risk of stranded TDI assets in the foreseeable future. And now for the purpose of completion, we provide the same analysis also for the production of polycarbonates. Again, alternative raw materials for various feedstock and intermediates along the production are commercially or pre commercially available as and are commercially or pre commercially available as potential drop in solutions. So in total, like in MDI and TDI, we see no risks of stranded polycarbonate assets in the foreseeable future. Having demonstrated now how we really work in-depth in all those areas to come to sustainable raw material supply. I would like to take another deep dive in our approach to circularity. I presented 4 focus areas besides renewable energies and alternative raw materials. The other two areas are innovative end of life solutions and cross industry collaboration. And here's one project on this chart as an example for both. Our goal is to reshape the polyurethane value chain for soft foams into a closed loop, as shown in the middle of the chart. The focus is here on chemical recycling of polyurethane mattress foam. We have a proprietary process for recovering both BU components, polyol and the amine or TDA. Our process delivers a recycled polyol in high purity and quality. This is important to enable a high content of recycled raw material in existing processes and plants. Our process also delivers a recycled TDA that fulfills the specifications for conversion into TDI in existing processes and plants. We currently assess that this proprietary recycling process gives us a competitive advantage over solutions that peers are developing for this task. A preliminary life cycle assessment or LCA demonstrate a significant improvement of the carbon dioxide footprint compared to the pure fossil route. The significant reductions of carbon dioxide footprints is increasingly becoming a customer demand. We also have developed shared IP on high accuracy, high yield from sorting the respective foam. However, this part of the process is to be covered by an industrial partner. Industrial scale up is next priority. So the pilot plant started already up in Leverkusen, Germany in the Q1 of this year. Investment into a first commercial plant is about to be kicked off soon for an intended startup in the mid-2020s. Together, all shown efforts on way to full circularity, we will ultimately progress to climate neutrality. As of today, Covestro can achieve large parts of progress toward climate neutrality with existing technologies and production assets. What does climate neutrality mean? Here. It is all in the discussion about defining climate neutrality as absolute carbon dioxide reduction for scope 1 and scope 2 emissions, emissions that make up roughly 20% of Covestro's total greenhouse gas emissions and that we can directly influence. Roughly 60% as shown on the chart of greenhouse gas emissions are related to our upstream value chain. The majority of this to our feedstock. Switching to renewable feedstock or mass balanced feedstock as presented would significantly lower the carbon dioxide footprint. Another roughly 20% of greenhouse gas emissions is related to downstream value chain. A large driver here are consumer preferences, behaviors and the willingness to pay. So those Scope 3 emissions, we can only influence indirectly. Still, there's options for scope 3 emission targets, and they are in discussions. So one would be an intensity target, so reducing emissions per ton of production. Ultimately, the value chain partnership must lower their direct emissions to reduce our indirect scope 3 emissions. That only works in close partnerships, collaborations and stewardship along the value chains. So which technical options exist today and what are their limitations? Well, technical options mostly exist today. Some examples are listed in the lower part of the chart. However, there are various limitations that prevent a short term adoption. For example, those limitations relate to capacities of alternative feedstock, infrastructure, renewable energies all necessary investments and readiness of new end of life technologies. However, I am optimistic that politics and industry together can solve this, but it requires tremendous efforts. Besides all this, besides all the discussions and preparation and really making of climate neutrality, we also discuss the targets that are associated with that. And there is already a comprehensive set of key performance indicators and goals underway as part of the Covestro nonfinancial disclosure. In our long term incentive remuneration, a carbon dioxide equivalent reduction key performance indicator was introduced for our top management at the beginning of this year. In the short term incentive remuneration, we plan the addition of a non financial KPI for 2022. Data to the climate disclosure project climate questionnaire was submitted during the summer. Our first rating is pending and to be published soon. The Scope 3 greenhouse gas emissions are in preparation to be included in our annual report 2021 and will be audited by KPMG. At the same time, we are planning a more comprehensive climate related disclosure according to the standards of the Task Force for Climate Related Financial Reporting, short TCFD, as a part of our full year 2021 results. The full year 2021 results will also contain disclosure in line with the EU taxonomy. I am convinced the additional non financial disclosure underscores our commitment to sustainability and will in future better allow to track our progress towards our vision of becoming fully circular. With that, allow me to switch to the next chapter of our sustainable future strategy. The recent political initiatives create a material demand boost for our products. Around the world, quantitative climate targets have been agreed. According measures and initiatives are being set up. This applies to the European Union and 2019, to China in fall 2020 and recently to the United States as well. They all target for the reduction of greenhouse gas emissions and climate neutrality. What they all have in common, in all regions we see emission reduction targets for building and insulation. Reducing emissions through higher energy efficiency standards for new buildings and promoting renovations of existing or old buildings to higher standards. And in all regions, We see emission reduction targets for automotive transportation, mainly by shifting from combustion engines based on fossil fuels to emission free electric vehicles. How Covestro products provide solutions to these challenges is what we are going to look at on the following pages. So let's 1st and foremost look at the standards for buildings. How do increasing energy efficiency standards and renovations of older buildings to higher energy efficiency standards impact Covestro? These macro trends increase long term demand for polyurethanes. Higher energy standards are difficult to achieve with inferior insulation materials. Polyurethane based insulation is one of the best options to reach high energy efficiency or zero emission standards. All over the United States of America, the European Union, and China, higher energy efficiency standards for buildings have been declared. How much more polyurethane per building is required to insulate a building in order to fulfill the targeted high efficiency standards. You see regional values on the right hand side of this chart. In Western Europe and in the U. S, it's around 40% more polyurethane than used for current insulation standards. In China, it's about 30% more polyurethane. It becomes even more tangible if you look at the absolute values. Building a standard one family house at 0 emission standard in Western Europe requires around 1.2 tons of polyurethane for insulation. Interestingly, we are indifferent to new building versus renovation because upgrading a standard one family house with insulation standards of the 1970s to a modern zero emission standard also requires around 1 ton of polyurethane. How do climate related policy targets around the globe affect the Covestro relevant automotive market? A shift towards electric vehicles means a boost to the demand of Covestro products. The chart in the center combines 2 trends. 1st, shown by lower by the lower part, the light pink part of the columns. Industry consultants expect the number of annually produced light vehicles to increase by 25,000,000 by 2025. This is translating into an annual growth rate of 6%. The major growth driver for automotive industry are electric vehicles. Hence, the annual number of produced battery electric vehicles, or BEVs, is expected to increase from around 2,000,000 in 2020 to more than $13,000,000 in 2025. Shown as the dark pink part of the column, this share is to increase from 3% as of today to 13% of total light vehicles. Especially, the expected outgrowth of BEVs translates into increasing demand for polycarbonates per vehicle. And that is also shown on the columns on the right hand side. While an average conventional combustion engine car consumes around 10 kilogram of polycarbonates, single crash absorbing battery housing of a BEV car already consumes around 8 kilogram of polycarbonates. This application alone nearly doubles the need for polycarbonate per car. Other aspects of e mobility from car design to functionality also favor the use of our polymers. Generally speaking, upper class vehicles consume significantly more Covestro polymers than standard models. Accordingly, an upper class BEV needs up to 5 times more polycarbonate than a conventional car. How do future demand trends translate for the global demand of MDI? We expect MDI demand growth to accelerate from today around 4% 5% to around 6% per year. The key underlying driver here, as already elaborated, is the increasing demand in construction coming from both new buildings and renovation of existing buildings. Both factors together. Let PU based insulation outgrow the general construction. The superior price performance ratio of MDI also supports the substitution of competing inferior insulation materials. Against this backdrop, we expect MDI demand to outgrow MDI supply in the foreseeable future. The MDI industry utilization rate is expected to move towards levels with pricing power for suppliers. The expected annual supply growth amounts to 5% between 2020 2025. Here in the by far biggest announced expansion of 500 kilotons by 1 competitor in China has already been on stream since February this year. And during the next 2 years, we do not foresee any major capacity expansion at all. Therefore, I think it is now the right time to talk about an MDI investment. With this very favorable outlook for MDI, we resume our MDI world scale investment to enable further growth. As a recap, in October 2018, we initially published our investment plans into an MDI Worldscape plant in Baytown, United States of America. In January 2020, we put these plants on hold. Today, our MDI production assets are virtually fully utilized in all regions. Despite some plant debottlenecking, we are only able to grow below demand growth until the start up of a new plant. The investment will also allow us to grow with the market for many years. While we had paused the project. Covestro reached a milestone for higher resource efficiency. In Brunsbergen, Germany, we successfully launched the pilot plant for MDI production based on the highly energy efficient ADIP technology. Our proprietary adiabatic isotherm phosphgenation technology reduces energy related carbon dioxide emissions by up to 35% compared with a high performance phosgenation technology. The reaction is controlled more efficiently and does not require an external heat supply as the heat generated during the reaction process is used. Also, this significantly improves our cost position. The 12 months pilot phase is now about to be completed exactly in time for application at large scale in our newly planned MDI asset. After the current project stage, we will analyze and decide if The location will be USA or China. Why do we pursue both options? Well, construction costs in the U. S. Have significantly increased, leading to a lower return on capital employed versus our original plan. Nonetheless, and unchanged versus our original plans, the U. S. Is a highly attractive market in comparison. In China, construction costs have remained relatively flat with attractive return on capital employed. Additionally, strong demand growth in China and Asia creates the need of another plant in this region. In both cases, a ramp up this plant in 2026. Besides MDI, we also expect accelerating demand for the product group TDI. For TDI, we project the 5 year average demand to accelerate from around 5% per year to around 6% per year. There are 2 key drivers. First one, the recent stay at home trend increases demand in furniture with increasing demand for comfort. TDI based soft foam as the basis for mattresses and upholstery benefit from the stand. And secondly, in automotive and transport, the growth of vehicle production in total and the comfort trend within substitution towards TDI to spur future growth. As a consequence, the TDI industry is expected to move into balance. An accelerated expectation of TDI demand growth, as described, meets a lower expectation of supply growth over the next 5 years. The average annual supply growth decreases from 3% to 2%. So both trends a favorable for a faster than before expected normalization of the TDI supply and demand balance. With competitor projects in delay, We now expect only one relevant capacity addition in the industry until 2025. Covestro aims to grow its TDI volumes in line with industry demand growth. This is supported by a debottleneck investment in Dormart in Germany, ramping up around 2023 and further debottlenecking measures after 2025. Remember that Covestro is the global cost leader in TDI with a cost advantage of about 55% versus the average of the 5 least competitive plants. Our favorable cash cost position puts us in a strong competitive position even in low cycles. So looking at standard MDI and TDI as they are both part of our new segment performance materials. So it is important in this context to look at the new segment structure. How does future growth of this segment compared to the Covestro Group and the other segment solutions and specialties. We aim to grow the segment performance materials by 3% to 4% per year or below the respective market development as we are limited by our product availability. We expect to accelerate this growth again with the ramp up of our new MDI Worldscape plan in 2026. In contrast, we expect a higher growth rate in the Solutions and Specialty segment of 6% to 7% per year. As a result, the differentiated business is expected to outgrow volumes of our standard business until 2025. We forecast the segment Solutions and Specialties to increase its relative share of volumes from about onethree to about half of our group by 2025. The outgrowth in solutions and specialty is mainly driven by engineering plastics in specialty films, while other business entities are expected to grow in line with the market. So let us have a closer look with the growth drivers in the following on the following pages. Let's start with Engineering Plastics. Engineering Plastics, as one strong growth driver, our solutions and specialty segments is heading towards selling higher value products. So instead of selling standard polycarbonates to the merchant market. We plan to steadily increase the internal use, therefore, creating more value in outgrowing the market in engineering plastics. The big driver here is, amongst others, auto and transport with 9% market growth per year, especially driven by the structural growth coming from the shift towards electric vehicles. The other 2 customer industries of engineering plastics, electro and health care, also show healthy demand growth over the next years. Electro benefits from generally strong demand as well as from 5 gs and connectivity trends. Healthcare benefits from an aging population and a trend towards home care with flexible devices. So with Engineering Plastics, We aim to grow in line with the high growth differentiated polycarbonate business with 8% growth per year. For this, we are investing into additional compounding capacities. Compounding means upgrading of standard polycarbonates with an additional conversion step to highly differentiated polycarbonates. Let's turn now to specialty films. Another strong growth driver of our Solutions and Specialty segment is specialty films. Here, we expect to double our sales until 2025. With market demand growth of 6% at 2025, Herein, we contribute our strong technical expertise and filled innovation pipeline. Further relevant driver are joint developments with customers with long term contracts. We particularly to push for market share increase in the medical segment where we benefit from IP protection, and we plan to grow the industry with more than 20% sales growth per year. And in the augmented reality business, where we want to grow with the emerging market of holographic light guiding, we're going for both in the existing, but the small market of head up displays in vehicles as well as in the new market of virtual head mounted displays and glasses. For additional volumes, we are investing almost €200,000,000 between 20.20.25. In our coatings and adhesive business, we aim to grow with the market. We had a period of flat sales volume development in a highly competitive environment with limitations of global supply chains. Currently, we are already sold out in several product lines. So for additional capacities, we will invest up to €300,000,000 With that, we plan to again grow with the market demand. Additionally, there are the top line synergies from the RFM acquisition, and they are contributing €100,000,000 of sales, what goes along with €40,000,000 of EBITDA impact. Close to my heart is now the next topic. Besides demand driven and investment driven growth, Innovation is another important growth driver, especially in solutions and specialties. The highlight is our new area of digital research and development that has the potential to transform chemistry as we know it today. The principle of work is shown on the chart. There is data generated in labs, and they are transferred to a digital infrastructure. The digital applications allow now seamless data processing. Another example is regarding chem informatics. So for future engineering of chemical reactions in new processes or plants, the data input is taken from the lab plant and digitally scaled up the world scale. This is about time and resource consuming scale up process from lab scale to demo scale being replaced by a digital solution because then all the way forward to a commercial scale would be skipped. So looking at the benefits for Covestro with these two examples, we today estimate that applying digital research and development consistently would result in an increase of research and development efficiency of up to 20%. Secondly, our competitive edge in polymer research could be expanded by digitally simulating reactions for our polymers without time consuming experience. Thirdly, we also consider to provide digital services to other companies and license models. As a first point, the focus for new production technologies is on circular economy. And last but not least, digital research and development will also drive the development off new product formulas for the development of new catalysts. One focus in this area of digital research and development is quantum computing. Quantum computing has an essential advantage compared to high performance computing. And this is all about scaling. Computational power in terms of bits is growing in a linear fashion, while computational power of cubits, so for quantum computing, is growing exponentially. There's a huge advantage of quantum computing, for example, in computational chemistry because in the end, Computational chemistry is highly complex mathematics. So the Covestro approach is shown on the right side of the chart. We work in a network of selected partners. Covestro's key competence within this network is translating issues of computational chemistry into hardware requirements of partners. And this is a fundamental challenge because the available number of so called cubits are below the required number of cubits as of today for an adequately depicting and simulating of molecule segments. At this point, we're working, for example, with 2 companies, HQS and QC Ware to develop various elements of the software stack. And Google provides the hardwares. And last but not least, University Research is doing research on fundamental topics, for example, in areas of theoretical physics. So I hope I could give you a first impression about where we are on our journey. And with that, I'm now handing over to Thomas, who will guide you through our 3rd strategy chapter, become the best of who we are. Well, ladies and gentlemen, also from my side, a very warm welcome to our Virtual Investor Conference. I'm very happy that you're joining this event. And thank you, Markus, for your presentation of the first two strategy pillars. Let me now talk after the, presenting the vision of the growth path, talk about the transformation to become the best of who we really are. And we have grouped all ongoing transformational activities in one program which we call LEAP, and we initiated this program in 2020. Now, before diving into the details of that program, Let me familiarize you with 4 major principles that really drive the key actions that are embedded in LEAP. And you have them here on the page. So the first one on the upper left hand side, the first principle is we regroup our businesses in line with the key success factors and according to the idea of customer centricity. And that is new because in our old structure, our business units where most of the time grouped according to chemistries, which from a customer perspective, but also from a commercial success perspective is not always the best solution. The second principle, and you'll find it on the upper right hand side, is that we make each business entity accountable for all business specific and all success critical resources, and we call this collectively our, run activities. And that is also new because before, and you can see this on the slide, There was a missing end to end resource responsibility and our structure did not really foster true entrepreneurship in the company. Principle number 4 of our transformation is that we realign our strategic cross functional competencies and group functions to foster really the long term development of Covestro and to promote key strategic initiatives. That's also new because before that, many things were dispersed across the company and not really effective. And the last and fourth principle, you'll find it on the lower right hand side of the page, is we develop a future proof and competitive cost structure. I'll talk about it in some more detail, But it's also a clear new paradigm because before, our cost structure was not always reflecting the distinct and specific operating models. So, the laid out transformation of LEAP is really substantial. And these things really started with the top leadership team. Now, as you can see, the structure is effective since July 1st this year. There are no personal changes on the level of the Board of Management. However, we have shifted some important responsibilities also on this level and I will talk about it in just one minute. What you see here and what is really important is that the new 7 business entities are led by experienced leaders, and you have their pictures on the lower side of the page. You can see this is a diverse team of international experienced Covestro Managers. All of them have several years of in our companies. They represent various nationalities, academic backgrounds and professional trainings as well as locations. And I think this is a fantastic proof point for the great talent pool that we have. And I should also mention the BU leaders that some of you might know from some conferences that we held in the past. All have left Covestro for different personal reasons. So I said there is an important transformation going on and I would like to illustrate this. And maybe the best thing to do is with the allocation of our full time equivalents, so FTEs in the company. And you can see this in the two pie charts. The left hand side shows you the former situation and the right hand side is after the transformation of LEAP. What you see on the left hand side is that the area of our Chief Technology Officer, Klaus Schafer used to be responsible for all production plants and a central procurement unit, and that is the light blue area of the pie chart on the left. And reporting to our Chief Commercial Officer, Sujita Govil, who are the 3 business units PUR, PCS, and CAS, with a dedicated marketing and sales organizations. Now what has happened with the transformation, and I think that is really well illustrated in the pie chart in the middle is that the majority of the of the FTEs is now part of the operational business entities and that is shown in pink on the right hand side. So the new 7 business entities continue to report to our CCO, Sujita Govil, but they are now fully responsible and accountable not only for the sales and marketing functions, but really for the end to end resource chain. And that is a big change in how we run the business and that most of the employee employees are in market facing units and are fully embedded into a P and L responsible entity. So, the comprehensive redesign of the new business setup and also the new reporting structures, we already presented that earlier this year. And the operational run activities as well as the new reporting segments reflect 2 distinctively different operating models, which are derived from a customer centric view. And I would like to talk you through this. So first of all, there is the segment Performance Materials. It comprises Standard Products with focus on reliable supply, competitive pricing and lowest internal cost. And as you can see on the chart, the reporting segment Performance Materials is identical with the Business Entity Performance Materials. Now on the lower right hand side of the page, you see the segment Solutions and Specialties comprises differentiated chemical products that have a higher complexity that need much closer customer interaction where innovation and product management are absolutely key. And the reporting segment Solutions and Specialties unites the 6 business entities which are all sharing the same operational model off a solution specialty provider. So like before, we will also report the segment others and consolidation. You see the little gray bar on the bottom, which basically comprises the group functions. And our reporting in the new segmentation will start with the Q3 interim statement of this year and we will look at some historic numbers in more detail, which we have reconciled with the new structure. You will find us and I will present this in the later part of this presentation. So let me just reiterate one thing which I think it's absolutely critical and important to understand our new transformation because these 7 business entities and are now fully accountable for all business specific and success critical resources. And this chart wants to illustrate the step that we have taken and also the difference to the old organization. So on the left hand side, you see the former 3 business units which we had and they were accountable essentially for sales and marketing and some BU specific R and D. However, they did not oversee the integrated planning. They had no influence on the raw material purchasing and also not on the production of their products. And on the right hand side, you see that the allocation of responsibilities for the newly created BEs is different. They have the full sales and marketing responsibility. They do BE specific research and product application development. They are responsible for the integrated supply chain planning. They do the purchasing of critical products for their Pacific BEs and they're also overseeing the production facilities because they're very different from a 20 fourseven production to a batch production which you may have in a solution and specialty situation. So that is really one of the key thoughts and it's a major change in how we run this business. Now we would like to help you with the reconciliation, of course, from the former business units to the new business entities. And the principle that we're consistently following is the distinction between the standard business and the differentiated business. And the graph that you see here essentially has 2 dimensions. The first one is we show the sizes of the 4 men also the new business entities in proportion to their 2020 sales. And that is excluding our RFM acquisition simply for the reason of simplicity. And the second dimension is that the breakup of the business of the former business units and the allocation to the new 7 business entities within the 2 reporting segments so that you can really track and trace how things have evolved. So you see the segment Performance Materials. It is shown in orange. It comprises our standard MDI, our standard TDI, the long chain polyols, the standard polycarbonates, polycarbonate resins and also the basic chemicals. And the segment Solutions and Specialties that is shown in pink comprises coatings and adhesives raw materials in our business entity coatings and adhesives. It has the polycarbonate compounds in our business entity Engineering Plastics. It has specialty MDI and polyols in the business entity Tailored Urethanes as well as the business entities specialty films elastomers and thermoplastic polyurethanes, which are comprising the respective businesses. So I hope this chart helps you to reconcile the old with the new world. Let us dive a little bit deeper into the 2 segments and start with Performance Materials. On the left hand side of the chart, you have the products again. I just gave you the highlights. But what is more important is what you find in the middle. So what are the key success factors for the Performance Materials entity? It's, 1st of all, ensuring high asset utilization. In order to optimize our output, the entire supply chain and the large scale production will be planned and steered in an integrated process. Secondly, it's about reliably supplying our customers. And that means both for the external customers as well as the internal customers. And our clear goal is we want to be our customers' preferred supplier. And the 3rd key success factor is really strengthening our superior cost position. We have a focused and we have a focused customer and product portfolio and we will be based on standard products. So cost efficiency and lean order management are really key. And what do we achieve with this? And you'll find it on the right hand side of the chart. The benefits for our group is we want to maintain the leadership in our core industries. We want to also implement our growth strategy centered our vision of being fully circular. We want to create the critical mass for Covestro in these standard offerings. And of course, we will also want to supply our downstream businesses based on market prices. And that last sentence is very important. I'll talk about it in some more detail. But please remember, the allocation or the delivery of products in our InterBE structures is based on market based pricing. Now let's look at the same chart for our Solutions and Specialties business. And not surprisingly, this looks very different. Again, you've got the products on the left hand side of the chart. And what counts are the success factors in the middle. So first of all, it's about implementing a pull supply chain. We will use our deep customer understanding to deliver unique value to our customers. The second thing is being leading in innovation. In order to maximize the value proposition to our customers. We continuously innovate products and applications to stay in the lead. And last but not least, it's about managing complexity. On the one hand, we have to efficiently steer customers and products at a small scale. On the other hand, we have to balance our cost of each solution against the value for the customer and also the value that we can extract in terms of the pricing. And that setup will again contribute and deliver benefits for our group. And you have them on the right hand side of the chart. We will maintain our leadership in differentiated niche applications. As for the performance materials, this will help us to grow and fulfill our vision of eventually becoming fully circular and it will also improve the earnings margin from a relatively low starting point. I will talk about this also in some more detail just in a couple of charts. So while the 2 segments comprise essentially our run activities, our group functions. We bundled them, on a strategic level to create the so called build activities. And what I'm talking about here, I think you can see in the chart in the bubble. So it's about the group innovation. Markus talked about the chances of digitalization and digital chemistry. It's about sustainability, our process technology and engineering functions, but also functions like IT, HR, strategy and M and A. So So what we're doing is really bundle those functions as central functions to make sure that we have the critical mass to really be powerful and innovate, to drive the transformational solutions beyond our current business, to anchor sustainability and to Larry on a group wide basis and to systematically embed and align the measures for the innovation digitalization. And as I said, Markus gave you the example of digital R and D. What is key here is we cannot afford to do those things 7 times in the group. We want to do it 1 time centrally and with more, force so that we really drive the transformation of the group. And I have one example for you which maybe illustrates very well, what we mean by this and the example is for the Group Function Process Technology. You don't have to read all the little dots on the chart. Essentially, what we're doing is transforming a decentralized community into a centralized technology enabler. Because before the reorganization, each of these 12 colorful dots with 1 group sitting in different business units. And therefore, it was a very decentralized community. What we're doing is bring this all together in 1 central process technology organization. So first, our process technology now bundles the key technology competencies and digital capabilities to to maximize efficiency and reliability of our core manufacturing processes. Secondly, process technology towards Covestro's sustainable growth strategy by rapid upscaling and implementation of leading process technology technologies. And thirdly, this new process technology group also supports the transformation to full circularity by developing new process technologies based on renewable raw materials. And I think it's easy to imagine you cannot do these things 7 times. You can only do it one time and you need the critical mass in a central function to really have the efficiency and effectiveness for those functions that you need. So let me just touch on one other topic, which is our headcount development. By executing our prospective program, which we then successfully closed at the end of last year. In this year, we're steering towards another reduction of roughly 400 FTEs to roughly speaking 16,100 until the end of the year and we are on a good path to achieve this. And this is, of course, excluding the people that we took on board with our RFM acquisition. So if you include this number at the year end, we will probably look at roughly 17,009 100 FTEs in the group. What the bar on the very right hand side in the chart also indicates is that probably with LEAP. We do have further potential for further efficiencies in the group. And I will talk about this now in some more detail because what matters much more than FTEs is our ambition to keep our fixed cost flat. And that is the key message here. Remember, I said the 4th principle of LEAP was to build a future proven competitive cost structure. And we said this will be manifested by the target to keep our fixed costs flat all the way until 2023 relative to the 2020 level. So let me just give you a brief recap. We published these numbers with our full year 2020 results in February of this year and they are unchanged since then. So as I said, the target is to maintain fixed costs flat until 20 23 based on the full year 2020. I should also reiterate that this excludes the and LTI bonus schemes because they are, of course, fluctuating. And I would like to say that it might sound unambitious, but We do think that this is a quite challenging target because first, there is, cost inflation we have to tackle every year, especially wage inflation. And secondly, 2020 is a very low cost year because remember, we implemented a lot of contingency measures and successfully concluded the prospective program. So it is a very low base. I would just like to look a little bit at the historic numbers so you can see that the fixed cost development was almost flat in the years 2016 2017 despite some dis synergies that we had, because of the separation from Bayer. And there was a strong increase in 2018, given the full focus on growth and many hirings, especially in the engineering and process technology area. So in 2019 2020, as you can see, active cost management through our prospective program and some short term measurements led to decreasing costs. And now let's look into the future and into this year. So for 2021, we're expecting a €100,000,000 to €200,000,000 cost increase. This is simply due to some swing backs, but also due to some higher maintenance costs and an increase in investments for digitalization and circularity. And then in 2022 2023, we expect to counterbalance those increases through the implementation of LEAP so that if you take those 3 years together, we should be at the same level as we left it in 2020. So that concludes our 3rd strategy pillar. And I would now like to talk about the financials. And let me first say what is the impact of all these things that we did in terms of strategy but also in terms of acquisitions? I think the first key message for you is we're raising our mid cycle EBITDA guidance from 2,200,000,000 in 2021 to SEK 2,800,000,000 in 2024. So let me just remind everybody on the call, what do we mean with mid cycle EBITDA? It is the EBITDA that the Group should be generating in mid cycle conditions of the market. And we are raising this, as I said, to 2 point €8,000,000,000 and what you can see is that the dotted blue line obviously is much steeper from 2021 to 2024 than it has been in the historic years. So there's a clear increase or over proportional increase in our earnings capabilities across the cycle. And now what is driving this, vice in EBITDA? So first, it is, of course, the step up from the acquired RFM business, which we closed successfully in April of this year. Secondly, I will talk about it in some more detail in just one slide. We will generate the synergies from this acquisition and we are on well on track to achieve this. And thirdly, of course, the LEAP program with our cost containment measures will also positively contribute to this increase together, of course, with the growth that we see in the market. So as I said, RFM is, of course, an important factor in this step up and I would like to give you an update on where we stand with the integration. And the key message here is the integration is running well. We can fully reconfirm the synergies and we're very happy with the operational performance. But you have some more details here on the slide. So, let me just remind you when we announced the deal, we said we would target synergies of €120,000,000 Now we're now 6 months the owner of the business and I can say that the identified potentials have been successfully detailed, validated and quantified for all measures. And therefore, now 6 months owning this business, we can reconfirm the 120,000,000 and we are even slightly ahead in the implementation our cost synergies. So you can see in the chart we're targeting CHF 20,000,000 for this year and we had originally only penciled in €10,000,000 for 2021. I would also like to highlight that the operational performance of RFM is going well and fully in line with our expectations and the business case that we had. And last but not least, but maybe this is also a very important factor, we are very pleased with the outcome of an employee survey which we conducted because 94% of the RFM employees who joined us said that they were happy with Covestro and positively excited about the integration. And I think this is maybe a soft factor, but many of you know that this is the basis for really also a successful financial integration and the business success that we want to achieve with this acquisition. So let me now talk about our cash allocation and our priorities. So you know that we have always depicted our priorities in declining order from the left to the right and that has not changed. So our first priority is CapEx because with our industry and cost leadership position, this has been the most value creating use of cash and we also think it will be the most value creating use of cash going forward. 2nd is dividend. We do want to pay an attractive dividend to our shareholders and therefore we have change our dividend policy to a payout ratio of 35% to 55% based on our net income. Number 3 is portfolio and the most prominent example obviously is the RFM acquisition. I just talked about it. We're very pleased with the integration. And finally, on the right hand side, what has our lowest priority are share buybacks. And I can tell you we would only do this in a very opportunistic and anti cyclical way. So currently, this is certainly nothing that has any, that is in the cards for us and we're not looking at any options here. Let me talk in some more details therefore about the first 3 priorities that we have and start with CapEx. So if you look at the slides, you see for all the years. First of all, our CapEx spending and also the DNA. Those are the 2 columns. And you see the bluish line which shows you the relationship of those 2. And the key message is that over the years, we are roughly spending in line also with our depreciation and amortization. So let's look a little bit into the historic years. You can see that in 20 15 or from 2015 to 2017, we're essentially under spending because we were growing into our capacities. For this year 2021. We're expecting a CapEx number of around $800,000,000 and this is including RFM. For 2022 2023, we're expecting CapEx around our depreciation and amortization, gradually increasing because of also our bigger asset base. And then for 2024 to 2026, we foresee capex above D and A because it's capex is including the growth investments into the MDI World Scale asset. And at the outer years, so after 2026, we expect capex again below D and A below the D and A level with the long term outlook of capex around D and A. Now I would just like to make a couple of comments. So first of all, These projections also include investments into our circular economy projects of almost €1,000,000,000 over 10 years and Markus alluded to that as well. And for each year, the numbers that you see here, they also include our maintenance CapEx. So for 2021, this is roughly between €350,000,000 €400,000,000 and the maintenance part should, in absolute terms, slightly increase over time in line with our growing asset base. So let's talk about the dividend. As I said, we clearly want to pay an attractive dividend and we want that our shareholders participate in the growth of the company with an attractive payout. So our dividend policy is a payout ratio of 35% to 55% based on net income and that policy has been in place since 2020 and I would like to reconfirm it for the future. Now of course, your most pressing question is what does this mean for the 2021 dividend? And we have sketch out a little mathematical exercise here on the chart, and I will comment on that. So you know that our EBITDA guidance is €2,700,000,000 to €3,100,000,000 for the year and this would translate into a net income number somewhat between €1,250,000,000 at €1,600,000,000 as you find the number here on the chart. Now if you apply the payout range of 35% to 55% to that, that would lead to a dividend of between 440,000,000 and €880,000,000 and you have the per share dividend then below those bars. So I think my personal comment would be, when we talk about the payout range, I do personally not consider 2021 to be an absolute peak year. And therefore, I would not think that the very low end of the range should be appropriate for this year's dividend. But this is, of course, the CFO's opinion, and I'm not alone determining what will happen. And it will also not give you the exact dividend, but at least it will tell you where I personally think it should not be for 2021. So with that, let's briefly speak about M and A and portfolio. We have two things here for you. On the left hand side is the divestments which maybe sometimes we're a little bit unnoticed over the past years, but what you can see is that we divested businesses with total sales number of €600,000,000 and an EBITDA of €20,000,000 however, at a very attractive multiple of 10 times. And what we acquired on the right hand side is the RFM business, so almost $1,000,000,000 in sales with in EV to equity with an EV to EBITDA multiple of 6 times if you take into full consideration the synergies. So we do think that, this was a smart approach and I would say that, we will further pursue value enhancing bolt on acquisitions for our Solutions and Specialty segment. But of course, we will continue to be very selective in terms of that they have to be value accretive and have to be attractive in terms of the IRR. So with that, I would like to go a little bit deeper into the numbers for our two segments. And what we have done is, is to restate the historic numbers into the current structure. So, let us now take a look at the financials of our new segments and here you see, 1st of all, the Performance Materials segment. What you see is there is a strong recovery after the coronavirus pandemic and that is the very right hand bar on the chart. You also see that the numbers, so the sales numbers, but more importantly, the EBITDA and also the margin are quite fluctuating over time because they're driven by supply and demand. So in the years 2017 'eighteen. The EBITDA was contributed by the fly up margin in TDI. And then the competitive environment began to be quite challenging at the end of 2018. And then in addition to that, The first half of twenty twenty was burdened by the impact from the coronavirus pandemic. Since then, however, we have seen a very broad based rebound and recovery and we've been virtually sold out since Q4 2020 against the backdrop of strong demand and consistently constrained supply. So this is why the numbers are fluctuating. What is important to note is that there is obviously captive supply from the segment Performance Materials to the segment Solutions and Specialties and we charge this at market prices. So therefore, the EBITDA margin that you see here, is including the inter company earnings, but it is without the corresponding internal sales. And I think this is something that you have to keep in mind when you look at the EBITDA margin from Performance Materials. So let's now take the exact same view on our second segment, Solutions and Specialties. So compared with the Performance Materials business, the performance of Solutions and Specialties is relatively stable and you see sales are growing until 2018 and then declining from the pass through of lower raw material costs and then during the coronavirus pandemic, Solutions and Specialties was even stronger affected by the automotive industry, which was the industry that was obviously hardest hit. Since then, I would say that volume growth and price increases have led with a strong rebound and you can see that the EBITDA margin is also fluctuating but to a lesser extent than with Performance Materials. So again, I would like to reiterate the captive supply by Performance Materials is charged at Performance Materials market prices. And therefore the lower margins that you see in 2017 'eighteen went obviously along with higher sales prices from Performance Materials. So let's look at the 3rd segment, which is our Others and Consolidation segment. Essentially, this bundles all the items that are beyond control of our operational segments. And business wise, this means and includes the site business activities like infrastructure, real estate and the sale of used assets and it also bundles the group functions, the Board of Management costs and the central group projects. So compared to our reporting and our previous structure, the others and consolidation now includes really all costs of group functions that are beyond the control of the operational entities and therefore the numbers are lower or more negative then in our previous reporting. I would like to spend one more minute on this topic of intercompany supply because here what we tried to depict is the impact and illustrate the impact of the intersegment earnings. So with that, the standard product market prices Charge by Performance Materials impact our Solutions and Specialties earnings in an anti cyclical way. So what you see here is the blue dotted line that shows the adjusted with EBITDA margin of Performance Materials and it excludes the intersegment earnings. So with that, it only shows the earnings with the corresponding external sales which are considered. And the intersegment Supply is charged at market prices, so the intersegment earnings are determined by 2 things. 1 is the Performance Materials prices and secondly, of course, the Solutions and Specialties volumes. And with that, you see the intersegment earnings in 2017, 2018 are very high with an anti cyclical, so negative effect on the EBITDA margin off Solutions and Specialties. I think this relationship is just important to be understood when you look at the numbers of our 2 segments. There is, however, one thing beyond the pure technicality that I would very clearly highlight here, because for you see here the EBITDA margin for our Solutions and Specialty segment. And our clear messages and that is the green dotted line that you see. We want to bring the margin of that segment to 17% by 2024 because in the past periods, irrespective with whether they were more peak or more trough, Solutions and Specialties never delivered more then 14%. And we do think that this is unsatisfactory. So On the other hand, what I would also say the major advantage of our new structure is that it gives us full transparency on where we with our profitability on a stand alone basis for our businesses. And therefore, the key thing for us is to tackle the issue and improve the margin of Solutions and Specialties and you see the key measures on the right hand side. The number one thing for me is focus on value based pricing. So really be absolutely clear what is the additional value that we deliver to the customer, what are costs that we are having and make sure that we can command an adequate pricing and compensation for this added value. And this, of course, got blurred in the past because people were looking at the integrated margin. This is over. We will look at standalone margins and I think personally this will be a very big lever to improve profitability. Secondly, also you see it on the right hand side, there should be fixed cost dilution because of the strong growth that we're expecting. And Markus talked about the 6% to 7% until 2025. We have the RFM business and the synergies that we will generate that should also be helpful. And last but not least, of course, also LEAP will help to increase the margin of this business. So with that, let me just summarize the Covestro Financials. The key messages. Covestro is on a growth path. We are raising our mid cycle EBITDA guidance from €2,200,000,000 to €2,800,000,000 in 2024. We're also fully confirming and reconfirming the $120,000,000 synergies that we will generate with the RFM acquisition. We will focus on capex with capex being on average slightly above our depreciation and amortization. We will improve the EBITDA margin of our Solutions and Specialty the business to 17% by 2024. We reconfirm our dividend policy off a payout ratio of 35% to 55%. And again, you have also heard my personal assessment of where it could be in 2021. So with that, I would like to hand it back to Markus for the concluding remarks. Thank you very much, Thomas. It's always a pleasure to listen to you when you are presenting all those numbers and make it very, very easy to understand what we are all about and what this business all about. So allow me to wrap it up for today. As we demonstrated, Covestro is transforming toward a successful future. And therefore, I would like to once again come back to the key highlights. Covestro is to become fully circular with attractive business cases building on mass balances, drop in, alternative raw materials, energy and innovation end of life solutions. Secondly, the future demand growth of Covestro products is boosted by political initiatives around the globe enforcing climate protection and sustainability. The organic as well as inorganic Covestro growth is progressing with the MDI World Scale Plant project resumed and strengthening solutions and specialties business. Our transformation exploit the full Covestro potential supported by customer centric organization, fostered entrepreneurship and a future proof cost structure. The shareholders participate in Covestro's growth path through attractive dividend policy based on net income payout ratio. And we would like to thank you for your trust and loyalty and invite you to be part of our journey. With this, back to Ronald. Yeah. Thank you very much, Markus and Thomas. And thank you all for listening and I hope you were not overwhelmed by all the details we have given to you. Nevertheless, we still will give you time for more detailed questions, but we want to do a 5 minute break and we will see each other then in 5 minutes from our side back in the studio and from your side. Yes, we are open to receive more questions. We already have a lot. But of course, the it's still possible to suggest with more questions. And so see you in 5 minutes. Bye. Welcome back to our Q and A sessions. And as I said, we already received a lot of questions. We will try to answer the questions in the following order as I came in. At the end of the day, I mean, we already had actually questions which were posted at 11:30. So Be not surprised if you have posted a question at 2 o'clock, you might be not the first one. And we have so far 22 questions. But as I said, the row is open. And, yes, you can insert more questions if you like. The first six questions are actually coming from Christian Seitz, It was indeed the first one, submitting the first question at 11:30, but then some more following up questions. And I will read them out and then the team will answer it. So the first question is actually on the forced power outages in China and is there with an effect on Covestro or on our value chain. Markus, perhaps for you. Yeah. Christian, warm welcome from my side and thanks for your question. And to actually be very precise and clear, we have not been affected as Covestro from those forced power outages nor to our knowledge any one of our suppliers has been affected to a significant extent. Then we go for the second question and it's regarding our MDI project. Your MDI project, what had led to the decision to optionally do this in China? In 2018, you were discussing with SEK 1,500,000,000 of CapEx. Is that still the current figure for the MDI project? And perhaps, Thomas, for you. Thanks, Christian. First of all, there are many things, of course, playing into our decision. I think we talked about China, which is a strongly growing market. But I think you're specifically alluding to the CapEx number, the SEK 1,500,000,000 which we cited in 2018. I would say it's not a secret that there has been significant, cost inflations, since then, especially for materials like steel, but also for labor, especially in the United States. So therefore, this is, of course, also one of the reasons why we're looking into all options that we have. And I would say relative to the 1,500,000,000, there would be a slight increase to that in China, but there would certainly be a significant increase to that in the United States and therefore we are in a very early stage to resume the project and to evaluate exactly this and to have then a full fledged business case to then take a well founded decision. And I think we stay with Thomas with the next question, and that is, How do you currently cope with the higher feedstock cost? Are customers still accepting higher prices? Well, I would say the general answer is yes. We have been able to successfully push through the prices to our customers. And therefore, if you look at the mark to market number, which I think is a good indication of what's going on, it stood at 3,100,000,000 at the in the middle of the year. It still stands at 3,100,000,000 as we speak today. And I think this is just another proof on that, yes, we have been able so far to hand to push through the price increases to our customers, especially in the more commoditized products. The next question on next 3, I guess, are for Markus. The first one of these 3 is, do you see a volume impact from the car industry structurally semi supply issues on Covestro. Can you quantify this impact? Or do your product simply go somewhere else outside of the car industry? Well, Christian, if you look at the trends in the automotive industry, you can see that this semi the crisis as your structure semi supply issues, as you have named them, are not there since today. So they have been around for a couple of months, I would say, even for the last, yeah, 8 months, 9 months, and it was becoming obvious that, therefore, there is some topics. On the other hand, I can say that we not only successfully shifted respective demands from the automotive industry into other segments where necessary and possible, But that we're still sold out. That's the current situation. So we have seen first slight signs off a very small amount of orders that has been canceled or been postponed, but we are still sold out with all respective assets and with all respective materials that go into the automotive industry. So that's the current situation. The next is on the MDI Tarragona project. And the question is, is a debottlenecking of towards 220,000 kilotons by 2022 still in the plan. And an additional question on that, are you still planning an 130 kT expansion in polycarbonate in Gottingen? And I guess, polycarbonate is actually referring to the compounding we have there in Jorgen. Yeah. Christian, on the MDI topic for Tarragona as we have looked into the investment plans as of 2020. And we have, therefore, also postponed some of the projects. MDI in Tarragona was affected by these revised investment plans. And Edwai from today's perspective, we would expect this 220,000 tonnes of MDI in Tarragona to come on stream by 2025. With regard to Oerdingen. Here, we are talking about polycarbonate compounds. That means material that goes into the new business entity, engineering plastics. And here, we have consistently, let's say, pushed through the respective investments. And that's why these respective investments are actually on stream and are available to the market. And I would like to clarify with Tarragona, we talking about the 50,000 expansions going from 170,000 tons to 220,000 tons and that is postponed. Good. That were the 6 question oh, no, there's another the 6 I forgot it from Christian. Still, what happened to your PCS brownfield expansion plans in Kaohsiung? Markus. Yeah. Christian, also here, we have followed up with those plans, and, therefore, there is no changes to the original plans. That means we have, the, invested or actually expanded the capacity, based on the existing infrastructure that we have built many years ago already by by 150,000 tonnes, and we keep the option to also have an additional 50,000 tonnes in this overall PCS investment at hand for investment for expansion at a later stage. Yeah. There is another follow-up question from Sebastian. That's on the MDI front and I'm just reading actually, the additional aspect which is the return on capital employed. What is our view on the return on capital employed pretax or after tax on the China or US MDI investment. Perhaps, Thomas? Yes, I mean, you know that we have very strict targets. So we want to achieve, a return on capital employed that is in line with our incentive system, which says, it should be 7 percentage points above our cost of capital. So that roughly equals 15%. That is certainly a challenge for a greenfield investment, but we think that we will be at least close to that. And therefore, this is also where we're critically looking into all the options with respect to locations. I alluded, to the fact that there has been quite a significant cost inflation in the United States and therefore it's really a very thorough business case that we're currently building to see what is the right location also with respect to the returns that we can generate. And therefore, your question is spot on to what we are currently looking into with our assessments. And there is another question regarding, a trading update question, okay? And not unexpected obviously. Question is Q3, trading update. Can you a bit elaborate on the current development? And perhaps also for Thomas. Yes. I think what I would simply like to do is reiterate what Markus said earlier today in an interview. We have given you a range for our expected Q3 EBITDA results between SEK 760,000,000 and SEK860,000,000. As I said earlier, pricing has been holding up quite nicely and therefore we're currently expecting Q3 to come out around the upper end of the guidance range that we have given, so around the 860,000,000 and that is in line with what we said earlier that pricing has been strong. Next question potentially also for Thomas how do you see better to say it's from Gina Iwamoto, we changed so to say to Goldman Sachs and the question is how do you see the availability of alternative feedstock and how will you evolve over the next 10 years? Are you able to lock in long term supply contracts? On what basis are prices negotiated? Thomas? Yeah. So I think, Georgina, many things baked into this one question. And and I think we have to really distinguish between very different topics in terms of alternative feedstocks. So if we talk about energy, you've seen that we have embarked on several PPA contracts with Erstej, but also for Antwerp and also for other regions. Those things, of course, are long term contracts and the market is increasingly developing. I think it's slightly more difficult in locations like China and the U. S, but especially in Europe, I think we do have much more opportunities. And here we have long term prices that we can lock in. The market for those bio based drop in feedstock products that we need for our drop in solutions, that is really currently in its infancy. And I would say, well, we would say that we are the ones who will promote this market and build this market because essentially what we're looking at as a chain is increasingly our customers are asking for certified products to also fulfill their scope 3 emission the ambitions that they have and to fulfill the promises that they are making to their customers. And therefore, we do see a pull from our customers. It's clear that we want to be also very proactive to ask those drop in solutions from our suppliers and therefore the market is developing. Currently. There is, however, no long term contracts. The prices are made very much on the basis of supply demand and expectations that we have what our customers will ask and therefore we are very committed to build this market because we think it will clearly take off over the next number of years. So it's an additional question which goes in a similar direction. I just read actually second part, I think we answered the first part. The second part is how is Covestro able to make much more ambitious CO2 and circularity targets versus peers? Perfect question for Markus. Yeah. Georgina, also warm welcome from my side and thanks for the question. So, If you look at this, there's never one single reason in this, let's say, I would say, transformational change of the entire industry. So what does that mean? I believe that instead of just focusing on proclaiming even more ambitious targets for this or the other topic, for example, in carbon dioxide or in circularity. What we are aiming for is getting into the making. That means driving the respective projects, making sure we talk to our respective partners on the supplier side and on the customer side, see which feasibilities, opportunities and possibilities we have by, for example, referring back to Thomas, now really driving also and developing markets for bio based alternative feedstock as drop in solutions. So there's numerous aspects that we, as a corporation, can and will drive ourselves. And on top of that, there's customer demand because we see now, in recent months, a significant pickup, and increase in customers actively asking for products with the lower carbon dioxide footprint, so to reduce their scope 3 emissions and total emissions for carbon dioxide in their value chains. And on top of that, for sure, there's measures by, for example, governments and, the regulatory bodies that could help to further push this development forward. But we are not waiting for politicians and politics to decide. We try to figure out in which fields can we move forward, in which fields do we have our destiny in our own hands. There, we start already doing things and get into the making. And the rest, so to say, is the icing on the cake. So if regulators walk in the right direction jointly with us, that is highly welcome, but not a precondition for us to move forward. And Georgina is also asking a question regarding TDI and I if we received many questions on that. I think we'll elaborate a bit broader here and then we might skip the one or the other follow-up question on that. So the question here is demand TDI 6% appears higher than historic trends. And what is the driving force behind that? And how confident are you about that 6% growth pattern, Markus? Yeah. Also here thanks, Georgina, for the question. So if you look at this, there's numerous factors that come into play with those numbers. Number 1 is we are taking into consideration for the 5 years also the low basis in 2020. That means 2020, the market was down by roughly minus 8% according to our insights. So if you include that and not taking a 10 years outlook, but rather 5 years outlook, you come to growth rates in the order of magnitude of 5% to 6%. Secondly, as we have mentioned in our presentations, Thomas has done that and I also have done that. We're looking into a shift of TDI demand because there is this stay at home trend. And I do not think that, that stay at home trend it's just a short term development, but this will change also to some extent or remain to some extent after the coronavirus pandemic, and that drives demand for furniture, that drives demand for upholstery devices, that drives demand for mattresses, for example. Then we see, as part of the change towards electromobility, also an increased, wish for higher comfort. That means different seating, in cars, and that requires higher amounts of TDI. And these are just some of the reasons that from our perspective are driving higher demand for TDI. And as always, we take lots of data into consideration, and then we have given you the best shot in terms of a good risk weighing about how we look into the mid term future. So that means the next 5 years. That trend. If you look at the 10 years horizon, we'll from our today's perspective not stay at that level. However, in the next 5 years, we are confident that it stays on that level, as confident as you can be looking into the future. The next three questions coming from Isha Sharma from Stifel. The first one is about MDI and the MDI exposure to construction. And the question is, isn't your exposure in construction higher in commercial buildings versus residential buildings? And does this differ regionally? And what would it take to penetrate the residential market? And I think it's obviously referring also to our charts with the increased use in residential. So Markus, I guess for you. Yeah. Sharma, it's not easy, because you're referring, let's say, to different individual markets with regard to the property market, so residential versus commercial buildings, at the same time looking at different regions. And yes, there are differences in the respective regions. However, coming back to what we have presented earlier, what I also set in terms of homes that need to be refurbished and renovated versus newly built homes. We clearly can say that jointly with our customers, the polyurethane solutions, the MDI solutions are still in terms of performance and price, one of the best, if not, at least to my understanding, the best material that you can get for money with the respective performance that MDI based rigid forms have for housing insulation. So long story short, these opportunities for our customers to penetrate the markets in the respective regions. All those markets are very local, so there is no global recipe to that. Nonetheless, recent years have shown that polyurethane based insulation systems are gaining market share exactly due to the price performance range, and that is happening actually everywhere across the globe. And we expect despite slight differences in the respective markets that this trend also will continue, and with that, will also globally benefit the MDI total demand. There is a follow-up detailed question on TDI from Isha. And this is we also have actually seen a decreasing number of supply projects coming on stream, specifically what was pushed out. And she suggested, is it which is pushed out or is it Van Hua Fuzian which is pushed out? So our answer, Markus. Yeah, thanks for that. So I'm actually not sure who is actually currently pushing out. My understanding is that, one was not the one according to what we have was actually pushing out, but I would actually refer back here to Ronald. Maybe Ronald, you have the details at hand. Yeah, indeed. I mean, we obviously always look at a period, and this period is now 2020 to 2025. And indeed, from our judgment, Dahua will not be able to deliver inside of 25. And if they are coming, and we still have some in our models, they will be definitely rather going several years later. On the other side, based on our information, Van Hoe of Wuzian project is running according to schedule, so at least we have no other information on that and that's therefore still in our supply projections for the 5 years. So So the last but least, a question for me, Isha, regarding China. And what could be the potential impact of the current developments in China on Covestro giving the regional importance in production and demand growth. And I guess also, Markus? Yeah, Isha, looking at the overall impact of Evergrande that it might potentially have, then first look at the overall GDP contribution of the entire, let's call it, construction and also associated service industry in construction. And then you see that we are just talking about an overall GDP contribution of the entire industry of maybe around of maybe around something like 10 ish, so 10%, 15%, let's say, percent of the total GDP contribution. If you put now this into perspective. What could it mean in a worst case or in a base case according to a recent study that has been published by Goldman Sachs. You can say that maybe the impact of the Evergrande, let's say, issues has an impact of 1% lower GDP growth. There is also scenarios that going in a worst case of up to 4%. Nonetheless, this is about newly constructed buildings, but at the same time, we see and we have and I have elaborated on that earlier, that there's very strong demand also in terms of renovating existing buildings, and that alone is a key driver for the respective demand for MDI based insulation solutions. So from that perspective, I would not expect that this has a significant impact on the opportunities for our MDI growth in China or in Asia Pacific. And on the energy topics, and I think that is somewhat related to a question that was asked by Christian Veitz earlier. We do currently not see any impacts on our production sites in Shanghai, and we do also not expect any significant impacts on our construction sites in Shanghai the production sites in Shanghai, sorry. The next question comes from Tim Jones, Deutsche Bank. And the question is, do you see differences in how easily available renewable energies or alternative raw materials are in China, Europe and the U. S. Or are all three regions the same, I think. Thomas? Yeah, I can try to take this, Tim. I would say The answer is yes. There are differences from region to region. And just in one sentence, it seems for us the easiest in Europe, then comes the United States and the most difficult in terms of energy is China. And one of the reasons, China, you have got a regulated energy market. You're essentially allocated the energy and the influence that you have is relatively limited. So it's we're taking various measures here to speak to the government, but our options in Europe are certainly better. And this is why many of the examples that we have cited do have their origin in Europe. In the United States, the issue is, when you're sitting in the Houston area, The wind energy typically is rather produced in California. So it's not so obvious, to bring it then, to to the Houston area if you don't want to deal with certificates and other things. So here's also a little bit more complicated than what we can do in Europe. But I can tell you we're looking into all options. So it's not that we're just focusing on Europe. We really have a broad view on all our production sites in all the regions and these solutions will be different, but also the situations as I just described is different. And then with respect to bio based feedstock. Also, I would say, but Markus, you can correct me, the situation in Europe is probably the further advanced and Europe is at the, it has a head start relative to other reasons with respect to the availability. Good. Then we would have actually had an additional question from Charlie Webb from Ron Stanley. However, I believe they are both on TDI and both are so far and it's the same as for me for from the Sebastian Zerts question on TDI. If that would be not the case, I guess write it again, please, if to see another feature here. So let's go for the follow-up question from Isha from Stifel. The first one is, why do we not receive the volume price split for the new segments? Thomas? Yes. Isha, thank you so much for that question. And the answers you will receive it, for our Q3 numbers. And therefore, you will have the respective numbers for 20 21 and then also the comparables for 2020. Just to manage yours and everybody's expectations, what we will not be able to do is a complete restatement off those bridges and those analyses all the way back to 2016. And therefore, as I said, starting in Q3, You will receive the numbers with their respective previous year comparables. There is also a follow-up question from Isha and another on polycarbonate. Could you also give us an update on the polycarbonate supply and demand dynamic? And how do you expect the BPA tightness to develop here? On what impact would it have on margins over the next quarters. I'm looking a bit, Thomas. I can take it. So, BPA tightness, I think that's maybe a difficult one. So it has been very tight. It has been slightly relaxed over the last, I would say, couple of months or so. We do not have a precise prediction on how exactly BPA prices will develop. But the fact is that we are quite independent because we are producing BPA ourselves and therefore, we think that at least the tightness will potentially continue for a little while, thereby preserving the margins that we're currently seeing. And I think on polycarbonate supply and demand dynamic, I mean, we gave you the numbers in the chart. I think this would be all that I could there's nothing beyond that that I could currently report, Isha, on the supply demand balance for PC. I would add to that, I mean, the chart we provided always at our roadshow presentation is, so to say, up to date. We didn't have it here in the set. So from that perspective, polycarbonate remains the only segment where we see over the next 2 years more supply coming on stream than demand. That also makes us obviously cautious, on the polycarbonate commodity side. But also as a reminder, we obviously want to take also our upstream commodity parts, so to say, and put it on downstream in engineering plastic and therefore we see an ongoing, let's say, good results in the engineering plastics, about potentially some correction, so to say, on the price side of the commodity part. Yes, that's still part of our expectation. We have some several questions. Nevertheless, I would like to take the opportunity and remind you there is still the chance to put in more questions either into the system or send us an email to ircovestro.com. The next question is from an undisclosed participant and it is: with the new structure, are there some economies of scale losses as each division purchases separately. So it's purchasing. There are some companies in the industry going the other way to ensure efficient supply chains. If you could elaborate on the pros and cons of both, please. Who wants to take it? I think I could take it. So I think to be very clear, we did a split and maybe this has not this did not come across clearly enough. What the BEs are purchasing themselves are the BE specific and BE critical materials that they need. All the things that go cross BE, so basic chemicals or also energy remains in a function that does the purchasing centrally for all the, BEs that need those materials. But what we put into the BEs are a number of very mission critical BE specific materials where it makes absolutely sense that they control also the procurement of those materials. So we're not foregoing any synergies here. The next with 3 questions coming from Dan Chung from Redburn. The first one is, any further color on approximate investments on the MDI capacity and I think CapEx and capacity. What is the rationale for 2026 ramp up? I thought a world scale greenfield plant takes 7 to 8 years. I think, Thomas? Yeah, I can take this. So I would say it's not, remember, it's not a pure greenfield. Irrespective whether we take the decision to build it in the US or in China, it would be on an existing site. And therefore, that is I think the first consideration. If it was China, it would be essentially not call it copy paste, but very much a closed copy of what we already have as an MDI train in China. So that obviously makes it much more efficient and would also accelerate the building. And for the United States remember we have already done some work in the years 2018 2019 which we can now take out of the drawer and bring to the most recent status. And therefore, the 7 to 8 years, that is probably on the long side. And therefore we think that we can be ready by 2026 in terms of the heavy spending because a, as I said, it's on an existing site and B, there has already been done some work that we can now usefully apply. Yeah. And in terms of capacity, we'd aimed at WorldSky capacity and WorldSky for us, we obviously aim in general for around 500,000 tonnes. However, that's also up for a final decision on that. And second question from Dan is for the growth in margins for Solutions Specialties to 17%. Does this assume further acquisitions or all organic? Thomas? Yeah, I can take this. So I think the 17% ambition and the target that really is purely organic on a standalone basis. And I describe the measures. And again, for me, the most important one is this value based pricing that the managers really to take into full account what is the value that we're adding and make sure that we command adequate pricing from our customers. So I think that is truly self help measures and looking into the numbers. But what I also would like to say very clearly, it does not exclude that we are looking for further bolt on acquisitions and therefore, especially the our segment solutions and specialties of course would be a field where we would look for potential opportunities with, the view that we always have. So it has to really to be value accretive and make sense for our investors. The next question from Dan is, if we compare the new S and S margins to the old CAS division. It seems that Engineering Plastic and Taylor Urosanes are dilutive. Any thoughts on whether there can be still pruning of the portfolio to also improve profitability. Thomas? So let me be very clear here. We have not chosen that structure as a preparation for divestments. We consider all the 6 BEs in our Solutions and Specialties segment as being core. They all earn their cost of capital. They all have a positive margin, obviously. But we do see some improvement potential. And that is not specifically a single BE. That is pretty much across many BEs where we think improvements can be done. Therefore, clear answer to the question, this is not, a preparation for a sell off. They all along to our core business. Good. Then we go on for Tali Woepp from Morgan Stanley with some follow-up questions. On the first one. Can you explain the logic behind the company's positioning on share buybacks? Why Doris Covestro why does Covestro focus on where earnings are in the cycle. Surely, that could be combined with the current share price and how the implied value looks versus mid cycle. Under the current strategy, it would suggest that Covestro is extremely unlikely to engage in a buyback. Perfect question for Thomas. Well, Charlie, so I mean, our view is we don't want to run this company with an inefficient balance sheet and we do want that our shareholders participate in the in our success. But, the reason why I would consider a share buyback unlikely and maybe I scratched out the super unlikely that you put in your question is simply that we have a dividend policy that enables us to be much more flexible and to also pay in years of very of high success, a very attractive dividend. And therefore, we think this is the much more flexible and better tool to achieve this objective that our shareholders participate in our success that we run the company with an efficient balance sheet and therefore, a share buyback. As I said, we would only consider this in a very specific opportunistic situation and would have to be really anti cyclical so that it is value accretive for the company and the shareholders. So and the last question here from again for the segment Solutions and Specialties. The low teens margins for Solutions and Specialties is low compared to other Specialty Chemicals business. Can you share with us how the returns and I guess return on Chem Employed compared to the Performance Materials business at the top and the bottom of the cycle. I also think, Thomas? Yeah. So First of all, both segments, Performance Materials and also Solutions and Specialties, they earn their cost of capital and also the 6 BEs within solutions and specialties earn their cost of capital. But of course, there's a high variation. And let me just remind you also why this is because, of course, the Performance Materials business is much more asset heavy and the solutions and specialties are much more asset light and therefore you have to put the EBITDA margin, this is not a secret, in relation to those asset bases which are very, very different. I think it's no secret that the fluctuation in the Performance Materials segment is much higher. We've seen years of fly up margins, especially for TDI, but to some extent also for MDI in 2017 and 18, where the return on capital employed was just phenomenal. But there are also years where it is significantly lower and the segment is struggling. But across the cycle, it is definitely, accretive and earning their cost of capital. And the same is true for our solutions and specialties with much lower fluctuations. So therefore, both are across the cycle, roughly comparable, but the patterns are very, very different. The next set of questions coming from Markus Mayer from Baader Helvea. The first one is, do you also have the ambition to convert Performance Materials assets capacity in Solutions Specialties business. With the portfolio change towards Solutions Specialties mainly happened by organic growth within the division. Markus? Yeah. Also here. Thanks for the question. So, if you look at this, what we have done with the transformational change into the 2 segments, one of Performance Materials and the other one, Solutions and Specialties. We have exactly done this split along the lines where are the true commodities in our portfolio and where are the true specialties and solutions. So we have taking a specific point in time, which was the 1st July, and said, okay, what we know from today, how the markets work, how the products behave, how the pricing is working, what is important to the customers to go for a very clear split. It still means that some of the products that are sold in specialties and solutions are produced in assets from the Performance Materials division. And to very, very limited extent, it even goes into the other direction so that the specialty and solution assets which are selling a very, let's say, limited amount into the performance materials. But there is no further opportunity within the given assets of Performance Materials, at least as of today's perspective, to really now shift further assets and convert those assets into specialties and solution business. Where this is possible, we have done this where we have a different product allocation fitting more to specialties and solutions. We're selling already out of the performance materials into the respective business entities of specialty of solutions and specialties. So long story short, over time, I see limited opportunities for further assets to be converted. And therefore, the majority of the specialty of the solution and specialty segment growth is coming from organic growth, as Thomas has already outlined in the context of our margin expectations and margin and also growth ambitions. If I might add a slight detail, obviously, in polycarbonate, standard polycarbonate, you currently still sell a significant part into the merchant market, which clearly the strategy is to convert that much more downstream into the solution specialties, which we do not shift the assets, but we obviously will downstream sell more of our products than as an added value product. And that's obviously also part of the growth story and part of the growth restrictions for Performance with the results for external sales. Just also to make you aware of that. Next question is, how much of your raw material supply will be based on cycled materials by 2025. And as the supply of, as an example, used mattresses seems to be an issue, Will you install an organization for the collection or will you work with external partners? Markus? Yeah. And that is also a question, let's say, that has many, many different loose ends, which we need to knit together to come to a complete picture. And there's a lot of assumptions also in that question. So, first, if you look at the point that we last year had a little bit more than 1500, maybe 2000 tonnes of alternative or bio based sourced or carbon dioxide based raw materials in our portfolio. This year, we have already purchased something a little bit more than 10,000 tonnes. You see the dynamic development in these markets. Does that now mean that we can increase that supply at the same amount or with the same amount and the same speed in the next couple of years? That depends pretty much on how those markets are developing, and we are actively pushing the development of those markets with our suppliers, and we have named a few in our presentation. Take Neste, take Borealis, take Total, and there's other players which are currently entering into that market of sustainable and alternative raw materials. So it is a very dynamic a development where it is very difficult to really now already predict where the numbers in 2025 will be we have started. We see continued dynamic. On the mattresses, it is not so much, the issue to get access, let's say, to mattresses because many consumers, particularly in Europe and to an increasing extent also in the United States and partially to some extent in China, have the ability after useful lifetime of a mattress to really give it back and those mattresses are collected. The key topic today is that there's no meaningful use for those mattresses to be recycled to a large extent. And that's why, for example, in Europe, many of those mattresses are actually ending up being incinerated as an alternative to, for example, oil or gas as a source of energy in some industries that require a high amount of energy, to run their processes. So long story short, the chemical recycling is now being built. The chemical recycling is now moving forward, and that would also enable alternative routes for mattresses to be used. So it's not the availability of mattresses more that we have to shift streams towards chemical recycling for the industry and I believe with the plans we have, with the growth opportunities that are there, we will not run short of mattresses for quite some time. Then we have 4 questions from an undisclosed participant. The first one is on Solutions Specialties margin. It has been relatively low. What does this tell us about the nature of the products included in this segment? Are these rather semi commodity segments with a mix margin across the product range. Let me maybe take this question. The answer is no. It what it tells you is not that it's maybe a semi commodity or only semi specialty. What it tells you is that, people in the past have looked at the integrated margin, including the, what is today in Performance Materials, so including the stream business and they were happy with the margin and not distinguishing what is really the value add of the downstream business and what is really the pricing at the command for exactly this value add. I can tell you that, the products are definitely, specialty and solution products and what we observe across the portfolio is exactly what you described, but for a different reason that, for different customers with similar products, we see different pricing. We do see that some of our salespeople are more focused on exactly commanding the right price than others. And therefore, I think the indication of the low margin, which we, I think, clearly labeled as unsatisfactory from our point of view, is not an indication of the product portfolio. It's an indication of the right management of the business. And therefore, it was a great experience to have first session with our BE leaders who fully embrace this new transparency and came up with an abundance of new ideas and measures how to drive the business forward. So I can really report this is not just the finance department who has this ambition. It's the entire organization who found this to some extent eye opening and is now following up on this with measures. And I think that is what is really behind. Yeah. We had a question around energy, but I guess this is a bit more specific. Here is a question impact from energy spike in Europe, if any on Covestro. Thomas? Yeah. I mean, energy prices are rising, as I said, so and not just Europe, I think it's across across the world and therefore it's not just limited to Europe. So far we have been able to pass on those prices to our customers and therefore as an indication, I gave you the mark to market, which continues to stand at 3,100,000,000. But yes, we do see that things are rising further also into 2022 and therefore therefore the focus must be to continue to pass on those prices to the customer. So my prediction will be there is no impact, but there is a clear challenge for the organization to make sure that we watch the development very carefully and include it in our pricing. 3rd question is, can you give us a timeline on the commercialization of the recycled polyurethane foam? Markus? If you look at the respective opportunities for commercialization. We first talk with PU Foam about PU Soft Foam. So the mattress example that I have given earlier, and it has been asked earlier about. And here, as indicated in the previous presentation, if now the lab scale demonstration plant is running according to plan, delivering the right products, which it does. Then we would foresee a first commercially available product based on an investment that needs to be done to really scale it up in the mid-2020s. So that is very difficult to exactly predict that as there's still a number of steps that we have to take before this can be scaled up to commercial scale, but I think the mid-2020s is a good time frame for this ambition. And the last question from that complex is, I'm still not sure how does LEAP help lower the cost. I can understand better access service to customers and have possible better growth, but what drives the cost savings? Thomas? Yes. Thank you for that question. Probably we were not explicit enough and did not bring this across very well. But it's a good question. So LEAP, if you if you look at it, really fundamentally changes the organization. I've showed you the chart where we depicted that, thousands of employees are changing into market facing organizations that we implement a full end to end P and L responsibility. What we did in in parallel to the implementation of that organization was, of course, to challenge the business leaders to come up with a list of measures to really implement their new organizations in the right lean and mean way. And I can tell you, of course, that for somebody who's running a commoditized standard business like our Performance Materials business, this has been a clear task and challenge to set up the new organization in a way that complies with, I would say, the standard in the market. And and the same is true for the other businesses. So it was not only about let's change the organization, but let's change it and set it up in the right way and just let let's to focus on the things that are necessary and let's get away with all the things that are not necessary. And therefore it is clearly not just a reorganization, but we use the reorganization to implement a full set of optimization measures that will then lead to cost savings. And just my last comment, don't underestimate the power of a reorganization in a corporate environment. It is very, very difficult to change things if the structures and processes and responsibilities stay the same. It's much easier if if there are changes and to use this wave to then really implement things that are, driving cost efficiency. And and that is what we're doing in parallel, of course. And therefore, you're right. It is, of course, about customer centricity, but it's also about efficiency and effectiveness. So we have still 3 questions on our list, but you would also have time for more. So again, if you want to have another question put it in Teams or send us an e mail. The next question is coming from Adrian Catley from Cape View Capital. The question is, how are the staff reacting to the P and L responsible and more customer focused rather than product focused? Markus. Yeah. So I think Thomas has alluded to that a little bit earlier, though in different context. It is really providing a lot of fresh energy in the entire organization. Yet on the other hand, with the reorganization, there comes also some uncertainty, at least for some time, for some people in the company. And that is 2 effects. So you have a short term effect on the one hand with regard to some insecurity because you have new colleagues, you have maybe a new supervisor or you have new subordinates and that needs some time to readjust. Yet on the other hand, exactly focusing now your entire internal supply chain and value chain on a very specific segment and really making sure that you have everything that is needed for that particular segment, for these particular products and for these particular customers and industries that you are serving and not having to change heads all the time between a more commodity prone market or a more solutions and specialty market that drives a lot of energy. Exactly like Thomas has said now is also where then the opportunities come from to be faster, to be more agile, to really focus, all your attention on specific needs that those markets have. And I think that drives a lot of energy. So not looking at short term effects that I just described, but mid- to long term that will have a very positive impact. And there's more and more colleagues now that we're talking about it, now that we are living in a new organization, we'll say that makes absolute sense. Let's continue that. And finally, I feel really fully responsible to deliver, and that gives me exactly the agility and customer centricity that I need. So I would say the perception is getting more and more positive by the day. The energy level is increasing more and more by the day. There is a follow-up question from Christian Heitz. This is, can you retrofit existing isocyanate plants with the ADIP technology? How expensive would that be, Markus? Christian, that is now a very challenging question. So Let me start from the MDI production overall. And we had one slide where we explained a little bit how, let's say, difficult or easy it is to find drop in solutions for the different stages of an MDI production. And it doesn't come as a coincidence that when we talk about MDI, we talk about a so called train. That means the real MDI product is the last chemical reaction of a long chain of different chemical reactions that we are running. So if we are talking about retrofitting with the ADIP technology, we talk about MDI trains. And here, we're talking about the last step, so from MDA to MDI. And here, according to my knowledge, you cannot take an existing last step reaction and just retrofit it, but you would have to rebuild this last step, and that would come, let's say, at costs, which currently, I think, we're not disclosing in this context, but once again, it is not an easy retrofit where you just shut down the plants for a couple of weeks and all of a sudden, you have the ADAP technology implemented, but you would really need to build the last step from the scratch. However, in an existing infrastructure, which then for sure with lower the cost and not come as a greenfield investment. So I hope that answer, even though it is a little bit longer, describes a little bit in which environment we are operating. And therefore this simple easy retrofit solution that you might have in mind will not work for that. And there are 2 last questions from an undisclosed participant. The first one is, are you assuming a higher through cycle price since raised mid cycle guidance of SEK 2,800,000,000 compared to what had been baked into the earlier SEK 2,200,000,000. Thomas? Rand, do you want to read out the second question as well? Okay. Then we take the second question together. Could you break out any other building blocks outside the program and the RFM that get you to the €600,000,000 increase. Yeah. Because I think those Things essentially belong together. So I would say to the first one, no. It's not that we're just assuming, a little bit of higher price and then that gives you the €600,000,000 increase. That would be way too easy. But of course, price is a big lever. But it's really operational building blocks that we think we have lined up that should have that should give us this increase. So it is, of course, the RFM business. It is the synergies of €120,000,000 It is the growth that we assume to be 3% to 4% every year and it is the stable fixed cost at the same time. And those are the key building blocks. I would say if you add them all together, you might even arrive at a higher number than the 2 point €1,000,000,000 but our assessment is that in corporate reality, not always 100% of all the things go right. But it might also be that the one or the other thing does work, not maybe according to plan. And this is also part of the equation that we have put into this. And therefore, we're pretty confident that the 600,000,000 step up with the measures that we have lined up should be achievable if we did not simply assume higher pricing to get to that number. Good. And the last question I see on my list is again from Sebastian Zatz. And the question is, You have announced that you will spend €1,000,000,000 on circularity projects over the next 10 years. Is this just a cost of doing business or can investors expect a return on these investments, thanks to the better prices or higher growth? Who wants to take it? Well, maybe just as an indication, we have not defined, for example, a lower return on capital threshold for those projects. There was a big debate in the organization, shouldn't that be a lower threshold and then, it's easy to label everything as circularity projects. We said no. Those projects have to earn also their cost of capital and generate a return and we think that we have a sufficiently high number of ideas that those projects will be profitable. I think the best indication is that customers are actively asking for those solutions. So therefore, we do think there's a market. We do think there's a price and we think it will be a profitable investment. But it is also fair to say that not all these projects that are part of this €1,000,000,000 have already fully been specified. And therefore, if the next question is, can you please break it down by projects? I think that will be too early to give an answer to that. So it was just another quick additions from Georgina Iwamoto. Question. Potential for any raw material shortages in Europe on the back of higher energy costs, driving production stoppage and we have seen that with ammonia productions, which is obviously not our chemistry. But yes, We have seen that. And the same question is, is there any risk of curtailment in China? And I guess, good for Markus. Yeah. Georgina, we have also read the news with high interest. These are not news that are absolutely new. They just made it to the headlines in recent days. Nonetheless looking at the supply situation for us also with regards to ammonia. And I'm talking now not only Europe, but talking for all regions in the world. We currently do not foresee any supply issues for our ammonia supply to rise to happen. And therefore, we also do currently not see any risk that this current situation and short term situation in Europe is actually impacting our ability to produce, in particular as ammonia can be transported also across and in between regions. And therefore, with the next question. There's different and additional opportunities also to source ammonia, and we are prepared to do so. Good. Another two follow-up questions from Charlie Webb. And the first one is, can you provide us the current view on commodity inventories across regions and products. And I think that perhaps for Thomas. Yes. I mean, it's if you if you talk about commodity inventories, you probably mean our products, what is at the level and also in the supply chain and at our customers. I would say, the assessment that we have is the big inventory refilling is probably over, but still our customers and also dealers are not sitting on a huge amount of inventory. And that is also due to the fact that, remember, there has been this consistent question hanging around, will prices decrease over time over the course of the year? And that was even part of our own guidance for our own products. And I think that is then always a driver that especially dealers don't want to sit on too much of an inventory level. And therefore, I would to turn it around. I don't currently see the risk that there is high inventories which will be first used and therefore could have a negative effect on the demand. I think inventories are still, I would say, relatively tight or to normal in terms of their level. And therefore, we don't see this as a threat to the business. The next question rather similar, I would say. Could you also provide a quick snapshot of the current demand by regions, assuming you were not sold out. So, of course, we are sold out, but perhaps Markus has a bit more insight into the demand development. Yeah. That's a quite hypothetical question, I would say, but let's assume we would have more to supply. I think that we see across the regions and across some materials, a little bit different dynamics. As I said, despite, for example, and just take the automotive industry, despite the fact that there is the so called shortages on semiconductors. We still see that there would be significantly higher demand and significantly means really a few percentage points higher demand for some of our polycarbonate products and grades if there would be more semiconductors available. So if the automotive industry could produce more, Similar trends we also see, for example, in the MDI industry, there would be significantly more demand. Once again, we are sold out. Where we see, for example, a little bit of a slowdown in demand is in Asia Pacific and here, particularly in China, on some TDI components. So from that perspective, here you see some signs of a cool down. However, still, we have sufficient opportunity to sell our materials there in the respective markets, by the way, also due to our very competitive cost position. So that's still obviously some players in the markets are not able to produce at the current, let's say, market prices and given the current supply restrictions in other areas. So long story short, we still see that even if we would have higher supply, there would be a significant amount of higher supply needed to really fulfill the current demand. And that is also, I think, with reflected in the current, let's say, pricing that is still on a very healthy level from our perspective, and we also do currently not foresee this to change on short notice. Good. And the last question for today comes from Martin Evans from HSBC. And the question is, a lot of work has gone into the creation of the 7 new units from the original three And the restatements, did you use management consultants in helping you to draw up the new structure? And if so, were there any areas That you did not think we're not suitable or not. So I think I guess it's about the structure of our company. Do we think to change anything? And what does Consultants suggest, Markus. Well, 1st and foremost, the Board of Management runs this company. And that means for sure we go here and there in some very specific areas and also ask for external support as a decision making support, but the decisions are taken by the Board of Management. And from that perspective, for sure, we have come up with ideas. We have come up also with opportunities where we think the structure was less effective and less efficient than the structure that we have today. But I can truly say that we looked into each and every opportunity, and we believe that the current structure is the right structure as the foundation for the transformational program that we are intending with the entire sustainable future strategy. And the new structures that have been developed as part of the first strategy chapter to come to become the best of who we are and the LEAP program, which was fundamental in this first chapter to drive the organizational changes, has actually being used to the full extent to put those structures into place that we believe are the right foundation for the years to come. And yes, in this context, we have also asked for some external support, but more as a decision support and additional data points, for example, benchmark that you normally not have readily available in your company for those specific projects that only happen, let's say, every 5 or maybe 10 years. So I hope that gives you some insights into what we have done. Thomas, you would like to add something? Just maybe one little addition because I'm tempted to give an answer here because I think if there was one good thing about, the coronavirus pandemic was that throughout the entire year 2020, The entire management board was sitting in Leverkusen, not traveling around the globe. And believe it or not, the development of the LEAP structure started with a little small off-site meeting that just the 4 of us had and then we met on a weekly the weekly cadence every week to discuss ideas and then throw them away again and come up with new ideas. And yes, as Markus said, we had somebody who acted as a moderator, but it was a very, very intense exercise among the 4 board members and and we use the time that all of a sudden, Corona offered us to, as I said, meet on a weekly basis. And therefore, I can really say it was a very intense teamwork and nothing that came from an external idea. Good. Thank you very much. It seems there are no further questions at that point. If there would be further questions later, then obviously don't hesitate and you can always contact the Investor Relations department. So thank you very much for your strong interest and for all the questions we received. And I wish you a good rest of the day, and I hope to see you soon. With that, goodbye.

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