Evonik Stock

Ladies and gentlemen, welcome to the Q2 2026 Earnings Conference Call. I am Shari, the Chorus Call operator. [Operator Instructions]

The conference is being recorded. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christian Kullmann, CEO. Please go ahead.

Thanks a lot, and a very warm welcome to our Q2 earnings conference call, and thanks to everybody for joining us this morning. And especially warm welcome goes again to our new CFO, Michael Rauch, who is sitting here next to me. Michael, I'm really glad that you had a good start with us in the last month and that you are taking an active role for the first time on this call today. As usual, I will start with select strategic highlights. Michael then will comment on our strong Q2 results before I will take over again to discuss our upgraded outlook. As you know, from our pre-release, we recorded a second quarter above expectations.

Actually, this was the best quarterly result in 4 years. But we are not resting on this short-term success. We know that structural challenges remain for the sector and for Evonik. What is in our hands, we are actively addressing with determination, and we can show really good progress in the first 6 months of this year. To demonstrate that we deliver on our promises, let me show you a slide that we already presented in February. I can only reiterate, we have more potential, even more potential than others. And we are going to realize this potential. On cost reduction, we have extended and expanded our Evonik Tailor-made program. More on that in a second.

On portfolio optimization, we have fully carved out Oxeno and SYNECT and are highly focused on executing these divestments. On growth, we have reorganized our innovation organization and added new investments to enable new business long term. And on cash, we have changed our dividend policy and stay highly disciplined when it comes to CapEx. Many of these are difficult decisions, especially when it comes to employee reduction targets. We're executing these in a socially responsible manner, but everybody has to contribute. I'm convinced that these efforts will pay off in the end. They will significantly strengthen our financial KPIs in the years to come.

Maybe a few more words on the extension of Evonik Tailor made. Until the end of 2026, Evonik Tailor made and our business optimization programs would have led to an employee reduction of around 2,800. You can see it in our numbers. Last year, we reported a reduction of more than 850 employees. Since the beginning of this year, we already count another 700 employees less. For the first time in Evonik history, our workforce is effectively shrinking. And ladies and gentlemen, we'll continue on this path. We'll rightsize our organization by another 3,200 people between 2027 and 2029. The extended Evonik tailor-made takes a holistic view, capturing now both administrative functions on the one side and operating businesses on the other.

These reduction targets have already been negotiated with workers' representatives. We are right now working on the details of the program and aim to have finalized our plans in the course of the second half of this year. Let me stress again with more potential coming from an already solid starting position. Now it is all about execution. And that is, I guess, the perfect transition to you, Michael.

Thank you, Christian. Welcome to all of you. It's great to be here. I'm looking forward to a fruitful dialogue over the years to come. As Christian rightfully said, it's all about execution. That is an important part of my CFO agenda, get our homework done, especially when it comes to portfolio and strict cost management. I will have a strong focus on cash generation and return on capital improvement while aiming to realize the significant potential of artificial intelligence across Evonik. Moving on to the numbers. Our adjusted EBITDA rose 24% year-over-year to EUR 630 million in the second quarter. This was clearly above the expectations communicated during the Q1 call in early May.

This increase was driven by both higher volumes and higher prices, contributing 7 percentage each. Especially Advanced Technologies recorded a strong quarter. You are, of course, all well aware of the favorable market situation in methionine, but this was not the sole driver of earnings growth. Also crosslinkers and our polymers did really well. Last but not least, C4 delivered improved results as expected and cost savings also made a good contribution. As usual, in such an environment, inventory revaluation effects support earnings, higher bonus provisions had an adverse effect. We are well advised to utilize this better-than-expected development to continue with our structural improvements on group level and also in the segments.

For example, in Advanced Technologies, we've completed the backwards integration of our methionine production in the U.S. With that, we improved our cost leadership in the U.S. and strengthen our position as the only player with integrated production facilities in all 3 major regions. We also continue to optimize our production footprint in silicas and our cost position in H1. Our cash generation improved significantly year-over-year in second quarter. Our strong operating results converted nicely into cash. We have our net working capital under control and saw less outflow compared to last year despite inflation.

Lower bonus payments, advanced customer payments and higher noncash provisions additionally supported our free cash flow. All in all, our good first half year cash flow performance underpins our full year guidance to again achieve around 40% cash conversion. Thanks to this cash generation and the lower dividend payment, the seasonal increase in our net financial debt is less pronounced than in the last years. And with that, back to Christian for the outlook.

Thanks a lot, Michael. We already communicated our upgraded outlook to you a few weeks ago. We've raised the midpoint of our range by EUR 250 million. These are, let me say, good prospects for this year. And while this is supported by tailwinds from global supply chain disruptions, we could not have monetized on this opportunity without our strong business setup in all 3 regions of the world. These earnings show our potential, our potential when we have a more level playing field with China. So ladies and gentlemen, how do we see the second half of this year? With EUR 1.1 billion of adjusted EBITDA in the books in the first half of this year, we need another EUR 1 billion in the second half to reach the midpoint of the upgraded outlook.

In the third quarter overall, we do not see a slowdown from our current performance. Let's keep it like this. My gut feeling tells me Q3 earnings could be similar to Q2 earnings with maybe even a slightly more upside than downside. This obviously implies a fairly steep normalization in the fourth quarter, which you could interpret as caution given the high uncertainty of our current environment. Visibility in many businesses is still subdued. Across most parts of the portfolio, we expect to see regular slight summer dip in August, which makes predictions even harder. Overall, it is fair to assume some normalization in selected business, which had a strong run recently, such as, for example, Oxeno or Crosslinkers.

But demand for sure is not falling off a cliff. Advanced Technologies will stay the earnings driver for now, especially since methionine momentum continues into the third quarter. Custom Solutions will continue to show its more defensive earnings profile. With a higher EBITDA outlook, we reiterate our cash flow guidance. This implies higher absolute cash generation. And you know, we do deliver cash in all weathers. The drivers of our cash conversion target remain relatively stable, but we now factor in a certain temporary headwind in net working capital from cost and price inflation. Given our year-on-year much better cash performance in the first half of this year, we have more flexibility with regards to net working capital in the second half compared to previous years. Having said this, thanks so far for your attention, and now we are happy to take your questions.

[Operator Instructions] The first question is from Anil Shenoy from Barclays.

Just 2, please. The first one is on methionine. In Q2, apparently, the volume was stable, but you've seen gains from pricing. So I was just wondering what is the outlook for methionine in Q3? Because the pricing is apparently has stayed up and you are expecting more volumes as your plants come out of the maintenance. So -- and after Q3, how should we think about the unwinding of this strong performances driven by price increases? Do you expect the prices to normalize by the end of the year or possibly in 2027? So any color on that will be very helpful. And the second question is on your guidance for Custom Solutions. Previously, you were expecting slightly above, but now you're expecting EBITDA to be stable in FY '26. And you've spoken about normalization in additives demand towards the end of Q2. So maybe you could sort of elaborate on that and help us understand why you're seeing a drop in additives, but not in Advanced Technologies, please?

Thank you, Anil, for the two questions. The first one on methionine that goes to Christian and the second one on the Custom Solutions outlook to Michael, please.

It's good to get your first question because it can't be somewhat like a solid quarterly call without questions about methionine. So I'm really glad about. Let's keep it like this. We do definitely believe that the strength of our methionine business will extend, so will continue into the third quarter. Why is it? First, the third quarter will be the first quarter where our positive price effects will now come through. That is definitely helpful. In respect to volumes, let's keep it like this, a good amount of the volumes are already booked. So my message that the continuation of the strength and the good development of our methionine business into the third quarter is well underpinned. Maybe -- yes, you know I'm a conservative.

But here, I have to tell you that our expectation is that all in all, we do expect the third quarter to be the best quarter for methionine in this year may be. And now you have talked about the outlook. Yes, let's keep it like this. This year, that is what you can bank on. methionine will do much better than most of you have expected. Why is it? Why is it? First, we are the only player in the market having a well-balanced geostrategical portfolio architecture in respect of methionine, having the world-scale capacity in the United States, having a world-scale capacity in Europe and an additional one in Asia. That is definitely paying off because, as you know, here, the import taxes from methionine into the United States of America are really helpful.

And reading the signs on the wall, I guess, in Europe, something similar is ongoing. In respect of the current market situation or maybe the outlook for the market situation, I do believe that we will see in 2027, somewhat like a shakeout. Shakeout means that tiny and maybe weaker competitors will at least Moscow, even shut down their capacities. And that is my guess about 2027 in summer 2026. Having said this, I dare to hand over to Mike.

Yes. Thank you, Christian and Anil, I want to address your second question regarding Custom Solutions. You had a question regarding the outlook change here. So maybe as the CFO, let me first argue a bit on the numbers. You might remember that in the first quarter, the EBITDA for Custom Solutions was about EUR 30 million down year-over-year. Now second quarter, EUR 20 million up year-over-year. So if you basically take a stronger third quarter versus the fourth quarter, you are about an even par level. Now when we talk about the businesses and you addressed the additives, we do see here a normalization on the additives to pre-war levels in the second half year, so which means staying rather stable for the full year. Well, if the business stays stronger for longer, then we have a little bit of an upside, but this is how we see on additives.

On catalysts, the alkoxide recovery in the U.S. is materializing. However, less catalysts for refineries are changed due to the war.

So that's pretty much overall and stable picture. And also Care should be stable for the year. So Care Solutions are suffering from deterioration of market environment in base ingredients, and we're not expecting any macro impulses anymore, so although urgently needed. On the active ingredients, they're doing well and biosurfactants plant is ramping up and new applications are being identified. And health care, we see positive effects from optimization program becoming increasingly more visible. So this gives you a bit more color on the Custom Solutions segment.

The next question is from Martin Roediger, Kepler Cheuvreux.

I have, in fact, three, if I may. The first question is for Christian Kullmann. You have been rather vocal in Veris Media regarding the intended changes by the EU Commission for the emission trading scheme within the European Union. What is your view regarding the upcoming changes which are planned? Secondly, this is certainly for Michael Rauch. Regarding the new cost-cutting program with another 3,200 FTEs being reduced between 2027 and 2029. What is your best guess regarding the split between admin people and operating workforce? And as a follow-up, are the EUR 207 million onetime in Q2 related to that program? I guess, for example, the closure of the polyester business is related to that? And which amount of restructuring costs should we expect in the second half and also in the year 2027?

And the final question, doesn't matter who's answering that, it's about the current drought situation in Germany. The water level of the Rhine River is rather low. Does this affect Evonik's logistic costs and logistic handling in any case?

Well, thank you, Martin, for making my job easier by just saying you should answer here. So Christian will, of course, start with ETS. Michael, then going on the tailor-made savings and so on. And then back to Christian for the Rhine water levels.

Martin, good to have you. And let's start with the emission trading system. Some bits and pieces about first. I do think that the European Commission has got that change is need to better the competitive position of European industry overall. Having said this, the proposals they have now brought to the table are, for sure, a step into the right direction because they will ease. They will definitely ease and mitigate the pressure we do suffer as of today from. So it is a chance to enhance the competitive positions of European chemicals industry. And now it is, I guess that will start after summer vacation that the European Commission will have to earn some negotiations with the European Parliament and on the other side, with the representatives of the 24/7 member states of the European Union to discuss it more in detail.

And please, you can believe in my words, you can bank on my words that we Evonik will also intervene to maybe to put these kind of proposals, which are now on the table, and they are a good step into the right direction to bring it a little bit more on to our budget side. That is what I can give you as of today. So helpful, yes, first step, right? Now it is about negotiations with the European Parliament on the one side and representatives of the 27 member states of the European Union. We, as one of the stakeholders will participate and then let's see what will come out of it. Having said this, I do hand over to Michael.

Thank you, Christian. And Martin, I'm happy to take your second question, which was on the extended restructuring program, which we have announced. So let me just reiterate what we have been saying also earlier. So we released the information that we are going to release about 3,200 positions until end of 2029 from our company, which is something which we announced. And we also said that we are in the negotiation now on the details. So please bear with me that I can comment not on all of the effects of that program yet. This is going to come in the third quarter. However, you asked broadly what is the split between admin and business functions. So let me go back to the first program Evonik Tailor made. Here, it was about 80% admin function and about 20% more business-related functions.

This time, this is a more holistic approach also affecting our businesses. So we would go more into the direction of about 60 admin and about 40 business details to come out, as I said, in the third quarter. You also asked a question regarding -- part of your second question regarding the restructuring, which we booked in the second quarter into our books. That was an adjustment for the site closure for Witten, that is within EUR 50 million within our books. And this is independent from the program which we announced and which we're going to talk more about when we come to the Q3 call. With that, I would hand back to Christian, please.

Yes. And I'll try to give you some more color about the impact of the lower Rhine water. It goes without saying that as of today, the level is on a very, let me say, historical low. But on the other side, we are well prepared because that is what is coming around the corner since [indiscernible] days. So in other words, since 10 years. And you would be really surprised if we would give you that we are not here pretty well prepared for this because that is what we have to deal with since, as mentioned, 10 years' time. What does it mean? Yes, okay. There will be a tiny impact because as a result of the lower Rhine water, we would have maybe some increase in respect of the freight costs. But on the other side, overall, it is manageable, so manageable. And if so, a tiny impact and we are prepared to manage it because we are familiar with the situation since decade. So far from my side.

The next question is from David Symonds, BNP Paribas.

Three from me, please. The first one is a quick follow-up on methionine. So there was an announced yesterday in France related to the Ran River levels, River. Would you also expect that to be a minimal impact? Or do you think that river is more affected and that could actually impact methionine prices? I'm going to count this as the same question, but a small follow-up on methionine again. So you mentioned the shakeout in 2027. Does that imply that you think prices fall a lot next year? Or is it just that you have smaller players currently not operating, so not making a windfall to support them into next year?

Secondly, you mentioned -- well, actually, I'll start with the -- there's a higher antidumping duty being imposed on Chinese tires now 45% in the start of July. Could you comment on whether you expect that to impact your silica business at all? And then finally, you previously said there'd be no buyback before 2027. but cash in the first half has been very good, particularly considering seasonality. Is there any chance that you bring a buyback forward or that a buyback moves up your order of capital allocation priorities before 2027?

Thank you, David. The first one on methionine will be addressed by Christian, and then we go to Michael for the antidumping on tires and the share buyback.

And by the way, Christoph, I'm really keen on checking and taking each and any question about methionine. So here's my answer. Yes, yesterday, we have read in the news that Adisseo has issued the force majeure because of logistical constraints in France and in Spain, but that is nothing which is touching us. There's no impact for Evonik in respect of this. And because here, as you know, our main -- our exclusively only European methionine plant is located in Antwerp. And therefore, we are not touched by this lower Rhine water issue now Adisseo has to face. That is what I could give you around methionine.

And having said so, I hand over to Michael.

Yes. So David, thank you. Your question was on the antidumping Chinese tires. So far, we don't have any impact seen on the precipitated silica, and we are not aware of. We will update, of course, as soon as we become aware. Your third question was on what do we do with the cash. So let's be very clear. We still have quite a sizable amount of net debt on our books sitting. So we will make sure that we utilize the cash as we always do in order, first, to fuel our organic business; second, to make sure that we also pay a reasonable dividend. You saw the change in the dividend policy for 2026. So it goes into effect first time in May 2027 with the new policy as we had an interim one with the EUR 1 for 2026. And that means basically the share buyback is currently not on the agenda.

Understood. And sorry, Christian, it's my fault was trying to squeeze 2 questions under one heading of methionine. But the second part of the methionine question, the shakeout in 2027 you mentioned, does that imply an expectation that prices fall into next year?

We are now summer 2026, and I hope that I will be able to enjoy my summer vacation in a couple of days. And in the meanwhile, I will start to think about what could be prudent how to manage our attractive located methionine capacities in 2027. But as I've already mentioned, we do expect the start of a shakeout, and that would mean that it, for sure, could have once again and to underpin, could have an impact on the markets in the next year. So let's see. And I'm confident that if we would meet next time in person, we will have a deep dive about this. But that is what I could give you as of today.

The next question is Chetan Udeshi, JPMorgan.

I had 2 questions. First one was just on Tailor made and the impact had on the earnings. I was just calculating your SG&A delta in H1 versus last year. It seems it's about EUR 40 million lower year-on-year. I think most of that can be attributable to the FX, just stronger euro. I remember from Capital Markets Day a couple of years back, you guys were guiding to as much as EUR 150 million of net savings by this year on an annual basis. And I'm afraid to say that we don't see any evidence of that in numbers. I think that was the same issue last year as well. So with these additional job cuts that you've announced, can you maybe help us understand how much net savings should we have in mind that Evonik can really achieve? Because for now, it seems it's very hard to see much of net savings come through in your P&L.

The second question is, and not surprising, a number of questions on methionine because there's the impression that everybody has that the Evonik numbers this year have basically just benefited from methionine prices. It's like one trick pony. And hence, there's so much focus on methionine. There's a moment it sort of turns, this is -- this party for Evonik is over. How would you respond to that comment that Evonik's earnings are basically one trick pony this year on methionine prices?

Thank you, Chetan. Michael will start on the net savings, and then we can go to Christian for the balance of the earnings this year.

Yes. Thank you, Chetan, for your question. You were asking regarding the Evonik Tailor made program. That, just to remind everybody, was in the baking during the year 2023 and then announced for '24 to '26. Now we all know the world has changed dramatically over those years. So just when you think about inflation, how inflation has surged, right, through that period. So many of the assumptions that were done no longer held true, which means the net impact basically on the savings is not as pronounced as it was anticipated. So when you ask me how shall we think about going forward also about cost-cutting programs, it is a hygiene factor, which any CFO is banging drum very strongly on to make sure that we get it in. The additional savings, however, must also come from structural improvements in the business and in the way we operate.

Christian?

Thanks for that, Mike. Maybe one more Chetan, about Evonik Tailor Made. Last year, we have demonstrated that Evonik Tailor made has a positive impact and is paying off because we have been able as one of the very few chemicals industry to compensate the fixed cost increase of 7% close to the completion. That was fair to say last year, a good contribution of Evonik Tailor Made to our -- to bettering our cost positions. And now happy to have you talking about methionine. Maybe as a tiny starter, you have called Evonik a one trick pony, and nothing against one trck ponies because that would make me -- if it is methionine, giving me the chance and bringing me into the position to give you a good amount of explanations why that is much more than a one trick pony.

But please, in this respect, don't underestimate and don't forget the positive impact we do see in our Advanced Technology segment coming from PA12, coming from crosslinkers, coming from additional savings. And of course, it is on the list of our disposal candidates, but nevertheless, it is worthwhile to mention that also Oxeno has contributed to the good numbers and figures we are able to present for the second quarter as of today. And now it is about methionine. If we would have exclusively methionine capacity maybe in Asia, you would be right. But we do have not only one methionine capacity in Asia. We are the only one being globally located and having here because of this the chance to cover each and every region directly, the customers directly in the respective regions.

And by the way, these regions are here all the more United States of America, well protected by import taxes. Second, we do extend and expand our positions by, for example, think about the backward integration of the Matua plant capacity in the United States of America in our methionine capacity in mobile, which will definitely better our position in 2027, which means here, we could harvest even more than it is already as of today. Third, we are not only the market leader, but also in respect of costs. And I've mentioned it several times during this pretty attractive call that we do see and hence does this foresee a shakeout starting in 2027, which will help us, let me say, to benefit in a similar way from our methionine businesses.

So that is what do I have in mind about the one trick pony criticism of U.S. And by the way, I've liked your questions very much because they have given me a chance to comment on it in a more, let me say, decent and disciplined way.

And just to clarify, this is not what I meant to say. I'm just saying this is the impression, but appreciate the color.

Next question is from Sebastian Bray of Berenberg.

I would have two, please. They're both on the other segment. The first is on the performance of the Oxeno assets and the related impairment. From what I can tell, the business environment was very favorable in Q2. The C4 and methionine prices were quite high. European energy costs, which I imagine were hedged were not that bad. What has happened internally to these assets that has warranted the impairment? And the reason that I ask this is that historically, a decent year seemed to be EUR 200 million plus of EBITDA for the C4 assets. And now that seems to be the absolute best possible run rate that they can achieve. Has anything happened to global C4 or MTBE markets that would mean that relative to, let's say, 4 or 5 years ago, these assets are simply less profitable? And my second question is on infrastructure.

Thank you, Sebastian. Both go to Michael at this stage. So first, on the other with -- even though you probably mentioned -- I mean, you mentioned Oxeno, which is also infrastructure, not in other. And then on the SYNECT assets.

Yes. Let me -- thank you, Christoph. Let me start with the SYNECT one because that's an easy one. That is year-over-year stable. So the answer is no. So we are basically sailing through at a similar level as before. On the Oxeno one, well, it's important that we all recognize that the long-term challenges remain. So yes, we have temporarily better results in 2026. We enjoy those. However, as you know, when you need to take a goodwill impairment, that is looking into the long-term perspective. And here, nothing has changed. So we are right now executing our path on making sure that we go ahead with our divestitures as planned. So that is the situation on Oxeno and SYNECT.

Just to check, is there any book value left?

Yes, indeed, there is about EUR 50 million left as book value for Oxeno.

I think we're good. Thank you very much.

Okay. Ladies and gentlemen, that ends our call today. We have been really appreciated having met you and providing you with the numbers and figures and some details you have been interested in. We wish you a happy summer, a good summer vacation and hope to see you soon on the road. Having said this, take care, and bye-bye.

[Interpreted] Welcome to the Innovation Press Conference 2026 at Evonik here from Essen. Nice to have you here. Innovation, well, that actually means renewal, changes, and we've got a lot of new things to present today to you. It starts already with the environment where you see me here because Evonik has got a new headquarters, and it's the first time that we broadcast live from our new headquarters to the outside world.

What we've also got is 3 new innovation examples for you and we call them cases. And as always, that's not only new things, but they are also tested and proven things. As of now, you can submit your questions, all the accredited journalists can use the conference space and the chat window to submit their questions and then later on, we'll have a Q&A session, and we will be answering your questions. That has also been the case in previous conferences, and we want to do so today as well. But before going into the different innovation cases, we would like to take a broader look at the Evonik innovation situation and who will be more eligible than the member of the Board of Directors, Lauren Kjeldsen, who is in charge of innovation.

Good morning. Thank you very much. Nice to have you here. Well, I just wanted to ask you how you feel here at the new studio, new headquarters and a new TV studio, but you're the only one who has already broadcast live from here. It's not a premier for you.

[Interpreted] Well, it's a great studio, and I had the opportunity with an internal program, a dialogue with the Board of Directors to have the experience of the studio already once. Thank you for the invitation once more.

[Interpreted] Well, internally, we practiced a little bit in order to be sure that it works all okay and it went well. Well, you are in charge of innovation on the Board of Directors, but also for Custom Solutions, it's a very important segment for the region Americas. It's not a small region either. What about your personal and individual resilience when I look at your workload?

[Interpreted] Well, as I said, well, there's a lot to do. Resilience is not only an innovation topic. It's also a personal topic. It's a personal achievement that is required. What I try to do every day is to find opportunities in each and every challenge, to learn from what we do and to drive our team in order to find solutions for our customers and for our markets.

[Interpreted] Well, new opportunities every day, identify them. that sounds much like innovation, and that brings us right into the midst of our topic today. We're very happy that you will start to give us a broader idea of the innovation activities. As a native U.S. American although she speaks excellent German, she could certainly do it in German, but she prefers to present in English.

Hello, ladies and gentlemen. I'm very happy to speak with you today about innovation at Evonik, a topic I'm proud to support and the great value we place on it for our future success. First, I'd like to a step back and give some context. Today, we're operating in a world where uncertainty has become a constant theme. The ongoing crisis in the Middle East and in Ukraine are a few obvious examples. Events like these have led to a growing number of global supply disruptions and high volatility of raw material markets. Our established trade relationships are being challenged and new collaboration partners and new markets continue to emerge. This constant uncertainty requires companies to rethink how they operate, how they innovate and how they grow and stay successful.

Today, I'd like to show you how we, at Evonik, are taking on these global challenges and positioning ourselves to generate value for our customers and stakeholders. In today's environment, it is obvious that resilience has increasingly gained importance. A resilient company is one that can absorb shocks, adapt quickly to changing conditions and recover efficiently from setbacks and emerge stronger by learning and improving from challenges. It's not just about survival, it's about performing under stress and capitalizing on change.

At Evonik, we build our resilience on our operational robustness, our strong financial foundation and our skilled and engaged workforce. Specifically, we build our resilience on our innovation capabilities and our strong customer relationships. Customer centricity is core to our business model. We identify risks proactively and make decisions when information is incomplete. I'll illustrate this with an example. At Evonik, we're no stranger to linking resiliency to innovation. In fact, during the COVID pandemic, we demonstrated our ability to pivot quickly in the face of global uncertainty and emerge stronger through collaboration and innovation with our partners.

At the time, we quickly adapted our research and knowledge into applicable products for the changing situation. And because of that, our lipid nanoparticles were able to play a key role in enabling messenger RNA vaccines that help save millions of lives. We demonstrated that we are capable to get things done. And at the same time, we contributed to the resilience of the health care system and society as a whole. Today, the challenges are different, but the value of resilience is the same. Like during the pandemic, our ability to be resilient will determine our future success as a company and as a contributor to the world we live in.

Along with innovation, resilience at Evonik is tightly connected to sustainability. According to the World Economic Forum's 2026 Global Risk Report, drastic environmental events are seen in the top 3 long-term risks businesses will face in the next 10 years. This includes extreme weather events and critical damage to our planet's limited systems. At Evonik, we believe it is possible to reconcile growth and prosperity with our planet's finite boundaries. This is the reason why we are working on our product portfolio transformation.

Between 2024 and 2025, the revenue share of our next-generation solutions rose from 45% to 48%. This is another great step towards a more resilient portfolio of products with a clearly superior sustainability profile. Scalable and economically feasible solutions are our recipe for success. Within the right regulatory framework, the green transformation can become one of the strongest market drivers of our time. As you can see, resilience, sustainability and innovation are intertwined. What does this mean for Evonik? With our products and system solutions, Evonik is positioned at the beginning of many value chains in a variety of markets. We create value for our customers so that their products become more differentiated, more resilient, or more cost effective.

As a consequence, our innovation power turns into a competitive advantage for our customers or even the players further down the value chain. An example of this is our new plant in China for high-purity hydrogen peroxide. From this material, we're able to support a wide range of important industries, such as solar panels and semiconductor manufacturing. Innovation has always been core to Evonik. It's part of our DNA. Thousands of scientists and engineers in R&D and engineering or applied technology work with and for our customers. That is why we continue to prioritize research and development even in challenging times.

Last year, our R&D ratio remained stable at 3%. That corresponds to around EUR 418 million in R&D expenses even in the face of significant economic headwinds. Approximately 82% of these expenses were directly allocated to R&D embedded in the business units, focusing on platform extensions and efficiency gains. A further 15% funded central R&D, working on adjacent markets and disruptive technology bets. As we stay committed to our innovation power, we need to get even more connected with our markets so we can become faster and even more effective. And this is now the moment to allocate resources efficiently and effectively towards our most promising projects.

As such, we have focused on 3 innovation growth areas: advanced precision biosolutions, accelerate energy transition and enable circular economy. We expect them to generate a combined EUR 1.5 billion in additional revenue by 2032. Within these broad innovation growth areas, we've identified value pockets where we can leverage our innovation power. You're going to see 3 specific examples in today's presentation. There are solutions already being industrially scaled today.

One in is our anion exchange membrane, our AEM technology for green hydrogen. Just yesterday, a new AEM center opened in Shanghai. It's our first one and fully dedicated to this technology and our first one in the region. In addition to advancing the benefits of this valuable technology, this investment is a clear commitment to the global market proximity. We are developing innovations where transformation is happening with the greatest speed. To strengthen resilience, we build production close to demand. This shortens supply chains and increases reliability.

Another example is the expansion of our fermentation capacities in Europe. At the moment, we're investing EUR 80 million in Slovakia to further scale our biotechnological production of pharmaceutical ingredients. These ongoing activities highlight how we combine global setup, market proximity and resilience. Identifying the right opportunities, however, is just one part of the task. We also need to make sure that we use -- make the right use of them. In other words, it's not only about doing right things, it's about doing the things right. That is why we have made changes to our organizational setup. Excellent research alone is not enough. What matters is how quickly we translate lab results into viable industrial solutions. We have aligned our structure to strengthen exactly that, clear responsibilities, stronger market focus and faster decision-making across the organization.

In just a moment, I'll hand it over to Christian Eilbracht, who's heading our innovation efforts to explain the details. Before I do that, I would like to say what is truly remarkable about our new setup is that it is significantly strengthening our ability to turn innovation into impact. Ladies and gentlemen, in a world that has become more volatile and uncertain, Evonik will continue to be a resilient and reliable partner for its customers and partners along value chains. Our innovation power and our ability to transform makes Evonik future relevant and the partner of choice. Thank you very much.

[Interpreted] Thank you very much, Lauren, for your presentation. I think we'll have plenty of questions afterwards. We'll take on board already that innovation -- sticks to innovation even in difficult times. But for you, I've got a good piece of news now because you've got a break now while you can relax and can listen to the presentations by our experts. And then later on, we will meet again for the Q&A session and look at the different comments that we get on the Internet.

Well, the question now stems from what Lauren Kjeldsen has just described. How can this innovation power be taken into practice? How can you create real products based on the innovation ideas that you have? And Christian Eilbracht, the Chief Innovation Officer, is going to tell you more about it.

Lauren Kjeldsen explained right now what is it about. And let us have a deeper look at this along with the gentleman who has to translate this into practice, Christian Eilbracht, our Chief Innovation Officer.

Thank you very much for coming here. Good morning. So for you, as opposed to Lauren, it's a real premier. It's the first time you are involved in this press conference and you are in the studio.

[Interpreted] Well, it's great to be here in this great and marvelous studio. It's great. Great experience.

[Interpreted] Well, the workers, they promise to be silent. And if there is any noise due to their works because well, we are just moving to this building as of June 1, we moved officially to the new building and headquarters. But let's have a look at what you have to say about innovation. Well, since a certain time, you are in charge of the topic and you achieved many things.

[Interpreted] Well, I've been very lucky because I have this job since 6 months. Well, I assume other responsibilities in the past and in the company since 25 years. So that's why it's a bit easier. It's not easy, but it's easier and I'd like to explain how we implement this, how we want to improve innovation, how we want to focus more on innovation and how we want to bring innovation into products.

[Interpreted] Well, let us begin then. Let's look to the presentation of Christian Eilbracht, Chief Innovation Officer at Evonik.

[Interpreted] Ladies and gentlemen, Lauren Kjeldsen has just explained why innovation is so crucial today, and I would like to show you how we organize this in practice at Evonik, with focus, structure and consistency, how we develop ideas into marketable solutions with clear priorities and strong ability to implement them because innovation does not happen by itself. True innovation is the result of conscious decisions.

We have extensively restructured our RD&I organization over the last few months. Our aim was to increase the impact of our innovation work. Around 2/3 of our researchers will work directly within one of our business lines. They will be able to respond even faster to customer needs and develop solutions tailored to those needs. And our principle is clear, market-oriented development takes place where economic responsibility lies in our business units, the business lines. And we manage cross-business topics and projects with a longer-term focus. And this makes us faster and improves the quality of our decisions.

Let me explain this briefly. Today, our business lines are responsible for business-oriented research and development. And this is where solutions for immediate customer needs are created and this is also where the responsibility for economic success lies. Our group innovation focuses on topics with the longer-term horizon. And this is where we pool expertise that benefits all businesses equally. This includes our biotech hub and analytics. Add to this, there are strategic initiatives. A good example of this is our Rhamnolipids. Evonik is the first company in the world to produce these surfactants.

Rhamnolipids were originally developed in the business line for a specific application only of cleaning and planting. The first major commercial application was a hand dishwasher, dishwashing liquid in Chile. However, we understood quickly that they are capable to do more. They are a technological platform. They drive progress. And with our platforms, we drive technologies forward across markets and applications and hand them over to the business units when they are ready for the market. And the Evonik innovation factory place an important central role in this. We have established it as an entrepreneurial development unit. Its mission to bring promising technologies to market.

And this time constraint makes us even more mindful of how we use our resources, and we are focusing all our activities at the innovation factory entirely on the 3 innovation growth pillars. As Lauren Kjeldsen said, these 3 areas are expected to generate an additional EUR 1.5 billion in revenue by 2032. And the Evonik innovation factory is making a decisive contribution to this. Its 5 to 7 programs are expected to contribute up to EUR 300 million of this. Our benchmark is not more activity, but greater impact.

And we are now placing even greater emphasis on combinatorial innovation. What does this mean? Well, ancient Greece researchers might have let out of their back tubes following a flash of inspiration and rush through the city shouting eureka, but those days are long gone. Innovations do not arise in the quite compliance of a study. They rarely stem from a single discipline. That's why we deliberately bring together different partners and areas of expertise, chemistry, biotechnology, digitalization, universities, industrial companies, customers.

And a good example of this is our collaboration with Abolis and L'Oreal. Together, we combine expertise in these to biotechnology, industrial fermentation expertise and a deep understanding of customer needs. This is where new bio-based production routes for specific molecules are created. This is combinatorial innovation practice. And this is exactly how we work at Evonik today. We are continuing to pursue this approach through the group-wide Next Markets Program. Here, we take a holistic view of the entire value chain. One example is the aerospace and defense sector. Here, high-performance materials, long-term availability, reliable supply chain are very important and are key. With our materials expertise and our industrial base in Europe, we contribute to the resilience and technological sovereignty of such security critical value chains.

Another key focus is the internationalization of our innovation activities. If you want to work with the brightest minds worldwide, and that is what we want to, you have to go to them. That's why we are actively involved in the world's leading innovation ecosystem. Examples include our Cambridge Innovation Satellite near Boston, USA. The Evonik's Skin Institute in Singapore or the India research hub near Mumbai. This international presence strengthens our proximity to markets, to partners, and it enhances our ability to learn. And all of this is complemented by targeted digitalization.

With our expert system, AIChemBuddy, we combine artificial intelligence and human experience. The system helps our researchers to accelerate development processes, plan experiments more efficiently and better understand data. This increases speed, robustness of our innovation and improves the quality of decisions. The BoFire software library, underlying AIChemBuddy is another example of combinatorial innovation. Evonik took on the pioneering role here at an early stage. We programmed a large part of the code base, that is important for us in the chemical industry, and we are now driving development forward in collaboration with renowned companies from the chemical and pharmaceutical sectors.

So the resultant tools that benefit not only Evonik, but the entire industry. We have set the course. Our experience shows that it's not the laboratory results that determine the quality of an innovation, but customer satisfaction and success. And it is precisely this ability to deliver that you will now see in our technical presentations. Today, we are presenting solutions that have already made the transition from the innovation factory to industrial scale up. These projects are the result of key priorities, synergistic collaboration and a rigorous organizational structure. They demonstrate how we develop innovation in a focused manner, and they show how we use this approach to create sustainable solution. Thank you very much.

[Interpreted] Thank you very much for your presentation. Later on, we'll meet you again during our question-and-answer session. I'm sure there will be many questions. So you said we have to focus more, and we have to do it all together. And we need combinatorial innovation. And I'm sure we'll come back to this topic. Thank you very much.

Lauren Kjeldsen, she explained that Evonik in difficult times considers innovation as important. Mr. Eilbracht explained how to focus on, what to focus on and how to make decisions because you cannot try out everything, impossible. There are some constant things like, for instance, biotechnology. And here, Evonik during years and decades has been building up huge treasury of competencies. And one expert when it's about biotechnology, Stefan Pelzer is here. A warm welcome to you.

[Interpreted] Well, I'm happy to be here again.

[Interpreted] As I said right before, biotechnology, you are involved in, and your working with us since a very long time.

[Interpreted] Well, it's the third time that I take part in this press conference. So I've been here in 2017 and 2024. And I'm happy to be back again. The last time we have been talking about the skin of the human. Today, it's about another topic.

[Interpreted] So once you are involved, it's very often about bacteria. So many things -- many people say, wow, disgusting. But you think they are very interesting. So what's interesting from your point of view?

[Interpreted] Well, bacteria are the main course of many diseases, infection diseases obvious. But on this planet, in our life, our life wouldn't be possible without bacteria, for metabolisms for our health. And in addition, we know that at Evonik, we are able to use bacteria in order to develop new substances or in order to use bacteria in the frame of the manufacturing of products.

[Interpreted] Well, I'm not an expert in this. But let me say in my words, well, there are probiotics and antibiotics. What's about this?

[Interpreted] Well, that describes two principal antagonisms in micro technology. So anti, this is against the life, very important substances. But they hinder or slow down microorganism, very important. This brought us a plus in our life expectations. On the other hand, probiotics, for the life, that's microorganisms protecting other microorganism, for instance, in the gut. And how are they related to each other? This is an interesting question. In livestock, farming, both are used, probiotics are used, and that might be a problem if they promote the existence or the spreading of disease-causing organisms, and we developed probiotics to be used and having a prophylactic effect and they may reduce the use of antibiotics. And that's the way both are related to each other.

We explained this much more in detail as Mr. Harald said right before, today, we are here already in real world, and we left the world of the lab. Well, in South Africa and maybe that's not the first country, I think of when it comes to livestock farming.

Well, as for innovation what's important for us and what's motivating us, that's the feedback of the customers because innovation is not just something related to invention, but it is about creating something close to the markets, marketable. And we always get a very important feedback from the market that generates demand for our products, Ecobiol PRO not only in South Africa, is strongly demanded. And for us, from the wide pick up, for the other colleagues, this is extremely motivating.

[Interpreted] Well, then let's have a look at this how this works. With the good bacteria and the bad bacteria and the products developed in this area and what this has to do with our life expectation of animals and an improved quality of product.

[Interpreted] Today, I would like to show you why and how we developed an innovative probiotic product that helps reduce the unnecessary use of antibiotics in poultry farming. Antibiotic-resistant bacteria are one of the greatest global health risks. The WHO even describes it as a silent pandemic. In 2021, more than 1 million people died as a direct result of antibiotic-resistant pathogens. By 2050, around 2 million deaths per year are expected, along with economic damage of up to USD 100 trillion.

Now you may be asking, what does this have to do with animal nutrition? Quite simply, around 73% of all antibiotics used worldwide are administered in livestock farming. The problem is not potential antibiotic residues in the meat, but rather the use of antibiotics itself. The use of antibiotics therefore, selects the bacteria that are resistant. They multiply rapidly and can even pass their resistance on to pathogens. The growing problem of antibiotic resistance clearly shows human, animal and environmental health cannot be viewed in isolation. That is why the WHO helped establish the One Health approach in 2006. If we reduce the use of antibiotics in livestock farming, we protect not only animals, but also people and ecosystems. To contain the problem of resistance, the One Health approach calls for a more responsible use of antibiotics across professional and systemic boundaries.

One important point to understand is that the excessive use of antibiotics in livestock farming is not driven by therapeutic applications alone. Rather, antibiotics are often administered prophylactically or they are used as antibiotic-growth promoters to stimulate animal growth. This use was banned across Europe as early as 2006 and has since been restricted in many other countries. Antibiotic growth promoters continue to be used extensively worldwide. Intelligent alternatives are, therefore, needed. This is precisely where Evonik comes in. The answer lies in a combination of specific capabilities that very few companies possess in this form. We understand biological systems. We understand bacteria, and we understand chickens. From amino acids to the microbio, our solutions holistically strengthen animal health and performance. We have been active in biotechnology for more than 40 years and have brought corresponding products to market.

The combination of systems understanding, biotechnological expertise and market experience enables us to develop new products, such as Ecobiol PRO, which I would like to discuss today. Probiotics are a particularly suitable alternative to antibiotic growth promoters. Probiotics are living microorganisms. When administered in sufficient concentrations, they can improve the health, performance and resilience of both humans and animals. In the feed sector alone, probiotics generated global sales of around USD 4 billion in 2025, with market growth of approximately 7% per year. They can be compared to a Swiss Army knife. Through multiple modes of action, they strengthen the gut microbiome and suppress the colonization of pathogenic germs.

Evonik has been marketing Ecobiol for several years. It contains pores of the strain, Bacillus velezensis CECT 5940. Ecobiol strengthens the gut microbiome and prevents the spread of pathogenic germs such as E. coli, Salmonella and Clostridia. One pathogen that causes concern that poultry farms worldwide is Clostridium perfringens. It causes subclinical necrotic enteritis, NE. It typically occurs between the second and fifth weeks of life and damages the intestinal wall of the chicken. This impairs growth or leads to premature death, thereby causing global economic losses of USD 4 billion to USD 6 billion every year.

To effectively prevent this disease without the preventative use of antibiotics, we need probiotics that are active precisely where the disease develops in the small intestine. This is precisely what we have achieved with Ecobiol. However, we have now once again made a decisive improvement to our product. Ecobiol PRO germinates much faster in the gut and multiplies them more efficiently than competing products. A study conducted by Oklahoma State University shows an impressive improvement in survival rates and gut integrity with our enhanced Ecobiol PRO.

Chickens without contact with the pathogen, Clostridium perfringens, served as the control group. After 17 days, 100% of them had survived. Among the animals exposed to the pathogen and receiving no probiotic, the survival rate was only 62%. Adding a conventional probiotic to the feed, improved survival to 69%. With Ecobiol PRO, a survival rate of 93% was achieved, an improvement of 50%. The intestinal lesions too were dramatically reduced with Ecobiol PRO. Ecobiol PRO, therefore, proves clearly superior, both in terms of survival and disease symptoms.

You are probably asking yourself, what is behind this? What is the secret of this improvement? That is what I would like to explain. The foundation of our innovation is that at Evonik, we have a deep understanding of living systems. Our systems understanding enables us to explain why germination and multiplication are crucial. To understand this, it helps to look at the extraordinary life cycle of bacilli. When sufficient nutrients are available, the bacterium reproduces like any other through cell division, in this case, every 25 minutes.

When nutrients become scarce, something remarkable happens. Vegetative cells transform into sports, a robust dormant forms. We utilize this process in the fermentative production of the product. Spores are heat resistant and very robust. They are, therefore, ideally suited for use in animal feed as the animal feed is pelleted at 80 degrees Celsius. The chicken ingests the spores with the feed. In the intestine of the chicken, the spores then germinate and outgrow into active vegetative cells. Overall, passage through the gas takes between 3 and 5 hours depending on the age of the chicken.

To understand exactly when and where the sports germinate, we used our unique poultry gut simulation model known as DAISy. The results show that the spores first enter the crop where they do not germinate. From there, they pass into the proventriculus and gizzard, where conditions are extremely harsh. A very low pH value and the presence of the digestive enzyme, pepsin, the spores survive these conditions without germinating. Germination begins only once the spores reach the small intestine, where the pH is higher because of pancreatic juice. After around 60 minutes, vegetative cells are once again present and can then exert their effect.

You may be wondering why germination, the transformation back into active cells takes place in the small intestine. Quite simply because that is where feed is digested. The decisive impulse is provided by germination triggers. Free amino acids, such as alanine and sugars that are released during feed digestion, they trigger germination by activating specific receptors on the spore coat. We determined that the production process, in particular, has an enormous influence on the germination behavior of the spores. We also identified conditions that enable us to produce spores with particularly fast germination. Figuratively speaking, we trained the memory of the spores so that they become active, particularly quickly in the intestine.

However, feed is not always the same. It differs worldwide from region to region and even between the different developmental stages of the chicken. We, therefore, tested the germination and the multiplication rates of Ecobiol PRO and several competing products in many different feed mixtures from around the world. Ecobiol PRO consistently demonstrated rapid germination and multiplication. All other products germinated and outgrew more slowly or showed greater variation across different feeds. Ecobiol PRO germinates around 46% faster than the average of competing products. This makes our probiotic an important key to healthier and more productive animals even without the use of antibiotics.

Allow me to conclude with a summary. Using the current example of Ecobiol PRO, I have shown you that the scientific understanding of biological systems, the chicken, but also the bacteria, leads to new high-performance products. Our holistic perspective enables us to develop innovative products with reproducible effects. We were the first to determine that the production process has a substantial influence on product efficiency. At Evonik, we can optimize systems for sustainable value-adding use because we understand biological systems. However, these findings are important for not only animal nutrition, but also numerous other applications involving bacillus-based products whether in human nutrition, personal care, oral hygiene, agricultural products or cleaning products, the scope of applications is extensive.

Thank you very much for your attention.

[Interpreted] Well, thank you very much, Professor Stefan Pelzer for this presentation and insights into the universe of bacteria, microbes and biotechnology. We're going to see Stefan Pelzer later again in our Q&A session. If you want to submit questions, that's possible anytime. So please use the chat. I've seen that the first questions have already been raised. So if there is anything open, please don't hesitate to ask your questions right away.

But first, we move out of the universe of biotechnology into the energy world. And there is one substance that is at the focus. And my next guest is very familiar with that, Christian Däschlein. Welcome, Christian Däschlein.

[Interpreted] Well, good morning. I'm very happy to be here.

[Interpreted] Well, for you, Christian, it is also premier when it comes to the presence here at the innovation press conference, but in the studio as well. But normally, you work at the Marl site.

[Interpreted] Yes, that's right. I attended the first conference on innovation for the first time, first time in the studio. So I've seen a lot of new things over the past weeks, well, when I came here this morning. I work at Marl site, I live in Herne, and I had to take the A40, the motorway A40 to come here. It takes a bit longer, took me an hour this morning, but I started off early, and well, I've come here in a relaxed without any stress.

[Interpreted] Well, that's great. So we may need some more innovation in the transportation sector. Well, I already said that you are familiar with the energy sector. There's one substance or one material that is at the center of your activities, which is relatively new. It's hydrogen. Hydrogen is not new, but it's green hydrogen that is new. Some call it as the champagne of the energy transition. What is it all about with regard to green hydrogen.

Well, green hydrogen, champagne of the energy transition, that's a term that I heard frequently. The reason is that green hydrogen for the time being is a lot more expensive than the gray or black hydrogen. They can't use it at industry scope yet. But if you want to be resilient in our energy systems and implement the energy transition as forecasted, as prepared, we need green hydrogen, and I'm going to give you some insights later on. So it's one element in order to make it possible to use green hydrogen in the future and it's electrolysis.

[Interpreted] Well, we'll take a look at your presentation, and of course, we meet you then afterwards for the Q&A session. But first of all, we are looking forward to seeing how relatively and significant thing a membrane, a sort of foil may contribute to producing champagne of the energy transition at the price level of water.

[Interpreted] Many sectors can decarbonize by switching to electricity from renewable energy sources. However, this does not work in certain sectors. These face particular challenges. For example, in the chemical industry and steel production, hydrogen is an indispensable molecule for products and processes. Climate-neutral hydrogen will also be needed to transport renewable energy over long distances, store renewable energy over extended periods and ultimately, strengthen the resilience of our energy system. There is thus an enormous demand for climate-neutral hydrogen in the industry.

The global electrolysis market will grow accordingly. This is precisely what we are seeing, particularly in Asia. However, the major challenge still lies in economic viability. Depending on the location, climate-neutral hydrogen is still too expensive. This is precisely where we at Evonik have focused our efforts. In recent years, we have developed a key component that enables more cost efficient hydrogen production in the first place, our Duraion, anion exchange membrane, or AEM. It consists of a high-tech polymer, especially designed for this purpose.

Global hydrogen demand is already around 100 million tons per year. Various studies indicate that this demand will increase to between 300 million and 700 million tons by 2050. However, more than 98% of the hydrogen used today is gray hydrogen. This means that it is based on fossil energy sources. Depending on the production method, at least 10 kilograms of CO2 are generated per kilogram of hydrogen. Based on the 100 million tons cited, this represents a potential saving of 1 billion tons of CO2 today. That corresponds to approximately 1/3 of the energy-related CO2 emissions on the EU. This shows that producing hydrogen without generating CO2 is one of the greatest levers for global climate protection.

The preferred method for producing climate-neutral hydrogen is electrolysis. It uses electric current to split water into hydrogen and oxygen. If the electricity comes from renewable energy sources, it is referred to as green hydrogen. However, green hydrogen has so far not yet been available in sufficient quantities and is more expensive than conventional gray hydrogen. In addition to the currently excessive energy costs, established electrolysis technologies are reaching their limits. They lead to either excessively high operating costs, because of limited efficiency, or excessively high investment costs because of the use of precious metals.

At Evonik, we have developed a solution for this. Our Duraion membrane. It is a high-performance anion-conducting polymer membrane and the central element of AEM water electrolysis. What makes AEM technology special is that it combines the advantages of existing processes without their disadvantages. In this way, we reduce both investment and operating costs. Duraion is thus paving the way for the cost-efficient production of green hydrogen.

Why is AEM technology so superior? First, it operates in an alkaline environment. This allows the use of less expensive materials for the electrolyzer and the electric catalysts. For example, manufacturers can dispense with costly iridium. This ultimately leads to the lower investment costs, and that is a decisive factor for large-scale application. Such applications are being planned and advanced in places such as China, a major market for green hydrogen. Second, our membrane technology enables the efficient production of hydrogen directly under pressure. Because hydrogen is typically used under pressure, this eliminates the need for costly downstream compression stages.

Third, AEM electrolysis is highly flexible. It can be quickly ramped up and down. This makes it ideally suited for operation with fluctuating electricity from wind and solar power. Realizing the full potential of AEM technology requires a polymer membrane that is both chemically stable and highly efficient. Until now such a membrane was not available on the market. Developing it was technically highly challenging. It must combine 3 contradictory properties. First, it must exhibit very high ion conductivity. This is a measure of electrolyzer efficiency. It must also provide high chemical stability and mechanical strength. This is crucial for its service life. Improving one of these properties typically leads to the deterioration of the other two. Finally, the hydrogen crossover should be as low as possible. This is crucial in preventing hydrogen and oxygen from mixing. Otherwise, an explosive gas mixture will form. This is not only undesirable, but also safety critical.

This is why we started our development at the molecular level with the monomer itself. As a result, our Duraion membrane best fulfills all the properties required by customers. It has another decisive advantage with regard to regulation. We do not use PFAS in the production of our membrane. Throughout the entire process, we drew on our extensive expertise in electrochemistry, material science and polymer chemistry. We had already applied this expertise in connection with our biogas technology, SEPURAN.

In addition to the technical hurdles, there were market-related challenges during development. Especially in the early stages of a new technology, there are either no users or only very few, there are no standards or norms, and all methods must be developed and established from scratch. This means that it takes time for the market to develop. Because of the aforementioned advantages of AEM technology, we are confident that it will play an important long-term role in the cost-efficient production of green hydrogen and the ramp-up of the hydrogen economy.

To help both the technology and the hydrogen economy achieve a breakthrough, we at Evonik have invested in a pilot plant. This enables us to manufacture our Duraion membrane on a large scale. At just under 20 meters in length, our coating lines for anion conducting membrane is, to the best of our knowledge, the largest in the world. The recent commissioning of our plant also marks a major milestone for us. We have made the leap from laboratory scale to continuous production. This means that instead of producing our membrane manually in DIN A4 format, we can now manufacture it continuously in a roll-to-roll process and in width of up to 1 meter.

The manufacturing process requires absolute precision. At the start of the coating line, a specially prepared polymer solution is applied to a carrier film. Depending on customer requirements, we can optionally embed a fabric reinforcement. The still moist polymer solution or a carrier film then passes through various drying elements. Depending on how we adjust the drying conditions, we can further modify the properties of our membrane. At the end of the coating lines, the dry membrane is wound on to rolls and delivered to our customers in this form. At the current stage of expansion, we are capable of producing membranes for an electrolysis capacity of up to 2.5 gigawatts. This corresponds to 1/4 of the total electrolysis capacity planned in Germany for 2030.

So how does AEM technology work? The heart of the electrolysis cell is our membrane, shown here in deep purple. The ion-conducting membrane separates the cell into 2 half cells, the anode side and the cathode side. On both sides of the membrane are the electrocatalysts shown here in light gray, which enable the splitting of water into hydrogen and oxygen in the first place. In addition, porous transport layers shown here in dark gray are required. These transport the gases away from the cell and carry the reaction medium, water, into it.

The cell is enclosed on the left and right by metallic bipolar plates. These conduct the electric current into the cell. Many of these cells connected in series form the stack, the central element of the electrolyzer. As soon as current flows, water, H2O, is split at the cathode with electrons, e minus, into hydrogen and hydroxide ions, OH minus. The hydrogen atoms combined to form hydrogen molecules, H2, which are discharged via the porous transport layer. The hydroxide ions migrate through our membrane to the anode, seen here on the right-hand side of the image, where they are oxidized to oxygen, O2. The electrons generated then react once again with water at the cathode. This results in the two reaction products, hydrogen and oxygen in high purity.

Although AEM technology is still at the beginning of its scaling and commercial use, the figures already speak for themselves. Technoeconomic studies calculate a potential reduction in investment costs of at least 25% over competing technologies. Of course, there are also competing membranes on the market. However, numerous business partners have told us that our Duraion membrane combines the properties required by the market in the best possible way.

Our particular strength lies in complete backward integration, from the starting molecules to the finished membrane roll. This means that as a chemical company, we can adapt the membrane specifically to customer requirements, if necessary. Because we have developed not only the product but also the entire manufacturing process, we can produce Duraion on a large scale with consistently high quality. Of course, introducing a new product for a new technology is challenging. However, we are confident that we will overcome these challenges because we can draw on our experience in the biogas sector. There, too, we have developed a new product family for an emerging technology, thereby contributing to market development at an early stage. As a result, we are now one of the market leaders in the biogas sector.

As mentioned, it is currently still considerably more affordable to produce hydrogen on the basis of fossil energy sources. However, the current geopolitical situation, in particular, shows how quickly international supply chains can become vulnerable. It also highlights the dependence of Germany and Europe on fossil energy sources. The development of a green hydrogen economy is, therefore, a question of not only climate protection, but also strategic sovereignty from regional resilience. AEM technology and our Duraion membrane can therefore make a decisive contribution to building a more resilient energy system. Germany and the European Union still hold a pioneering position in hydrogen and electrolysis. This position must now be defended. At Evonik, we are convinced that this can be achieved. That is why we have taken a first decisive step with the investment in our pilot plant.

[Interpreted] Thank you very much to Christian Däschlein for this presentation related to the topic of the energy transition, and Christian Däschlein, he will be available during our Q&A session as well. So if there are any questions, you may write it already now. I pass over to the topic of recycling, and we pass from the topic of gases to another material to oil, pyrolysis oil. Hendrik Rasch, very welcome to you. Well, I hope it was easy for you to come here this morning. We had some problems with transportation. It's a premier for you here.

[Interpreted] Well, there was not a lot of traffic this morning. Well, the studio is completely new, brand new. Well, I'm in charge of recycling plastics, old plastics. But nonetheless, sometimes it is better to see new things and new materials.

[Interpreted] Well, recycling old things, old materials, that's the topic. And I mentioned the topic of pyrolysis oil. Many people may not know what this means and what it stands for. What is this?

Pyrolysis oil, it's just the liquefying of plastic, all those who have an oven at home, know the function, the feature of pyrolysis, for cleaning your oven and chemical pyrolysis is just -- it works without excluding oxygen, instead of burning things or liquefying it, that's how we generate new raw material to be used in later subsequent manufacturing processes.

Now we refer to big industrial equipment like steam crackers and similar equipment. And the process of pyrolysis might be easy on an oven in your kitchen. But on a large scale, there might be other problems with dirt, and how Evonik can help to find solutions, Mr. Rasch will explain to you now.

[Interpreted] Used plastics are not waste, but rather a raw material. Nevertheless, enormous quantities are still lost mainly through incineration and landfill disposal. As a result, there are increasing political initiatives worldwide to bring more plastics into a circular economy through recycling. More on that later. How big is the problem? Based on current assumptions, more than 400 million tons of plastics are produced every year. Yet today, recycled raw materials are reused for less than 10% of this amount. A large proportion is therefore not recycled. That is an enormous waste of resources.

One promising technology for recycling, even heavily contaminated and mixed plastic waste is pyrolysis. The starting material consists of plastic flakes like these. In the pyrolysis process, the long hydrocarbon chains in the plastic are thermally broken down and converted into a liquid oil, pyrolysis oil. In principle, this oil could serve as a raw material and replace petroleum-based raw materials or fossil naphtha. However, the oil contains various impurities because of food residues, mixed plastics and additives. This means it cannot be used directly in a steam cracker as a replacement for petroleum-based raw materials. European steam crackers are multibillion euro facilities that have been optimized for specific naphtha qualities over decades. But more precisely, the pyrolysis oil matches the respective steam cracker, the higher the yield. This both reduces environmental impact and improves economic viability.

The central challenge is, therefore, figuring out how to upgrade contaminated pyrolysis oil so that it can once again be used on a large scale as a basis for new plastics. We at Evonik began addressing this question more than 6 years ago. Our advantage was that although we do not operate pyrolysis plants ourselves, we are specialists in processing raw materials for petrochemical applications. We, therefore, have extensive expertise in processing naphtha products for use in steam crackers.

Our products have long been used to selectively remove impurities from oils in petrochemical processes. These substances called absorbents, specifically bind impurities. The process began with intensive analysis, comprehensive literature reviews, conventional laboratory testing and extensive experimental series. This made it clear which approaches might be used to effectively separate the various impurities with the aid of absorbents.

What exactly are these impurities? Our analyses have shown that pyrolysis oils are more commonly contaminated with chlorine compounds, other halogens, silicon, heavy metals and nitrogen compounds. These unwanted substances cause considerable problems in petrochemical plants. For example, they can damage catalysts, cause corrosion in plants and impair product quality. Without targeted processing, the use of pyrolysis oil would, therefore, remain limited to small dosages. Our colleagues at the site in Little Rock, Arkansas, took on the challenge of developing a tailored solution for this.

As a first step, they focused on absorbents that had worked well in the purification of conventional oils. However, it was not possible to sufficiently bind the organic chlorine compounds in this way. They were too big for the cage, as the colleagues put it. Because of their sheer size, these molecules did not even reach the binding sites of the absorbent. The decisive step was to combine catalytic and absorption functions in a single product. This combination converts the organic chloride compounds into simpler inorganic chlorides. These are easier to find and can therefore be reliably removed. This innovation is now marketed under the product name Purocel 505.

Here is a schematic illustration of the purification process using Purocel 505. The pyrolysis oil is fed into the top of the absorption vessel. When the hydrocarbon chains contaminated with chlorine come into contact with our Purocel, the chlorides are separated off in a catalytic reaction and absorbed. This allows more than 2/3 of the contamination to be removed. However, the right chemistry is not the only important factor for operators of pyrolysis plants. What matters is that solutions can be integrated easily into existing facilities.

It was therefore clear to us that our innovation to be particularly successful in the market, it had to work without major investments or lengthy conversions and shutdowns. That is precisely why we developed our Rocket system. This modular preassembled purification unit can be integrated flexibly into existing infrastructure without major conversions or lengthy shutdowns. This lowers investment costs, reduces operating costs and facilitates the adoption of pyrolysis oil. This system uses Purocel 510, a product based on the aluminum or bauxite which is also recyclable.

In applications with particularly demanding requirements, an additional hydrotreating step follows. In this process, the remaining impurities here alongside the chloride, shown in yellow, or silicon, shown in green, are removed via the gas phase through the use of hydrogen at high temperatures. This makes the oil more stable and thermally robust. That is a prerequisite for use in steam crackers that produce raw materials, such as ethylene or propylene, but now with the attribute recycled.

The recycled content in the plastic product is verified and certified through mass balance accounting. Evonik deliberately positioned itself in chemical recycling as a systems partner. We do not offer a single solution for a special case, but rather a modular system for different plant sizes and process requirements. You are already familiar with the Rocket system. The absorbents are ideally suited for use in smaller facilities. Alternative purification options, such as hydrogenation, would involve excessively high investment costs and would not be economically viable.

For larger scale facilities, we offer 2 complementary technology solutions. First, the efficient removal of selected impurities; and second, integrated solutions such as hydrogenation catalysts. This is then economically viable. This means Evonik is well positioned to meet the growing demand for chemically recycled materials. Some of you may now be wondering where these growing markets actually are? Is recycling only a European topic?

Clearly not, both the U.S. and the large parts of Asia have launched legislative initiatives to advance chemical recycling. For example, China recently launched major programs to expand plastic recycling. By 2030, 20 million tons of plastic are to be chemically recycled each year. In the U.S., alongside voluntary commitments by industry, there are various legislative initiatives that rely on chemical recycling. And in 2025, the EU introduced regulations for not only single-use plastics but also the automotive sector. These stipulates that from 2032 onwards, new vehicle types must contain at least 15% recycled plastic. From 2036, this will increase to at least 25%. Alongside mechanically recycled materials, chemically recycled materials can also be used here. For example, in safety-critical applications, such as brake lines.

What does this mean for industry and society? First, there is the effect of sustainable innovation. We replace fossil raw materials with existing materials. This benefits the climate because plastic waste is not incinerated, and less crude oil needs to be extracted. In addition, it strengthens the resilience of our industry. In the coming years, steam crackers will come under economic pressure because of declining fuel consumption. However, they are indispensable for the production of starting materials for medicines, plastics and everyday materials. That is why it is important to preserve them.

With the growing feedstock stream from pyrolysis oil, the petrochemical industry gains access to a defossilized petrochemical feedstock stream. In recent months, we have also seen how strongly the global economy depends on individual regions for certain raw materials. But we could become more robust and independent by supplementing fossil raw materials with materials already circulating within our own economy. This makes us less dependent on fluctuating imports and uncertain supply chains. Of course, the solutions of Evonik alone will not achieve this. But they are an example of how sustainability and resilience can be considered and implemented together along key value chains.

Well, and now you've seen our 3 business cases from innovations at Evonik. Thank you in the [indiscernible] for the last presentation. And now we get together again with the entire innovation, power and competence of Evonik and. Thank you for being back for Q&A session. And now it's time for questions.

We've received some questions, but I can only challenge you to submit additional questions. that we put to our experts steps why we're here. We've got LinkedIn and YouTube as well where this event is also streamed. So if you have questions on these different channels, so please don't hesitate to submit. But as I said before, we have already received some questions and well, that was to be expected. Lauren, that there are some questions to the Board of Directors and looking at the entire innovation segment.

Well, [indiscernible] our initial cost has come up wit a the question. What's the percentage rate of F&E investment, R&D investment goes into Germany and in which country you invest most?

Well, thank you for the question. Of course, as a company based in Germany, a large share of our R&D investment is allocated to the German sites. But we are a global player and we play in the area of transformation. Transformation is something that challenges us everywhere in China and the U.S. We've seen some examples today. And we do that specifically in ecosystems that drive these changes, these technologies. We need to be on site. We need to be in those regions and countries. And Christian, maybe you can explain a bit more in detail what it's like in innovation.

Well, I would like to hear your echo, Germany remains one of our centers or the core piece of innovation and that is going to continue in the future. Because in Germany, we've got an incredibly strong scientific setting that we can use alongside the fact that we have a very strong team in Germany and Europe that we want to be building our activities on. But all the topics come into Europe, the best on the European legislation make us fit for the future. They give us some impulse that will then be translated into growth and innovation.

And we've seen research development and -- we've seen that the market is not in Germany, but we've developed indulgence. So we can transfer the technologies into other regions in the world. And that is the point that needs to be taken into consideration. That's why it makes sense to sustainably do research and development here in Germany. Another point I was mentioned and that I would like to support is, we need to make sure that in other ecosystems, we remain close to the market.

So it is internationalization, where we need vicinity to the markets. Market and technology need to be on site. Therefore, we have expanded our activities in the different hubs. We've built up new hubs. We just mentioned Mumbai in India, and we've got the hub in Boston, where we go deep into new ecosystems that again, generate growth. We need to be close to our customers, close to the decision-makers and that leads to growth. And then, of course, it strengthens the economic side of Germany that is crucial to us as a consequence.

So we need to be active in both elements, need to find a good balance. I don't want to talk about numbers, but it needs to be clear to everyone that we have and we'll have a strong basis in Germany and in order to answer your question, this was the case in the past. This is the case today. And going forward, we see that this is going to be the case in the future as well.

Well, that's the -- I hope it's a good answer to a [Indiscernible] Jonas Jansen, who intensely studied the press review that we published. And he said, well, here I read that the researchers built upon internal and external knowledge within Evonik and at a later point in time, they the innovation process.

Christian, I think it's a question for you. Are you using AI? And the critical second question, could we assume that this means that you are not interested in very expensive fundamental research?

Well, that's like 3 questions. Let me start with the last question. Fundamental research, is a core element of our research competence that we want to develop further. We do so differently than in the past. It's not about withdrawing from DeepTech, but we look at it differently. We want to do things differently. And we've seen the example of the innovation factory at Evonik, where we step in later, but we still do DeepTech. So we start at a higher level of technical maturity because we hope and we assure that we can then scale up things faster.

So it is a further development based on a different level of maturity where we enter into the process. So we still have DeepTech, which is still part of our DNA of the R&D community. And you see that when you look at different examples as well. Of course, there is the expert community, the [indiscernible] community that is connected within the European German science community in the scientific landscape and environment. Many of these scientists work as professors at universities and colleges. So we want to combine our knowledge expertise in a combinatorial common natural way and use it in order to get impulses for our development.

For R&D, once more, we step in later at the point in time when we know that we can scale it up and that is a topic of a derisking approach rather than withdraw from DeepTech. There's an additional element that I would like to mention. And that means that, in particular, via our venture capital activities, which are also crucial a permanent element in our activities.

We try to recognize and identify trends in the market and ideas early on, and we used the combinatorial aspect once more in order to develop new solutions and bring them in the market. When does something is transferred into the innovation factory when we get a higher level of maturity or when we see a larger opportunity to have an industrial realization of that.

Second question, AI. Well, I the role of AI in what we do. We separate AI from the reduction of staff. We want to be faster, better. We want to build up expert systems. I mentioned some of them. There are others that have an even broader approach, [CogniSphere], for example, that we are advancing within the company, within the business in order to make tech faster, better and create expert systems in order to be more efficient at a broad level and scale things up faster. So AI should not have and will not have any influence on headcount.

First question. Are we internally immune as RD&I organization as a research organization when it comes to reduction of headcount? No, of course, not. But let us note once more and Lauren will probably confirm it. We take note of the fact that more than EUR 400 million, EUR 420 million that we want to spend into research and development. And that does not contain the important part in all the businesses which in their business application close to the sales function also contribute to innovation.

Let me take another question because it fits perfectly, and that's exactly the point that was just mentioned. And it's got from Camino Engineering News asked and we transferred that English question into German. It's directed to you, Christian. Thank you for your presentation. But we would like to pass that question on to Lauren now.

AI, the role of AI for innovation at Evonik, not only scientific analysis but also to support innovation, decision-making, but the company finds in the third year of a program to reduce thousands headcount, it's even 2,000 headcount that Evonik wants to reduce its headcount by over a period of 3 years. And as Scott asked specifically how many of these posts are in R&D, how many headcount reduction in R&D and will AI enable you to cut headcount?

Well, taking the bigger perspective, we are under pressure. The market economy is not fun right now and that is not only true for us as Evonik. It's true for many markets and many supply chains and many value chains. We find that we are under pressure. Of course, it's a lot simpler to invest if there is some tailwind when there is sufficient money that flows into different directions and that helps you to allocate it into different areas. But the only way to grow is to advance innovation to drive innovation. We know that we need to do that more specifically with our investment, with our decision-making, we place we allocate our funds into the right opportunities.

So of course, it is not only by even in innovation, it's a real hard time. We need to be highly resilient. We need to be very smart in our decision-making. And AI supports it. It supports our decision-making, which gets faster. It prepares the ground for more options. And we see that in many areas, not everywhere, I can't say that our entire innovation chain, is driven by AI at 100%.

Now we see that in different bubbles, so to speak, that AI plays a role, and we see in what way AI supports us to find faster round for new biotech synthesis. For example, we need to be competitive with people, with colleagues within competition, and we need to use AI as the competitors use AI. So we need to keep working on that. We are not immune to the environment and the macroeconomics. We need to be fit for the future, and we need to be able to say no. So we go more into the direction where we can move things on-site with areas where we are relevant and we can make a difference.

Thank you, Lauren. And Christian, it makes your life easier, if it was not true for innovation, but it's part of the entire universe and it's part of the entire business.

Jonas Jansen has got a follow-up question regarding the numbers. I think, Christian, you should take that question. Regarding the EUR 300 million share of the EUR 1.5 billion. Is that the same amount that you had allocated also for Creavis or that increased, an increased amount EUR 1.5 billion had already been communicated? That was a number that was already known to the market.

Well, let me try to give you some insights. Creavis before had no -- well, it was about new products in new markets. The risk profile, therefore, was a different one. And therefore, former Creavis has not been allocated any expectation regarding revenue. Because the development cycles were clearly longer. With the new approach in the Evonik Innovation Factory to be faster in the market to say that within 5 years, we want to have viable products for the market. That increases the aspiration. The claim to the Evonik Innovation Factory to contribute to the revenue. So the EUR 300 million is new. It's an additional promise to grow which is to be generated via the Evonik Innovation Factory.

Will that lead to a scenario where we say that we want to go beyond the EUR 1.5 billion? So EUR 1.5 billion plus EUR 300 million, I would rather say no, because we find ourselves in difficult troublesome times together as a team at Evonik. We need to make an effort in order to meet our growth expectations by 2030, this EUR 1.5 billion. Therefore, the EUR 300 million help to be more resilient, and I would like to focus on that term once more to make a contribution to that overall EUR 1.5 billion in the 3 areas that we mentioned, but that implies and this is true that all the programs that we are currently running at the factory. They have a direct 100% linked with the innovation growth areas, IGA. This is the ones that account for the EUR 1.5 billion. So that's energy transition advanced biotech and the third area that was mentioned as well. And with all 3 innovation growth areas, we want to have the leverage for this EUR 1.5 billion and one contribution will be the Evonik innovation factory.

Well, thank you very much. And very -- in a short moment, we'll come to the specific questions, but first, I pass on to Lauren once more. London, and our chemical SG talked asked about China. China develops very quickly into a power center for innovation at low cost. How can Evonik protect their customers? Maybe a question to both of you, and then there is a follow-up question regarding corporations, combinatorial innovation that we take afterwards.

China has a strong chemical industry as well. We have been investing during a long time in strategic strategy we are producing there in the America. So, 1/3 here in Europe, 1/3 in the U.S., 1/3 in Asia. So we are a part of this very strong and efficient chemical industry in China as well.

And there are interesting and very intelligent and smart people everywhere in all the countries. Maybe their teams are working differently yesterday, for instance, we've been talking about carbon capture required in the U.S., by the U.S. policy. Well, they have their Inflationary Reduction Act and for an ecosystem like this, we take this into account, or we talk about hydrogen.

And here, we made a clear statement. The Chinese State made a clear statement. They wanted to invest in this, and that's why we go there. And I would say that makes us stronger, that makes us competitive because the intensity is the same everywhere. It's not always fun, but it's our job and our task. And I think -- so we are here in Europe, and I'm grateful to see that there is intense competition and Evonik in this process of transformation will play an important area.

So no fears about China and working there but a smart approach as for China. Let me give you an example in order to understand what it means and how we will work with the innovation factor. We have a lithium-ion battery center in China, cooperating with our partners and customers. And we developed this to the extent that this year, now we can translate this in concrete business. This shows that the impulsions coming from the regions are perceived by us, and that's why this might make an important contribution to our business, and this refers to this lithium-ion battery center.

Question from [Indiscernible] as well. As for consolidation and cooperation. He says, well, it said that Europe in the future will have less chemical industry. There will be a consolidation and a stronger cooperation between different industrial companies. But to what extent a cooperation like this is realistic? Evonik, for instance, along with DSM, both companies at a certain moment of time, separate from each other and went their own way.

I would say that's a good example. This partnership between DSM and Evonik was challenging. So a new application, a new market, a different value chain. So we try to make a solution for the future out of it. We did this together. GGV is running well. I would say we may have the technology. Another one has an entrance and access to the market, and we should bring or can bring both things together. And then we have the chance to bring technology faster to a marketable solution and to the market.

I think we need more of this instead of less. As Christian said before, we need our academic expertise as well. In terms of technology, we need to develop prototypes faster and we have to scale up things faster, and we need these ecosystems. And I think Veramaris, this is a good example. So combinatoric innovation on the one hand and the pressure of consolidation does not exclude one each other.

Well, before coming to the 3 specific technical presentation, a question from Marc Romel from Camp Manager. Right, it just came back from the U.S. So Rom, former part of Evonik, opened their business there. MAA business. And they implemented to lead our technology there. That was a topic addressed here at our innovation press conference. And this kind of an innovation last many years, you have to make used investments. So Evonik, will they have the financial means to do this kind or to promote this kind of innovation.

Second question. What kind of support by state subsidies for R&D pilot plants would be needed in order to develop sustainable technologies in Germany?

So just to comment as for Roman and Lima well, I've not been on site, unfortunately, at this inauguration. But my congratulations to Rom. It's really challenging an investment like this. But they did it and their team, and that's another good example that shows that in these times, you have to keep on investing. I would say that at Evonik, what do we talk about? We talk about budget, budget for innovation, we talk about innovation, but it's always related to CapEx, CapEx investment. I would say there are less investment in existing already existing technologies because macroeconomics does not permit this to utilization of capacities in theory of 80% and well you do not have to invest immediately in the next new equipment and systems.

But once it is about a new technology, you have to scale it up. Let me give an example. Today, we still have EUR 700 million, EUR 800 million of investment in CapEx. And this is not only for maintenance of existing technology. This is invested in new technology as well. We will keep on driving this and focus on this. So it's about existing technology, but it's about new technology, and it's about scaling up new technologies as well. This is what we see, and there are several examples, our biotechnology plant in Slovakia. We will expand this plant further.

In 2024, we had the first rhamnolipids production there, and we'll build up our competence center further. And there are further investments to be done in order to support next-generation carbon technology. Perfect example. We have been talking about this at our innovation press conference. And well, that's something we did from the lab to a big industrial plant here in Europe and industrial production.

Just to complete this what we want to do, and I try to explain it in the frame of my presentation. At an early stage, we want to see, can we scale up once we see we can scale up, then we'll have and make available CapEx. So we'll have this idea at an early stage, we'll implement this at an early stage. And later on, this will help us to provide the needed financial funds because we want to grow, and that's a decisive point.

Second point. What We've been talking about the topic of funding several times and we know that funding is essential. At an early stage, when you build up pilot plants, which are not profitable at this moment of time. But we have our own team within R&D, and they are in charge of the topic of funding as well. So they have the expertise in terms of funding. So we do not have only expertise in R&D in this area. But in funding as well, we know where to apply for subsidies, state funding and there's something to be considered as well. So I think [ Mike Robels ] want to know how about beside of the offer not only the demand. You always can do more also.

Now you may relax and have a break because now we can pass over to the topics of the 3 presentations. Christian, let me begin with you and the membrane technology. First technical question addressed to you by [ Oliver Ridder, Go Jones ]. Evonik, how do they plan to do the go-to-market for the AEM. Is there any context with this group. Other industrial companies, ABE or is there any potential buyer for this technology already?

Very important question. Currently, we are introducing this into the market. And what I cannot mention in detail our partners, but what I can say is that globally, we are in contact with all the relevant players and stakeholders with the big ones, the well-established ones, but we are in contact with start-ups, smaller companies, new companies. And with many of these companies, we are mounting first demonstration project in order to check the performance of the system. It looks quite well. But right in the middle of market introduction, you may buy the membrane already. If you want to do so, you can do so.

Well, let us see what the press and media representatives think about this idea and suggestion. Well, about the 3 examples mentioned, they are strongly related to innovation, and there is a matter of being close to the market and making it marketable.

And Luis has a question. Pipe and profile exclusion, please. How about your time planning the time line up to the commercialization.

Currently, there is still a pilot plan. But how about the next step and when the next steps will be done? Can you give us some further explanation? Well, we have clear targets. For this year, our targets are very clear. Our sales targets are very clear. So the market ramp-up for the hydrogen economy, this is still ongoing. And looking into the future, it's not that easy. So it's always looking into a crystal ball. But all those working in the field of hydrogen, we hope strongly that this will ramp up strongly in the next 2 or 3 years.

Second question, the pilot plant. Our pilot plant currently enables us, allows us to produce high volumes up to 2.5 gigawatt of electrolysis performance. If you calculate this per electrolyzer volume per square meter, there is a lot. And this will drive our activity during the next years. And the next step for us will be horizon 2, 3, 4 years, then we'll do the next investments and expand this business further.

There is another very concrete question, you have been talking about capacities and there's a gentleman from Rohrbach. So what's the maximum pressure for the membrane.

That's a very good question. I just tried to explain it in the frame of my presentation. But as I said, hydrogen is always used under pressure. And if I do not produce under pressure, then I need further compression stages that costs further money. That's something I want to impede. And what I can say is that -- so in the last year, during thousands of hours, we tested the membrane under a pressure of 35 bar. We did it during shorter times with higher pressures. But well, last year, 35 bars during thousands of hours, and it worked out perfectly.

That sounds great. Let's pass over from the membrane. If there's no further question regarding the membrane, at the moment. Then I suggest to pass over to the topic of the pyrolysis oil.

Hendrik, [ William Derk ] has another question, or [ William Dexcluding ] I don't know how to pronounce his name. Evonik, do they work on the treatment and recycling of plastics before pyrolysis, density of VR, infrared and so on.

Well, we have to understand that Evonik as a chemicals company consider ourselves as being an enabler. We are not a recycling company. We enable our customers, the recycling industry to produce better products, to remove impurities in a better way. We do not have any direct recycling activity. But well, we need a common understanding. We need to know what kind of flow of materials we have, pure clean materials in order to optimize flow of materials. And very often, we talk about ecosystems, circularity, very important.

So once you develop a product, once you design a product, you have to think already about the end or take into account the end of its life cycle.

Yes, William Derk another question. Pyrolysis oil. Many companies have different properties. They have different materials. So this process, can it treat any kind of materials, including wax-containing materials?

Good question. We tested many pyrolysis oils. So that's due to the fact that out there in the market, there are different technologies. I think during the next years, the market will be consolidated. But well, you'll have different technologies, different raw materials. And according to this, you have different pyrolysis oil.

So we have a kind of a toolkit. We provide different solutions and the effectiveness for different impurities like halogens, this must be considered, but well, you have to know the properties of the different materials.

Another question from India, [Indiscernible] LinkedIn, Thermax Limited. Pyrolysis, is that a continuous process? Or is it possible to use it as a batch?

Well, when looking at the pilot systems, then these are batch processes simply because we want to try and look at the different iteration stages to make the process more efficient from the pilot plant to the commercial plant. There will be a permanently continuous process, which means the different technologies are aligned to one permanent process. And as a result of the impurities in the raw materials, you also need to provide for some shutdown. So these 8,600 hours that we know from lubrication systems cannot be used for pyrolyzers as well, but we think between 7,000 and 8,000 hours of operations per year will be feasible.

And then to the economic efficiency in the market, there are some questions here that is always interesting. Beatriz Santos from Sustainable Plastics asks what is the demand like for your severance for pyrolysis oils? What can you tell us about the demand?

Well, we have been looking into the market for the past 5 to 6 years when we realize that the narrative that the politics goes into that direction. This year, we are strongly supported. Independently of the geopolitical situation, there are clear targets for the packaging market, for the automotive market that have been communicated. And we talk about the amounts of more than 10 million tons of recycled materials and plastics by 2040.

So it's a big cake for mechanical and chemical recycling. And very early, we have positioned ourselves in these markets. We tested different oils. So we know about the variability, the problems that the businesses have with that. And our portfolio is rather broad. As for hydrogen, we see that these targets will take effect in 2030, 2032. This is now time for investment, and therefore, it's known that we are important that we are known that our targets are understood and that we can contribute in the different systems that are being set up.

And there's a second question from Beatriz Santos which moves away from your direct topic. Or maybe it's Christian, who should answer. Regarding partnerships, we come back to the combinatorial innovation. How does your partnership with Oerlikon, Barmag in the area of chemical recycling of PET develop? Would you like to take the question?

Well, it develops slowly. We would love to speed it up. PET recycling is a very difficult environment, commercially difficult environment or it's a challenge if I may leave it at that. Well, we've outlined that early on that you need to focus on what is in high demand and you need to focus on market developments in order to make sure that you don't develop something away from the market.

Let me take a look at my questions. There is one open question here, popping up. To Stefan Pelzer via YouTube. I don't know who has submitted the question. 2 years ago, you talked about the importance of micro by tubes. Ecobiol is just one type. Wouldn't it be better to have a dual system or something that is more effective?

Well, excellent question. And certainly a possibility to approach the area alternatively. But we have generated so much knowledge by Ecobiol and Ecobiol PRO regarding the mechanisms of impact that we're always surprised how manful that Swiss Life is when it comes to the microbiomes and to put them into a well-balanced health situation that is a positive health situation by pushing out pathogenic organisms via digestion of certain substances that is more effective.

So we're quite happy about the different properties and capabilities of our Ecobiol and Ecobiol PRO, which acts even faster. So it can never be excluded that going forward, a consortium approach goes into that direction. And of course, if you read our press releases thoroughly, you know that we also prepare activities in this area and get funding for that, but we are very happy with Ecobiol PRO. We get positive feedback, as mentioned when we introduced the topic. Our customers tell us that this is a new level of quality, a new level of understanding regarding the probiotics in combination with the microbiotics in the intestines and that, of course, has a positive impact on the performance of chicken.

And that's outstanding. If you already tell us that there is going to be something else coming up, then you will also participate in the fourth addition of our press conference on innovation because there will be results from biotech as well.

There is another question on AEM. Let me quickly check the question from France, from [ Abu Kava Abdul Malik ] from the university environment, a student from this AM electrolysis. Has historical changes regarding the robustness of membranes at high-density currents. Can you give us some insights into the materials that you use in order to prolong the life cycle of your membranes and can you compare that to the current state of affairs regarding the PEM technologies.

Well, that's a very broad question.

Well, that's a very broad question. Well, now it's a simple question, actually, but I can't give you any details, of course. Of course, when developing the membrane and the chemicals and materials, we have really made sure that we can cope easily with those challenges, life cycle, stability, electrochemical performance of the membrane. These have been the main challenges regarding the analysis. And as I said some years ago already, we started with our polymer, now at Evonik. And specifically, we developed a system that has all of these properties.

But what it is chemically in detail?

Well, unfortunately, I can't give you any details on that. Well, this is the student curiosity that we find here are very appropriate. But of course, there are some things we can't disclose, that's the know-how that you need to keep confidential, and we talked about that earlier.

Well, I think all questions have been submitted and answered. It was a wide portfolio and broad portfolio of questions. Thank you very much to all of you that you have presented your different topics and that you've been here for answering questions. And -- thank you to the 2 of you for answering so many questions after your short presentation. Thank you for attending this press conference on innovation. Well, it seems that there are no further questions.

Thank you very much to all of you. Thank you very much to anyone who has contributed to the success of this event, our Editor in Chief, [ Mr. Karl Vasta ], with many helping hands behind the scenes in backstage. It was great fun, and I think it worked fine. I hope you've enjoyed it. And to the journalists out there, thank you very much for your time and for attending this press conference. We're very, very curious to get the media feedback that we will see. And of course, with our communication teams, we're always ready to help you out if you've got additional questions. If there's anything that's not clear or if you need further information, we will pass you on to competent minds. We've got plenty of experts here at Evonik. Therefore, my recommendation to all of you. So strengthen your personal resilience as well. I wish you a good week. Have a good day, and goodbye from us.

[Statements in English on this transcript were

Spoken by an interpreter present on the live call.]

Ladies and gentlemen, welcome to the Q1 2026 Earnings Conference Call. I'm Matilda, the Chorus Call Operator. [Operator Instructions]. The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Christian Kullmann, CEO. Please go ahead.

Thanks a lot. Ladies and gentlemen, good morning. Thanks, everybody, for joining our first quarter earnings call. Today, marks another special call for Evonik Industries. I have not only 1 but 2 CFOs sitting next to me. First of all, lot. Thanks a lot to you, Claus.

Over the last 7 months, we have navigated our finance organization confidentially through rough waters, especially in crisis times like these. -- judicate longer on experience has prudenproven once and once again to be incredibly valuable. This experience was also pretiated by capital markets.

As we had 2 good earnings calls with you so far, and I'm confident we'll have another 1 here today. Luckily, you're not gone but we will return to Singapore and continue to help our Asian operations.

Second, Welcome, Michael, I'm looking forward to at least the next 4 years together. We have a lot of challenges ahead of us for sure. But with your vast experience across industries, companies and roles, you will for sure make a difference for us.

I have no doubt that when my renewed contract ends in 2030, we will have jointly created a different one, a much better positioned and much more profitable company. With that, ladies and gentlemen, let's jump into today's agenda. Claus will start with our Q1 results, and I will then take over for the outlook. Claus, stage is yours.

Thank you, Christian. Thank you for your kind words as well. And as much as I enjoy sitting here with you, I am now looking forward to be back full time in Singapore and Asia again. Asia is the center of our future growth, and this is, in these days, I think, even more important than ever.

Michael, welcome to I am happy that you decided to join us, and I'm looking forward to a good teamwork with you.

Now let's have a look at the first quarter of 2026. Adjusted EBITDA came in at EUR 475 million. And with this slightly above our expectations at the beginning of the year. This result was supported by continued self-help measures. For example, we accounted 410 employees last end of March compared to end of last year.

But of course, the main driver was a better operating performance in March after January and February had continued on the weak of last year.

However, with the stronger-than-expected March, or without the stronger-than-expected March, we would have still delivered our guidance for Q1. After the war in the Middle East broke out, we started to see volumes picking up only in late margins. This was likely not an improvement in underlying demand.

We believe this was rather pre-buying with customers aiming to secure volumes and potentially avoid price increases in the future. This was visible mainly in Advanced Technologies the segment that clearly beat our end year expectations.

Next to prebuying, we also see notably weaker competition right now. For example, in crosslinkers, PA12 was strong in Q4 already and continued this trend in Q1. In Q1, we saw only minor pricing benefits. As we have a certain delay in price adjustments.

Q2 is looking more promising on the pricing side. Our cash generation was strong in Q1. Free cash flow was at EUR 183 million. This is almost on prior year level despite clearly weaker earnings. Support came also from customer payments and from a take-or-pay contract that we terminated about 1 year ago. We had recorded the corresponding earnings last year in Q1 and Q2.

We also received a couple of customer prepayments and cofinance for investment projects.

Net working capital was about EUR 100 million outflow so very similar to Q1 2025 and in line with our usual seasonality.

Chart 7, when you look to it shows how we are positioned in the current Middle East war environment. There are a lot of disruptions. -- and in global supply chain and chemical production. First and foremost, this impacts companies that are heavily export oriented and that are predominantly rely on feedstocks from the Middle East.

These are mostly local players directly in the region and also in Asia. So with our global setup in which we source and produce local for local, -- we are relatively better positioned with the 1 partial exception of methionine in Singapore. Our production and our customer deliveries are cured.

And to a high degree, also out of Singapore. But as always, let's say, fluctuation and changes which we have to take into consideration. And we have also a balanced product mix portfolio mix of specialties and more upstream products. This is also a great help right now. This means we will likely see a good advanced technology and a better-than-expected C4 performance in the short term.

Beyond quarter the disruptions were the risk of order effects or more specific, the risk of inflation led demand weakness. More details on this now from Christian in the auto Christian, and back to you.

Since Claus, it's a pleasure for me now to convey you the audience with some more with pieces about what is going on. And I'm sure -- that is what interests you the most our expectation for the second quarter and the full year. Ladies and gentlemen, given the steep increase in input costs, we are pushing hard on pathways through to our customers. And it is working.

Consequently, we see strong trial momentum in many businesses right now. At least in April, prebuying is continuing, so will likely see higher volumes in the second quarter. That all sounds great.

But please keep in mind, though, we will also have significantly higher input costs and increased supply chain risks. And especially, we're looking at were volume limitations from the force mater in Singapore plus a planned maintenance shutdown in 1 of the 2 single propanes in April.

Both effects are limiting our volumes and enhanced our ability to fully capture the attractive price environment. All in all, we record at least EUR 550 million of adjusted EBITDA in the second quarter. This is a significant improvement both versus this year's Q1 and last year's second quarter.

I guess this is a strong message in these days. But honestly, I can hear you say, can't it get even better. Ladies and gentlemen, that is hard to say right now as things change quickly. But we are using the term at least -- so you can see we are aiming to strike a balance between on the 1 side optimism. And on the other side, the necessary caution given volume uncertainty towards the end of the quarter.

In the third quarter and beyond that uncertainty is increasing. So it is plausible that driving inflation can lead to end customers demand softness. Consequently, demand for our products could fall again, possibly even amplified by destocking after current prebuying.

This could lead to lower utilization enhanced could weigh on our performance in the second half of this year. But -- and I guess it goes without saying, none of these developments are certain. So we take a balanced view. Let me say a balanced view with confidence.

In the short term, there are clear opportunities. Everybody at Evonik is working hard to capture as much of these opportunities as possible. Our outlook for the second quarter feels well underpinned by these to the second half of this year risks might increase.

Against this backdrop, ladies and gentlemen, we confirm our outlook for the full year 2026. Adjusted EBITDA is to come in between EUR 1.7 billion and EUR 2 billion. We know that many of you here earnings at the high end of this range or even above it.

But I guess, I hope -- you will understand that given we just reported on the first quarter and given all the uncertainties around for the second half of this year, it would not be -- it would really not be prudent to get to entities already now. But with a better first quarter of the year, the risk profile for the outlook is obviously developing to the right direction, the right direct.

With a good turn EBITDA outlook, we also reiterate our cash flow guidance. We delivered cash in all weathers. We had a good start into the year, underpinning our 40% conversion target. Second quarter will see support from year-on-year lower cash out for bonus payments, and our balance sheet will be supported by our new dividend policy. Given cost and price inflation, net working capital could temporarily turn into a headwind in the next few months.

But as a weaker second half is a possibility, the year-end effect is really hard to predict right now. Thanks so far for your attention, and now we are happy to take your questions.

[Operator Instructions] The first question comes from the line of Simon David from BNP Paribas.

David from BNP -- so a few questions, please. Could you give an early view of the May order books versus what you saw in April? That's number one. Related but sort of slightly different. If you're seeing prebuy continuing how can you tell the difference between prebuy and share gain?

Have you had customers telling you they're stocking up or indications that stock levels are rising. And then finally, could you talk about the sort of mechanism of price increases in meting how much of the increase you'll see in the second quarter versus how much is coming through later in the year on contracts, et cetera?

Yes. David, thank you very much for your questions. The order book question goes to Klaus, also the prebuying indications to close, and then we continue with the methionine question with Christian.

Okay. Yes. David. So order books for me, are still looking good. And we had a good order book in April. We don't have the final numbers of April yet, but shows also a further improvement compared to March, and we also see a strong order book in May. Beyond May, it's already difficult to say because -- there's also a tendency right now to place orders late or change orders.

So that's currently order book for the next month looks pretty good. identify prebuying is, of course, difficult. We have so many different business lines, as you know. And we have a lot of markets, different markets. In general terms, speaking is we don't believe that there is a fundamental improvement in the economy.

So whatever we see right now there is only 2 options. Either it's be buying or we gain market share. And from that point of view, we have also both components. We know in certain areas. -- we have a split of where we believe 80% really prebuying, but also a touch of market share gain because we are in certain areas able to supply where others are not.

One prominent example is, for example, our oil additives business line. So here, we are really in a very favorable position to be capable of supplying whereas some others are not. So like I said, this is now a mixture of prebuying and some, let's say, market share gains. However, having said this, the vast majority, we believe, is a pre-buying effect.

Okay. I take care answering the question about methionine. -- let's keep it like this. 2026, as of today, the third year in a row, which where we will have much better than expected methionine performance. And looking into the second quarter, are saying that we will have a pretty good signing business which is well underpinned already looking forward.

It could be that the -- let's keep it from the market perspective and sign sort could last also. -- into the third quarter. So in a nutshell, for our outlook, the business is much better than at the beginning of the year that our assumption has been during the beginning of the year. Maybe some more color about the background for it.

For sure, we are a market leader, not only in terms of production, but especially with regards to our global setup because we are the 1 and only methionine player having 1 world-scale capacity in each and every growth region.

In Europe, in the United States and in Asia, in Singapore. So having said this current situation proves again how valuable this kind of signing positioning for us is. In other words, that is really helpful in underpinning our position of, let me say, having a good raw material access, which leads to a good position of fighting potential supply disruptions.

And you should keep in mind that from the second half of this year, our mature mercaptan backwards integration of our capacity in the United States in Alabama will ramp up. So that is another, let me say, kind of tailwind for our.

On the other side, the level of uncertainty is high. And therefore, it is prudent to say that we should not ignore that in the midterm, a normalization of prices, we should expect. So in a nutshell, second quarter, we will see a good machining rates could also last into the third quarter.

And then let's see what is going to happen, and we should not put a blind eye on the potential, let me say, prices normalization, which could occur so far from my side.

That's really helpful. It was also just to understand the amount of refining pricing, which is on contract versus spot. So the spot prices that we see having materially increased. How much of your business is on those spot prices and we'll see the benefit in Q2 and how much might come through later if prices hold up?

David, I can't read you. David, I hear you and I could read you really from the bottom of my heart. But would it be true and clear to talk into the details. I guess it would not. But as you know, the spot prices are not at all the contract prices. And if the spot prices get up, the contract prices will follow but not to this kind of extent.

And you should keep in mind, as you know, already because our methionine professional that there is always somewhat like a time delay from the, let me say, from the increase of the spot prices. And then you have the respective or similar or running this direction on contract prices, but I can really read you and please give me a chance to answer the question in the way I have done. Thanks a lot.

Next question comes from the line of Anil Shenoy from Barclays.

Good morning, everyone, and thank you for -- the first question is on the methionine market again. So I was just wondering if you could give us a sense of like what percentage of methionine capacity may be disrupted because of the raw material and availability in Asia.

And again, on similar lines, if these Asian operations stay up, I mean if the straight of almost where to open tomorrow, how long do you think these Asian operations may stay disrupted? So any color on the disruptions in the methionine market would be very helpful. So that's my first question.

And the second question is -- is there any chance, and this is generally for the group, that the benefits from the Asian disruptions that you're seeing be permanent. I'm asking this because a couple of companies have said that given the Asian disruptions, they're trying to get longer-term contracts with the customers.

And customers would ideally be willing to pay premium if they're secured of volumes throughout the year. So are you seeing, I mean when you negotiate your contracts with your customers, would you be thinking from this point of view?

Anil. Question is taking the ion and Klaus, maybe on the long-term implications and if structurally something has changed in the industry. Okay.

Yes. Sometimes I don't feel like the methanoate of the company. So happy to take your question. First of all, by some rule 80% of the crude oil of gas from the Arabian Gulf is transferred to Asia, which means, in other words, the impact of the supply chain of methane capacities in Asia overall is heavy is heavily impacted by this.

Second, we talking about our capacities in methionine are largely covered for the coming months, but not fully. That is why we have declared a force majeure for our capacities in Singapore, which is still ongoing. So we are largely covered but for the coming months, but not to the full.

And then you have asked how we would assess how we would judge upon if the war in the Middle East would come to an end, how long would the impact last would step would put pressure on the supply chains.

Honestly, I'm not an owner of a crystal ball. But so far, if I would give you with all the cautious of the German give you some idea about, I think, for sure several months. Could I can closer to it, maybe when we will meet in August, giving you our second quarter numbers and figures. But that is, let me say, best assumption for sure, several months plus. With this, I hand over to Claus.

Good. Anil. So yes, your question was some of the benefits of the disruption permanent. So generally speaking, we don't like this rate. It's not good for the business. So -- so we rather prefer to have a normal open market, no disruptions, fair competition.

Here, it's -- the question is right now. So of course, we look into what is changing because of this disruption. And it's another 1 that's pointing towards more regionalization. Supply chain, security, so of course, it has another impact that companies think about this, I think we even more intensive than in the past, but it's still in the general direction.

That's why we believe the strategy we have put in place many, many years ago, 1/3, 1/3, 1/3 in the world be in the region for the region, which we have not fully mastered yet but to a certain degree, of course, is the right way to go. That's 1 thing, let's say answering your question, it is underlining our strategic approach.

Then when I go to a little bit more specific. There are, of course, some areas where we see it. Right now, we know supply security is playing a bigger role, again, also in pricing. But we also know from the past -- but we know it is not that long ago, it fades out. So this element plays a role, but over time, it fades away.

So we would not bank on this. So what we are looking right now is in certain other areas where we will certainly have an impact. So biodiesel is something that is delayed. Our business is not doing in the U.S. and in Europe as we predicted.

Here we see now and we see a trend that this legislation will come in place faster, put more biodiesel into diesel to become less dependent on oil-based diesel. In Asia is already happening. Indonesia has just increased mandatory amount of biodiesel that has to be put in place. And Malaysia is thinking about this as well, even though they have already high degree gives you an element.

So this will be a permanent thing to the benefit of our LCOs business. Our membrane business will also benefit because here, we have the membranes for biodiesel plants -- for biogas plants, sorry, and also here, we see a pick up much more interest now to use waste gas and purify it with our membranes, another permanent element.

And last but not least, our Oil Additives Group is also helping customers right now. Maybe I have had base oil high-quality base oil is becoming short, especially because a super big plant of Shell in the Middle East has been -- is out of production right now. So here, we help customers to reformulate and by doing this, to use our additives.

So we have elements that will be permanent, and we will have others that are not permanent. So, sorry to say it cannot -- there's no general answer for your question, but there will be some benefits that will be -- we are going to keep and others will go back to normal when it is over.

We now have a question from the line of Martin Roediger from Kepler Cheval.

Yes. Thanks for taking my 3 questions, please. The first 2 are on the guidance for the second quarter. Firstly, on Oxeno and the expanding spreads in the C4 chain, -- is it possible that Oxeno will contribute a large part of the EUR 75 million sequential earnings increase from EUR 475 million in Q1 in EBITDA to the guided minimum EBITDA of EUR 550 million in Q2.

And in connection with Oxeno, there are hopes by some market participants that Oxeno could reach record earnings this year. Do you agree on that bullish expectation.

Secondly, the role of methionine for your guidance in the second quarter, it seems that methionine did not have a very strong Q1 partly because of the force majeure in Singapore and some other things you mentioned already.

Would you agree that due to the rising volumes and the rocketing prices for methionine in April and May that a large part of the EUR 75 million sequential earnings increase between Q1 and Q2 will come from methionine.

And the third question is on the free cash flow of EUR 183 million in Q1. This includes the EUR 20 million cash inflow from the termination of a take-or-pay contract from Q1 2025. Why did it last 1 year to receive that cash? And beside that, can you disclose the amount of the other 2 items which supported free cash flow, i.e., the customer prepayment and the customer cofinancing of investments because I would like to know what the underlying free cash flow was?

Thank you, Martin. Christian will start with more general comments on the Q2 outlook and including methionine, Klaus then takes the xeno part and the comments or your questions on the free cash flow.

Okay. Martin, good to hear you. let's keep it like this. First of all, at least EUR 550 million of EBITDA means at least EUR 500 million of EBITDA. So that is, for sure, a significant improvement if I compare it to first quarter of this year and second quarter of last year.

And having said so, I would say it's -- as mentioned, it is a balance between optimism on the 1 side and the necessary caution on the other side. And coming no closer to your question, all of our 3 segments, we'll likely see an earnings rise if I compare it to the first quarter.

And that will be, as you know, mainly driven unsurprisingly for sure, in advanced technologies. Here, we have seen continued prebuying on a good level in April -- so in nutshell, April, I are saying was quite sexy. And now is it exclusively because of methionine? No, not at all.

Look at our crosslinkers businesses, for example, look at PA12. Here, we have a really strong upcome -- and in methionine. Of course, you're right saying during the first quarter was signed methionine was, let's say, quite okay, and then by the increase of demand, by the increase of the prices where we have started to benefit from this from the last days of March.

Because, as I mentioned, there is a certain delay between spot on the 1 and then contract prices on the other side, -- so here, we will see a better, better, definitely better the second quarter in respect of methionine, but is it the only an exclusive growth pillar for Evonik in those days, no, no, no. Not at all. Here, we are well positioned and are in a different -- and a good amount of different pockets of growth. And by having said so, I hand over to Claus.

Yes. Then let me continue with another element that, of course, country will contribute to Q2 and rest of the year. You asked for this, what is the Oxeno part doing. And maybe 1 comment before I go into Oxeno, please don't underestimate totally huge increase. Don't get misguided by pricing only. We have a lot of cost increases on the raw material side.

And so that has to be really taken into account, which you also are not fully -- we have not seen our pricing effect fully yet, but we also have not seen the cost effect fully yet. So having said this, come back to your question. Ono, we expect, of course, an improvement.

However, it will also contribute to our guidance, no doubt. Will it come back to a record level and what's your second part of the question, absolutely not also here. I think what we feel in the market is really over-exaggerated. There are many reasons for this because in the old days, we had different kind of raw material contract in place, we have also had at these times a full loan demand, which we don't have now.

Now we have, of course, now a better spread on the NAFTA side, no doubt we will benefit from this. But on the other hand, we also have minuses because I give you 1 example, we sell also quite a bit of material to the Middle East from Oxeno, that's not happening anymore.

The MTBE market is not as strong as before because in summer, usually MTBE is mixed with NAFTA. And if you put more naphtha into the fuel, you need more MTBE there is not enough naphtha. So that's not happening. So I don't want to go in too much detail. But basically, you cannot just take the old numbers of Oxeno many, many years ago because there was also a full-blown demand behind it.

Now we have the NAFTA spread helping us, but we also have -- we have some demand components. short in Asia. We, of course, have butadine that is helping us, but we also have other elements like I just said, having the contrary effect. So having a long story short, Oxeno will contribute. We go to record levels. or near them, -- absolutely not.

Cash flow question you asked about the contract we had, which we, let's say, resolved or take-or-pay contract, there was some dismantling -- we don't disclose any kind of details here. I think the number you mentioned is not correct. Petropar is smaller.

And -- and also for the, let's say, prepayments of investments is nothing unusual. We have this all the time. You also have seen that we have quite a high level of investment CapEx -- and that was always hand-in-hand, so high CapEx, but also get, of course, lowered by payments of customers, but they are shown in different buckets, and that has to be taken into account. So I think we still believe we have a very strong underlying operational cash flow. I hope that's good enough.

The next question comes from the line of Tom with us worth from Morgan Stanley.

Two questions, if I may. Just coming on to the kind of competitive landscape that you see noting. Could you just highlight where you felt more strongly the reduction in Asian exports? And any comments around the finding on that would be very useful.

And on the other side of that, -- any -- are you now seeing any inputs drying up into Europe that you use or any of your products in Europe being asked to ship to Asia because pricing is more compelling in Asia than Europe. So I'm just trying to get a sense of the flows of chemicals that you see noting the feedstock constraints in Asia.

Second question, if I may, is on Senex. Can you share with us the time line that you have for any potential strategic review here? Clearly, it looks like regionalization of assets is becoming more valuable, which might suggest at least to our eyes, that the value of net is going up, not down, and the threat of the deindustrialization in Europe is reducing, not increasing. So any thoughts there would be very helpful.

Okay. Thank you, Tom. Klaus will start with the trade flows and Asian competition that we are not see right now, and then Christian will comment on SYNEQT.

Yes. let me try also this very complex question because it's very, very different market segment and product by product. So generally, you see, as you know, freight costs went up quite a bit. It's not only the freight cost in up, availability of freight is also a topic.

This alone affects all the shipments from China. So that's an easy factor in general terms. I think we pointed out some areas already like our core business. We see quite a pickup in or, let's say, a much weaker competition from Asia that is transferred into better pricing in Europe.

And this would be a specific one. Methionine, I think Christian pointed out quite a bit already. Also here, the pricing increase is, of course, a question that comes supply/demand. So there's less supply. Most of the capacity besides ours is sitting in Asia. So there is less supply from Asia. On that side.

In other areas, we don't see a bigger impact besides the more general 1 I just mentioned. So we have specific areas where we can really point out cross-linker, which was really, really -- and I think we reported on this in the last meetings, was suffering quite a bit. From heavy competition in Asia, this is softening. And that's the most pronounced 1 besides the methionine one.

Okay. Tom, I'll take the 1 about SYNEQT, maybe as a starter, I'm not on your page arguing that the infrastructure, the industry -- the industrial infrastructure in Germany is coming tremendously under pressure. Why? First of all, we do have the infrastructure investment initiative from our government, which is helpful.

Second, if you look a little bit more into the details of SYNEQT, you will see 2 gas steam plants and a good amount of, let me say, the piping and net are elements of the SYNEQT . And in this respect, it is even becoming more attractive because this is what we need in Germany and in Europe also more to provide the industry and the inhabitants with a sufficient amount of energy and electricity.

In detail, as you know, here, we talk about EUR 1 billion of revenues. Here, we talk about roughly EUR 200 million of EBITDA. So it is, let's say, well placed. and in a stable year-over-year, stable positioning stable development. And having said so, carve-out is done, successfully done. And we have not taken any decisions what to do next.

But as you know, we are still evaluating several options for the future JV cooperation, straight divestment. And I will provide you as soon as possible when we have taken a decision. But as of today, we have not taken one. Thanks a lot so far for your questions.

We now have a question from the line of Chetan Udeshi from JPMorgan.

I'm just trying to understand your comment that the EUR 25 million uplift in EBITDA you got for Q1 ahead of your guidance was from prebuying in March. And I was just quite curious, if I look at your volumes in Q1 as a whole, they are down 2%. If I just do some math, the prebuying probably contributed plus 2% in March.

So the point I'm trying to get to is how bad was start of the year that even after prebuying, your volumes are still down 2% year-on-year.

And second, is there an element of inventory write-off that may have contributed to Q1 EBITA as well because we're struggling to see that come through from the volume point of view in terms of the reported numbers?

Thank you, Chetan. Both points go to Claus.

Yes. So yes, you have to always consider when you take the volume on a company level that we have super different businesses in terms of volume. And so we had a I think in my introductionary word, I said we would have reached our guidance without the prebuying. That gives you a feeling for what it really is the additional part in March.

So it was not necessary for us to have the pickup in the end of March to reach out to, let's say, reach the guidance. It was only responsible for what the overdelivery was. We had no write-ups of inventory write-up of inventory in March. And so at a year, we did not support it.

However, we had a very, let's say, a very soft start of our Oxeno business, which is big in volume, and we also have a very soft, let's say, start of hydrogen peroxide business, which not only for the base part of the business going into the paper market. these are big volume elements that contributes to the volume piece.

And this maybe is misleading when you look to the volume part of the start into the year. I hope that answers your question.

And comes from the line of Georgina Fraser from Goldman Sachs.

I just have 1 -- and it's a bit theoretical, and I'm still very good trying to figure out how to phrase it. But if we do end up in an environment where we have such inflation that we see demand destruction. Is there a chance that capacities have been affected by shortages and to high feedstock prices in Asia, don't come back online in the second half of the year. Like if 1 was facing that situation. What would be the conditions for ramping your capacities back up that you would need to see?

Yes, Georgina, thanks. I think this can probably go to Claus. So the question is, if I get it right, is will capacities be permanently shut down, right?

If there's demand destruction -- or what -- did I get that right? It's more like why would capacity be rushing back to the market if we're in still a very weak environment with inflation. I think there's this assumption that we'll see a normalization of supply as soon as the straight opens never be working hard to bring capacity back.

But I mean, to some extent, you also need the economic conditions to while they're doing that. And we were already in such a week starting quite at the beginning of the year before the conflict. So what's the risk that, yes, we have more permanent or longer-lasting shutdowns because of economic conditions, not just shortages.

Okay. So Yes. in. I hope you are well because you are sitting in the Middle East, right? And from that point of view. Let me try to give, let's say, our -- maybe my thoughts, I have to say. Right now, I think this kind of crisis is leading just into the opposite direction. When you look to where is the biggest overcapacity in the market, it's clearly China.

And the profit margins when you also look to the last statistics in the markets went even further down 3 years in a row, profitability went down. So this sooner or later leads also to consolidation.

And there's even the government in China when you look to the latest 15th 5-year plan, there is active measures to take old plants out. The pricing peak right now, of course, is just doing the opposite, even weaker ones can still live if they have material. -- but this will go away.

And if, let's say, theoretically now we have inflation that's suppressing demand later. Then I think you are right. I would think then the weaker ones will be forced to move out. as 1 sign are, we know there are some very weak players that are not capable of surviving. But right now, this is, of course, super difficult to judge how that is playing out.

But yes, if -- and the second order effects now from all point of view, not only inflation. When you look right now, there is a big debate on the farming side that the fertilizers are so expensive to farmers cannot buy them. And they're considering not to plant crops. So later down in the year, we will see problems in these areas. There is not enough food being provided.

And this just 1 of the second order effects that we are going to see. And from that point of view, super difficult to judge. I can only say for us, -- what we have, we don't see any 1 -- any 1 of our plants being in that situation that this would become a question for us.

Thanks a lot, Claus. Having said so, ladies and gentlemen, this concludes our call for today, Claus. From the bottom of heart and the name of our company, thanks a lot for taking in the meanwhile, and for your outstanding commitment, it's a great pleasure to have you and to have you as our CO in Asia.

Michael, next time, it is your term -- and I appreciate very much to having had an on side. So far, thanks a lot for your attention. Take care and hope to see you soon in person. Goodbye.

Bye-bye.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Thanks a lot, and thanks, everybody, for joining our call today on such short notice. We have quite some news for you this afternoon and expect quite a few questions from you. So having said this, let's get right into it.

To start, I would like to highlight 3 points. First, we've achieved our revised outlook for 2025. It was a tough finish in the last quarter, but we made it. Our EBITDA in the fourth quarter was solid enough to reach around EUR 1.9 billion for the full year, and our cash generation was more than just solid. We delivered almost EUR 700 million of free cash flow, resulting in a 37% cash conversion rate, making the upper half of our guidance corridor. This demonstrates once more no matter what the environment, we deliver on cash. Last year was not a great year for sure. But given the environment, I would say we came away with a black eye. So having said so, let's look ahead from there.

And second, for 2026, we aim for broadly stable earnings at the midpoint of our guidance range in an environment which remains tough. And with normalizing methionine prices, delivering stable earnings, I guess, is a good thing. Claus will elaborate further on this in a second. And third, the consistent execution of our strategy is in this environment where challenges are everywhere as crucial as never before. To be able to do this, we need more financial flexibility. This is why we present a new dividend policy today, which combines a still attractive dividend for investors with more financial flexibility for us. The support from RAG Foundation on this change demonstrates their commitment to our success. More on this at the end of our prepared remarks.

Before, ladies and gentlemen, I let Claus dive into the more operational topics, I would like to make a case for Evonik. Some of you would ask why invest in us? Why invest given all the headwinds for chemicals? It is true that right now, we face structural challenges and weak demand at the same time. This is, of course, not a good combination. But already in these challenging times, we are strong industry-leading cash generator. That is why despite investing and despite paying an attractive dividend, our leverage is moderate. This enables us to act from a position of strength. We, ladies and gentlemen, we do control our own destiny. From this relatively better starting point, we have significant potential to improve in the years to come, and we will realize this potential. We will reduce costs further. Our headcount will be another 1,000 lower at the end of this year or better at the end of last year. We have exciting applications and attractive growth niches such as for our batteries or drones. We still have significant portfolio optimization potential that lies within Oxeno, that lies within SYNEQT and more.

And last but not least, as just mentioned, we'll adopt a more balanced capital allocation strategy. This means, in other words, in any kind of environment, we will improve in the years to come, and then we will generate a ROCE of around 11%. I have no doubts about this. By the way, ROCE will become part of our Board compensation with the approval at the upcoming AGM in June. This will help us to stay more disciplined and to align our interest and the interest of our investors.

With that, I do hand over to Claus.

Yes. Thank you, Christian, and to all the people listening to us online, a very warm welcome from my side as well. Before I go into the financial outlook, let's run through the puts and takes that are behind the numbers. On the side of the headwinds, we expect the demand environment to remain weak. We don't think -- we don't bet on a recovery. I think that's the best thing to do at the current moment in time. So in absence of a major demand recovery, competition, especially from Asia will stay tough.

Of course, these are not Evonik-specific headwinds. Evonik specific is, in fact, that after 2 strong years, we now see a normalization in the methionine prices. I think this is well anticipated by the capital market. However, we will be partly offsetting these lower margins by our volumes and after a series of intense maintenance shutdowns last year, we have more capacity and a lower cost base in the U.S. once our backward integration is up and running, and this is the case from the mid of this year. Increasing support will come for us from our self-help measures with Evonik tailor-made and business optimization programs in full swing.

On top, we will introduce short-term contingencies again, which we already had in the year 2023 and 2024. Also, we are expecting lower energy costs, mainly from regulation changes in Germany. That brings me to our guidance for the adjusted EBITDA in 2026, which we expect to be between EUR 1.7 billion and EUR 2 billion. The base assumption for our outlook is the aforementioned positives and negatives should largely balance out and leaving us at the midpoint of our guidance range with, you can say, broadly stable earnings versus last year.

In Custom Solutions, we expect a year of slight growth, both in terms of volumes and earnings. In Advanced Technologies, we anticipate slightly lower earnings, mainly driven by the normalization of the methionine prices and less support from onetime effects, which we had last year. So interesting question certainly is what are we seeing for quarter 1, 2026. It's very early in the year, of course. And nevertheless, of course, we looked into this very, very intensively before we gave you this guidance range.

So far, we see little change in Q1. So Q1 is more or less currently seen by us on the level of Q3 2025, in which we recorded an adjusted EBITDA of around EUR 450 million. So I guess this will be a good proxy for the start into the year, suggesting that our business in total is currently relatively stable. However, if all quarters continue on this level and even accounting for Q4 seasonality, we will be able to meet our outlook. But to reach the midpoint of our guidance, we need a small earnings improvement in the quarters to come. And we believe this is realistic, not because we are betting on any kind of support from the general environment, but because of specific elements in our business. So I'll give you some examples.

Second half of Healthcare is always stronger than the first half. And we have seen this last year in a very, very strong Q4 of Healthcare that this is the case. Then we expect a stronger catalyst business in the second half partly because it's, say, normal seasonality, but also mainly because of change in, let's call it, regulations because there's regulation out for the use of biodiesel in Europe as well as in the United States, which has not been put into reality yet, and we expect that this is going to happen certainly in the second half of this year.

We have Oxeno business where we believe there will be an improvement compared to Q1. And we have the second half in the year supported, let's say, margin improvement in our methionine business because our backward integration in methyl mercaptan in the U.S. is going online. Last but not least, also, we have a new hydrogen peroxide plant, which we are starting by the mid of this year in China. So just to give you a few examples, I could also even mention some more. So this gives us the confidence for the guidance level we gave to you. This brings me back to Christian.

Thanks a lot, Claus. Ladies and gentlemen, in this tough environment and facing clearly weaker results than we would like to see, the execution of our long-term strategy is more important than ever. We need both growth and cost optimization to be successful in the long run. Realizing growth is obviously more difficult than we thought 1 year ago. We are ramping up new capacities, as Claus has already mentioned, and attractive products and end markets. These are making a contribution, albeit a smaller one for now.

We are complementing these with more focus on growth opportunities in attractive end markets. So we have interesting solutions, for example, for drones, for data centers and for consumer electronics. I can hear you. I can hear your skeptical question. These businesses are too small, Kullmann, to make a difference. Yes. They are small today. But this is how innovation or new application always starts in chemicals. For example, think about our Veramaris businesses. So it takes time to build sales and earnings, but that does not mean we should not be doing it because the opportunities we could have and we could benefit from are really attractive.

The second pillar for future success, obviously, are our self-helping measures. Renting from Evonik tailor-made to various business optimizations and our procurement optimization, here, we have a lot of things in hand. All of these are pretty well on track, visible in a clear headcount reduction of more than 850 in the last year. And another 1,000 as part of these programs are to be reduced in this year. Unfortunately, the benefits of our cost reduction programs are partly eaten up by fixed cost increases. On average, these are around 4% a year or in other words, around EUR 200 million.

In 2025, especially due to strong wage inflation in Germany, the increase was higher than normal. We were able to offset this higher inflation and expect that in 2026, the increase will be definitely lower. We will also bring back short-term contingency measures such as travel restrictions or training and communication spending reductions. Here are really saying we are used to it because we have proved to be successful in the years 2023 and 2024, and it is now urgent need again. In total, this means that more savings will come to the bottom line in 2026 compared to 2025. Before we jump into your questions, let me please close the presentation with the details of our new proposed dividend policy.

First of all, in principle, our priorities of cash allocation remain unchanged. We focus on CapEx, we focus on dividend and deleveraging in that order. Note that we will still rule out M&A until 2027. In the past, we had a stable, very high dividend payout. This was favorable for and rewarded by mostly the REG Foundation. However, a rigid dividend is not adequate in this tough market environment and for a company in transformation. So we are switching to a dividend, which is tied to the financial performance of the company. This enables first, the long-term sustainability of our dividend; second, more financial flexibility for us to reach our strategic targets and goals. And third, investors to participate in future growth. And we will roll out the new policy in 2 steps. At the upcoming AGM in early June, we will propose to pay EUR 1 per share for last year.

We offer this as a smooth transition from the previously fixed dividend to the performance-oriented dividend. This is still an outstanding dividend yield of around 7% today. From the AGM 2027 onwards, we will propose to pay out 40% to 60% of the adjusted net income. For this year, this would have resulted -- sorry, for last year -- excuse me, for last year, this would have resulted in a dividend between EUR 0.54 and EUR 0.82 per share. The range we provide for the payout ratio allows us to provide a good degree of dividend continuity and reliability in euro terms. That means we aim at a higher payout ratio in years of weaker financial performance and vice versa.

So obviously, right now, payout would be rather 60%. At current share price levels, this would imply a yield of still around 6%. And let me stress again, the support from the RAG Foundation on this change demonstrates the commitment to our success. Thanks a lot for your attention, and now we are happy to take your questions.

The first question comes from the line of Tom Wrigglesworth from Morgan Stanley.

Two, if I may. Firstly, just on the change in dividend policy. Clearly, your shares were not being rewarded for the high yield. But at the same time, I think investors would look at the challenging conditions and say this is not a market that needs more CapEx. You've talked in the past about share buybacks, probably more so in the last couple of years than you've ever spoken about potentially returning capital through other measures. Is the buyback -- does the cut of the dividend mean that a buyback becomes more attractive given how undervalued your shares are?

I'm just trying to square where we sit on that. Then with regards to the strategic review of SYNEQT, can you give us an update there? Have you got a deadline as to when you think you'll come to the conclusion of a strategic review? What are the moving parts in terms of the process? I think we saw an announcement of an appointment of some bankers at the end of last year. So just keen to know what you think the time line is there?

Thank you, Tom, for your questions. The first one on the capital allocation and buyback, I give to Claus. And the second one on SYNEQT, 2 questions, please.

Yes. Okay. Yes. Thank you for the question. Dividend policy, I think Christian explained what are we looking for? We need more financial flexibility for, let's say, for our future. And of course, here, and Christian said it, we have to look for CapEx. Of course, we have projects, fast return projects, which are attractive. So these remain on the list. And as much as you are right, with the current utilization of plants, there is not much need for a huge investment at the moment, but there are smaller ones that really promise fast returns. So this is number one.

The dividend, of course, is and will remain an important factor. We want to offer an attractive dividend yield. We are very high right now, but I think our share price is also too low and has to rise. And lastly -- or not lastly, then we will actually look for deleveraging. We are very stably financed. We have a very good financial -- solid financial foundation. And -- but here, we still want to reduce our debt. And of course, we also don't rule out buyback of shares. So that will depend very much on how strong the cash flow is going to be. But of course, it remains an option.

Tom, I'll take the second question. First of all, I really take pride in saying that we have successfully with high speed, carved out this business over the course of the last year. And now it is an independent company. What is next? Next is that -- that means we will tackle different options. Option one is joint venture or maybe specific cooperations. And of course, that goes without saying straight sales, straight divestment. That is what we will discuss over the course of the next weeks internally in the Executive Board, and then we will come along. That is where we are as of today.

The next question comes from the line of David Symonds from BNP Paribas.

I think I'm going to go to 2 as well, please. The first one is you mentioned an Oxeno improvement from Q1 onwards. And I've been noticing C4 prices rising recently. Is this the reason for the improvement that you expect there? Or is that just passing through higher energy costs that we've seen in the first part of this year?

And then just maybe coming back on capital allocation. Am I right in thinking that buybacks are the lowest priority use of capital for you? Because it sort of comes bottom of the list, but at the current share price and given weekend market volumes, I would have thought deleveraging and new CapEx would be lower on the list than buybacks at this point.

Yes. Thanks, David. Christian starts with Oxeno and what we see there. And then capital allocation, I give Claus again and comment on the priority list that we.

David, I guess it is fair to assume that the last year, our Oxeno business, let me say, has met the trough point. And for this year, having said so, we -- let me say, we see the chances for a slight recovery. How comes? First, there are first positive signs in respect of permissions given for -- in the area of construction. That is really helpful. It may be over the course of the year that the stimulus program of the government in Berlin could pay off in this direction. As you know, construction is one of the key areas where they want to see and where they want to, let me say, increase additional growth. So here might be a good chance.

Second, and that is what we should not underestimate is the announcement of the commission in Brussels that they will overhaul the CO2 trading system because that means in future terms that we would, in respect of our Oxeno business benefit from this and that would even lift up the chances for the sales process to get a better price, referring to the announced changes of the commission in Brussels.

So for 2026, however, there is a chance for a bettering for an uplift because of the construction and maybe for the construction impulse given by the government, which could pay off over the course of the second half of this year. And we do see and hope for some ups in the automotive businesses. So this altogether gives us some, let me say, -- it is a mixture of, let me say, underpinned confidence and good hope that it would turn into the better for Oxeno in this year than it has been last year.

And please keep in mind that if -- and we do welcome and appreciate the announced changes of the CO2 emission trading system very much, this would additionally better the chances for our Oxano business getting a more attractive price than maybe before. With this, I hand over to Claus.

Okay. Thank you, Christian. Maybe a few additions to this. Oxano, when you look into -- we don't expect -- we are not calculating a huge improvement, just to make it clear in terms of quantitative level, but a significant one. And Christian pointed it out very much. And there's also -- when you look into -- we had a major shutdown in 2025, which cost us quite a lot of money. This is not going to happen in 2026. So these maintenance costs are not there in 2026. We see currently also a little shortage in butadiene in Asia. So we will certainly benefit from this. If the freight route through the Suez Channel goes up again, we will save freight cost as well.

All of this together, we put into this kind of assumption. And so I think it's not a hope. I think it's a clear fact-driven expectation. And coming back to your question with the priorities, I can only repeat what I said before. I think CapEx is number one. Like I said, we have topics which we get fast returns. And I mean fast means 1 to 2 years. We want to remain an attractive dividend company. And so this is, of course, also very important to us. And deleveraging is also clearly right now, when we look to our net financial leverage, it's only at 1.6, yes. If I take our pension obligations into account as well, then it's 2.4, still very much, let's say, maybe a little bit below average of the market. But I think we believe in the times ahead of us, it's very important to have a very, very sound balance sheet. And so this remains number three.

And then again, I can only repeat if we really have a lot of free cash available, then, of course, share buyback remains an option. And so this is maybe just to clarify again, this would be the list priority list for what we do with our earnings.

The next question comes from the line of Chetan Udeshi from JPMorgan.

I had 2. First, can you remind us -- you mentioned this maintenance shutdown in C4 having an impact in 2025, but you then also had a lot of bonus accrual release through the year. So just remind us what were the key headwinds and tailwinds outside of the business conditions in your businesses that we should have in mind as we think about the bridge for 2026?

And the second question, maybe for you, Christian. I mean, from your perspective, what do we need to actually see for this sector to really come out of this malaise because we've seen the industrial production globally improve last year PMIs in most regions, at least outside Europe, have been at 50 or above 50. But when we look at the numbers of Evonik, but also most of your competitors, they still look very, very tough. And I guess the question for a lot of us is what can change that? I mean from your assessment, what do you think we need for this sector to become, let's say, more interesting again for investors?

Chetan, thank you very much for these. The first one on the special effects, bonds provisions and so on, goes to Claus. And then on the broader sector outlook and what we need for the improvement that's Christian done.

Okay. Good. Then yes, going -- when you look back to 2025, of course, the major impact on bad results, don't get me wrong, that's why I said the improvement will be not a super huge one was, of course, volume and price. Price is down. But we also had -- we had only, I think, every 5 years or so a shutdown to do where we take all the entire chain out and have the maintenance. I think here, it was then, let's say, a lower double-digit million cost for us, which contributed to the result level of Evonik Oxeno.

And of course, the bonus provisions, last year, we had good performance bonus. So we had high payouts. We -- and this is not the case this year. Of course, you are right. And from that point of view, this will also have a release. But of course, we also have -- also in Oxeno, we have our cost-cutting programs. This will contribute as well. We reduce still spendings in the unit. So that's all this together. But when you look to the biggest single portion, you are absolutely right, is the maintenance shutdown, middle double-digit million area plus less bonus payments in 2026.

Okay. Chetan, I try to answer your second question. And let's be -- maybe let's start in being very concrete on this. As of today, of course, the chemicals industry looks a little bit lackluster for the markets. But if you look behind the curtain, we could occur sexy. And why is it that I come to this kind of conclusion. Yesterday, the German newspaper has penciled and published that there is a good chance for the energy-intensive industries all over Europe to get a relief from the -- from an easing of the emission trading system.

And out of a sudden, our share prices have remarkably risen up, which means, in other words, for me, that the investors do have realized that if we would -- that the pain from regulation, that the pain from the Evonik trading -- emission trading system would be eased. Hence to this, we could create a level playing field with our competitors abroad, it could really become a game changer and help us to become for capital markets more attractive. So first issue that we have to tackle is less regulation and create for Brussels and create a level playing field that we could be able to bring our performance straight -- straight on the street. Let's keep it like this.

Second, I guess we have to differentiate between the company. As of today, there are companies maybe having reserves, in other words, having additional potentials, maybe by cost cutting, maybe by divestments, maybe by being in attractive growth niches, maybe by the geopolitical footprint and those who do not have. I'm convinced that Evonik belongs to the first group. So that is on top, a chance. In Germany, we should maybe give the acceleration of growth, the stimulus program of our government in Berlin, we should give it a chance. And it could start to pay off from the second half of this year onwards. And of course, maybe last comment about the politics of our days.

If we could see an easing of geopolitical tensions, if we could see less tariffs between United States and China, then, of course, that would be helpful in an additional way. So that are my ideas about what is need. And I do really bank on the announcement of Brussels in respect of the emission trading system that could really become a game changer for us. And as I know the governments in France, in Belgium, in the Netherlands, in Poland, in Slovakia and in Germany, too, are elaborating here, let me say, new ideas of how to support the supply and value chains all over Europe that our economy could, in future, prosper in a better way.

The next question comes from the line of Martin Roediger from Kepler Cheuvreux.

Questions. Question number one is I have to come back to this CO2 topic with the EU Commission eventually softening this CO2 scheme, including the postponing of the deadline for the free CO2 allowances and also the auction time. Based on your talks with these guys, do you have the impression that the shift in the time line will be 1 to 2 years or 5 to 6 years or up to 10 years?

Secondly, on cost savings, you expected incremental cost savings in the magnitude of a high double-digit euro million figure in 2025. Did you achieve that? And going forward, what are the incremental cost savings you expect for 2026? My guess would be EUR 100 million. Is that correct?

And then thirdly, on energy costs. I recall that you intended to reduce energy costs from EUR 950 million in 2024 to EUR 900 million in 2025. Did that work out? And what is your best guess for energy costs in 2026, including your hedges?

Yes. Thank you, Martin. The CO2 certificate question will go to Christian. And then on to Claus for the savings and the energy costs.

Martin, let's keep it like this. I'll give me a chance to split my answer up referring to your question. First, maybe as a sprinter, which would help us, where we would benefit from here, in particular, in Germany is about the new industrial electricity price system and the compensation of it. That is what would work for the next 3 years. Decisions in Berlin are already taken. And now they wait for the approval from the commission in Brussels. And here, I'm confident that it will come soon. So not in due course instead of soon. That would -- let me support our energy cost calculation over the run for the next up to 3 years. And then it is about the emission trading system. The emission trading system, there's desperate need to overhaul it in a radical way.

As mentioned before, talks are ongoing, and that is what would pay off in the long run, which means if we take investment decisions for new technologies, ETC here in Europe, and we would be eased or the relief would be there in respect of the level of the CO2 fees we have to pay that would be somewhat like a game changer could come. Is it now possible for me to judge upon it about the, let me say, duration when it is going to happen. No. Here, we have to wait until July when the commission will provide us with a precise, let me say, proposal what they have in mind. And in the meanwhile, there will be a lot of negotiation and talks about how we could become -- or let me say, how we could bring this beef that it would be digestible in the future for each and everybody to the table.

The next part of the question. Yes. So first, the cost question. So when we look into 2025, we can say our programs went very well. So we achieved more than a reduction of 850 headcount in 2025. That means these costs are really gone. Of course, they went over the course of the year. So it's not a full year impact. And we also heard Christian saying that we have the plan to have 1,000 more in 2026. Here, the same will apply over the course of the year.

When I look into the numbers of 2025, I can tell you we reached almost the level we wanted to reach in terms of cost savings. However, and now it comes to, however, we also had a lot of cost increases that are more or less compensated the cost savings. So of course, we had huge increases in wages in last year. Germany alone, just to give you a benchmark here, was 7% wage increase in 2025. And we had also across the world, significant increases in wage because of inflation compensation. I don't have to explain it to you. You know it yourself very well.

So this actually resulted that we kept our fixed costs more or less stable. This was 2025. 2026 will be totally different. We will have -- again, with our cost-saving measures, we have the program. We know that we will deliver. And I'm certainly not expecting that kind of increase in factor cost increase, fixed cost inflation in 2026. So that means at the year-end, certainly, alone from this portion, we will see quite a significant reduction in fixed cost. And so that is certainly happening in 2025. I

don't think that we will see much more than 1% increase in fixed cost. That is at least the target of the CFO or interim CFO, if you want to say. But in 2026, you can take my words, you will see a significant increase in fixed costs, which we unfortunately for the reasons I have given could not achieve in 2025. 2026, I think -- yes, over and above, you heard Christian, we have also contingency measures. However, they will, like the word says, is not a permanent one. The headcount reduction, of course, is a permanent. And over and above, we have the temporary ones, which will support the results in 2026.

Coming to your question about energy costs, Yes. In 2025, you are right, we saw quite a decline in energy costs, double-digit million decline in our energy costs, and we reached a level now below EUR 900 million in our total energy bill. Unfortunately, we will not see much more decrease in 2026. Here, it's a different story to what I just said on the fixed cost side. So we saw also pricing in the spot markets for energy, gas going up, strong winter in the U.S. contributed to this. Of course, it will not stay on forever. Nevertheless, in a nutshell, I have to say we believe in 2026, we will see a low double-digit million decrease in energy cost, but not more.

The last question for today is from Christian Bell from UBS.

I've got 3. The first one is, if you are expecting significantly lower fixed costs, as you just explained in the previous questions, in 2026 alongside flat to slightly higher sales. Could you just help us understand why that does not translate into earnings growth for 2026?

That's it?

Sorry, I was waiting for the answer. I can ask my second and third question as well.

The second one would be the preannouncement today, together with the level of detail provided a month before the result is not something we typically see from Evonik. So I was just curious as to why you decided to preannounce today.

And then finally, as a result of the new dividend policy and the current outlook, on our rough calculations, that suggests dividends to RAG could be around EUR 100 million lower. To the extent you can comment, do you know how RAG plans to address that potential shortfall? Or are they comfortable with a lower level of income? Sorry, that's the end of m questions.

Never mind, never mind. Maybe I take the one about the ad hoc communication style. I'm close to fall in love with my Chief Counselor, and he has given me strong advice to give this ad hoc communication. And that is what -- for me, it was a must to obey. So that is the reason why we have decided to have this ad hoc communication.

In respect of RAG Foundation, first, it is to underpin that they do support the strategy of the company and that they do have totally agreed upon the suggestion saying, here we need a new Evonik strategy, dividend strategy because that is helping us in respect of future growth. And so here, they are totally supportive. That is what I could say. So comfortable and convenient for them, yes.

And the first question about lower fixed costs, I have to now to hand over to Claus.

Yes. Thank you, Christian. Maybe one addition. If you calculate the numbers, EUR 1 is actually resulting in EUR 466 million of dividend payment compared to the [ EUR 117 ] million we paid so far is EUR 545 million. So it's roughly, let's say, EUR 120 million below. And then you can see what the share of RAG and you get a feeling for what it means.

Coming down to the other question, let's say, fixed costs not translating into earnings growth. Yes, this is a good question. And the major or the biggest point towards this one is the development in our methionine business. So here, we have I think that is also capital markets know well about it. You make your own assumptions. But we see the new capacities coming in. We have the new NHU capacity coming in, in Q4. We will have another new capacity from [ Leben ] coming in most likely Q2. And so we anticipate and we see it already from the decrease in price level. U.S., super stable, protected territory by tariffs. Europe, slight decrease so far, strong decrease in China and also moderate, let's say, in Asia.

All of this together, unfortunately, has an impact, and it will consume, let's say, quite a bit of the fixed cost savings. That's why we put our guidance into see more or less stable kind of results in 2026 compared to 2025. That's the biggest single reason.

Sorry, I'm just still not fully able to understand. The impression I got from your previous answer -- on the previous questions was that we would see a net decline in fixed costs. But are you actually saying that we're going to see a net increase?

No, no, sorry. I was talking about our methionine business, amino acid, as you -- and here, we have the situation that we are more capacity buildup in -- at the end of last year, and this is reducing the market price. And this is quite a significant counter effect to -- not on the fixed cost side, it's actually more or less on the contribution margin side. So -- and therefore, you don't see the full impact of the earnings -- on the fixed cost reduction, sorry. Fixed cost reduction on Evonik is compensated to some degree by decline in methionine business.

So I still don't fully understand at the group level, you're guiding to higher sales, but then you're also saying your fixed costs are going down, but you're still expecting flat to slightly lower earnings growth. So I still don't quite understand.

Maybe we take this after the call, and we will call you later and clarify this.

Christoph, what a beautiful bridge you've built for me because that is now bringing us to the end of the first call of this young earnings session for our sector. All the best to you, and I hope we're meeting soon in person on the road. And that is the end for our call today.

Thanks for your attention. Take care, and goodbye.

Ladies and gentlemen, welcome to the Evonik Industries AG Q3 2025 Earnings Conference Call. I'm Mattilde, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Christian Kullmann, CEO. Please go ahead.

Thanks a lot, and welcome to our Q3 earnings call. Looking around in our boardroom, I see a very different setup here today. First of all, welcome to First of all, welcome to Claus Rettig, our interim CFO, who is sitting left to me. Many of you already know him. In his previous roles, he represented Evonik at many investor conferences and Capital Markets Day. His extensive experience and knowledge of our company is helping us in this new role while the search for our CFO is ongoing.

I would like to take the opportunity here today to thank Maike Schuh for many years in different roles at Evonik. She has left the company at her own request in September. And while this was very sudden, we have to accept that. I would like to thank her for her efforts and the positive impact she had on our organization.

Second, after 49 -- worthwhile to repeat, after 49 reported quarters as a public listed company, Tim is not sitting on the right side of this table anymore. For more than a decade, he has built an Investor Relations program, which is highly regarded by all of you out there. Now he is taking a well-deserved sabbatical. Thank you, Tim, for your lasting commitment to the Evonik Equity story. Christoph, whom all of you already know pretty well, will have a strong foundation to build on in the coming years.

And with that, let's go into today's results release. We will be largely focusing on the outlook during the short prepared remarks. You will know that we are facing a very tough environment currently, although already coming from quite a low level, customers currently are acting even more cautiously across all segments and in nearly all end markets. Demand stayed very weak, exiting the summer break. That is why with our prerelease end of September, we had to lower our full year guidance to around EUR 1.9 billion of adjusted EBITDA, coupled with a cash conversion rate between 30% to 40%. Your and our look today goes ahead into the fourth quarter.

For that, I'm now handing over to Claus, who will show you why we are confident to achieve our outlook for both EBITDA and cash conversion in the last 3 months of the year.

Yes. Thank you, Christian. As you already said today, I'm here in my role as interim CFO, which I took over a good month ago. I have to say, during my almost 30 years at Evonik and in my different roles, I've joined quite some meetings, events, investor presentations, presentations, discussions with customers, suppliers and partners. Nevertheless, this earnings call marks a first for me. And unfortunately, we have to report a weak quarter 3 for Evonik. However, I spent most of my time in my new role already on the future. Let me therefore comment on the fourth quarter in 2 parts.

I would like to start with the supporting factors for our earnings development. And then I would like to comment also on our free cash flow and net working capital expectations. Starting with the EBITDA. There are several supporting factors in Q4. We will see the typical year-end recognition of sales and earnings in our Health Care segment, which will be more pronounced this year versus a weaker last year. In Animal Nutrition, we will see a pickup in sales coming from the low levels in Q3, especially compared to previous year. And these low levels were, of course, impacted by a planned maintenance shutdown. In Q4, almost full capacity will be available again. And we have already rather good visibility on the booking levels today.

Another aspect to address are lower personnel costs. For several quarters, we are seeing a reduction in our FTE numbers, which will come through more and more into the bottom line. In addition, bonus provision releases are further supporting our earnings and also in the upcoming quarter. So all in all, with the environment that will stay tough, the finish until the end of the year will also certainly not be easy. But there are good reasons why we are confident to deliver around EUR 1.9 billion of EBITDA this year. The same is true for the free cash flow. We are on track to deliver our guidance, which we gave as between 30% and 40% cash conversion.

In the first 6 months of the year, the weaker-than-expected environment has made it difficult for us to reduce the net working capital as intended. Now we have adapted to the new situation, which has resulted in a positive free cash flow of around EUR 300 million in Q3. And we have seen an acceleration in net working capital reduction throughout the quarter, making most progress in September. This makes us optimistic for further significant steps in quarter 4. To reach the midpoint of our guidance range, we will need another EUR 380 million of free cash flow in Q4. Again, as with the EBITDA, it will not be easy. But looking into the past years, it is doable, and that's what we are going to do.

And with that, I hand back to Christian.

Thanks a lot, Claus. Ladies and gentlemen, in this tough environment and facing clearly weaker results than we would like to see, the execution of our long-term strategy is more important than ever. Continuing to transform our portfolio and to optimize our administrative and operational processes is a necessity, and we have made good progress in both regards this quarter. A significant milestone is for Europe, carve-out of our infrastructure activities, although maybe not so visible from the outside, this is one of the most complex reorganization projects in our history. More than 3,500 employees are directly affected, many more indirectly. So it is good to see that we are well on track in our initial project plan.

The new SYNEQT, that is the name of the new company, will start in January of next year as a 100% subsidiary of Evonik Industries. The different options for the future will then be evaluated. But also our Evonik Tailor Made program and the Business Optimization programs like in high-performance polymers or health care are progressing as planned. Compared to the end of last year's third quarter, the number of employees has shrunk by more than 740 without divestments. And these are mostly leadership roles, mostly in Germany. This impact will be lasting and felt all the more once demand recovers. Executing those projects will help us to focus on our core activities, which is essential in these difficult times.

Having said so, we are now happy to take your questions.

[Operator Instructions] The first question comes from the line of David Symonds from BNP Paribas.

Yes, two from me, please. So just the first one, if you could give any comments on October trading and what you're seeing so far and whether it's supportive of hitting the EUR 1.9 billion on the nose. And then the second one, so I'm a little bit confused by Advanced Technologies. And if I bridge from last year, taking relatively minor impacts from price, volume and FX sales and the standard drop-throughs, then I would probably come to an EBITDA number of around EUR 260 million for this year's Q3. Then you've reduced full-time employees in this division by around 450 year-on-year. So I would think that would contribute sort of EUR 10 million to EUR 12 million positive. And yet the eventual number was only EUR 202 million EBITDA. So there's arguably -- there's a EUR 70 million gap compared to what I'm able to bridge. And I'm just wondering are there any sort of production effects or anything in this quarter? I can see that you've reduced working capital. Did you reduce production in Advanced Technologies in Q3 in order to support cash and so had less coverage of fixed costs? Or where does that gap come from, please?

Yes. Thank you, David. Both questions actually go to Claus. So the first one on Q4 and October trading and the second one and then on Advanced Technologies.

Yes. Yes. Thank you for the question. And let me answer them as following. Maybe first on current trading and outlook. Like I said before, we are absolutely confident to reach our guidance around EUR 1.9 billion. And there are certain factors that are supporting this. So like I said, we have a very strong demand on the health care side, which we see in Q4. And we have some of the negative impacts we have seen in Q3, not anymore, like that goes into costs for maintenance shutdowns we had.

Our methionine business was really weak in Q3 because of this maintenance shutdown costs plus lower business. This we don't have in Q4 anymore. And we also, like I said, have already a good visibility in our order book on the methionine side. So this is clearly giving us confidence. Another piece that gives us confidence is when you look to our Q3 development month by month, September was already clearly on the upside. We had a weak August, but also not as weak as August, but a weak July. September, certainly better. September contribution margin from the market was above the average of Q2. And first indications of October are also that we are on the level of September. So we head into the Q4 really along what we are expecting. And that makes us very, let's say, confident that we can reach our guidance range as published. Maybe so far for this one.

The other one was Advanced Technologies. Yes, it looks when you -- on the first glance, when you look to the numbers, of course, it looks strange because the EBITDA is much weaker than you would expect when you look to the loss on sales. However, some of the factors I already mentioned here is we had methionine shutdown, which created quite a bit of cost on the cost side. But even more so weighing on the EBITDA was quite a big step in inventory reduction. As we said, last year, we have done inventory management maybe a little bit earlier than this year. That's why we had a better cash flow last year at the same time. Now in Q3, we really, really go down on the cash flow side, management of cash flow, reducing inventories is a big portion of this.

And when you look to the numbers we provided to you with our KPIs, financial KPIs, you will see that when you look into the Advanced Technology, yes, we dropped down from EUR 1.5 billion in Q3 '24 to EUR 1.4 billion, you can say, in Q3 '25. And we almost lost the same amount on the EBITDA line from EUR 296 million to EUR 202 million. But when you look on the cash flow side, you see that cash flow increased. So from EUR 146 million previous year's quarter to EUR 182 million this quarter. And that gives you clearly indication this is due to working capital management. And as you all know, this is suppressing EBITDA. And -- so these are the 2 factors, net working capital reduction, maintenance shutdown costs, mainly on the methionine side, with also force majeure on the crosslinker side in the last quarter, which also was jeopardizing our crosslinker business. These elements have contributed to this low EBITDA in Q3.

The next question comes from the line of Martin Roediger from Kepler.

Three questions. Number one, the earnings effect from the release of bonus provisions in Q3 has been obviously above the EUR 20 million level you had in Q2 already. Can you provide some color how much above EUR 20 million was it? And what are the targeted bonus provision releases in Q4?

Secondly, on the cost savings, based on what you have announced or done already so far with restructurings and disposals, what are the incremental cost savings in 2026?

And thirdly, a more general question. Do you see any rising imports from Chinese competitors into Europe because export volumes, which were initially dedicated to the U.S. market are now rerouted to Europe due to the implemented tariffs. If so, in which product categories is this the case?

So yes, a lot of questions for Claus today. So we will start with the cost savings and incremental savings in 2026. And then going to the additional imports from China. On the bonus provisions, Martin, I think I can answer that. We don't comment and break that down in detail. So of course, it has been an impact in the other line in the third quarter. It will continue to support us to a certain degree, but there's also a structural element to that. As we mentioned during the prepared remarks, we have 740 FTEs less this year. So on the personnel cost side, it's a combination of both.

And with that, over to Claus for the 2 points on cost savings and imports from China to Europe and the rest of the world.

Yes, let me comment on this as well. So like I said, we have the structural cost savings from all our cost savings programs, mainly ETM, Evonik Tailor Made. And you heard before, they are actually proceeding fully as planned. So -- and one of the most significant key performance indicators is we are now year-on-year 740 FTEs less by the end of September, and that's a very hard cost saving element. So this is by far the biggest one.

And then like Christoph said already, we don't disclose and publish bonus pieces. Of course, they play a role, but to a much lesser degree. And so I think the structural part is going on. It's going to continue into the next year and also going to continue into Q4. So we have the 740 less as we speak. But of course, they are being released or leaving us during the course of the year. That means we don't have the 740 FTE cost impact for full year yet. But in the Q4, of course, we have a full element of this. And of course, even more so in 2026.

So from that point of view, we have also -- there's no doubt about it, we have compensating factors. We have inflation. Unfortunately, this year, we had pretty high salary adjustments in the chemical industry. They are on the other side. So that's counteracting these cost savings. Nevertheless, without the structural improvements, we would have a bigger problem. So that's maybe to the cost saving -- maybe inflation last year, salary cost inflation, to give you a number, around 7%. I think that's a pretty high number.

Then the other one, imports from China. When you look to the general statistics, imports from China into Europe have been rising. That's clear. We have certain areas in our business where we see this as well. It's sometimes indirectly, I'll give you one example. We have imports on the silica side, so which are used in tires. There we see directly, but you see also an indirect impact that the entire tire is coming from China. And therefore, tire demand or tire production in Europe is going down. So yes, we have these effects. I could not quantify it at this moment in time exactly. But there are elements like this, the crosslinker, I think we mentioned this some time before. We have pretty tough competition from China as well. It's not across the entire range, but in certain areas, it is. And from that point of view, it has an impact. Unfortunately, I cannot quantify it for you now.

We now have a question from the line of Chetan Udeshi from JPMorgan.

My first question was following up on Martin's question in a slightly different way. Maybe this goes to Christian. I think the message you gave us, it seems is much more of earnings pressure due to what you call broad-based demand weakness. I'm just curious, if I look at what BASF mentioned last week that they think the global chemical production is up 4% year-on-year. It doesn't feel like the demand itself is so bad. So what I'm trying to understand is how much of the pressure that you see and not just you as in Evonik, but also as an industry right now in Europe is actually structural in a way because there's just genuinely more competition across many, many product segments than we ever used to. And if that's the case, why should we think next year perhaps will be any different? That's one.

And second, maybe a bit related to that. If I look at your Q3 earnings or Q3 EBITDA, if I just run rate that, we are close to EUR 1.8 billion annualized EBITDA right now. I mean what are the key moving parts into next year, which can help your number grow versus that run rate?

Thank you, Chetan. Christian will start, and I think Claus can then add a few points on 2026 performance, maybe a bit more on the business side.

Chetan, I appreciate it to take your questions. Maybe first about the market environment. The simple math is the higher your businesses are positioned in respect of specialties, the better will be a chance in 2026. And if you look at our numbers and figures in respect, for example, of our Custom Solutions businesses, you could see that they have been able, even in this tough environment, to hold the prices up. So that is somewhat I would take as sign, which is providing me with confidence, first.

Second, it was about your expectations now in detail. Chetan, as you know, if I could, I would provide you with the very specific details, but it is a little bit early than to give you now a complete picture about what we do see in 2026. But for sure, that we -- and I guess you could do the same. So it's fair to assume that the macroeconomic environment will stay somewhat challenging also in next year. Are there reasons that it could become better? Are their signs? For example, the German stimulus program, which we think the German industry, and that means also we could benefit from the second half of the year. That is something we see as supportive. And then it is to see how the weak U.S. dollar will next year -- how the Americans will manage on the other side. And that is what I guess it is in those times of uncertainty worthwhile to underpin that we do remain delivering on our revised EBITDA and our free cash flow guidance. And here, as Claus has already conveyed to you, we are confident to get it. So in a nutshell, it is about the long view. It is about executing our strategy of reducing costs and bettering our position in regards of growth and optimization. And I guess, having said so, I do hand over to Claus.

Yes. Thank you, Christian. Yes, Chetan. So maybe to add -- the Q3, I think, would not be a good quarter to extrapolate because I think the reasons I tried to explain before, this is a very weak quarter for certain also extraordinary factors, like we said. 2026, super difficult to judge right now, even though we are in the middle of the discussions of how to see 2026, what kind of budget we are going to have. And of course, we always have the ambition to be the next year better than the year before. But so far, super difficult to judge. However, there are certain areas which clearly make us confident that 2026 for Evonik can be better and should be better than 2025.

The total environment, we don't believe will change much. Even though you have seen President Trump and President Xi in South Korea agreed upon, let's say, call it a cease fire, which helps. But since it's only a year, it does not really remove the underlying total uncertainty, but it certainly will help. So from that point of view, we believe the environment will be as tough as it is in 2025. Will it be worse? I don't think so.

So then it comes back to our own kind of elements that we believe are supporting us in 2025. We have a very weak Oxeno business, our C4 business in 2025. Here, we clearly see an improvement coming up in 2026. And Oxeno this year is not contributing at all, as you know, this will be different in 2025. Will it be back to 2024 levels? No, but something in between. So that is certainly a major element, which we see. Then we -- like we said, we have capacities that are ramping up. One is older, our polyamide 12. And by the way, polyamide 12 also in 2025 has volume growth. So it's on the way up and it's going to continue. We have the membrane business where is this year a little bit weak. We expect better business next year. We have the price erosion on the crosslinker side that has come to a standstill. It's starting to reverse. And -- yes, then we have methionine. And not to forget, we have methionine as, of course, a challenge, maybe new capacity coming on stream or most certainly on stream. When exactly? Not clear yet. That can have a suppressing factor on the price. At the same time, we have improved our cost position.

In Singapore, where I'm living, we have put a new technology into a methionine plant this year, which is not only increasing the capacity, but also improving the cost. And over and above, even bigger cost improvement will come in our U.S. plant once we have the back integration in methyl mercaptan on stream, which also will happen next year.

So this is -- then we have new plants. We have a new alkoxide plant in operation now in Singapore. The demand for biodiesel catalysts and biodiesel is strong. So there, it's going to ramp up, contributing next year. We have just started the new plant for aluminum oxide, highly dispersed aluminum oxide used in 2 big fields. One is lithium ion battery and the other big field is coatings. This is moving into markets where the demand is there, and we have this new plant will contribute.

Maybe I already mentioned health care. Health care is also a market segment where the demand is strong. So it's not really affected by the general weakness. You know that we have also tendencies that health care production is coming back from Asia to the United States and to Europe. I think we are going to benefit from this. And -- so there are these kind of elements which make us confident that we can increase our business in 2026 a little bit despite still remaining challenging market conditions.

The next question comes from the line of Geoff Haire from UBS.

I was just wondering, could you help us understand what the sustainability of the profitability in Infrastructure and Other is? Obviously, that was a big surprise, at least relative to what we were forecasting on consensus going forward because obviously, there's one-offs from bonus releases in there and how -- what proportion of that is one-off and what portion is ongoing.

Yes. Geoff, this goes to Claus.

The sustainability -- just to make sure I understood it correctly, is sustainability of...

The earnings level was better than in the past quarters in Infrastructure and Other lines.

Others. Yes. Okay. As you know, in Infrastructure and Others, we have grouped our , like I said, infrastructure business, which we are currently carving out into a separate legal entity. And we have also our Oxeno business in this. And here, the profitability improvement is coming from Oxeno in the next year. So this year, like I said, it's weak. Here, of course, we have profited from -- this is a very FTE-heavy operation. So a lot of the -- many of the FTE reductions are taking place there. Also in the course of the carve-out, we streamlined the processes. So absolutely sustainable.

And the Oxeno part in it, like I said, we had to deep dive into our Oxeno business, you can believe me. And here, we're also confident that we are improving step-by-step over the next years, and we will certainly make a step in 2026, which we also -- okay, this is, of course, also depending on market conditions. The part which is on the bonus side, which is the lower part in the end is, I have to say, hopefully not sustainable. We all won't have a normal bonus again. And so we are aiming for not making that sustainable, that's for sure.

We now have a question from the line of Anil Shenoy from Barclays.

I have two, please. The first one is on lipids. So you've spoken about lower demand for lipids in Custom Solutions in Q3. So I was just wondering if you could quantify in terms of percentage, how much was it down quarter-on-quarter and year-on-year as well? I mean, any kind of color on it would be very helpful. And on that note, if you could give us an update on the new lipids plant in U.S. I'm trying to understand what kind of a contribution could we expect in 2026 from it? And if you could remind us the EBITDA contribution that you expect once the plant is fully ramped up? So that's my first question.

And the second question is on the divestments, especially SYNEQT. Now that you have carved it up as a separate entity, do you have a time line? Or would you like to give any color on it as to when can we expect the sale of SYNEQT? And would you be okay with the JV structure like the one Macquarie did with the infrastructure assets of Dow? And would you expect similar kind of multiples to that of Dow's assets? So those are my questions.

Okay. Thank you, Anil. This time, both questions will go to Christian. So lipids and then SYNEQT.

Maybe first about the lipids. We are quite happy with the ramp-up of the capacities we have started to build in the United States of America. And here, we made good progress. So we are confident that we will benefit from it in future. But besides, it is a long-term perspective. So maybe give us now, first of all, a chance to build the -- to finalize the construction and then to ramp the capacities up. But nevertheless, and worthwhile to underpin it, here, we are confident that it will in future become a good and attractive EBITDA contribution business. All the more, as you see that the government of the United States of America has started some reshoring initiatives to bring pharmaceuticals and in particular, these on this very high level, high technological level back to the United States of America. So here, we are confident.

In respect of Infrastructure, first of all, yes, we are progressing pretty well in respect of separation. This is close to be completed. And from January next year onwards, we will have a legal entity with SYNEQT fully organizationally and legally independent. And then as you know, all options are lying on the table. What do I mean talking about this? Could it be a partnership? Could it be a straight divestment? Could it be a JV? Yes. And for us, it means that we will tackle these different opportunities and that we will judge upon how to move ahead over the next year.

But for Evonik, it is quite clear that the main benefit will be that we will have a less amount of CapEx, which we will pump in future -- which we would have to pump in future into our infrastructure businesses, and that is, for sure, helpful.

So having said this, and then maybe that was -- you have asked about the revenues, somewhat -- the revenues and the EBITDA. In 2024, these infrastructure businesses have gained around EUR 1.8 billion of revenues. Here, it is fair to say Marl plus Wesseling plus C4. So in respect of the EBITDA, it was half -- first half of this year, EUR 100 million in the Infrastructure plus C4. But because C4 was virtually -- they have not contributed to the results, you could take this as, by thumb rule, EUR 100 million half a year, EUR 200 million full year in respect of our infrastructure business. I guess these are the two questions I have taken pride to answer.

The next question comes from the line of Thomas Wrigglesworth from Morgan Stanley.

Two questions, if I may. Firstly, on Custom Solutions, you've done well with pricing, but volume has fallen 8%, which might suggest that pricing is coming at the expense of volume, which in itself might be a harsh statement. But then I look at the EBITDA change, much like Advanced Technologies, and it's substantially weaker in 3Q for the loss in sales than we've seen in 2Q. So is it that we're losing high-value tons in the volume? Or -- yes, I'm just kind of keen to unpack that a little further.

Secondly, on methionine, I think you called out the methionine prices are down and yet you've been taking maintenance in 2Q and 3Q indirectly managing the volumes into the market. As you add tons and have full availability into 4Q, how do you expect pricing to perform? And do you think that your return of tons will weigh on prices into 2026 as well?

Thank you, Tom. First one, Custom Solutions to Claus and then Christian on methionine.

Okay. Good. Yes, Custom Solutions, I can actually first say, when you look -- we can do the same as with Advanced Technologies. If you look to the data we provided you, you will see that some of the EBITDA decline is not reflected in the cash flow. That's because we have also here, not to the same degree as in Advanced Technologies, but also certainly substantial net working capital reduction to align the inventories mainly to the current sales and demand. You can see that even though the EBITDA is down from EUR 287 million in Q3 '24 to EUR 215 million in Q3 '25, cash flow remains the same at EUR 172 million. So this is something we have to consider. Yes, volumes are down, which is unusual, I have to say, for this usually very stable business. And it shows also how broad, I have to say, the weakness in the market is because here in Custom Solutions, as you certainly know, we have a very broad portfolio, which makes it usually resilient because not all markets go down at the same time. But when I look right now to the performance in Custom Solutions, you can see an impact everywhere. I can see it in almost all the businesses.

And I think in Custom Solutions, all the businesses have an impact to different degrees, yes, but also in all regions, and it shows -- first of all, it's a general slowdown of the demand. Nevertheless, I think what we are looking into is exactly what you are mentioning, is our price volume strategy, the right one. And are we not sacrificing volume to keep the margins high, and that's certainly on our agenda for the next months to come. And from that point of view, pricing, I think in these days, remains super critical. Also in the market, everybody knows in the market going for market share is not a good idea. And because with lowering the prices, you don't create more demand. But nevertheless, we will look into this. So it's one of the agenda points on our agenda.

Okay. And I take then the methionine question. First, maybe let me split my answer up into 2 parts. First, about the expectations in the fourth quarter. Here, we see a demand which remains overall pretty healthy. Yes, fair to say. And that is what we could give to you because we have a quite good visibility on the already booking level for the fourth quarter. So in a nutshell, the volumes will be up compared to the last quarter. And in respect of the prices, it might. It might end up a few cents lower, but it depends. It depends first on the ramp-up of a new capacity of NHU. So here, it depends. I won't call it -- it's a question, but let's say it depends. And second, on the [indiscernible] side, we do have the situation in the United States of America, where the businesses are protected by the U.S. tariffs. That is why I would say, for sure, volumes up compared to last year -- to last quarter and in respect of price, could be down in some sense, but don't forget that there is an exception in respect of the trade tariffs in the United States of America.

Now maybe outlook 2026, what do we think about this? First, it's somewhat like an evergreen, an evergreen that we do see a market growth that will continue in an average between to 3% to 4% to 5%, maybe by thumb rule around 4%, which translates into an additional capacity of 80,000 tons per year. On the other side, we are aware that there are some new capacities which could come on stream over the course of the next year, but it is hard to judge as of today when they will come on stream. And you should keep in mind that there's a new brand-new competitor in. We could not really calculate if he could bring his capacity without having any experiences in this market and with this technology right into the market in the first step. So let's see how this will work. And on the other side, don't forget that some older capacities could be taken offline. That is what we have seen, what we have observed over the course of the last year. For sure, the market is in a restructuring period. And let's see how this will work over the course of 2026. That is what we could give to you in respect of methionine for 2026 as of today.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Christian Kullmann for any closing remarks.

Yes. Ladies and gentlemen, it was great having had you today. This is what now ends our call. So far, thanks a lot for your attention. Have a happy autumn and hope to meet you soon in person. Take care, and goodbye.

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