Clariant Aktie

Ladies and gentlemen, welcome to the Clariant Second Quarter First Half Year Results 2026 Conference Call and Live Webcast. I am Sandra, 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 is my pleasure to hand over to Andreas Schwarzwaelder, Head of Investor Relations. Please go ahead, sir.

Thank you, Sandra, and good afternoon, ladies and gentlemen. It's Andreas speaking, and it's my pleasure to welcome you to this conference call. Joining me today are Conrad Keijzer, Clariant's CEO; and Oliver Rittgen, Clariant's CFO. Conrad will start today's call by providing a summary of the second quarter and first half year developments and an update on the Middle East situation, followed by Oliver, who will guide us through the business unit results and the first half year financials. Conrad will then conclude with the outlook for the full year 2026. There will be a Q&A session following our presentation. [Operator Instructions]

I would like to remind all participants that the presentation includes forward-looking statements, which are subject to risks and uncertainties. Listeners and readers are therefore encouraged to refer to the disclaimer on Slide 2 of today's presentation.

As a reminder, the conference call is being recorded, and a replay and transcript of the call will be available on the Investors section of Clariant's website.

Let me now hand over to Conrad to begin the presentation.

Thank you, Andreas. In the second quarter of 2026, Clariant continued to deliver strong results, demonstrating resilience in a volatile and challenging operating environment. On the top line, we delivered sales of CHF 941 million, representing an increase of 0.6% in local currency on a comparable basis. Including the impact of our portfolio pruning measures, sales decreased by 0.3% in local currency. Our EBITDA margin before exceptional items increased by 80 basis points year-on-year to 18.2%. Strong performance in Care Chemicals, supported by pricing and underlying volume growth more than offset the effects from lower volumes in Catalysts due to the Middle East conflict. We increased our free cash flow conversion rate by 15 percentage points on a last 12-month basis to 52% due to effective net working capital management, disciplined capital spending and improved operating cash flow. Our overall expectations for the group for the full year 2026 remain unchanged with continued volatility and uncertainty related to the Middle East conflict. We continue to expect sales in local currency to be around flat with pricing offsetting lower volumes and increased raw material costs. We expect an EBITDA margin before exceptional items of around 18% in 2026, also supported by value-based pricing, together with increased savings from our performance improvement programs and continued active cost management.

We welcome the decision by the Amsterdam District Court to dismiss the ethylene damage claim brought by Shell in its entirety against ourselves and 3 other defendants, which related to the 2020 competition law infringement. The court's ruling confirms our position that Shell suffered no harm attributable to Clariant's conduct. The judges particularly found no proof that the information exchange amongst buyers caused market harm or altered pricing metrics like the Monthly Contract Price, MCP. While we recognize that this dismissal does not set a legal precedent for the other cases, we see this as encouraging as we feel -- as we will continue to defend ourselves vigorously in the remaining proceedings in the Netherlands and Germany. In addition, the Amsterdam District Court has also dismissed a claim seeking declaratory judgment of liability of the defendants for the same conduct brought by a claim vehicle, Stichting Ethylene Claims.

Now moving to further detail on our sales performance in the second quarter. Pricing increased by 3% and was positive across all 3 business units, driven by strong value-based pricing actions to offset inflationary raw material prices. This is particularly positive given that formula-based pricing operates with a time lag relative to inflation. Volumes decreased by 3.3%, impacted by the Middle East conflict and our portfolio pruning measures. Underlying volumes grew by 0.5% in Care Chemicals and by 2.0% in Adsorbents & Additives. While Catalysts volumes declined by 14.2%. The reported revenue figure was affected by a 2.4% currency headwind.

Turning to profitability. EBITDA before exceptional items increased by 1.5% to CHF 171.1 million, corresponding to an 18.2% margin. The 80 basis points increase was the result of strong pricing and higher underlying volumes in Care Chemicals, supported by a favorable valuation effect on inventory. This more than offset the impact of the Middle East conflict on Catalysts volumes, lower operating leverage, and higher raw material cost. Adsorbents & Additives delivered an almost stable margin. Our performance improvement programs and cost productivity actions supported all business units.

Looking at the savings programs in more detail. We have increased the savings target of our performance improvement programs by CHF 20 million, now targeting a total run rate savings of CHF 100 million by 2027. We now expect CHF 90 million run rate savings already by the end of 2026. In Q2, we achieved savings of CHF 10 million, which brings the total savings achieved to CHF 69 million. The implementation of the additional programs has resulted in restructuring charges of CHF 24 million in the second quarter. The key measures announced in the second quarter include an additional headcount reduction of around 110 positions, increasing the total announced reduction to around 640 positions. We are implementing new targeted cost management initiatives globally across the business units in production, supply chain, engineering, and technical support, as well as in corporate functions.

Turning now to our updated assessment of the impact of the conflict in the Middle East. All of our 150 employees across our Middle East sites are safe. There has been no damage to any of our facilities, and all Clariant sites in Bahrain, Qatar, the UAE, and Israel, as well as our joint venture in Saudi Arabia, have resumed operations. Globally, access to feedstock remains secured across our production footprint.

During the second quarter, we increased our pricing by 3% across all businesses, enabling us to offset the impact of an inflationary raw material environment. We expect raw material inflation to moderate in Q4, with uncertainty against the background of the ongoing developments in the Middle East.

On volumes, our Catalysts business remains most affected, with the Middle East accounting for around 2/3 of the 14.2% year-on-year volume decline due to order delays. We saw limited prebuying in Care Chemicals and Adsorbents & Additives. Clariant's Catalysts customers outside the region slowly resume operations, and we expect improvement in the second half of the year. However, ongoing developments in the Middle East could affect the pace of this trend. The situation remains volatile and supply security remains a primary concern for our customers. We continue to leverage our global production footprint to ensure supply to our customers. As I mentioned earlier, we have also identified an additional CHF 20 million of savings through active targeted cost management to help offset the overall negative effects of the conflict. Together, these actions support our profitability guidance for the year.

With that, I now hand over to Oliver for further details on our business performance in the second quarter.

Thank you, Conrad, and good afternoon, everyone. Let us now look at the second quarter development by business unit. In Care Chemicals, we recorded strong underlying growth, driven by consumer-facing segments. Sales increased by 4.2% in local currency when excluding our portfolio pruning measures, and by 2.5% when including them. Pricing was up 3.7% as value-driven pricing offset inflationary trends related to the Middle East, despite the time lag associated with formula-based pricing. Volumes declined by 1.2%, including the impact of portfolio pruning, while underlying volumes grew by 0.5%.

Sales in Swiss francs increased by 1.4%, reflecting a 1.1% currency headwind. Growth was strongest in industrial applications, followed by Personal and Home Care and Mining Solutions, driven by positive pricing and higher volumes. Sales in Crop Solutions declined against the high comparison base, driven by restocking in the prior year. Base Chemicals declined as increased pricing was more than offset by lower volumes, partly due to pruning. Sales in Oil Services declined due to portfolio pruning and the impact of the Middle East conflict. Although the business grew at a low single-digit rate on an underlying basis.

We recorded EBITDA before exceptional items of CHF 104 million, representing a 19.1% increase compared to the prior year. This translated into an EBITDA margin before exceptional items of 20.7%, a 310 basis point improvement, reflecting strong pricing and underlying volume growth, further supported by a favorable valuation effect on inventory and contributions from our performance improvement programs.

In Catalysts, sales declined by 13.3% in local currency and by 19.1% in Swiss francs. While pricing was up 0.9%, volumes declined by 14.2% versus the prior year period due to the significant impact from the conflict in the Middle East, with high margin orders delayed and continued disruption to regional and global supply chains. Sales in Specialties increased at a mid-double-digit percentage rate, supported by strong growth in hydrogenation and oxidation catalysts. Sales in ethylene decreased at a double-digit percentage rate, while syngas and fuels and propylene each decreased at a high 20s percentage rate.

EBITDA before exceptional items decreased by 32.5% to CHF 32.8 million, representing a corresponding margin of 18.6% compared to an elevated 22.3% in the prior year, which included positive one-offs. This was driven by the significant volume impact from the conflict in the Middle East, resulting in lower operating leverage along with higher raw material costs.

While continued delays to refill orders in the Middle East and Asia remain a factor, we expect an improved top line trajectory in the second half as customers, particularly outside the Middle East, resume operations.

Moving to Adsorbents & Additives. We recorded strong top line growth driven by Additives. Sales increased by 5.3% in local currency and by 3.4% in Swiss francs, with pricing up by 3.3% and volumes increasing by 2%. In the Adsorbents segments, sales were flat as growth in renewable fuel applications in the United States offset declines in edible oil purification in other regions. In Additives, sales increased at a double-digit percentage rate, driven by strong growth in polymer solutions, particularly in flame retardants and in coatings and adhesives, especially in intumescent coatings.

EBITDA before exceptional items increased by 1.4% to CHF 51.2 million, while the corresponding margin was slightly lower at 19.6% versus 20% in the prior year. The 40 basis points decline reflected mix effects, which were offset by active margin management and contributions from our performance improvement programs.

Let's now move on to cover the half year 2026 financials. In the first half of 2026, sales of CHF 1.859 billion were flat in local currency when excluding portfolio pruning actions and decreased by 1.2% when including these. Pricing contributed positively by 0.7% while volumes declined by 1.9%. Currency translation impacted sales by negative 4.9% in the first half of the year.

Looking at our business units, underlying volume growth in Care Chemicals and broadly flat volumes in Adsorbents & Additives partly offset the Middle East impact in Catalysts. In local currency, Care Chemicals sales increased by 2.3% excluding portfolio pruning and by 0.1% including it. Catalysts sales decreased by 8.3% and Adsorbents & Additives sales increased by 1.3%. Group EBITDA before exceptional items decreased by 7.7% to CHF 331 million against the prior year, while the corresponding margin decreased by 30 basis points to 17.8% from 18.1% a year ago. The improvement in Care Chemicals offset most of the Middle East impact in Catalysts. Group reported EBITDA increased by 3.1% to CHF 300 million due to lower restructuring charges compared to the prior year. This resulted in EBITDA margin of 16.1%, an improvement of 140 basis points from the 14.7% reported for the same period in 2025.

Net cash generated from operating activities increased by CHF 52.8 million reflecting effective net working capital management, improved profitability, and disciplined capital expenditure. This resulted in an increase of our free cash flow conversion by 15 percentage points to 52% for the last 12 months, from 37% at the end of half year 1, 2025.

Group net debt increased by CHF 79.2 million versus the end of 2025. The resulting net debt to last 12 months EBITDA before exceptional items ratio increased to 2.2x at the end of the second quarter, compared to 2.0x at the end of 2025.

And with this, I close my remarks and hand it back to Conrad.

Thank you, Oliver. Let me conclude with our guidance for 2026. For the full year 2026, we continue to expect a challenging and volatile market environment with continued geopolitical conflicts, uncertainties, and risks. The Oxford Economics forecast now assumes global GDP growth of 2.5%, broadly in line with their 2.4% in April. While expected global chemical industry growth has increased to 1.0% from 0.4% in April, driven by improved, but still declining markets for the U.S., minus 0.3%, and Europe, minus 0.6%.

The conflict in the Middle East continues to negatively impact orders in Catalysts and Middle East Oil Services. It has also increased inflation for raw materials, energy, and logistics costs. To mitigate these effects, we continue to deliver our proven value-based pricing, supported by active cost initiatives. We are leveraging our global production network to provide a reliable supply of products to our customers.

Our guidance for 2026 remains unchanged, with sales expected to be around 2025 levels in local currency, and an EBITDA margin of around 18% before exceptional items. We expect growth in Adsorbents & Additives, slight underlying growth in Care Chemicals, and lower sales in Catalysts due to Middle East order delays.

With that, I turn the call back over to you, Andreas.

Thank you, Conrad and Oliver. Ladies and gentlemen, we are now opening the floor for questions. To ensure everyone has a chance to participate, please ask no more than 2 questions per person. Thank you for your cooperation. Sandra, please go ahead.

[Operator Instructions] Our first question comes from Katie Richards from Barclays.

My first question will be on the positive result in Consumer Care, please. The press release this morning referred to some customer prebuying. Could you explain which end markets were affected by this within Consumer Care? And also, whether you see any risk that the Q3 volumes could be negatively impact as a result of demand being pulled forward?

And then naturally, my second question, if I can, would be on the litigation, please. Clearly very good news yesterday. So I would be interested to hear your opinions on whether the dismissal of the Shell claim offers positive read across to the other CHF 9 billion claims, in your opinion. And if I could just break that down into 2 parts, please. Do you think the Shell dismissal largely removes the risk for the other claims in the Dutch Court, say, from Total, OMV, et cetera? I assume they were expecting to use the same methodology to Shell.

And secondly, if you could just give us an update on BASF's claim in the courts in Munich, whether they're using the same or different methodology, and how far along the case is there, please? So would just be interested to hear your thoughts, to the extent that you can answer.

Yes, thank you, Katie. So, yes, on the prebuy, what we basically saw is very limited prebuying, where we did see some of it in Care Chemicals was in our cosmetics business, where we are dealing with very unique active ingredients. During the second quarter, there were obviously heightened supply chain, supply security sort of concerns at some point in time. But what you saw in the past when -- that actually large home care customers would do prebuying also in speculation of higher raw material prices. That hasn't happened this time. So a very limited effect in our chemical business. Inventory levels are fairly normal and average across the segments.

As to your second question, on the Shell case. Yes, so this is actually, I think, a big step forward for the company. If you look at the remaining cases -- remainder of cases, almost half of them will serve in the Netherlands, the others actually either in Munich or in Dortmund in Germany. Yes, in terms of the methodology across the cases, indeed, the cases filed in the Netherlands are very similar in methodology. If you look at them, the facts are very similar. In fact, the vast majority is actually referencing the same economic reports, the AlixPartners report, that was basically used in the Shell case, and clearly the court found that report failed to demonstrate any causality between the behavior of the defendants and the MCP prices for ethylene.

To your second question, yes, we prefer not to comment on individual cases, your question on BASF. But I will say that also the cases that basically will serve in the German courts are actually using a similar methodology, and also here, the facts are the same. So even though the German courts are not bound by any of the decisions that were made in the Dutch court, they will independently come to their own judgment. It's fair to say that the facts and the methodology are very similar. So I think the win in the Netherlands also positions us quite strongly for the cases to come in the Netherlands.

The next question comes from Christian Faitz from Kepler Cheuvreux.

Congrats on the results and also congrats on the Amsterdam court win. Two questions, please. First of all, your agricultural business within Consumer Care was weaker as you published this morning and as Oliver mentioned. How much of that is share wins from generic manufacturers that might not be your typical customers as opposed to the innovators such as Syngenta, Bayer, et cetera?

And then my second question would be -- or best actually, at the Q1 reporting, you gave us a very helpful figure of your assessment of plant outages due to the Middle East situation. I believe the figure at the time was 88 or so, of which roughly half were your customers. Would you mind giving us an update on that figure on the outages currently affected by the Middle East per today?

Yes, thank you, Christian. Two very important questions. The one on Ag, I will leave to Oliver to answer. I will take the one on the Middle East. What we see in the Middle East is basically, not only in the Middle East itself, but also outside the Middle East, as a consequence of the conflict, there have been outages in feedstock. We reported after our Q1 results, a total global force majeures number of 88. So 88 companies basically in shutdown modus because of either a lack of feedstock when they are based outside the Middle East, they couldn't bring in propane, they couldn't bring in naphtha. They had to shut down operations. They were previously bringing that in from the Middle East. And the other half based in the Middle East because either a lack of feedstock there or an inability to ship their finished products.

What we've seen during the quarter is, the second quarter, not a surprise, this number went up. And at one point in time, in May, June, we were actually at a number well above 100 force majeures globally in the sector. It's actually very positive to look at the recent developments. So if you now look at the July number, we're below 100 force majeures globally. We see an easing outside the Middle East. So companies in China, in Japan, in Korea, in India have been able to source their feedstock from other regions now, are back up and running again. In the Middle East, we still see quite a significant number of customers in shutdown. We expect that will be taking a bit longer to ease. But I think the positive news is that the overall number of force majeures is actually coming down right now, especially outside the Middle East. Within the Middle East, it will take a bit longer.

Oliver, if you could comment on agrochemicals?

Christian, on agro, I mean, as you know, the majority of our customers is in the branded businesses. So in that sense, the current performance is not so much affected by the generic play. I think what's important to consider when looking at the Crop Solutions performance in the second quarter -- the Crop Solutions performance in the second quarter is that, we were trading over a very strong previous year quarter. The second quarter in '25 was in the mid-20s, in terms of growth. And hence, of course, you would see after that restocking that happened last year with that year-over-year trading, you would see a bit of a softer volume quarter, Q2, in this year. But our expectation for now, the remainder of the year is that, we will see growth coming back in Crop Solutions, driven by exactly the branded players that we are operating with, and the volume developments that we're seeing there.

The next question comes from Thea Badaro from BNP Paribas.

Two questions from me, please. And the first one is on the guidance. The midpoint of your guidance currently points to a 5% improvement sequentially in H2. Obviously, this is where we have a prior year split between the 2 halves. And so, the question here is how confident are you that you will be able to achieve this? And maybe what are assumptions by division?

And the second one is on the regional growth. It looks like APAC seemed to have grown across all divisions. Can you maybe help us understand where exactly you've seen strength, and maybe what are the drivers of the growth in this market?

Yes. So I'll let Oliver comment with a bit more granularity on the APAC growth that we saw, or the China growth, I think specifically in Q2. As far as the guidance, Thea, so yes, we are actually quite confident about the guidance for the year. So it's obviously a very volatile environment. But if you first look at revenue, we are seeing a pickup in the second half, especially in Catalysts. I mean, there's always a bit of seasonality and a stronger second half in Catalysts. But especially this year, I mean, we obviously in the second quarter had a big hit in Catalysts, minus 13%, largely attributed to the Middle East situation. And what we think in the second half is clearly an easing in terms of the force majeures we just talked about, especially outside the Middle East, we'll see an improvement there. So that is definitely a stronger second half for Catalysts than the first half.

In Care Chemicals, we will continue to see the positive performance underpinned by the positive pricing that we see already, well over 3% positive pricing there, with still an additional wave to come from formula-based pricing. So resilient volumes, especially in Personal and Home Care, but also as Oliver alluded to, a bit of pickup in crop protection.

A&A is actually having very interesting pockets of growth. Overall, the macro is not strong if you look at automotive build rates or electronic products production. But we have actually very interesting pockets of growth. If you look at our flame retardants, they're now also applied in data centers in fire protection coatings. We see that in our numbers. That's actually a good performance. We see for renewable oils, a good pickup for biodiesel, for sustainable aviation fuel. So there is a number of positive developments in A&A, as well.

Oliver, if you could comment on Asia Pacific specifically?

Sure. Thea, on Asia Pacific, we have some of the trends that Conrad was also mentioning now on a global level. If we really go by the business units, in A&A, we actually have seen growth in both areas, in the Additives, particularly in the flame retardants with our customers in the region, but also the Adsorbents business has been growing nicely in the second quarter, both on price and volume, in the region.

On Care Chemicals, equally, especially when we look at the Personal, Home Care and Industrial Applications business, we have seen good growth. And that was also across the region.

In Catalysts, we had a bit of a sort of a split development across the region. Actually, we saw a decline in China, and that was expected, behind some of the feedstock challenges and also the propane prices that we saw in the region, utilization rates of less than 60% in parts of the production that impacted, clearly, our Catalysts business in China, and then as we talked before, also globally for the second quarter. But outside of China, we actually also saw in the Catalysts business across the countries, good growth, which led at the end of the day to that mid-single-digit growth performance for the Catalysts business.

The next question comes from James Hooper from Bernstein.

First one is, Conrad, I saw you on TV this morning, and you mentioned in the context of the lawsuits that it gives you a bit more strategic flexibility. Can you go into a little bit more detail about what you mean by this? Does this kind of lawsuits change how you think about consolidation and what Clariant's able to do?

And then the second question is around the midterm targets. Can you just -- so it looks like, can you give us a bit more detail -- or cash is already there on conversion, but can you give us a little bit more detail on how you see getting the margins and the revenue targets to the 2027 targets, please?

Yes, sure. Yes, James. So what -- basically, what we see is that, you saw a very positive reaction, basically on the stock market yesterday with our share price up significantly. What it reflects is that, there was a overhang on our share price. Clearly, there is an overhang from these ethylene cartel cases, which we have argued all the time. So it's actually very good to see that actually now moving out of it. But just for clarity, the overhang that we have seen on our share price from ethylene has never actually impacted our ability to finance acquisitions, or it has never impacted our operational performance. We've maintained a solid investment grade. So it has actually not stopped us from doing anything.

And as far as M&A or strategic M&A, I would say there's no change in our strategy. It's first and foremost about organic growth, and you've seen that we've actually stepped that up over the years, in local currency. Also in the second quarter, more than 4% local currency growth in Care Chemicals, more than 5% in Adsorbents & Additives. We're very pleased with that. So first and foremost about organic growth, then it's bolt-on acquisitions, really to strengthen our core segments, and you've seen a nice example with Lucas Meyer. We are eager to continue to make acquisitions like that. So there is no change as such in our strategy.

Your second question, James, on the midterm targets. Yes, so we stick to the 18% EBITDA margin for the year. For next year, that actually puts us in a good position to also achieve the targets for next year, which was a range of 19% to 21% EBITDA margin. I think it's important to note that we have increased also the cost performance improvement program from CHF 80 million full runway to CHF 100 million. CHF 10 million additional from that will be coming in this year to support our guidance. Another CHF 10 million will actually come in next year. So that further strengthens and underpins also our commitment to sequentially improve again next year to the 19% to 21% range.

The next question comes from Jaideep Pandya from On Field Research.

Conrad, when you look at your innovation portfolio and you compare the innovation demand for new catalysts in Asia versus Europe and the U.S., is there any like major difference in terms of what the Asian players are demanding, be it with regards to those plant size or the fact that there is more of these integrated sites in Asia compared to Europe and the U.S.? That's my first question. And also related to that, how do you see the mix of Catalysts evolving in 2027, 2028, given the Iran war? That's my first question.

The second question sort of links to the previous question, really, but from a different way. You've spoken about consolidation. One of your key peers in Care Chemicals is performing a strategic review. And interestingly, the size of that business would sort of complement your size in Care Chemicals. So have you given any sort of size in terms of what sort of size would you be able to look after? And in that regard, would you be thinking of actually exiting some of the smaller businesses that you have, like Adsorbents or Additives in this to become a pure play company on Care Chemicals? Or would you keep this current portfolio and just add on in terms of consolidation on that?

Yes, thank you for these 2 questions, Jaideep. Interesting enough, I'm just back from China and our team was there actually, and we spent quite some time with the large local customers. In fact, some of these chemical companies, really some of the largest ones actually in the world right now. And what you see in China right now is clearly a shift back to coal-based chemistry. And basically, not only coal as obviously a feedstock for power plants to generate electricity, but also coal as a raw material through the methanol route, and then methanol to olefins as a raw material to basically make polymers. We are involved in that. We obviously here provide catalysts that then actually still improve the carbon footprint of these processes, but we are actively engaged in it, and we have obviously a sizable position in that market.

The other interesting thing is, in China, is at the same time that there is actually renewed focus on coal to chemistry, there's actually a continued commitment on their sustainability targets. So peak carbon 2030 is still a very strong commitment by the Chinese government in their latest 5-year plan, the 15th 5-year plan that is reiterated. And 2060, the target to be basically climate-neutral as a country. So these are ambitious targets, and what we see in China is actually continued investment in green hydrogen. We see in China investments in green methanol, in green ammonia plants at a much larger scale than Europe, where unfortunately some of the green hydrogen plants and announcements before in green hydrogen have actually been pulled back. In China, it is accelerating. So I think that is very positive for us, and we see a lot of these new plants where actually Clariant is extremely well-positioned with our catalyst, our syngas catalyst.

Yes, your second question, I can be relatively brief. Yes, I think we've said all along there is a consolidation at some point to be expected and actually already happening in specialty chemicals. We always said we want to be an active player in that, but I think it's also important to know that it will be very disciplined. As I said before, it's first and foremost organic growth. And it is really bolt-on acquisitions that bring true synergies to our existing segments, and that will be very much the focus of any M&A that you will see in the coming years from us.

The next question comes from Christian Bell from UBS.

Well done on the result in what has been difficult circumstances. I just have 2 questions. The first on the Shell ruling. Do you have any indication as to whether Shell is likely to appeal or should investors view that case as effectively closed now?

And then secondly, just on Crop Solutions, the restocking impact last year, was that mainly limited to the second quarter, or did it continue into Q3 and Q4? And should we therefore expect easier comparables in the second half of this year?

Yes. I think Oliver can comment again on the Crop Solutions sort of phasing here. As far as the Shell case, yes, the Shell case, which has been dismissed in the Netherlands right now, as well as by the way, the case of the Foundation for Ethylene Claims, separate case that also was dismissed. Both 2 cases can be appealed. So, yes, there is that possibility and the appeal, I think is about 3 months from now, from the day of decision that needs to be brought forward. But we cannot comment on, is Shell going to appeal or not? And quite frankly, I have no knowledge on that.

Christian, on your Crop Solutions question, yes, indeed, the second half of last year was more of a more normalized half year, and that is what I said earlier in the call. This is also where we expect now in the second half of the year that in Crop Solutions we would see growth coming back because the first was, as we said, characteristically on the restocking.

The next question comes from Chetan Udeshi from JPMorgan.

The first one is, I don't know if you quantified, but what was the benefit from inventory revaluation gains in Care Chemicals in Q2?

Second is, you've given the second half guidance. I'm just curious if you can help us with modeling of third quarter, what do you see right now across businesses. Is there anything beyond normalcy that we should consider when modeling Q3 versus Q2 on absolute basis?

And the third question is, just going back to this whole question about consolidation, Conrad, and I'm just a bit curious. Lucas Meyer was interesting asset, it was small asset, but it doesn't really move the needle these days. What I'm trying to say is, if you really want to improve fundamentals, perhaps one needs to be a little bit more strategic in terms of how you do the consolidation rather than buying teeny-tiny assets where it doesn't move the needle. And again, I think I asked this question maybe last year as well, like this whole structure of Clariant with Catalysts, where you've seen Johnson Matthey sell Catalysts business, their own business for 12, 13x EBITDA. Like why do we have Clariant with these different assets in one place? Why can't you think more strategic and look at consolidating the individual bits to probably make the fundamentals better for each of these different bits? Sorry, it's a bit left wing question, but just thought more expressing.

Chetan, I would go for the first question before Conrad then comments on half year 2 and your third question on industry.

On the inventory reval, let's also look at this more from a Q1, Q2 dynamics, because we saw a few dynamics in the quarter. We had a negative one in Q1. We had a positive one in Q2. So when we look at the first half for Care Chemicals, we're talking about an effect of less than 100 basis points on margin. And then the more we go now into the remainder of the year, expectation will be also with the developments that we're seeing that towards the end of the year, that curve is even more flattening out.

Yes, Chetan, on the phasing H2, H1, yes, there's nothing unusual this year. So, basically, Catalysts typically has a stronger second half. Care Chemicals, sometimes the swing factor here is how deicing comes in, if that's Q4 or if it's more Q1 next year. And Additives & Adsorbents is fairly even. So we do think it's a stronger second half for the reasons mentioned, primarily Catalysts, primarily the fact that also we see actually the force majeures easing outside the Middle East and the business got hit pretty hard in Q2 with minus 14% on volumes. So overall, we're actually confident that the second half will be slightly better in terms of revenue for the overall business compared to H1.

Yes, your second question on M&A. First of all, I think Lucas Meyer for us, has moved the needle. So for us, we have actually repositioned, I think successfully, in Care Chemicals towards consumer-facing segments. And I think the interesting thing is also that if you look now, for example, in the second quarter, high single-digit growth in Personal and Home Care. We continue to see double-digit growth in the Lucas Meyer business with very accretive and high margins. And there's a lot of positive spinoff to basically our own cosmetic business from that business. So if we can make continued acquisitions like a Lucas Meyer, yes, we are very happy with them. And yes, we obviously continue to scan for these sort of, yes, important bolt-on acquisitions. There's not many out there. We haven't missed any, I think, in this segment. But certainly the ones that will come up, we all will look critically at them. Larger scale M&A, we obviously will look at them. But, yes, we need to be extremely disciplined here, because there has to be tangible and real synergy.

And your final question on, are we the right owner for some of the businesses? I think ultimately it's about financial performance. So we need to show and demonstrate leading financial performance, not only in margins, but also in growth. And if -- as long as we can achieve that, I think the question about are we the right owner is certainly not being asked frequently to me, because I think if you look at our Catalysts business, more than 80% EBITDA margin, despite actually 14% lower volumes. I think that is a remarkable achievement. So last year, more than 20% EBITDA margin for Catalysts, relative to the relevant peers, that is clearly a very strong performance.

The next question comes from Walter Bamert from Zurcher Kantonalbank.

Could you help me with the one-off cost in the second quarter? You explained that, but I lost a little bit track how that develops in the rest of the year.

Yes, thank you, Walter. Good to hear you. The one-offs, the majority of the program that Conrad was alluding to, the CHF 20 million upgrades that we did to our CHF 80 million program. The majority of the onetime cost for that program, we have now booked in the second quarter. So we are talking about a mid-single-digit number for the remainder of the year in general for restructuring. So the biggest part is behind us in half year 1.

Okay. And then coming back to the question about the share price and its implication for strategic initiatives. I mean, when I have read that sounds like now I'm going to make a big capital increase for acquisitions. I mean, that's the only interpretation I had here at the beginning. And my question is, don't you have to wait until you have the legal cases off the table before you go for acquisitions? And then you have to be very fast because otherwise you end up at the wrong side of the food chain.

Yes, Walter, I think I answered the question, but maybe not completely. Let me be very clear. If you look at the strategy for the company, organic growth, bolt-on acquisitions, we haven't seen any limitation from the Ethylene Claims that were out there. So even with an suppressed share price, we never had any issue regarding our funding. We've been able to fund our operations. We've been able to do nice bolt-on acquisitions like Lucas Meyer. So likewise, there was no negative impact on the way down for the share price. On the way up, there will not be certainly a different strategy for us on acquisitions. It will continue to be disciplined. And actually, yes, you will see that with acquisitions, they have to deliver tangible synergies, and bolt-ons are definitely the preferred way to go here, and there's no change in our strategy here.

You see, actually, successfully, maybe there's one thing that to bring up, the bonds. I mean, EUR 500 million bond that we issued, and that was well before the positive outcome of the court case in the Netherlands, it was oversubscribed. So there's never been, and there isn't any concern for funding in the company. So, yes, I hope I'm clear about that now.

This is Andreas speaking. We answered all the questions. So ladies and gentlemen, we conclude today's conference call. A transcript of the call will be available on the Clariant website in due course. The Investor Relations team is as always available for any further questions you might have. Once again, thank you for joining the call, and goodbye.

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.

Ladies and gentlemen, welcome to the Clariant First Quarter Figures 2026 Conference Call and Live Webcast. I am Valentina, 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 Andreas Schwarzwaelder, Head of Investor Relations. Please go ahead, sir.

Thank you, Valentina. And ladies and gentlemen, good afternoon. I'm Andreas Schwarzwaelder, it's my pleasure to welcome you to our Q1 conference call. Joining me today are Conrad Keijzer, Clariant CEO; and Oliver Rittgen, Clarion's CFO. Conrad will start today's call by providing a summary of the first quarter development and the Middle East situation, followed by Oliver, who will guide us through the business unit's results. Conrad will then conclude with the outlook for the full year 2026. There will be a Q&A session following our presentation.

At this time, all participants are in listen-only mode. I would like to remind all participants that the presentation includes forward-looking statements, which are subject to risks and uncertainties. Listeners and readers are, therefore, encouraged to refer to the disclaimer on Slide 2 of today's presentation. As a reminder, this conference call is being recorded, a replay and transcript of this call will be available in the Investor Relations section of the Clariant website.

Let me now hand over to Conrad to begin the presentation.

Thank you, Andreas. In the first quarter of 2026, we delivered sales of CHF 918 million, representing a 2% decrease in local currencies and almost flat when excluding our portfolio pruning actions in a challenging macroeconomic environment. Our EBITDA margin before exceptional items decreased by 130 basis points year-on-year against a strong comparison base, reflecting the impact of the Middle East conflict and a dilutive one-off precious metal sale in our Catalyst business.

We increased our cash conversion rate by 12 percentage points on a last 12 months basis to 54% due to effective net working capital management and disciplined capital expenditure. Our overall expectations for the group remain unchanged. We continue to expect sales in local currency to be around flat as pricing offset lower volumes.

We expect an EBITDA margin before exceptional items of around 18% in 2026, supported by value-based pricing, savings from our performance improvement program and continued active cost management. We also expect free cash flow conversion of over 40% for the year.

Before turning to our first quarter developments in more detail, I would like to provide an assessment of the situation in the Middle East and what we're doing to mitigate its effects. Our first priority is the safety of our people. I'm pleased to confirm that all of our around 150 employees across our Middle East sites are safe. There has been no damage to any of our facilities, and all sites are back in operation.

The Middle East and Africa region represents approximately 10% of group sales, with the directly affected areas accounting for around 5% of group sales. Of our total raw materials, around 37% are fossil-based. We're carefully managing our own raw material supply in Asia, especially in China and India across our Catalysts and Care Chemical business.

On direct business impact, our Catalyst business is most affected. Of 88 force majeure declarations or shutdowns globally, driven by feedstock shortages, logistics constraints and infrastructure damages, 44 involve Clariant customers, predominantly in the Middle East and Asia.

Turning to the effects we're managing and the actions we are taking. The situation remains volatile and supply security is the primary concern for our customers. We are responding by leveraging our global production footprint and proactive logistics management to ensure continuity of supply. On costs, we are seeing material inflationary pressure across the board for 2026.

Raw material and energy costs are both expected to increase at a mid- to high single-digit percentage rate While logistics costs are expected to increase at a low double-digit percentage rate. We're executing value-based price management to counter these effects consistent with our approach in prior cycles. On volumes, we're still -- on volumes we're seeing refill phasing impacts in Catalysts across the Middle East and Asia. Some prebuying in care chemicals and softer industrial and consumer demand across absorbents and additives and Care Chemicals. We're proactively managing our cost base across our businesses in a lower demand environment.

With that, let me now turn to our first quarter financial performance in more detail. In the first quarter, we delivered sales of CHF 918 million, representing a decrease of 2% in local currency versus the prior year period and almost flat underlying sales excluding the effects of our proactive portfolio pruning measures. Pricing decreased by 1.5%, mainly driven by formula-based pricing adjusting to lower raw material prices recorded until the start of the conflict in the Middle East.

We expect the deflationary environment for raw materials in the first quarter to turn inflationary from Q2 onwards. Volumes decreased by 0.5%, impacted by the Middle East conflict. Our portfolio pruning measures and a softer start of the absorbents business. The reported figure was affected by a 7.4% currency headwind.

Turning to profitability. EBITDA before exceptional items decreased by 16% to CHF 160 million, corresponding to a 17.5% EBITDA margin. The 130 basis point decrease was the result of a significant impact from the Middle East conflicts on Catalysts volume, reducing operating leverage and a dilutive one-off of precious metal sales. Unfavorable mix in Catalysts and Care Chemicals as well as an inventory reval effect in Care Chemicals, weighed on profitability. Despite continued contribution, from our performance improvement programs.

Looking at the savings program in more detail. We now expect to achieve the full run rate savings of CHF 80 million already by the end of 2026. This is 1 year ahead of our original commitment. In Q1, we achieved savings of CHF 9 million, which brings the total to CHF 59 million. The execution of the program resulted in total restructuring charges of CHF 64 million. The key measures in 2026 include a head count reduction of approximately 60 full-time equivalents, increasing the total FTE reduction to around 530 positions. In the current weakening demand environment, we maintain our focus on active cost initiatives.

With that, I now hand over to Oliver for further details on our business performance in the first quarter.

Thank you, Conrad, and good afternoon, everyone. Let us now dive into the first quarter development by business unit, starting with Care Chemicals. Sales decreased by 1.9% in local currency and grew by 0.8% when excluding our portfolio pruning measures. Pricing was down 2.6% due to formula-based price adjustments, as raw material costs have declined until the start of the conflict in the Middle East. We expect this to reverse from Q2 as the inflationary effect of the current geopolitical situation feed through. Volumes grew by 0.7% and including the impact of the portfolio pruning measures. Excluding these measures, volumes grew by 3.5%.

The reported figure was negatively affected by a 6.8% currency headwind. Growth was strongest in Mining Solutions as volumes more than offset lower formula-based pricing. This was followed by a growth in Personal and Home Care, driven by volumes, especially in the health care business. Sales declined in industrial applications with soft demand environment and coatings. While the seasonal aviation business drove volume growth in base chemicals, this did not offset formula-based price adjustments.

Sales in Oil Services declined due to lower volumes being impacted by the Middle East contract and portfolio pruning measures. Sales in Crop Solutions declined against a high comparison base in the prior year when a restocking effect led to strong growth.

We recorded an EBITDA before exceptional items of CHF 114.6 million, representing an 11% decrease compared to the prior year. This translated into an EBITDA margin of 21%, a 60 basis point decline that reflects less favorable mix and an inventory revaluation effect reversing a positive impact in the prior year. These effects were partially offset by contributions from our performance improvement programs.

In Catalyst, Sales declined by 1.6% in local currency and by 12.2% in Swiss francs. Our pricing was up 0.4%. Volumes declined by 2% versus the prior year period. due to a significant impact from the conflict in the Middle East with orders pushed out due to force majeures and shutdowns as well as supply chain and logistics disruptions in the region.

Sales in ethylene Catalyst increased due to a positive onetime effect from a precious metal sale by being particularly impacted by the Middle East conflict and delayed orders. Sales & Specialties increased at a mid-single-digit percentage rate with strong customs orders. Sales in Syngas and Fuels declined at a mid-single-digit percentage rate driven by mix and sales in propylene at mid-teens percentage rate also impacted by the Middle East.

EBITDA before exceptional items decreased by 51.5% to CHF 12.8 million, representing a margin of 9% compared to 16.2% in the prior year. This was driven by a significant impact from the conflict in the Middle East with high-margin orders being pushed out and lower operating leverage. The one-off sales of precious metals that came with no EBITDA contribution was also dilutive to the margin as were a less favorable mix and higher raw material costs.

As Conrad mentioned earlier, chemical plants around the world continue to be affected by feedstock shortages leading to lower utilization rates and force majority declarations or shutdowns. Therefore, refill order time lines may continue to be pushed out going forward.

Moving to Adsorbents and Additives. Sales decreased by 2.7% in local currency and by 9.1% in Swiss francs, with pricing down slightly by 0.2%, while volume decreased by 2.5%. The absorbent segment, sales decreased at a mid-single-digit percentage rate as growth in renewable fuel applications in the United States that started towards the end of the quarter did not offset declines in other segments.

In the Additives segment, sales increased at a low single-digit percentage rate, especially driven by growth in flame retardant in our Polymer Solutions segment. While we recorded a soft start versus a high comparison base in Coatings & Adhesives. EBITDA before exceptional items decreased by 9.2% to CHF 42.6 million, representing a flat year-on-year margin of 18.6%. This was the result of active margin management and performance improvement programs offsetting the lower volumes.

And with this, I close my remarks and hand it back to Conrad.

Thank you, Oliver. Let me conclude with our guidance for 2016. For the full year 2026, we expect challenging market conditions with increased macroeconomic challenges, uncertainties and risks. The Oxford Economics chemicals industry forecast now predicts a reduction of chemical output growth from 1.9% at the beginning of this year to 0.4% in April 2026, mainly as a result of the Middle East conflict.

This estimate is volatile and dependent on the duration of the conflict and the closure of the Straight of Hormuz. Prolonged war scenarios would increase the negative impact on the industry. The conflict in the Middle East continues to negatively impact customer demand in the catalyst and oil services business. Furthermore, the conflict results in an inflationary raw material, energy and logistics cost environment.

To mitigate these cost increases, we activated our proven value-based price management, further supported by continued focus on active cost initiatives in a low-demand environment. By leveraging our global production network and proactive logistics, we provide continued supply for our customers. Our guidance for 2026 remains unchanged with sales expected to be around 2025 levels in local currency and an EBITDA margin of up 18% before exceptional items. We expect the Middle East conflict to impact demand in our Catalyst business, cause increased input costs and elevate overall uncertainty and volatility. However, we expect to offset these negative effects through increased pricing and continued overall focus on cost actions. We also expect free cash flow conversion of over 40% for the year.

With that, I turn the call back over to Andreas.

Thank you, Conrad and Oliver. Ladies and gentlemen, we are now opening the floor for questions. To ensure everyone has a chance to participate. Please ask no more than 2 questions per person. Thank you for your cooperation. Valentina, please go ahead.

[Operator Instructions]. The first question comes from Katie Richards from Barclays.

A question firstly on Catalysts, please. It would just be useful to get some color, I think, on the order book visibility you have for this division in Q2 and beyond. I think the sort of takeaway from this set of results is despite having good visibility on the new order projects coming in ahead of time, maybe for refill catalyst, it looks like people can pull orders away quite far.

So I guess there are 2 parts here. Do you think the order pool that we observed in March was reflective of the worst of this or has there been an accelerated pullback in the month of April? And it would be quite useful to get sense of how you think the sort of Q2 Catalyst could swing intra-quarter with the ceasefire headlines emerging? Do you think the refill orders would come back immediately if there is a final and just sort of at group level, for my second question, looking at the historic trends, Q2 is typically down versus Q1. Do you think that would be a fair assumption for the quarter ahead, maybe towards 150?

Yes. Okay. That's a lot of questions, Katie. Good afternoon. I'll leave the question on overall Q2 to Oliver, but I'll try to give some color as you ask for on the Catalysts demands and what we're seeing in basically the first quarter versus second quarter and moving forward. So I think, first of all, a comment. So our Catalysts business is mostly affected when it's about demand. So what you see right now in Catalysts is of our customer

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active customers. The other sort of half of it is supplied at the moment by the rest of our competitors, but it is our entire client base, so potential client base. If you look at these 88 force majeurs and shutdowns, interesting enough, more than half of them sit outside the Middle East. If you put things in perspective, the Middle East, and let's say the Strait of Hormuz represents one fifth of the global exports for crude oil and liquid gas. It also represents roughly 15% of the world's production for base chemicals and petrochemicals. And when I say base chemicals, I mean items like ammonia, methanol. When I say petrochemicals, I mean items like propylene, ethylene, et cetera.

If you look at our Catalysts business, what happened in the quarter is that after the breakout of the war, in the month of March, we started to see the immediate effects already because what happened was that customers basically start to delay their orders in the Middle East. What you see is that customers are not able to get their finished product out, and actually their storage tank are all filled, and they need to shut down operations. Sometimes customers in the Middle East cannot get feedstock because of infrastructure damages. So the effect of this was actually a total of 5% of our sales in Catalysts in Q1 was due to delays from the Middle East, but also from customers in Asia that were facing feedstock shortages, because this is the other effect that we're seeing.

Keep in mind, of the Naphtha production in Asia, roughly 40% came from the Middle East, these ships are not arriving right now. What we see is that more than half of the force majeure and shutdowns sits actually in Asia. China primarily affected, also South Korea, Japan, Taiwan and even India. So what you see here is the feedstock is not available.

Now coming to your question, how is it gonna further develop? Well, we're obviously very relieved for our people on the ground with the ceasefire. But I also like to note that for business to resume, we need an opening of the Strait of Hormuz. In our scenario, we expect that by the end of June. So we expect an opening of the Strait of Hormuz in the second half of this year. What we have for the second half of the year is a recovery scenario whereby clients in the Middle East can start up their production again. Obviously, there is bits and bits of delays because first they need to empty their storage tanks. Ships need to get back into the Strait of Hormuz. And likewise, in Asia, there will be bits of delays because we need shipping back to basically make sure that also facilities in Asia can start up running.

So that's sort of high level what we expect. We saw a 5% impact in Q1. We see a bigger impact in Q2 because we have three months of impact here. We will see a recovery in the second half of the year. Oliver, back to you.

I comment then on the remaining businesses of Q2. Catalysts, Conrad mentioned already, so I think that's covered. An then on Care Chemicals and A&A, Katie, I think it's important to look a bit on the underlying drivers that we also have seen in Q1 and then and that you will see also in Q2. We had a very strong volume growth in mining in Q1. We had an underlying volume growth in the oil business. Yes, there were some negative effects in the Middle East,but overall, we have seen underlying volume growth also in the oil business if you exclude Middle East and the pruning effects.

We have seen underlying volume growth in the Personal and Home Care segment. So that seasonality phasing and some of the effects that we saw in Q1, we would expect the underlying growth that we have seen to continue into Q2 and then especially also the pricing measures that we're taking right now to kick in, then in Q2 already. And then for A&A, also here, we had some underlying growth drivers in Q1. We had a very strong flame retardants business in the first quarter. And that we expect to continue also in Q2. The renewable fuel in the U.S. that picked up towards the end of the first quarter. With the new legislation now in place in the U.S., we expect there also a recovery in the second quarter. So actually here, we will see some positive momentum on those areas. And then Catalysts assets Conrad commented already on it. Q2 will also see some of the effects that we saw towards the end of Q1.

The next question comes from Christian Faitz from Kepler Cheuvreux.

I have 2 questions, please. I mean first of all, again, on the Middle East and your Catalysts business. I mean, let's assume that all these 44 plants were, so far, you are in are coming back on stream at the same time or want to come back on stream at the same time. Would you actually be able to service them and deliver them at the same time? Or how does it work? And then the second on Lucas Meyer, how has the business developed within Care Chemicals? Are we still seeing EBITDA margins north of 40%? Or is that business also a bit impacted by consumers trading down?

Yes. Okay. Thank you, Christian. Let me first quickly comment on Lucas Meyer. So it's now fully integrated into our Personal Care segment. So we actually are not so much commenting on it in granularity as we did before. But I will say if you look at margins, if you look at the growth in that business, that's holding up very well. In general, what you see is a downtrading, and luxury brands are suffering from it. But if you look at this Premium segment for basically anti-age creams and haircare, demand for that is holding up very well, and there's a very loyal customer base for that.

Then to your question on the Middle East and the 44 plants that are in force majeure shutdown, let me once again say, more than half of them is actually sitting outside the Middle East and that's primarily in Asia because of feedstock shortages. What we expect in terms of the ramp is that as the Strait of Hormuz opens, feedstock becomes available for customers that are now shut down in Asia. Finished product can move out for customers that are shut down right now in the Middle East. I will say only one out of these 44 plants has physical damage. That is actually, we're very fortunate that the physical damages to plants have been very limited.

So we think that in the Middle East also, we will see a ramp-up, which very much depends on logistics availability. So Q3 will still be a challenge, primarily because of ships not being there yet in the Middle East. And ships still need to sail to Asia to supply them with feedstock. I think the full recovery we'll see in Q4, we have actually visibility on the orders, and we actually have a quite a significant part of the orders already produced. So we're not expecting ramp-up issues in the sense that we cannot supply. I think logistics gonna be more challenging. No, I think the big -- the key message here, Christian, is that this is not a structural setback for our Catalysts business. It's a delay of orders primarily that will actually see a recovery in the second half.

There's one other element which I do need to mention and that is that actually the business that's now shut down in the Middle East and partly in Asia is to a large extent substituted through increased run rates with customers in Europe, with customers in the U.S. What we see is a lot of requests from customers to delay, for example, their shutdowns. They want an extra year or so out of their catalyst because the demand is so high. Their margins are so good at this moment that obviously at some point will also lead and result into better refill activity. So that's why overall we're confident that this is a 1-year effect and that we should see a full recovery, into next year.

Okay, great. Good luck managing your business in these challenging times.

The next question comes from Thea Badaro from BNP Paribas.

Two from me, please. The first one is on Care Chemicals. You mentioned an underlying volume growth of 3.5% in the quarter. What areas of the portfolio exactly that you see volume momentum in? And how likely it is to have been impacted by prebuying in your view?

And the second one is maybe a longer-term question on the A&A division. Your EBITDA margins have been quite volatile from 1 quarter to another. So considering the work you've done on margin management, what would be a normalized level of margin for this division?

Thank you Thea, for these questions. I think in terms of the precise volume breakdown in Care Chemicals, Oliver, if you can take that, including the question on on pre-buying. And I'll provide some comments on A&A. Yes, so what you see is in terms of the EBITDA percentage, historically it has been actually indeed quite volatile. I will say that what we've done is a lot of improvements, particularly also on the cost base of that business. And what you see is for the quarter, our ability to actually continue profitability at 18.6% EBITDA margin from last year, even though the revenues were down 3%, I think, is a big compliment to the business and the management. Because what they do is they've been very diligent, I think, in the recent periods on their cost management, and they've also been very diligent on margin management.

So there was a bit of a negative pricing in Q1, but the raws basically came down a lot, a lot more. Maybe one final comment on A&A, because we did see overall revenues down actually, rounded by 3% in local currency. The outlook for the year is actually very positive. So what you see is, at the moment, a big pickup, particularly for biodiesel, diesel based on renewable feedstock. You see a big pickup for sustainable aviation fuel. Basically, the margins obviously are very significant for that industry right now because they haven't seen the same amount of feedstock price increase that normal diesel and kerosene have.

We see also that right now the increased renewable targets by the EPA in the U.S. have been formalized. We saw a pickup of the business in Adsorbents already towards the end of the quarter. We are actually quite positive on the Adsorbents business moving forward. Final comment on flame retardants, we also saw strong growth. Interesting to learn that actually bromine is in short supply at the moment, 60% to 70% of the world's bromine comes from Israel and Jordan. You see that the brominated flame retardants were short in supply. We obviously benefit from that. Luckily we're not in brominated products. We have one of the only alternatives available in the market for it, not only a much better sustainability profile, but also not dependent on this bromine supply.

Oliver, perhaps you can comment on the volume breakdowns in Care Chemicals?

Sure. Hi Thea. Volumes in Q1, we actually grew in volumes in almost all segments underlying in Care Chemicals with that 3.5% underlying volume growth that we were also mentioning in the speech and the presentation. Except for crop, where we were trading over a very strong previous year, all segments underlying were growing in volumes. In personal home care it was especially as I mentioned before, in the healthcare environment. And in mining we have been growing significantly with customer expansions and also due to the fact that we have very specialized products there that where we have seen significant volume growth actually in the first quarter.

So it's really across all segments that we have seen that volume growth in Q1. Going forward, of course, what we're going to see is with the price increases that we are taking now across the board, there will be a dynamics in terms of pricing going up and volumes being affected by that, no doubt. Q1 has been extremely strong on underlying volume growth.

The pre-buying, Oliver?

Yes, sorry. Prebuying that was more limited for us in Care Chemicals. We have seen a little bit of prebuying in Personal and Home Care and also in industrial applications, but that was not a significant contributor in the first quarter.

Next question comes from James Hooper from Bernstein.

I have 2, please. First one is about going back to Catalysts, about some of the long-term effects, some are in the market saying that not all the capacity that's declared force majeure will come back and that you're expecting less ramp-up of new capacity in the future, which could affect your kind of total business and then future license growth. Do you have a view on this, about the long-term attractiveness of Catalysts?

And then the second question is around ethylene. As you've mentioned, a lot of it is in the Strait, and that's one of your largest raw materials. Have you had any issues with procurement? And while we're on this topic, is there an update on the lawsuits?

Yes. Okay. James, well, that's basically 3 questions. The last one I can be very short because there is no news on the lawsuits. On ethylene, we've been impacted by shortages. We, I think as many other companies have been impacted. I think it's very good that we have a global footprint. But particularly at one of our facilities in China. We were facing allocation, we were facing short supply of ethylene and ethylene oxide. And this is a direct result of Naphtha shortages in China because of the crude feedstock not arriving from the Middle East.

So the answer is what you see is ethylene runs flat out in Europe, flat out in the U.S. right now. So the companies in that sector are seeing strong volumes right now, high capacity utilization rates. The reason for that being that the part of the ethylene production in the Middle East is shutdown, and part of it in Asia is capacity constraint. Now, to your first question is this -- what are the long-term effects of this and is there now a structural change in the industry? Well, what we can say is that the plants in the Middle East actually are very competitive plants. They will start up at the moment that they can start shipping their finished products out of the Strait of Hormuz, the minute that their feedstock runs smoothly. And only 1 out of 44 customers on force majeure has structural damages, so I think you will see a recovery here.

You also, I think, will see the recovery in Asia. I think there is temporary relief for some of the European players because they see less imports coming out of China. But this -- the moment that feedstock supply is back up and running into Asia, we are back to the prior situation, I will say. But this is really a long-term effect in terms of energy security and energy supply, particularly for Europe, particularly for China. This reinforces actually for both regions the need for an energy transition. As you are aware, we are very well positioned for that as a company.

The next question comes from Angelina Glazova from JPMorgan.

I just have one question regarding the price increase actions that you mentioned that you were going to do to offset raw material cost inflation. If you could just remind us how that process is structured and to what extent you could do through the clauses that are already in your contracts with customers for raw material cost indexation and to what extent you might have to go out directly to customers with price increases. For the latter, could you confirm if this is something that you have already initiated? And how do you expect that process to develop? And then secondly, do you think you will be able to offset this inflation pretty much in real time? Or there is a possibility that there is some lag in how price increases might come through versus the inflation?

Sure. No, it's an extremely important question in the current environment. I will say this process within Clariant is extremely well structured. So we literally have visibility, pricing visibility at an SKU sales rep client combination. And we are reviewing this. Actually, there are daily reviews right now of pricing. So this value-based pricing, what we have with our customers, and passing on the complete extent of raw materials, freights, and energy costs is actually in process. And we see it. We have begun it already. We see it already if we look at the April numbers where we see positive pricing in all of the business units. Maybe just a broader comment as far as phasing and timing. Where we have our value-based pricing, we start this immediately. You will see the results in Q2, as I mentioned.

And where we have formula-based pricing, there is typically a delay. These are contracts that, for example, can refer to the monthly contract price for ethylene. Typically there's a one month delay, sometimes up to a quarter delay. Fortunately, the formula-based pricing is isolated to only smaller part of the business. It's roughly 40% of the Care Chemicals business, primarily in Oil Services and in Mining Solutions. So here you see a delay in the pricing going up. But the rest of the business, we go up right away. But overall, we think that despite some of the delays that we can fully offset, and that's also based on the fact that we have still obviously lower priced inventory in our plans, and that compensates for some of the delays on the inflation compensation.

The next question comes from Jaideep Pandya from On Field Investment Research.

First question, sorry to ask again, but on Catalysts, just curious your growth in Q1, you indicate ethylene growing sort of low double digit and properly naturally not growing low double digits. So what sort of -- what's the dynamic between ethylene and propylene in your opinion? And then sort of a related question to what has been asked in the sense that with all these force majeures, when there is a restart, how is typically the ordering pattern. Do you typically get the same level of volume for the refill or generally, is the volume a bit higher or so? So curious on that.

And the second question is around the top business in Care Chemicals. You guys are generally a good lead indicator of how the market is doing. So what have you seen in the market given all the disruptions in the value chain and the fertilizer cost inflation in terms of volume and sort of what is the outlook with regards to that? And then Conrad, just a last question. I think this was a topic discussed a bit earlier as well, but like when you think about industry consolidation, what pockets of your portfolio is where you feel that bulking up in a material size would make sense for Clariant strategically?

Okay. Sure. Clear. So 3 questions. Well, the one on crop, I think Oliver can make a deeper dive on crop. I'll take the one then on Catalysts and your specific question on what we see specifically with ethylene, propylene and refill levels. Yes, I think, if you look at ethylene, propylene, propane to propylene as well, we're dealing with large orders, so I think it's important to state that a result in 1 quarter doesn't mean that then actually there's certainly a different trend. So if you say you see actually that our ethylene business was up low double digits in Q1, but that is basically a few big orders, in particularly one, large one on precious metals that move that.

In general, what you see right now, and I think that's the bigger picture, if you look at refill and what will be the order pattern after startup again, when these companies go out of force majeure. What you see right now for our refill business is that Europe has actually capacity util rates of 85% -- 80%, 85% overall. The U.S. is even as high as 95%. So if you look at the refill, clearly the consumption at the moment is higher in North America, higher in Europe, and factories are shut down right now in the Middle East and parts of China.

What you will see in a situation after the Strait of Hormuz is opening and after all the feedstock shortages are resolved and plants are up and running in the Middle East again is, we will be back to the prior situation. There is no structural change here. We will continue to see the U.S. being energy advantaged, particularly on ethylene. You will see continued some challenges in Europe, primarily because of the high cost of energy. So in terms of refill business, we expect a full recovery into the next year. We expect some changes by region, but over time these will then actually smoothen out. Yes, in terms of industry consolidation, your question, Jaideep, which part of our business is sort of most exposed to that?

I think it's important to note that we have typically number 1, number 2, sometimes number 3 positions, very strong market positions already. But it's also fair to say that Catalysts is consolidated already quite a bit. You see the same at a segment level in the Additive business where we see more fragmentation is in Care Chemicals. So if there's industry consolidation ahead, I think certainly we would like to participate in Care Chemicals, and that's what you've seen in recent years with the Lucas Meyer acquisition, nice bolt-on coming in, strengthening our cosmetics business. The bio-based surfactants out of India, Indian Glycols, the Beraca cosmetic ingredients business in Brazil. We did three bolt-ons already in this sector, and if there's any opportunity moving ahead, we definitely like to participate.

Oliver, if you can provide your insights also on crop?

Yes, Jaideep. Let me start, maybe a bigger picture on the crop market. I mean, what we're seeing this year overall, of course, is tightens P&Ls of the farmers with the commodity prices that we see on the one hand on their sales side, so to say, and then the input cost inflation on energy and other input costs that they have. So P&Ls are quite tight on a farmer basis. The second bigger thing that we're seeing, of course, is different flows of chemicals than in the past. When you think about China, U.S., China, Brazil, that's also influencing the market and crop at the moment.

For us, that means, I mean, we are a supplier of all the big crop chemical companies in the world. We are working with them on innovative products and that's where we create the value and where we need to drive all our volumes, being in these innovative products, providing our solutions, pricing for it in the current environment, and with that drive, volume and pricing going forward in crop. That is where our opportunity lies and this is where we are obviously have the teams working on. Maybe that gives you a little bit of context around the crop market and our positioning in it.

And the last question comes from Tristan Lamotte from Deutsche Bank.

Two questions. The first one is I'm just wondering if we come back a bit on phasing in Q2. And I was wondering if there are any items you think we should consider in particular in Q2 versus Q1? And linked to that, given you're guiding for around CHF 680 million for full year, is it fair to say that if the war continues and isn't an H2 recovery versus H1, then there might be some risk to guidance? Just wondering how you'd frame that.

And then second, I'm just wondering, you mentioned some feedstock shortages. I'm just wondering if the war continues again, is there a risk of further feedstock shortages and how large do you think the kind of exposure is there?

Okay. Thank you, Tristan. Two important questions. Oliver, if you could comment on the guide and the phasing by quarter. I will make some comments on feedstock and further sort of potential developments. I think it's important, Tristan, to note that the basis for our guidance is actually a reopening of the Strait of Hormuz by the end of June. If that were not to happen, then actually you have a much more challenging scenario on feedstock because what you see is now there is shortages in Asia. If actually the Strait of Hormuz would not open by midyear, you will see actually shortages in Europe as well. And that would obviously result in also higher oil prices and another wave of inflation.

This is not what we have as our base scenario. This is -- if you look at peers in the chemical industry, I think we're all aligned on the scenario that we should see a reopening by the end of June. But in a sort of a dark scenario, the Strait of Hormuz remains closed and that would result in higher oil prices, higher raw material prices, but also feedstock shortages. And that's obviously a different scenario, but it would be a different scenario for many companies then.

Okay. Tristan, then in Q2 and half year, 1 half year 2 dynamics. It goes a little bit in line with what I said before, in Care Chemicals, we see some underlying strength in some of the segments. And then the phasing that we usually see in Q1 and Q2 also of the seasonal business, so I mean, we are positive on growth for Care in the second quarter with these drivers pricing kicking in. Then obviously, more than what we saw at the beginning of the year with the dynamics that we're seeing in input cost inflation is now the strong pricing activity that Conrad was mentioning before.

For ANA, what you see in the second quarter then Adsorbents North America picking up the continuation of the flame retardants growth where we have seen strong momentum in the first quarter. So also here, growth in A&A in the second quarter. And then with Catalysts that indeed, with the effects that we saw in March. We see a weakening second quarter in the Catalysts business. And then overall, then the recovery in Catalysts in the second half, a continuation of Care in the second half that should then bring us into the outlook of flat growth and around 18% margin. So that's sort of the dynamic that you're going to see. A stronger second half, obviously, on the margin and the growth side given by the Catalysts' effects.

This is Andreas speaking. So no further questions. So this concludes today's conference call. A transcript of the call will be available on the Clariant website in due course. The Investor Relations team is available for any further questions you might have. Once again, thank you for joining the call today, and goodbye.

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.

Ladies and gentlemen, welcome to the Clariant Fourth Quarter Full Year Results 2025 Conference Call and Live Webcast. I am Valentina, 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 Andreas Schwarzwaelder, Head of Investor Relations. Please go ahead, sir.

Thank you, Valentina, and ladies and gentlemen, good afternoon. My name is Andreas Schwarzwaelder, and it's my pleasure to welcome you to this call. Joining me today are Conrad Keijzer, Clariant's CEO; and Oliver Rittgen, Clariant's CFO. Conrad will start today's call by providing an update on the progress we have made on our purpose-led growth strategy and a summary of the full year 2025 financial highlights and savings programs; followed by Oliver, who will guide us through the Q4 and business unit results; Conrad will then conclude with the outlook for the full year 2026.

There will be a Q&A session following our presentation. At this time, all participants are in listen-only mode. I would like to remind all participants that the presentation includes forward-looking statements, which are subject to risks and uncertainties. Listeners and readers are therefore encouraged to refer to the disclaimer on Slide 2 of today's presentation. As a reminder, this conference call is being recorded. A replay and transcript of the call will be made available on the Investor Relations section of the Clariant website.

Let me now hand over to Conrad to begin the presentation.

Thank you, Andreas. 2025 was a year that demonstrated the success of our transformation journey. The progress we've made over recent years is bearing fruit, with our purpose-led growth strategy proving its strength through effective execution.

Built on 4 strategic pillars: customer focus, innovative chemistry, leading in sustainability and people engagement, the strategy reflects our integrated approach to creating value for all stakeholders.

On our first pillar, customer focus. The execution of our commercial excellence programs delivered further improvement in customer satisfaction as indicated by the Net customer Promoter Score, cNPS. In 2025, this cNPS increased to 50 versus 45 in 2024, with the company receiving outstanding scores for product quality, technical support and customer service. Overall, this score placed Clariant in the top quartile amongst peers.

Our local-for-local strategy has continued to help us to weather geopolitical challenges and tariffs. We serve our customers to a very high degree based on local manufacturing and local raw material sourcing.

We successfully accelerated the rollout of CLARITY, a cloud-based service platform designed to optimize catalyst management and performance monitoring. It offers 24/7 real-time operations data so that customers can manage their plants more efficiently. By the end of 2025, CLARITY utilization has almost doubled to over 220 customer plants and over 800 users in 38 countries.

And finally, differentiated steering, which ensures that we allocate resources strategically. Each business segment has its own strategic mandate to optimize value creation. The restructuring and capacity expansion actions taken in our Additives segment resulted in successful turnaround with improved sales growth and better margins.

In our second pillar, innovative chemistry, we demonstrated a strong improvement in innovation sales, reaching 18.8%, marking a significant step-up from the 16.9% recorded in 2024. This trajectory reflects the strength of Clariant's innovation portfolio and execution. We maintain our commitment to research and development with sustained investment at 3% of revenue in 2025.

The products from our innovation pipeline are growing faster than the rest of our portfolio. We will continue to intensify supplier partnerships to co-develop innovations meeting the highest environmental standards. This dedication to innovation resulted in over 30 awards and recognitions received throughout the year from customers like L'Oreal, Unilever and Schneider Electric and various industry associations.

2025 marked another year of great progress in sustainability leadership. Clariant's greenhouse gas emissions reduction targets that were originally announced at our Investor Day in November 2024 were reviewed and approved by The Science Based Targets initiative in 2025. By 2030, Clariant is committed to reducing absolute Scope 1 and 2 greenhouse gas emissions by 47% and absolute Scope 3 greenhouse gas emissions by 28% from the 2019 base year.

In 2025, Scope 1 and 2 total greenhouse gas emissions fell to 0.43 million metric tons in 2025, a decline of 11%. The main driver for the greenhouse gas reduction in 2025 was a further switch to green electricity. The share of renewable electricity increased from 69% to 76%. The total indirect greenhouse gas emissions for purchased goods and services, Scope 3.1, were 6% lower to 2.4 million metric tons in the last 12 months.

As a result of consistent progress over time, credible targets, verified data and clear accountability, we achieved top leadership level scores across all environmental categories of the Carbon Disclosure Project, CDP, the most widely used environmental disclosure platform globally. Ranking in the top 1% of all companies evaluated worldwide, Clariant was awarded A in climate change and forests and A- in water security. We are convinced that the transformation towards more sustainable business models will not reverse. Companies that stay on the course will shape the future and gain enduring competitive advantage.

And finally, people engagement, where we increased our employee Net Promoter Score, eNPS, to 37 in 2025, up from 34 in the prior year. I'm particularly pleased that participation rate of our employees further increased to 88% and our employee engagement came in at 87%, which positions us in the top quartile compared to industry peers.

Our safety performance also was top quartile of the chemical industry globally. Clariant recorded a Days Away, Restricted, or Transferred rate of 0.13, down from 0.17 in 2024. This reflects our high awareness and continued commitment to safety, training and accountability. These achievements are thanks to the hard work of over 10,000 Clariant colleagues across the globe who are committed to our purpose-led growth strategy and who delivered strong results in 2025.

We delivered sales of CHF 3.9 billion, representing a flat performance in a challenging macroeconomic environment. We improved our EBITDA margin before exceptional items by 180 basis points to 17.8%, driven by the successful execution of our performance improvement programs. This is the third year in a row where we have delivered strong EBITDA improvement, both in absolute and in margins.

I'm particularly pleased with the 42% cash conversion rate we achieved in 2025. This represents a 10 percentage point improvement compared to 2024, already exceeding our medium-term target of 40%. Our performance in 2025 enables us to propose a stable distribution to shareholders of CHF 0.42 per share.

Now, moving on to more details relating to our financial performance for the full year 2025. We delivered sales of CHF 3.9 billion. This represents a flat performance in local currency, with the reported figure impacted by a 6% negative currency translation effect. We maintained pricing discipline across our portfolio in a slightly deflationary raw material environment with a year-on-year increase in Adsorbents & Additives and flat pricing in Care Chemicals and Catalysts. Organic volumes decreased by 1% across the business units. The acquisition of Lucas Meyer Cosmetics had a positive scope impact of 1%.

Turning to profitability. We had a strong overall performance with 180 basis point improvement in EBITDA margin before exceptional items versus the full year 2024, driven by our performance improvement programs and cost productivity across all business units and the corporate functions. In absolute terms, EBITDA before exceptional items increased by 5% to CHF 679 million.

As I mentioned earlier, we recorded a free cash flow conversion rate of 42% in 2025. This represents a 10 percentage point increase versus 2024 and delivers on our medium-term target of 40% ahead of schedule. We were able to achieve this through effective cost and margin management, which drove an increase in operating cash flow. Higher net working capital and phasing effects were offset by disciplined CapEx management. In absolute terms, free cash flow increased by 31% to CHF 273 million.

Now turning to our Investor Day savings program. As a reminder, we expect full run rate savings of CHF 80 million from business units and corporate actions to be delivered by the end of 2027. In Q4, we achieved savings of CHF 19 million, which brings the total to CHF 50 million for 2025. This represents 63% of the total savings target with the remainder largely expected in 2026. The key measures include a headcount reduction of approximately 470 full-time equivalents across the business and corporate functions and the closure of 2 production lines and 2 sites as part of our footprint optimization.

Procurement added another CHF 22 million savings related to structural changes in qualifying alternative suppliers and implementing best practice contract management. Cost-efficient execution of the programs and phasing led to restructuring charges of CHF 63 million. This was below the CHF 75 million restructuring charges originally expected for the year.

With that, I now hand over to Oliver for further details on our business performance in the fourth quarter.

Thank you, Conrad, and good afternoon, everyone. In the fourth quarter, we delivered sales of CHF 1 billion, representing an increase of 1% in local currency versus the prior year period. Pricing was overall flat as formula-based price adjustments linked to raw material costs in Care Chemicals were offset by a 1% increase in Adsorbents & Additives and flat pricing in Catalysts. Volume increased by 1% as growth in Catalysts and Care Chemicals offset a decline in Adsorbents & Additives. The reported figure was affected by a 7% currency headwind.

Turning to profitability. Our Q4 EBITDA, before exceptional items, increased by 10%, corresponding to a margin of 17.1%. This represents a 240 basis point improvement versus the fourth quarter of 2024. Key contributions came from continued strong execution of the performance improvement program in all business units, effective cost management, a positive mix due to strong growth in Catalysts and operating leverage.

Let us now dive into the fourth quarter development by business unit, starting with Care Chemicals. Sales increased by 1% in local currency as 2% volume growth recorded in the quarter more than offset the 1% decline in pricing due to formula-based price adjustments linked to raw material costs. The reported figure was negatively affected by a 7% currency headwind.

We recorded low double-digit organic growth in Mining Solutions, driven entirely by volumes; and in Oil Services, where higher volumes were supported by slightly positive pricing. Sales in Personal & Home Care increased at a low single-digit rate, also driven by volume growth and including a continued positive contribution from Lucas Meyer Cosmetics.

Base Chemicals declined slightly despite volume growth in the seasonal aviation business as pricing declined due to formula-based price adjustments. Sales in Industrial Applications declined due to lower pricing and volumes. Crop Solutions declined, driven by lower volumes versus the prior year period when a restocking effect led to strong growth.

We recorded an EBITDA before exceptional items of CHF 96 million, representing a 7% increase compared to the prior year. This translated into an EBITDA margin of 18.3%, a 220 basis points improvement, driven by increased operating leverage and a strong contribution from the performance improvement program.

In Catalysts, sales increased by 5% in local currency, a result of materially higher volumes in Ethylene versus the prior year period. The reported figure was negatively affected by a 7% currency headwind. Sales in ethylene catalysts recorded the strongest growth at a high double-digit percentage rate with some first fill business coming on top of the regular refill cycle, followed by Syngas & Fuels. This more than offset lower sales in Specialties and Propylene, which both declined at a double-digit percentage rate against a strong comparison base in the prior year.

EBITDA before exceptional items increased by 22% to CHF 62 million, representing an EBITDA margin of 23.4% versus 18.8% in the prior year. This was driven by effective price and cost management and the contribution from our performance improvement program.

Moving to Adsorbents & Additives. Sales decreased by 3% in local currency and by 8% in Swiss francs as slightly higher pricing was more than offset by lower volumes. In the Adsorbents segment, sales decreased at a low single-digit percentage rate as stable volumes in APAC and EMEA were more than offset by a decline in the Americas, which were impacted by delayed U.S. renewable fuel regulation.

In the Additives segment, sales decreased at a mid-single-digit percentage rate as growth in Polymer Solutions was more than offset by lower volumes in Coating & Adhesives, mainly attributable to the construction market.

EBITDA before exceptional items decreased by 9% to CHF 30 million with an EBITDA margin of 12.6% at a similar level to the prior year. The positive contributions from the performance improvement programs partly offset the impact of low volumes.

And with this, I close my remarks and hand it back to Conrad.

Thank you, Oliver. Let me conclude with our outlook for 2026. For 2026, we expect macroeconomic challenges, uncertainties and risks to remain. According to the latest assessment of Oxford's economics, the global GDP growth projection for 2026 has increased slightly to 2.8%, driven by AI investments. The chemicals industry forecasts predict a reduction of chemical output growth from 2.9% in '25 to 1.9% in '26, driven by slower growth in China from 7.4% to 2.7% and the U.S. turning negative to minus 0.6% compared to a positive 0.6% in 2025, while Europe expects some improvement to positive 0.5% after negative 0.4% in 2025.

Looking at our addressable market, we expect 2026 market growth for Clariant of around 1%, considering our geographic footprint. We remain focused on delivering profitable growth and executing our self-help actions. That said, there are some positive signals in certain end markets. Growth in mining and electric vehicles is expected to continue. We also see continued growth in data centers, a recovery in consumer electronics supporting our Additives business and an improvement in renewable fuels demand supporting our Adsorbents products.

We, therefore, expect sales in local currency to be around flat as we look to offset a negative top line impact for the group of 1% from portfolio pruning in the prior year. We expect slight growth in Care Chemicals on an underlying basis.

And in Adsorbents & Additives, while sales in Catalysts are expected to be at levels similar to those in 2025, we expect to further improve our EBITDA margin before exceptional items to around 18% in 2026 with the CHF 80 million performance improvement program expected to deliver most of the remaining cost savings during the year.

Clariant expects to continue to achieve a free cash flow conversion of around 40% in 2026. We remain committed to delivering our medium-term targets, assuming a recovery to normalized trading conditions in 2027.

With that, I turn the call back over to Andreas.

Thank you. Thank you, Conrad and Oliver. Ladies and gentlemen, we are now opening the floor for questions. To ensure everyone has a chance to participate, please ask no more than 2 question per person. Thank you for your cooperation. And Valentina, please go ahead.

[Operator Instructions] The first question comes from Thea Badaro from BNP Paribas.

Two from me, please. We are seeing positive data points in both chemical specific and industrial surveys. So, I'm curious to know if that optimism is also being reflected in your conversations with customers? And if so, are there any end market in particular?

And then my second question is on Care Chemicals. You're guiding for slight growth for the division in 2026, while many peers are expecting actually a flattish year overall due to tough comps. Can you elaborate on where exactly you're getting more positive?

Okay, sure. Yes. So, your second question was on Care Chemicals, where you say that many peers are guiding flat growth is what you say, right?

Yes.

Yes. Okay. Clear. Yes. So, first on the overall market outlook. So, what you actually see overall is less growth in chemical production rates globally than last year. I mentioned them in our speech, where actually markets are expected to slow down, particularly in China, where we had strong growth last year that really will be significantly slower this year. And in the U.S., where we had positive growth -- slightly positive growth this year, markets will turn negative next year, amongst others, also due to trade actions.

In Europe, we were slightly negative this year. We may turn slightly positive. But overall, I wouldn't characterize this as an optimistic outlook in chemicals. So, if you look, what we have in the industry is operating rates typically between 70% and 80%. That's still historically low. And a recovery is typically not expected for this year yet, but more 2027.

So, in '27, there is actually a general consensus that there should be a recovery. So, if you look at recent years, consumer spending has not been sufficiently on durable goods or semi-durable goods. There was more spending on services and recently on AI. So, this switch back to durable goods spending and semi-durable goods spending that is really expected at some point in time. There's a natural replacement cycle to products. But for this to happen, we first need better consumer confidence levels, which still are generally low considering geopolitical and trade tensions.

More specifically to Care Chemicals, what we say here is actually that in our outlook overall around flat, there's underlying growth because last year, we had a fair amount of pruning in Care Chemicals, which had an effect of roughly 2% of revenue in Care Chemicals. As you are aware, we closed a site in Argentina. We also shut down a plant in Europe for EO derivatives. And with that, when we're giving an outlook of around flat for Care Chemicals, underlying, that means actually that there's growth also in our outlook.

The next question comes from Christian Faitz from Kepler Cheuvreux.

Congrats on the results. Two questions, please. First of all, if I look at weather conditions, both in Europe as well as in North America in Q1 so far, I would figure your de-icing business must have been rather robust. Can you confirm this? And if so, possibly put a number on this?

And my second question is on Catalysts. You seem to be a bit less optimistic on your Catalysts performance for '26 after a rather robust Q4, particularly on the ethylene side. Why is this the case? Would you see a sequential slowdown again?

Yes. Thank you very much, Christian, for the question. So, on Care Chemicals and de-icing, we had a strong start. You saw that also, I think, in the press, also one of the airports in Europe almost running out of de-icing material. But it is too early to call it. It really also depends on how March will come in. So we can't really give numbers yet.

As far as Catalysts and our outlook for this year, yes, we basically signal that we are bottoming out. I think the recovery in Catalysts really requires a recovery in new build. So, if you look right now at our order book and also what we basically saw last year is still of the orders, it's by and large, a refill business. So, the new build has dropped to roughly 10% of our orders. For us to really see a big recovery in Catalysts, we should see the new build coming back in.

That is visible in the order book, not this year. But if you look at '27, '28, '29, we are seeing actually a pickup in new builds, particularly in China. There is, let's say, a small wave of new build coming in there ahead of their peak carbon year in 2030. So, we're not seeing a recovery yet this year, Christian, we are bottoming out, but we are actually quite optimistic for the years after that, then we should see a recovery in Catalysts.

The next question comes from Christian Bell from UBS.

I've got 2 questions, please. My first one is, how should we think about the earnings phasing in 2026? Are you sort of expecting a softer first quarter, then a stronger second half as savings and volumes build? If you could provide a loose guide for first quarter '26, that would be really useful.

And then the second question, if you could just help me, I'm a little bit confused on your 2026 guidance. So, you're basically guiding to top line down 3% to 5% on currency, which is similar to the outcome in 2025. But last year, you still expanded EBITDA margins by 180 basis points with CHF 50 million of cost out with another CHF 30 million planned for 2026 and a similar top line result. What's preventing any margin improvement this time around? Like what's the difference from 2026 versus 2025 that stops you repeating that same margin progression?

Okay. Christian, I'll take the first question on phasing, and Oliver will provide some more granularity on your second question. As far as the phasing throughout the year, I think we should keep in mind that we had last year actually a strong first quarter. Other than that, if you sort of ignore the year-on-year comp, we are seeing a fairly normal pattern throughout the year. It's not that we see a significant recovery in H2 versus H1, like we sometimes have in other years in the outlook.

What is important, maybe some specific comments in Care Chemicals, we see at the moment, nothing unusual. De-icing is obviously playing a role there in how Q1 will come in. In Catalysts, we are comparing against a strong quarter last year. But normally, we always see a weak Q1 as we also saw last year after a strong Q4. So, there is that sequential effect.

In Adsorbents & Additives, we are seeing a somewhat weaker start in Adsorbents where we still are waiting for the regulation for renewables to kick in. The EPA has set ambitious targets for renewable diesel and SAF, but these need to be still endorsed by Congress. And because of the government shutdowns, there's a delay in that. You see that the market expects these increased targets to kick in because RINs prices are going up, but we're not seeing that in our numbers yet. Other than that, I think there's nothing here to comment.

Yes, Oliver, to you.

Christian, yes, let me comment on your second question on margin progression year-over-year. I mean, first of all, as you have seen, there's a strong progression from '24 to '25 with 180 basis points of improvement, which brought us now to 17.8%. And that was driven by the performance improvement programs, the cost productivity and effective price management, as we said.

So of course, when you -- and we had a flat top line at this. For '26, we are guiding for now a second year of flat top line with the effects that we alluded to before, the pruning that needs to be compensated and the soft market environment. And again, we are executing now on the performance program and delivering further savings in '26. At the same time, of course, in '26, like in '25, we need to compensate for the inflation that is happening in the cost structures that we do have. And we guided for '26 that we have 3% to 4% inflation in the cost structure.

We have the savings from the savings programs plus other productivity measures that we're taking. And hence, we guided for around 18%. So -- of course, the ambition here is to make further progress also towards our medium-term targets. But as we alluded to, for '27 that it requires also a bit of a rebound of growth that we then bring it really in.

Okay. It just seemed like a similar setup in 2026 with a similar level of cost out. So, you're basically saying that your underlying inflation -- your underlying cost inflation this year is much stronger than it was -- or you're expecting it to be much stronger this year than it was in 2025?

No. I mean, there is another year of inflation. I think, Christian, the point is more -- we did 180 basis points last year where we set the organization on a leaner base. And obviously, the savings were also a bit higher in '25 versus '26, and that's partially driving that effect.

The next question comes from Katie Richards from Barclays.

I had a question on the use of capital and the balance sheet. You were on Bloomberg this morning, Conrad, and mentioned that Clariant would be open for bolt-on acquisitions potentially on the scale of Lucas Meyer. But you're also, at the same time, targeting CapEx potentially as low as CHF 150 million. So, a few questions on this then. With leverage coming down and proceeds also coming from Stahl, which end markets would you be interested in exploring further? Could you also remind us how much you're spending annually for maintenance purposes, please? And finally, how are you looking to balance organic growth versus paying a premium to grow these?

Yes. Katie, maybe first to clarify on comments made this morning on the calls. Yes, there's nothing new. So, we're always open for bolt-on acquisitions. But we also said this morning that our first priority is always organic growth and margin improvement. And then if we can complement that with the right bolt-on acquisitions, we're very open to that. And we defined as the right ones, acquisitions that really fit to our core segments and that provide real synergy. And then I mentioned Lucas Meyer as a great example of an acquisition that basically fits those criteria in the past. But that's not to say that there is right now a target of that size available. So just to be clear about that.

But overall, people do expect with limited growth perspectives right now in the chemical industry that there should be an increased level of potential consolidation ahead of us. And what I said this morning is it's important that we obviously participate in industry consolidation if and when that happens.

As far as CapEx, maintenance, that's fairly steady at roughly a level of CHF 100 million a year. You see the big reduction in CapEx for us from the fact that we haven't actually added to our footprint, particularly in China in recent years. And now actually, we're very well set up there. So, keep in mind, in recent years, we invested CHF 80 million in a new catalyst plant that came up on stream.

We invested CHF 80 million last year in a new surfactant plant in Daya Bay that came up on stream we invested last year. We completed actually the investment of 2 lines for flame retardants. That was another CHF 100 million. So, if you look at those items alone, that explains why the CapEx envelope is structurally lower than it was in the past. So, we haven't cut any corners on maintenance CapEx. So, no worries there. That's at a fairly steady level around roughly CHF 100 million per year.

The next question comes from Michael Schaefer from ODDO BHF.

On one hand -- first one, I want to come back to your Catalysts outlook for '26. So, as you said, you guide for flat local currency sales into '26. So, nevertheless, you also reported on some greenfield projects helping you to record what we haven't seen for quite some time, this kind of EBITDA level in the fourth quarter. And I think also on the full year, the 20.8% margin was rather unique over the past 4, 5 years, so to say. So, I wonder how should we think about mix effect into '26 and how margin is progressing in the Catalysts segment? This would be my first question.

And the second one is on the cash flow in '26. You built up some working capital, quite sizable, in 2025, maybe a bit as a surprise here, talking also about phasing effects. So how should we think about the measures you are implementing and what you expect in '26 in terms of working capital?

Yes. I will answer the question on margins and mix outlook for Catalysts and Oliver will provide some clarity on working capital movements. If you look at Catalysts and the performance that we saw, we're very pleased that indeed, new build that is out there that we're getting it. So that is, I think, very positive. So particularly on ethylene, there is actually a large project in Europe that is starting up actually early next year. And we see actually the first fill order for that coming in. So that's very positive.

We also saw -- if you look at Syngas & Ethylene, we saw actually that both of these segments are performing well on refill. So, we have a full share on new builds. And if it's about refill, we think that on -- particularly on Syngas, we've gained some share. So, if you look at our margins, they are reflecting that as well. So, there is the very positive effects from the cost-outs also in Catalysts, but there's also underlying a structural improvement in mix. And what you see is in Catalysts with rising prices for metals, it is not an easy environment. You may have seen the profitability reports of some of our competitors that show EBITDA margins significantly down. So, we're actually very pleased with the results in Catalysts with a 21% EBITDA margin for the year.

But to further step up the margin in a significant way in the year ahead of us, that is still requires a pickup -- that still would require a pickup in new builds. And that is not yet what we see for this year. We see that more for '27.

Michael, on working capital and cash, let me first start from the broader picture, cash. I mean, we are very satisfied with the cash performance overall that we had in '25, 10 percentage points of cash conversion, up versus previous year. CHF 80 million better operational cash flow performance. And then indeed, we had a bit of a buildup in net working capital that we then also compensated with very disciplined CapEx management.

So, that buildup in net working capital in the fourth quarter is also a bit related to the phasing of the sales pattern that we have seen in the fourth quarter. We had a very, very strong December in Catalysts, but also in Care with the aviation business. And I mean, obviously, with the payment terms that you have then on these sales, you have a bit of a buildup of accounts receivables. We also have slowed down on inventory buildup in A&A, which had an impact on accounts payable. So, we had a couple of effects at the end of Q4.

What we have done independent of that particular quarter is that we initiated a cash program in Clariant, where we structurally will look into the different net working capital levers. It's an integrated approach across the business units. It's ingrained in the target setting that we have on a segment level. So, it's a clear focus area. You have seen it also with our triangle and to say growth, margin, cash. That's what we focus on. That is what drives our differentiated steering. So, there's a focus on net working capital and to drive that down in '26.

The next question comes from Julia Winkelmann from Bank of America.

I was wondering, you finished the year ahead of schedule on your cost savings target and also achieved your cash conversion target already. Given this progress, do you plan to update your mid-term targets and perhaps also give an update on how to think about your capital allocation going forward given the stronger cash generation?

Yes, Julia, that's a great question. And we are obviously very happy with and pleased with how we finished the year in terms of our EBITDA margin being up 180 basis points and our cash conversion being up 10 points to slightly over 40% conversion now. So, where we are versus the midterm targets is that indeed, for cash conversion, we have achieved these targets already. But it's fair to say that we still have a bridge from 17.8% to the bottom range, which was 19% to 21% EBITDA margin.

I will say, we look at 3 years in a row now of improvements, annual improvement in EBITDA margins as well as absolute EBITDA. We came from 14.6%. We're now at 17.8%. That was certainly in a challenging market environment for us now to revisit the midterm targets, that's not on the agenda. We're very much focused on delivering them. So, we are very much focused to have all the levers in place to bridge towards the 19% to 21% EBITDA margin, and that is the differentiated growth strategy.

It's repositioning the businesses to more profitable segments. It is finishing the cost-out program, as Oliver has alluded to. It is -- maintain pricing discipline. And with that, we think we have the levers in place in addition to a pickup in markets that we do anticipate for '27. So, we have all the levers in place to deliver the 19% to 21%. But yes, that is -- those are actually quite ambitious targets in the current environment.

The next question comes from Tristan Lamotte from Deutsche Bank.

Two questions, please. The first is, could you maybe just run through your end markets and the trends and outlook that you see in those, so in agriculture, autos, construction, electronics, et cetera? And then, can I ask a general question about your views on the threat to European specialty chemicals companies from China? Do you still think that European chemical companies have sustainable moats in specialty chemicals? And to what extent are you seeing Chinese competition moving into specialties so far? And to what extent do you expect that to accelerate over the next 10 years?

Yes, sure. These are important questions. So, first on end markets, what we are seeing. Well, first of all, let me start with Care Chemicals. We see, in general, the consumer-facing segments with a robust demand. So, if you look at Personal Care, Home Care, that is basically low to mid-single-digit growth with a bit more growth in Personal Care in the premium segments like skin care, hair care, but then really the premium, premium products, the level just under that, there is actually some downtrading, the so-called aspirational buyers.

Home Care, very, very solid and robust; laundry, things like that. Crop Protection, we've had interesting years behind us. Last year, we had a strong year in Crop Protection, but that was really very much because the year before, we had still the destocking. So, it was also, let's say, some of the year-on-year comparisons. I think now we have a much cleaner comparison, and we should more trade in line with historic levels where we sort of slightly outperform GDP levels.

Oil and gas, it's basically a relatively modest outlook right now. And oil prices, now they're up to $70 because of the geopolitical turmoil in the Middle East. But in reality, there's plenty of supply and more so than demand. So, it's not an environment with high oil prices or a lot of investments that we are seeing there. Mining continues to be positive, especially for items like copper and still lithium.

Catalysts, yes, we still globally run 70% to 80% util rates. And for us, really to see new builds kicking in, we need to go first to higher utilization levels. I did mention China as one where '27, '28, '29, we are seeing new builds coming back in. But for this year, it is really a bottoming out year in Catalysts in our forecast.

And finally, Additives and Adsorbents, what we see actually is relatively weak demand if you look at electronics and particularly smartphones, but that was already the case last year. So, actually, there's a certain level of maturity here with very low single-digit rates for growth for smartphones. PC production was actually quite nicely up last year. And we think that will continue to be relatively okay.

And finally, if you look at our Additives business, end markets like furniture, we had expected a big recovery there last year already as consumers at some point should spend on durable goods again or semi-durables, but it hasn't happened yet. And for this year, so far, we are not seeing that either. And to finish it all off with Adsorbents, this is very much for us driven by renewable diesel now, sustainable aviation fuel.

In Europe, there are the mandates in place. But in the U.S., we're still waiting for the endorsement by Congress for the new increased EPA targets, but that should come at some point in the year. So, overall, if you summarize it, it's a very modest sort of growth environment overall and with some differences by region.

Maybe specifically on your second question on China and how is this impacting Specialty Chemicals. I think there is a big difference between commodity and petrochemicals on the one hand and specialty chemicals on the other side. In China, there is significant capacity being built up in local -- in recent years for commodity chemicals for petrochemicals.

In specialty chemicals, we are not seeing that level of competition in China. I mean, this is based on IP that took decades to develop. And actually, what we see is that for our business, we make good margins in China, but there is a shift where we increasingly supply to local Chinese companies. And I think high level, the other big impact that China has is historically, Europe was exporting a significant part of its production into China, the same with the U.S. That has come down significantly, and China has become an exporter for some items, but not so much in specialty chemicals again. It's much more on the commodity side.

The next question comes from Chetan Udeshi from JPMorgan.

I just wanted to follow up, Conrad, on your comment on industry consolidation. And I'm a bit puzzled and also curious that we've not seen much happen already. For Clariant, and you've signaled openness to participate in any consolidation, but you have a very different business structure in the sense like you've got Catalysts business, you've got Care Chemicals, which is comprised of industrial plus consumer. And then, of course, you have Adsorbents & Additives. It just feels like the structure of the business is probably too complicated to see Clariant as an obvious candidate or initiator of any consolidation? I'm just curious how you think about that.

Was it a question or an opinion that you were voicing, Chetan?

It's a both. I mean, a bit of both. I think it's not just for Clariant. I'm just curious, is this a problem for the industry overall that there is no like pure-play company that is easy to buy or easy to sell, and that makes it quite complex for industry to consolidate.

Yes. No, it's an important question that you're raising. So, if you look big picture where we came from is we were a hybrid. So, Clariant was both active in commodity businesses and in specialty businesses. And if you look at the recent years, we've really repositioned the business to become fully specialty. So, if you look at the recent, let's say, 5 years, what we did is in '22, we divested our pigment business, which we clearly saw that was commoditizing. By the way, it has indeed even further commoditized. So, I'm glad that we divested that in 2022.

Actually, a year later, we divested our North America Land Oil business, which also was very much a commodity business. And if you look now, what we also did was we divested a part of our Care Chemical business, the commodity surfactants to Wilmar, and we put it in a joint venture there.

So, we've done actually quite a bit in recent years to, first of all, get out of our commodity business, but at the same time, to strengthen our specialty chemical business. So, we did a number of smaller bolt-on acquisitions. We bought the cosmetic ingredients business in Brazil with Actives. We bought the green surfactant business in India. We did the purification business from BASF for renewable diesel, Attapulgite in the United States. And last but not least, the Lucas Meyer business, which really strengthens our position in Personal Care.

So, what you see now is that we have leading positions in specialty chemicals in the segments where we compete. At the same token, what you also see, Chetan, is that we have year-on-year improved the profitability of these businesses. So, we rarely get the question asked, are you the right owner for this business as long as we just continue to improve the profitability and in fact, achieve leading profitability, both in terms of growth, in terms of margins, we have very sustainable positions in each of these segments because we are having significant market shares in the individual businesses.

So, yes, that's, I think, sort of the summary from a sort of an M&A perspective where we are, and we remain interested to continue to do bolt-on acquisitions in these businesses, but only if they bring real synergy.

The next question comes from Jaideep Pandya from On Field Research.

First question is on Catalysts actually. What do you think is the longer-term outlook like when you look at the next 3 years, considering so many capacity shutdowns that have been announced in Europe and also sort of asset rationalization in China as well. So, what do you see as a longer-term outlook in Catalysts? That's my first question.

And then the second question sort of is on the legal -- I apologize if you have answered this before or if you cannot go in details, but if you can give us some color at least on the legal situation around the ethylene cartel case. What sort of provision have you booked already? And any time line in terms of result that we could hear around this?

And then, finally, just on the consolidation point, Conrad, I mean, from -- on paper, if I just sort of ask the question differently, what Chetan was, I guess, trying to ask, the obvious candidate for increasing your size would be in Care Chemicals. So, if there is a case to be presented, are you saying you could be aggressive enough to further pursue divestments of some of the other areas to pursue increasing size in Care Chemicals?

Yes. Thank you, Jaideep. Yes. First, on your question on Catalysts and the long-term outlook, I think what is important to realize is that there has been a shift in production. So, Europe is -- has actually significantly come down in chemical production. CEFIC issued an interesting recent study that since 2022, a total of 37 million tons of capacity has been taken out of the market in Europe. That's roughly 10% of the overall capacity.

Now at the same token, you have seen a buildup of capacity in China and to a lesser extent, in the Middle East. So yes, so there is a shift. If you look at the global outlook for Catalysts, it is actually a fairly robust business, even regardless of these shifts, these regional shifts. And if you look at the long-term outlook, petrochemicals historically, globally, has always performed at or above GDP. So that is still intact. The change is actually that there are some regional shifts. And therefore, it was for us extremely important to invest in China in Catalysts in our footprint, and we're very happy with that footprint now that we also have in China to support the local growth. So, in terms of long-term outlooks, the fundamentals are still intact at a global level. But yes, there have been regional shifts for sure.

In terms of your second question on legal, yes, in terms of ethylene claims, at this stage, we cannot publicly comment any further than what we've already said. Clariant firmly rejects the allegations and will adamantly defend its position in the proceedings. And we do have substantiated economic evidence that the conduct of the parties did not produce any effect on the market.

And yes, we are in litigation, so we cannot comment further on that other than your question on the provisions, we haven't taken any. And this obviously has been reviewed with our auditor, KPMG, and they are obviously of the same opinion, and you will see that in our integrated report also explained.

The last question for today is a follow-up coming from the line of Thea Badaro, BNP Paribas.

Just a quick follow-up for me. Specifically on the flame retardant business, can you quantify the size of the data center market opportunity for your flame retardant business?

Yes. This is a very interesting question, and we just made a deep dive actually on data centers and to make sure that we capture all of the share that is out there when it's about our products. And what we are seeing is indeed that our flame retardants are benefiting from this. This is about the -- yes, our flame retardants for connectors, for switchgears, cable jackets. That is a part of it. There's also a part of it which sits in fire-resistant coatings actually, that are applied to the infrastructure of these buildings.

But finally, and this is also quite important, our Catalysts business, we are really targeting data centers here as well. And this is first from a development perspective, but we're very happy that we also commercialized now the first application where we basically have a fuel cell technology. So, we have methane. We have basically gas, then we convert it to hydrogen. And then the hydrogen basically gets converted into water and electricity. And this is a climate-neutral, if it's biomethane, a climate-neutral solution actually, for decentralized and distributed electricity generation in the right -- high quantities that are necessary.

So, there's other solutions. Nuclear is also mentioned. But particularly with the limited grid capacity, the solution will be power plants, small power plants in the United States and Europe has the same challenge. And with Catalysts, we're talking about a very interesting opportunity here, which already the first -- what we now commercialize is a few tens of millions already in revenue in the outlook that we have. The size for flame retardants combined right now globally is also in that order of magnitude. So, it is not moving the goalpost for the company as a whole, but we are seeing a nice upside from data centers.

So, thank you very much. This is Andreas speaking. This concludes today's conference call. A transcript of the call will be available on the Clariant website in due course. The Investor Relations team is available for any further questions you may have. Once again, thank you for joining the call today, and have a good afternoon.

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.

Ladies and gentlemen, welcome to Clariant's Third Quarter, 9 Months Figures 2025 Conference Call and Live Webcast. I am Sandra, 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 Andreas Schwarzwaelder, Head of Investor Relations. Please go ahead, sir.

Thank you, Sandra. Ladies and gentlemen, good afternoon. It's my pleasure to welcome you to this call. Joining me today are Conrad Keijzer, Clariant's CEO; and Oliver Rittgen, who joined Clariant as Clariant's CFO on August 1 and participating in his first results call today. Welcome, Oliver.

Thank you.

Conrad will start today's call by providing a summary of the third quarter developments, followed by Oliver, who will guide us through the business unit results and savings program. Conrad will then conclude with the outlook for the full year 2025. There will be a Q&A session following our presentation. [Operator Instructions] I would like to remind all participants that the presentation includes forward-looking statements, which are subject to risks and uncertainties. Listeners and readers are therefore encouraged to refer to the disclaimer on Slide 2 of today's presentation. As a reminder, the conference call is being recorded. A replay and transcript of this call will be available on the Investor Relations section of the Clariant website.

Let me now hand over to Conrad to begin the presentation.

Thank you, Andreas. I'm pleased to report that Clariant achieved significant growth in EBITDA before exceptional items in the third quarter of 2025 showcasing the success of our performance improvement programs and effective price and cost management in a continued challenging market environment for our sector. We delivered sales of CHF 906 million. This represents a 3% decrease in local currencies and a 9% decrease in Swiss francs. Our EBITDA before exceptional items increased by 5% in absolute terms to CHF 162 million. We delivered a significant margin improvement of 230 basis points to 17.9%, driven by our performance improvement programs as well as price and cost management across all of our business units.

Our savings program continued to support our performance in Q3. We achieved savings of CHF 19 million and booked CHF 3 million of restructuring charges in the quarter, taking our total savings to CHF 31 million in the first 9 months of 2025. As a reminder, this program is set to deliver CHF 80 million by 2027 with a significant contribution expected this year. We expect to book the total CHF 75 million of restructuring charges related to this program in 2025.

Now turning to our 2025 guidance. We anticipate local currency sales growth at the lower end of our guided 1% to 3% range due to weaker industrial production and weaker consumer sentiment. We also confirm our 2025 profitability guidance of 17% to 18% EBITDA margin before exceptional items, underscoring our confidence in sustaining our improved levels of profitability. Last Friday, Clariant's Board of Directors decided to reduce its size from 11 to 8 members. This will be reflected in the nominations for the upcoming AGM 2026 on April 1 next year. Supporting these changes, 5 current directors will not stand for reelection and 2 new independent members will be nominated as appropriate ahead of the 2026 AGM. With this proposal, the Board aligns with Clariant's rightsized organizational setup, and it optimizes independence, tenure and gender diversity. The management team thanks the departing directors for their trustful collaboration over many years.

Now moving on to more details relating to our financial performance in the third quarter of 2025. We delivered sales of CHF 906 million. In local currency, this represents a 3% decrease with the reported figure impacted by a 6% negative currency translation effect. We maintained pricing discipline across our portfolio with a year-on-year increase in Adsorbents and Additives and flat pricing in Care Chemicals and Catalysts. Volumes decreased at a low single-digit percentage rate in Care Chemicals and Absorbents and Additives, while Catalysts volumes decreased by 8% as the weak economic environment and utilization rates continue to trade below long-term averages, impacting refill timing.

Turning to profitability. As I already noted, we had a strong overall performance with a 230 basis point improvement in EBITDA margins before exceptional items versus the third quarter of 2024. In total, the business units drove a 130 basis point improvement mainly from our performance improvement programs, price and cost management. The remaining 100 basis points was in corporate, with the majority related to phasing of provisions. In Care Chemicals, lower volumes were more than offset by a positive mix effect and contribution from Lucas Meyer Cosmetics. In Catalysts, lower volumes were partly compensated by price and cost management. In Adsorbents and Additives, profitability was positively impacted by pricing and mix effect despite slightly lower volumes. Reported EBITDA increased by 14% to CHF 159 million, representing a reported margin of 17.5%, including CHF 3 million restructuring charges booked in the quarter.

With that, I now hand over to Oliver for further details on our business performance in the third quarter.

Thank you, Conrad, and good afternoon, everyone. It's great to join the call today and present the first set of quarterly results as the CFO of Clariant. I look forward to fruitful discussions with our investors and the analyst community going forward. Let us now dive into the third quarter development by business unit, starting with Care Chemicals, where we recorded a strong margin uplift despite a weak industrial market environment. Sales declined by 3% in local currency, entirely due to lower volumes. We recorded high single-digit organic growth in Mining Solutions as we were able to cater for increased demand and compare against prior year, which was impacted by destocking. Sales in Oil Services increased at a mid-single-digit percentage rate, recovering from shut-ins in the first half of this year.

As mentioned, the weak industrial market environment also impacted our industrial applications and base chemicals businesses, both recording a high single-digit decline suffering from tariff uncertainties. Finally, Personal and Home Care and Crop Solutions both declined at a low single-digit percentage rate. Regionally, sales in EMEA as well as the Americas decreased by a mid-single-digit percentage rate as destocking led to lower order volumes. Sales in Asia Pacific increased at a low single-digit percentage rate as the capacity expansion in Daya Bay, China drove local volume growth. We recorded an EBITDA before exceptional items of CHF 92 million, representing a stable performance compared to the prior year. This translated into a margin of 18.9%, representing 150 basis points improvement.

Profitability was positively impacted by the strong operational performance of Lucas Meyer Cosmetic as well as positive mix effect and contribution from the performance improvement programs. In Catalysts, we were able to drive a margin improvement in a weak demand environment. Sales decreased by 8% in local currency, entirely as a result of lower volumes versus the prior year period. Low double-digit sales growth in Specialties did not offset declines in the other segments. The weak environment and utilization rates continuing to trade below long-term averages, impacting refill timings for Propylene and Catalysts in China in particular, leading to a high double-digit percentage rate decline. Sales in Syngas & Fuels as well as Ethylene were down by a mid-single-digit percentage rate versus a strong comparable in the case of Syngas & Fuels.

Regional dynamics were driven by the refill delivery schedules of the business with sales in the Americas increasing at a high double-digit percentage rate, driven by deliveries in Propylene and Ethylene catalysts. In both EMEA and Asia Pacific, sales decreased at a high single-digit percentage rate, driven by lower sales in Ethylene catalysts in EMEA and lower Propylene catalysts in China. In the third quarter, EBITDA before exceptional items decreased by 13% to CHF 33 million, representing a margin of 19.3% versus 18.7% in the prior year. This was driven by gross margin improvement and contributions from performance improvement programs, which more than offset the impact of lower volumes. Moving to Absorbents and Additives, where we also drove a margin improvement of 130 basis points versus prior year, supported by our continued additives growth. Sales increased by 1% in local currency with pricing up 3%, while volumes decreased by 2%. By segment, Adsorbents sales decreased by a mid-single-digit percentage rate, while Additives increased by a high single-digit percentage rate.

Regionally, we recorded sales growth in EMEA at a low single-digit percentage rate, driven by pricing. In the Americas, sales decreased at a high single-digit percentage rate as growth in Additives did not fully offset the decline in Adsorbents. Sales increased at a low double-digit percentage rate in Asia Pacific, driven by volume growth in both Adsorbents and Additives. EBITDA before exceptional items increased by 5% to CHF 42 million, with a margin of 17.2% versus 15.9% in the prior year. Profitability was driven by growth and mix effects in Additives as well as benefits from the performance improvement programs. Cost efficiencies and raw materials of 5% also contributed positively.

Now turning to our Investor Day savings program. As a reminder, we expect full run rate savings of CHF 80 million from business unit and corporate actions to be delivered by end of 2027 for the savings program that we announced in November of last year. As Conrad mentioned earlier, savings achieved in the first 9 months totaled CHF 31 million with CHF 19 million delivered in the third quarter. Key measures aimed at helping us to deliver these savings are being implemented. These include headcount reduction of approximately 340 full-time equivalents as of 30th of September 2025 across the businesses and corporate functions. The closure of 2 production lines and 2 sites globally as part of our footprint optimization and procurement savings of CHF 15 million related to structural changes in qualifying alternative suppliers and best practice contract management. In the first 9 months of 2025, we booked CHF 63 million of the expected CHF 75 million in restructuring.

And with this, I close my remarks and hand back to you, Conrad.

Thank you, Oliver. Let me conclude with our outlook for 2025. There remains an increased level of risk and uncertainty due to tariffs and trade tensions, which has a negative impact on global industrial growth expectations and consumer sentiment. According to the latest assessment of Oxford Economics, the global GDP is mainly driven by AI investments and services, while industrial production is still lagging. In addition, the uncertainty created by tariffs and trade tensions is impacting consumer demand for durable and semi-durable goods. Oxford Economics global GDP growth projection for 2025 has slightly increased from 2.5% after H1 to 2.8% in October, driven by the AI boom in the U.S.

On the other hand, the chemicals industry forecast further declined to 2.1% growth from 2.2% growth after the first half year in 2025 and from 2.9% at the beginning of this year. This weakened market environment assumption in the U.S. and Europe, in particular, aligns with our own experience, and we, therefore, expect local currency sales growth to be at the lower end of the 1% to 3% range for 2025. We expect slight local currency growth in Care Chemicals and in Adsorbents and Additives, with sales in Catalysts expected to be slightly below those of 2024.

We continue to expect to deliver an EBITDA margin before exceptional items of between 17% and 18%. The continued profitability improvement in prior years and in the first 9 months of this year shows the effectiveness of the structural changes we implemented under our performance improvement programs. We also aim to further improve cash conversion towards our 40% target. Despite these current impacts, we remain committed to delivering our medium-term targets, supported by the continued execution of our targeted initiatives.

With that, I turn the call back over to you, Andreas.

Thank you, Conrad and Oliver. Ladies and gentlemen, we are now opening the floor for questions. [Operator Instructions]. Sandra, please go ahead.

[Operator Instructions] Our first question comes from Thea Badaro from BNP Exane.

Two questions from me, please. I'll start with the obvious one. You've clearly booked lower exceptionals in the quarter than most people expected. Are you still anticipating the full CHE 75 million to be booked this year? Or do you maybe expect some of it to be pushed into next year? And then my second one is on CapEx. I've noticed that you're now guiding to CHE 180 million versus 10% higher Q2 and 20% higher at the beginning of the year. Where is most of the cost coming from? And how should we think about it through to 2027?

Yes. So I'll let Oliver comment on the one-offs, and I'm sure he also has some comments to be made on CapEx. But basically, if you look high level at CapEx, we're actually very pleased with, I think, a structurally lower level of CapEx when you look at Clariant compared to historic levels. The key reason is that after the opening, in fact, the opening next week of our new Care Chemicals plant, which was an CHE 80 million investment in China. And after the opening of the second line of the Additives line in China, which was a CHE 40 million investment, most of the CapEx, the gross CapEx is actually behind us.

So you see now a switch towards more maintenance-oriented CapEx. And that is actually structural because if you look at capacities, we're actually quite happy now with the global footprint, and we don't target any sort of new greenfield plants in the foreseeable future. Maybe Oliver can comment on one-offs in the quarter and moving forward as well as maybe some more detailed comments if you have them on CapEx.

Sure. Yes, I mean, you're right. We booked so far like CHE 63 million of one-offs year-to-date. Q3 was a bit of a smaller one with the CHE 3 million. But we still foresee, as we communicated before, that we're going to hit the CHE 75 million for the full year. And with that, obviously, delivering on the CHE 80 million savings that we envisioned. As we said, CHE 31 million of that we have seen in the first 9 months, and we still have the confidence that more than half of that will be delivered by the end of the year.

Maybe one additional comment on CapEx. Yes, indeed, the guidance that we have given with the CHE 180 million is now lower than what we have seen in previous years and also beginning of the year. And additionally, to Conrad's comments, of course, that is also a function of the business dynamics that we're seeing right now and our commitment to deliver on our cash flow commitments that we have given with managing towards the 40% cash conversion that we have been communicating before.

The next question comes from Katie Richards from Barclays.

I've got one on Care Chemicals, please, and then one on Adsorbents and Additives, if I may. So on Care Chemicals, could you just talk us through the margin bridge, please? If I take the 1% raw materials decline and higher energy costs, this looks to have been a slight tailwind for the quarter, maybe about CHE 1 million. And obviously, we have CHE 5 million add back, I think, from the inventory revaluation of Lucas Meyer not occurring this quarter.

And then taking into account the volume headwind, it looks like the positive mix effect or the cost savings coming through must have been pretty significant this quarter. So just any color on the bridge here and how significant the positive mix effect would have been outside of Lucas Meyer and then on Adsorbents and Additives, I was quite intrigued by your comments that the Americas decreased high single-digit percentage rates driven by Adsorbents with volumes impacted by the U.S. renewable fuels regulation. I was under the understanding that the EPA was increased in the blending mandate and this would be a benefit for Clariant. So can you explain what's going on here? Is it just full utilization or regulatory uncertainty?

Okay, Katie. Yes, thank you for those questions. I'll make some high-level comments on margins on Care Chemicals, but let Oliver also provide here some additional details, and I also will comment on the Adsorbents, slow demand right now in the U.S. So first of all, on Care Chemicals, we were extremely pleased actually with the step-up in EBITDA margin from basically before exceptional items from 17.4% last year to 18.9%. That is a combination of high level of pricing where actually we've been able to hold prices in an environment where raw materials were actually down by 1%. That is very consistent with our strategy. We are seeing some competitors sort of going out for volume, but we are actually able to hold prices in an environment where there's weak demand.

And I think that's a testimony to the strength of our products, but also, I think, a big complement to our frontline sales leaders. Positive effect from pricing on margins, positive effect from mix where you see weakness in the sort of lower-margin segments like industrial applications and base chemicals. And finally, performance improvement programs that are contributing here. Adsorbents, the weakness in renewables in the U.S., yes, there is clearly a weakness right now. If you look at basically biodiesel where we do the purification with our Adsorbents, but also SAF where we do the purification.

There were incentive packages that temporarily were taken away by the new Trump administrations. But under the new big and beautiful tax bill, there is actually incentives. There are incentives again. The challenge here is that these still need to be approved by Congress and the current shutdown of the government hasn't helped here. So it is not a structurally lower growth market, but there is a temporary weakness in markets for biodiesel and SAF, but we expect this to pick up actually early next year, yes.

And just one follow-up because you mentioned people going for volume. Some of your competitors have commented on increased agent competition, particularly in surfactants. Do you think you are making volume concessions to protect margins there?

We're not making any concessions. We just are basically holding price. There's no need for us to lower the price on products that are differentiated enough that they add a lot of value to our customers. That's one effect. I think the other effect is the continued repositioning towards more premium, more specialty, more consumer-facing segments in Care Chemicals.

The next question comes from Christian Faitz from Kepler Cheuvreux.

Two questions, please, from my side. In your Catalysts business, is there any visibility into 2026, i.e., customers flagging, for example, that mothballed plants might be back and might need a Catalysts refill? And then the second question is actually on Lucas Meyer. I mean, well noted that this business continues to contribute nicely to the profit development of your Care Chemicals business. Can you please elucidate a bit if the business kept its high operating margins when it entered Clariant, I believe it was in the 40 -- actually in the higher 40% EBITDA? Or is consumer hesitancy also impacting the Lucas Meyer business a bit?

Yes. Thank you very much, Christian, for these 2 questions. Well, first of all, yes, we're not giving an outlook yet for next year 2026 nor for Catalysts, but maybe I can maybe reference some of the industry data where basically, if you look at chemical production volumes this year, we're heading for, let's say, 2%, 2.5% growth overall globally in chemical production. That is actually a mix between flat growth in Europe, slightly up in the U.S. and, let's say, around a 5% growth in China. If you look, however, for next year, there is an anticipation of further slowing down in chemical production growth.

So if you look at next year, the industry outlooks are more like a 1.5% growth for chemical production globally, which basically is an outlook that's based on, again, flat production volumes in Europe. Volumes turning slightly negative actually in the U.S. next year as a result of tariffs and people expect a further slowdown in China from currently, let's say, 5% growth to very low single-digit growth. So in terms of bottoming out, we're certainly not bottoming out this year for our Catalysts business, as you've seen in our numbers. We think though that next year with these outlooks, that is actually a bottom.

And on a positive note, in '27, you should see a recovery actually, and that is for all of our businesses, a positive. At some point in time, consumers will start to buy durable and semi-durable goods again, people will start to buy new furniture, new electronics products, et cetera. And that means a recovery will come in chemicals, but it's delayed. Finally, on Lucas Meyer, yes, we're very pleased with the performance inside Clariant, and I can confirm that margins still are, let's say, mid- to high 40s in terms of EBITDA.

The next question comes from Christian Bell from UBS.

Well done on the result. I just have 2 questions. My first question relates to your guidance, which I think I'll ask in 2 parts, if I can. So part of that, to meet your sales guidance, you'll need about 5% organic growth in Q4 to offset foreign exchange of about negative 5%, and that's coming off organic growth of negative 3% in the quarter just been. So just curious, where is that strength coming from by segment? It looks like you'll need a big fourth quarter for both Care and Catalysts.

So is that market driven, keeping in mind, you've already indicated that, it doesn't seem likely. So -- or is it sort of specific projects? And then part B to that question is, after narrowing your sales guidance, you've left Q4 EBITDA margin range quite wide by my estimate sort of 14% to 18%. So what's behind that variability? And then I'll wait to ask my second question.

Yes, Christian, the sound was not so great. Could you repeat high level the question in very crisp language because we couldn't hear it very well.

Okay. Yes. So it's about your guidance, what it implies for the fourth quarter, what you need to do to reach your guidance. On sales, it implies that you need to do about 5% organic growth. And I'm wondering where that strength is coming from. It looks like you need to do -- it looks like you need to have big quarters from Care and Catalysts, which seems difficult in the current environment.

Yes. No, clear. Now let me comment on revenue, and I'll let Oliver comment on the profitability on the EBITDA guidance. If you look at revenue guidance for us to land at the low end of the 1% to 3% local currency growth, what we're guiding for. Indeed, you're correct, we need a pickup in the final quarter, not only sequentially, but also relative to prior year. Where we see mainly that happening is in Care Chemicals, where we actually had last year an unusual weak season for de-icing that was entirely weather related. This year, based on a normalized sort of pattern in terms of the weather, we should see a big pickup in Care Chemicals relative to prior year and also sequentially.

On top of that, we actually see a strong pipeline in mining. You see that in our numbers, our Q3 numbers as well as in oil services. And both of these increases in Q3 were market share related, which should continue as a positive momentum in the fourth quarter. And finally, the Lucas Meyer business continues to do well, both in terms of revenue and margins. Catalysts is against a very strong Q4 last year. But based on the order book, we expect a solid quarter in Catalysts, both for PDH, propane to propylene orders in the book from China again as well as for ethylene. And finally, Adsorbents and Additives is slowing, as mentioned, but we expect there -- the pattern to continue consistent with prior quarters. But all in all, we do indeed expect a pickup from prior year, which should land us somewhere close to the bottom end of this guidance range. Maybe Oliver, some comments on EBITDA margins.

Yes. Christian, maybe one addition to the top line, which also explains a little bit the bottom line performance. I mean you have seen the Catalysts volume decline of 8% in Q3. There was indeed a bit of a move from some of the orders from Q3 into Q4. This is why you see a softer Q3 in Catalysts. And then obviously, that will be part of that driver for the Q4 performance that we are expecting. And with that, based on the top line picture that Conrad was painting here, the growth in Catalysts, the growth in Care is going to drive margins in the fourth quarter.

And then we have 2 counter effects. One is that we slowed down on production in Additives and Adsorbents as a measure also of optimizing our net working capital and staying committed on the cash flow performance. And the second one is the corporate cost phasing that we were mentioning in Q3, which is a different phasing of incentive provisions this year versus previous year. And you see that one coming back -- those costs coming back in Q4 then. And that's going to drive the margin performance and we expect, obviously, to land the margin in the guidance range that we have provided.

I think my question was slightly more simple in a way in that how come you've narrowed your sales guidance, but you haven't sort of narrowed your margin guidance for the fourth quarter. Why is the sort of margin guidance so wide in the fourth quarter alone?

I mean we haven't really adjusted our guidance overall, as you know. I mean, the sales guidance is since second quarter, the 1% to 3% and the margin guidance is also still 17% to 18%. We didn't adjust any of the guidance ranges. So there's no particular reason behind that.

Okay. Cool. And sorry, if I could just squeeze in my second question. I think that sort of follows on from one of the previous ones, some of the commentary around -- from your peers in Care Chemicals segment. Just curious, is there sort of increased competition from Chinese players, a more recent development? Like -- and how do you sort of see that dynamic evolving in the near to medium term?

Yes, increasing competition from Chinese players. We are actually seeing little of that in our segments. So Catalysts is a true specialty business, which requires a lot of IP and technology. We see very limited competition there from Chinese players. In Care Chemicals, certainly in the segments where we are playing, we also see very limited competition. Where we are seeing actually quite some activity is in the Additives area. And that is actually for local players, for example, for UV stabilizers, but even some local players for flame retardants.

Now some of these are, frankly, the so-called copycats that are infringing our IP, and we're going obviously against that. But we are well positioned with local manufacturing for flame retardants there. But one of the things that we did see was for the UV stabilizers that we were no longer competitive with the plant out of Muttenz in Switzerland. And this is actually part of the recent restructuring line that we will actually transfer that production from Switzerland to India to become more competitive for these UV stabilizers. But in all of these segments, we have differentiated technology, but local manufacturing in China has become really a prerequisite to be competitive.

The next question comes from James Hooper from Bernstein.

The first one is around the Board changes. Can you give us a little bit more background on why you wanted to cut the numbers on the Board? And then also a little bit more on what you're looking for from the new Board members and what you're expecting the Board to do? And then the second one is a little bit about capital allocation. I think it was referenced earlier in the CapEx question that you've been taking CapEx down a little bit in order to protect cash flows.

And given the low growth environment we find ourselves in and protected 2026, not a high year of chemical production, is there an extent that you need to trade off your kind of 2027 medium-term targets? You're making great progress on the margins, but are you going to have to choose a little bit between making growth investments in this macro environment or protecting cash flows?

Yes. Thank you very much, James. I'll take the first question on the Board changes, and then Oliver will make some comments on capital allocation and CapEx specifically. Yes, if you look at the Board changes, what we have done recently over the years in the company is actually to right-size the company in terms of -- yes, delayering, in terms of taking out duplication in management. We used to have the decision-making metrics with functional directors, country directors, BU directors. We basically implement full P&Ls and 3 business units. But the Board basically in size has not adjusted. And the consistent feedback from proxy advisers recently has been that they perceive the Board of Clariant -- they perceived the Board of Clariant, I should say, as too large.

The feedback from proxy advisers also has been that on gender diversity, we are currently not meeting the 30% target for a minimum representation of females on the Board. And finally, in terms of independent Board members, some of our Board members had a tenure above 12 years, and then they are no longer seen as independent. So it is these 3 elements that consistently have been brought up by the proxy advisers, the size of the Board, the diversity of the Board, the independence of the Board that actually are now being addressed with the reduction of the Board to 8 and by bringing in 2 new independent -- outside Board members. So it's not that we're lacking or we're lacking certain expertise to your question, it's really very much building on the feedback by proxy advisers.

Okay. James, on your capital allocation question and without maybe hitting too much on the '27 because as we said before, we're not looking at specific numbers now for '27, but maybe more in general, how we will look at capital allocation. How we approach it is very much from focusing on a triangle of growth, margin and cash. And the decisions around capital allocation is pretty much balancing this off across the portfolio and the segments that we are having. And capital allocation, of course, is the strategy that we're having here is to fund innovation to drive the growth for the future. And with that also driving that, obviously, the cash generation of the company.

In terms of capacity availability for a potential growth, then growth pickup in '27, this is what the industry indicates at the moment. There's capacity available for us. So therefore, we are also well prepared for a potential pickup in that time window.

The next question comes from Tristan Lamotte from Deutsche Bank.

A couple, which are kind of linked and high level. In Chemicals, I was wondering, is your view that something has changed structurally in Europe in H2 '25? Or is this kind of a global and cyclical weakness? I'm just trying to figure out if this weak Q3 level is kind of the new run rate or if there's something kind of exceptional in the H2 that will revert? And then the second part to that question is, I'm just wondering what your current views are on the levels of support that chemicals is getting in Europe and whether this needs to increase and what practically could be done in that regard? It seems there's been a lot of discussion on what needs to happen, but the follow-through to this state has been quite limited.

Thank you, Tristan. Yes. So as far as your question, what has changed, if anything, structurally in H2? Well, I think we need to take a look a little bit back further. So what structurally changed for Europe is actually 2022, and we have no longer access to cheap gas from Russia. That is actually the reason that European production levels in chemicals in Europe are still about 20% below the last year before corona, whereas it has recovered basically in the U.S. and Asia is well ahead of pre-corona levels. So this is the structural change.

It is affecting primarily the chemical industry that is high energy intense, which we're clearly not. And it is also affecting parts of the chemical industry that use gas as a footprint, as a feedstock, which we're also not. So, for us, we have a global footprint. We have 65% of our revenue outside Europe. And what we see is a shift of some production and consumption away from Europe, but we pick that then up elsewhere. So, for us, this as being truly specialty is all manageable, but it's fair to say that a good part of the industry is affected by this. To your change, what's Europe doing, I think there are some positive signs.

So we had, first of all, the green deal, which was primarily a package of legislation and commitments to carbon neutrality in 2050. What you now see is the new European Commission has this clean industrial deal which is much more focused on the competitiveness of the industry. So Europe needs obviously a competitive industry to deliver the green deal. And I think there are some positive signs here. But in all fairness, there's still some ways to go. And the carbon taxation is obviously something that at the time that this came up was absolutely seen as the right instrument. There was, however, the assumption that other regions in the world will follow. That's one thing.

And at the time, the industry was making money. I think 2 things have changed. The other regions have not followed with carbon taxation and the industry right now is struggling to a large extent and can then itself much more difficult it is then to fund this energy transition. So this is -- I think this is on the radar for the European Commission, but still some more work needs to be done here, I think.

The last question is from Walter Bamert from Zürcher Kantonalbank.

The first question is regarding the Board changes. And there it is mentioned that the 2 new Board members will be independent. Does this apply that these are not from SABIC, so the SABIC members will be reduced from 4 to 2.

Yes, that's correct, Walter. The SABIC representatives have been reduced from 4 to 2. And I will also say that the German shareholders have representation of 2 Board members that also has been reduced from 2 to 1. And indeed, the 2 new Board members coming in from the outside will be independent Board members.

Okay. And then can you please help me with the headquarter cost, which was very low in the third quarter. Should that be for the full second half be at the level of the previous year, so a reversal? Or should it -- is it rather that the fourth quarter only is at previous year level?

Yes, Walter, indeed, this is a phasing between the 2 quarters, Q3 and Q4. So that cost will come back in Q4. We have a bit of a different phasing of incentives provision from previous year to this year.

Okay. But I hope for you that the incentives will be at the same level as previous year.

[Audio Gap]

Ms. Glazova, your line is open.

I think I just have one left at this stage. Could you comment in a bit more detail of what developments you are seeing in the Crop Solutions end market? You have mentioned somewhat softer performance in Q3, but in part due to stronger comparable. How do you see that developing maybe into next year? Because again, some of your peers mentioned somewhat slowing momentum in the end market.

Yes. In terms of Crop, Angelina, we basically compare against a much weaker prior year where there was still destocking. So for the full year, we still see high single-digit growth in Crop Protection. We indeed had -- in the third quarter, we basically had sort of low single-digit negative in Crop Solutions, but that was against actually a strong sort of restocking quarter last year. So underlying, we see good demand. There's nothing here to worry. We actually think for the year, we will end up high single digits. So yes, we -- it's actually a strong segment for us.

We have a question from Ranulf Orr from Citi.

I'm just wondering about how you view Clariant's portfolio overall as a kind of combination of fairly discrete businesses. And in the context of a weak -- another weak year in 2026 and frankly, who knows for 2027, I mean, is now maybe the time to start thinking about whether there's value to be had in breaking Clariant up or doing asset swaps to improve your scale in some of the businesses and make the individual units more competitive on a global scale.

Yes. Thank you, Ranulf. So if you look at the portfolio, high level, where we came from was a hybrid between, on the one hand, commodity chemicals and on the other hand, specialty chemicals. Over the years, we have successfully repositioned the business towards purely specialty chemicals. As you are aware, we divested our Masterbatch business. We divested more recently the Pigment business, even more recently, the North America Oil Land business. And what we have now is really a portfolio that really is truly specialty in nature, and we're actually very pleased with the businesses there. To your point, limited growth in '26, limited growth this year. There may, at some point, be a certain level of industry consolidation. That is certainly what most people are predicting.

We obviously want to play an active role in that, but you've also seen that we've been very disciplined with the acquisitions that we've made in recent years. All of these have actually strengthened our core businesses and we have no intent to bring in businesses that sort of do not bring true synergy to the existing portfolio.

We have now a question from Chris Counihan from Jefferies.

I just wanted to come back to the Board changes and the reduction because I'm just sort of thinking back to a few years ago and the accounting investigation that happened, I think, in 2022. And as part of the investigations, you talked about more controls, financial controls over financial reporting, procedures, a lot in the finance side, but I also remember you at that stage talking about more active Board control and involvement in terms of controls at Clariant. So I'm just trying to marry the statements from a few years ago versus now the way forward of reducing the Board size because it almost feels to me like the Board's role in such controls is maybe reducing as well.

Yes. No, Chris, this is totally unrelated. So we basically are in 2025 now. We had the accounting challenge that was actually very early on in my assignment. That was about the 2021 numbers and even 2020 numbers. Then indeed, you're right, Chris, and we discussed it at the time. We identified a number of serious gaps. We brought in a new CFO. We really strengthened our checks and balances and controls, including more appropriate involvement by including our Board members at the time. But no, this is in place now -- solidly in place for a number of years, and these recent announced Board changes are unrelated to that.

So ladies and gentlemen, before we close today's call, we would like to ask for your feedback by scanning the QR code on the presentation or using the link, www.clariant.com investor/feedback, you will be guided to our feedback tool operated by Quantifier. We appreciate your views and your assessment and sincerely thank you for your support.

So this concludes then our today's conference call. As I said, the transcript of the call will be available on the Clariant website in due course. The Investor Relations team is available for any further questions you might have. Once again, thank you for joining the call today, and good afternoon.

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.