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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.

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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.

Ladies and gentlemen, welcome to the Clariant Second Quarter First Half Year Results 2025 Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Andreas Schwarzwaelder, Head of Investor Relations. Please go ahead, sir.

Thank you, Sandra, and welcome, ladies and gentlemen. My name is Andreas Schwarzwaelder, and it's my pleasure to welcome you to this call. Joining me today are Conrad Keijzer, Clarion's CEO; and Bill Collins, Clariant's CFO.

Conrad will start today's call by providing a summary of the second quarter developments, followed by Bill, 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. 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 a 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. I'm pleased to report that Clariant delivered strong profitability in the second quarter of 2025, demonstrating resilience against a challenging environment for our sector. Let me start by highlighting some of our key achievements.

We delivered sales of CHF 968 million. This represents a flat result in local currencies and an 8% decrease in Swiss francs. Our EBITDA before exceptional items, increased by 3% in absolute terms to CHF 169 million. We delivered a significant margin improvement of 200 basis points to 17.5%, driven by strong profitability increase in Catalysts and in Adsorbents and Additives.

Our savings program supported our performance in Q2 and H1. This program is set to deliver CHF 80 million by 2027 with a significant contribution expected this year. In H1, we achieved savings of CHF 12 million and booked CHF 60 million of restructuring charges. As a reminder, we expect to book the total CHF 75 million of restructuring charges related to this program in 2025.

I'm also pleased with the improved cash generation in the first half of the year. The 130 basis point improvement of EBITDA margin before exceptional items to 18.1% resulted in operating cash flow of CHF 116 million compared to CHF 112 million in H1 2024. We achieved free cash flow conversion of 37% for the last 12 months, up from 32% reported at the end of 2024.

In safety performance, we have achieved 2 accident-free months this year. This helped to lower our days away, restricted or transferred rates to an industry-leading top quartile level of 0.16 for the last 12 months compared to 0.17 reported at year-end 2024.

Clariant's new greenhouse gas emissions reduction targets were originally announced at our Investor Day in November last year, and these upgraded targets have now been reviewed and approved by the Science Based Targets Initiative, SBTi. By 2030, Clariant is committed to reducing absolute Scope 1 and 2 greenhouse gas emissions by 46.9% and absolute Scope 3 greenhouse gas emissions by 27.5% from a 2019 base year.

We have accelerated the rollout of CLARITY, our digital service platform in the business unit Catalyst, which is designed to optimize catalyst management and performance monitoring for our customers. CLARITY is now operational at over 185 plants and has over 700 users in 35 countries.

Now turning to our 2025 guidance. While we remain focused on driving growth, we have revised our 2025 sales guidance to a range of 1% to 3% in local currency, reflecting the continued weak industrial production outlook and uncertainty in our end markets. At the same time, we confirm our full-year profitability guidance of 17% to 18% EBITDA margin before exceptional items, underscoring our confidence in sustaining our improved level of profitability.

Despite ongoing market challenging -- ongoing market challenges and macroeconomic uncertainties, we remain committed to delivering our medium-term targets, supported by the continued execution of our targeted growth and profitability initiatives.

Now moving on to more details relating to our financial performance in the second quarter of 2025. We delivered sales of CHF 968 million. In local currency, this is a flat result, with the reported figure impacted by an 8% 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. Our volumes were flat as growth in Catalysts offset a slight decline in Care Chemicals, with a flat performance in Adsorbents and Additives.

Turning to profitability. As I already noted, we had a strong overall performance with a 200 basis point improvement in EBITDA before exceptional items versus the second quarter of 2024. In Care Chemicals, profitability from Lucas Meyer Cosmetics, partly compensated for the 2% volume decline we recorded in the second quarter. In Catalysts, the 5% increase in volumes positively impacted operation leverage -- operating leverage. Margin management and onetime effects also positively contributed to margin improvement.

In Adsorbents and Additives, profitability was positively impacted mainly by our performance improvement programs, lower input costs and mix effects.

At the group level, our performance improvement programs and cost discipline also positively contributed to profitability. Reported EBITDA decreased by 16% to CHF 139 million, representing a reported margin of 14.4%, including the CHF 22 million restructuring charges booked in the quarter.

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

Thank you, Conrad, and good afternoon, everyone. I will now discuss our second quarter development by business unit, starting with Care Chemicals.

We recorded a 2% organic decline in local currency, entirely due to lower volumes, as strong performance in Crop Solutions and Mining and slight growth in Industrial Applications could not fully compensate for declines in Oil Services and Base Chemicals. On a quarterly sequential basis, Sales decreased by 12% in local currency, again driven by weaker volumes, which is largely attributable to the seasonality in aviation.

We recorded strong high double-digit organic growth in Crop Solutions as the demand environment improved compared to the prior year, which was impacted by destocking. Sales in Mining Solutions increased at a high double-digit percentage rate and Industrial Applications at a low single-digit rate, with volume growth supported by positive pricing.

Oil Services sales came in lower against the high comparison base as well as in Base Chemicals. Personal and Home Care sales were muted despite continued growth by Lucas Meyer Cosmetics as positive pricing could not offset lower volumes in challenging markets.

Regionally, sales in EMEA decreased at a low single-digit percentage rate driven by volumes as the decline in Germany could not offset growth elsewhere in the region. Sales in the Americas also decreased at a low single-digit percentage as positive pricing could not compensate for lower volumes and strong growth in Brazil could not offset a decline in the United States. Sales in Asia Pacific decreased at a mid-single-digit percentage rate despite slight growth in China and was largely attributable to lower volumes.

We recorded EBITDA before exceptional items of CHF 88 million versus CHF 100 million in the second quarter of 2024. This translated into a margin of 17.7%, maintaining the level achieved in the prior year period. Profitability was positively impacted by the strong operational performance of Lucas Meyer Cosmetics, which is maintaining growth and profitability in a challenging market.

Catalyst sales increased by 5% in local currency, driven entirely by an improvement in volumes versus Q2 2024 as the business picked up as expected, following a slow start to the year.

Sales in Syngas & Fuels increased at a high double-digit rate and ethylene catalyst at a low single-digit percentage rate. Sales in both Propylene and Specialties decreased at a double-digit rate.

Regional dynamics were driven by the project nature of the business, with sales in the Americas increasing at a high double-digit percentage rate. In Asia Pacific, sales decreased at a low single-digit percentage rate as growth in India was only able to partially offset the decline in China. Sales decreased at a high single percentage rate in Europe, Middle East and Africa region as lower sales in Germany could not offset growth seen in the Middle East.

In the second quarter, EBITDA before exceptional items increased by 20% to CHF 49 million, representing a margin of 22.5% versus 18.5% in the prior year. This was a result of operating leverage driven by higher volumes, margin management and cost control. The performance was also positively affected by onetime effects. Excluding a positive onetime effect of CHF 2.5 million related to termination fee sunliquid impact of CHF 2 million, the underlying margin was around 20% for the quarter.

Moving to Adsorbents and Additives, sales increased by 1% in local currency. Pricing increased by 1%, while volumes were flat. By segment, Adsorbents sales were flat as growth in EMEA was offset by declines in other regions.

In the Additives segment, sales increased at a low single-digit percentage rate despite a high comparable base. Regionally, we recorded sales growth in EMEA at a mid-single-digit percentage rate with both pricing and volumes up as the region's automotive industry improved slightly from a low base.

In the Americas, sales increased at a low single-digit percentage rate, particularly driven by growth in Additives. In Asia Pacific, sales decreased at a mid-single-digit percentage rate with sales in China declining at a similar level as growth in Additives was unable to offset a decline in Adsorbents.

EBITDA before exceptional items increased by 16% to CHF 50 million with an underlying margin of 19.8%, representing a 380 basis point improvement versus the prior-year period. Profitability was driven by a positive mix effect in Additives as well as by benefits from our performance improvement programs. Lower raw material costs of 3% and energy cost of 2% also contributed positively.

Reported EBITDA of CHF 46 million increased by 2% compared to the prior year. This corresponds to margin of 18.2% versus 16.7% in the prior-year period despite restructuring charges of CHF 3 million.

Now turning to our 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 the end of 2027 for the savings program that we announced at our Investor Day back in November of last year. As Conrad mentioned earlier, total sales achieved -- total savings achieved in H1 of CHF 12 million with CHF 9 million achieved in the second quarter.

The key measures aimed at helping us to deliver these savings have now been announced and are being implemented. These include a headcount reduction of approximately 200 full-time equivalents as of June 30, 2025 across the business and corporate functions, the closure of 2 production lines and 2 sites globally as part of our footprint optimization and procurement savings of CHF 4 million related to structural changes in qualifying alternative suppliers and best practice contract management.

In the first half of 2025, we booked CHF 60 million of the expected CHF 75 million in restructuring charges and expect the remaining CHF 15 million to be booked in the second half of this year.

Let's now move on to cover the first half year financials. In the first half of 2025 sales of CHF 1.981 billion represents a stable organic performance versus the prior-year period. Volumes had a negative impact of 1%, while pricing and scope each contributed positively by 1%. Currency translation impacted sales by negative 5% in the first half of the year.

Looking at our business units, we saw slightly lower volumes in Care Chemicals and Catalysts, while Adsorbents and Additives was up. Selling, general and administrative costs increased by 9% versus the prior year, mainly related to restructuring costs and the inclusion of Lucas Meyer Cosmetics. Our cost savings programs continue to offset inflationary pressures.

Group EBITDA before exceptional items increased by 3% to CHF 359 million against the prior year, while the corresponding margin increased by 130 basis points to 18.1% from 16.8% a year ago. Group reported EBITDA decreased by 14% to CHF 291 million due to CHF 60 million of restructuring charges being booked during the first 6 months of the year. This resulted in an EBITDA margin of 14.7%, below the 16.4% reported for the same period in 2024.

In the first half of 2025, net income was CHF 44 million versus CHF 176 million in the previous year, largely driven by the restructuring costs, impairment of CHF 30 million related to footprint optimization as part of the Investor Day savings programs and exchange rate differences in net financial results.

We recorded operating cash flow of CHF 116 million compared to CHF 112 million in H1 2024 as improved profitability more than offset an increase in net working capital. Our free cash flow conversion increased to 37% for the last 12 months, up from 32% reported at the end of 2024 and confirming our path towards our medium-term target of around 40%.

Group net debt increased to CHF 1.596 billion from CHF 1.489 billion recorded at the end of 2024, largely due to refinancing activities. The resulting net debt-to-EBITDA ratio stood at 2.6x at the end of the second quarter and at 2.4x on an EBITDA before exceptional items basis, lower compared to 2.7x a year ago.

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

Thank you, Bill. 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. According to the latest assessment of Oxford Economics, the industrial slowdown will be more pronounced than previously expected. This is due to both the uncertainty created by tariffs and a shift back to services in consumer spending.

While the global GDP growth projection is still at 2.5%, the expectation for industrial production has declined to 2% from 3% at the beginning of the year and for the chemical industry to 2.2% from 2.9%.

In response to this weakening of our operating environment, Clariant now expects local currency sales growth of between 1% to 2% for 2025. We expect slight local currency growth in Care Chemicals and Adsorbents and Additives, while sales in Catalysts expected to be at levels similar to those in 2024. We continue to expect to deliver an EBITDA margin before exceptional items between 17% and 18%.

The continued profitability improvement in prior years and now the strong performance in the first half of 2025 shows the effectiveness of the structural changes we implemented under our performance improvement programs.

In terms of margin, We, therefore, have a resilient foundation to weather the current low-growth environment and increased uncertainties. We aim to further improve cash conversion towards our 40% target. I reiterate our commitment to the medium-term targets we outlined at our November Investor Day.

Before I turn the call back over to Andreas for the Q&A session, let me add a personal note. The strong Q2 results presented today marked the final set of results presented under the finance leadership of Bill Collins as Clariant's CFO. As previously announced, Bill will retire as of today. And as planned, we'll hand over the CFO position to Oliver Rittgen.

I would like to sincerely thank Bill for the many years we have worked closely together, both at ExxonMobil and the last 3 years here at Clariant. Bill's contributions to Clariant extend far beyond financial statements. He joined Clariant during one of the most challenging chapters that we have and helped write a new beginning.

The results of this journey are already visible both in our profitability improvements but also and equally important, in our nonfinancial metrics such as employee satisfaction in the finance organization. I wish you, Bill, all the best for your well-deserved next chapter. Thank you, Bill.

Now back to Andreas.

Thank you, Conrad. And from my side, echoing the big thank you to Bill. It was a pleasure and honor being part of your team. Ladies and gentlemen, we are now opening the floor for questions. to ensure everyone has a chance to participate, please ask no more than two questions per person. Thank you for your cooperation. Sandra, please go ahead.

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

A special thank you to you, Bill. My first question is on Catalysts. Can you just do a little bit of a deep dive into what went on with the Catalysts this quarter? Volumes are up 5%, which I think is probably higher than most expected. But if I look back to Q1 volumes, these were down 13%. And again, Q4 was possibly stronger than expected, although I appreciate this was partially seasonal.

So essentially, it looks like to me when there might have been some projects that have been pushed around here in addition to some of the exceptionals you stated to in this quarter. So can you give me any color on this, please?

My second question relates to your exposure to China. You highlighted at Q1 that your business in China was notably more exposed to tariffs because of the 50% local production and slightly lower regional sourcing here.

I know you've got some capacities coming on later in it, but could you provide some clarity about how your divisions are faring in light of this? Because I noticed sales to China in Q1, for example, were much lower than the 11% to 12% you've historically reported. So can you talk through the drivers of this? And if there are any mitigating measures in place here?

Okay. Thank you, Katie. Yes. So first, your question on Catalysts, yes, in the first quarter, minus 13%; in the second quarter, plus 5%. What basically happened here in the second quarter is that we did have -- and you're right, the timing of orders does play a role here because we can have the Catalyst orders of a significant size, CHF 20 million, CHF 30 million per order, sometimes even more.

We did have actually the benefit in the second quarter of a very large order. This is actually an order -- was actually an order in Syngas that actually explains the high double-digit growth rate in Syngas that we reported. On a very positive note, this is a customer win. So this is something we're very happy with. But at the same time, it doesn't come back in the coming quarters in the same magnitude.

So if you basically look underlying what's happening, if you basically look at Q1, Q2, but also our outlook for the year; what we think is, over the whole year, we will see basically the Catalyst business bottoming out. We are expecting flat volumes overall on a year-on-year basis in Catalyst. And that is reflecting still challenges in the refill business in Europe, but also in the U.S. and even globally.

So just to give you a bit more color, if you look at the planned capacity utilization rates overall in Europe in chemicals, they are roughly 75% at the moment. In the U.S., we're looking at 80%. In China, we're looking at a very mixed picture, but for example, propane to propylene, PDH plants in China are running right now at only 60%, 65% of capacity utilization.

So we still see an environment in Catalysts with very weak demand. We're actually quite pleased with our numbers being flat for this year, bottoming out. But I also like to note the structural profitability improvement in Catalyst. So we are actually running in this weaker demand environment, underlying now at around 20% EBITDA margin, and that is clearly the step-up from the past in profitability associated with the lower structural costs and group margin management in this business.

Your second question on China and tariffs and how is that impacting our business, you're right, it's basically -- it is actually now more than 50% of our local sales that are locally manufactured. But we are putting up on stream 2 new plants in November. And that would bring the local manufacturing as a percentage of revenue, close to 70%.

We will, as a reminder, startup in November, our new Care Chemicals factory in [ Dyabay ]. This was an CFH 80 million investments for basically multipurpose plant locally for Care Chemicals as well as an EOD derivatives plant, ethylene oxide derivative plant for Care Chemicals.

And we also, in November, we'll start up the second line of our Additives investment. This was CHF 100 million investment, and this is very much supporting the strong demand for flame retardants in the local market in China. So we are much more robust than we were in terms of local content, certainly after the startup of these new plants.

Okay. That's great. Can I just do one follow-up on utilization rates in China, please? You mentioned PDH being a weak point, around [ 6%]. Is that lowered just due to tariffs? Because I know these PDH plants are dependent on U.S. imports. Or is this a natural decrease year-on-year?

Now if you look at PDH, basically, the key reason for the PDH run rates in the 60 percentage rate is the overbuild. So what we have seen is a lot of new plants that have been brought up on stream. So there is still a solid demand here, but we see basically an overcapacity that has been built in recent years.

We benefited from that, by the way, with our new builds first fill Catalyst sales. That does mean that we do not expect a soon recovery of the new build -- first fill business in China, but at some point in time -- because the demand continues to be there. At some point in time, these plants will be running at full capacity and the new build cycle will start again in China.

The next question comes from Christian Faitz from Kepler Cheuvreux.

Yes, good afternoon, everyone. And Bill, also from my side, all the best. I hope for your future private ventures. Two questions, please.

First, I'd just like to get some more clarity on the Ethylene litigation situation, also your take on it. In my 30-year period as a chemicals analyst, I have witnessed quite a few litigation situations, including rather prominent ones that are still active. Maybe your new CFO can talk about that as well.

But I've never seen industry participants suing each other for such quite significant amounts, particularly given the fact that Clariant is both the customer as well as the supplier for many of these litigation counterparts. So please enlighten us.

And the second question is, when do we see Personal and Home Care segment returning to growth? And in this context, with the consumer trading down perhaps to private label products, does this really affect your sales and/or margins?

Yes. Thank you, Christian. On the first one, I can be rather short because at this point in time, we cannot publicly comment any further on all the things that have already been set around these Ethylene claims. We do expect this to be a multiyear process, and we are still in the early stages. What is, I think, the important point here is that we do have substantiated economic evidence that shows that the conduct of the parties did not produce any effect on the market. And therefore, we are adamantly defending ourselves here in the further proceedings. .

As far as your second question on Personal and Home Care, what we saw here is apart from a very strong comparison base with the prior year in Personal, Home Care, we did see actually in the second quarter, an effect where a large program with a large Personal and Home Care customer actually run out, and this is not unusual. And there is, at the same token, a number of new programs coming in.

We are seeing a very positive momentum in our Personal and Home Care business. On Personal Care, obviously, in cosmetics, we see it in the premium segment of cosmetics continues double digits, around 10% growth. In the sort of less premium segments, there is some down trading. What we see in Home Care is really a pipeline very much based on innovation.

So as a reminder, we won the innovation supplier of the -- rewards at Unilever this year for our soil release polymers. These are actually products that take the dirt out of your laundry not at elevated temperatures but abnormal room temperature, and they actually do that in a wash cycle of only 15 minutes, [ 1-5 ] minutes.

We see very strong traction with Unilever on this product line, but also the sort of the technology underpinning, we think, is platform for further growth. And we see that already that recovery on Personal and Home Care in Q3 and Q4.

The next question comes from Thea Badaro from BNP Paribas.

Two questions from me, please. The first one is on pricing. How confident are you in your ability to maintain pricing levels into the remainder of the year into next year? And maybe are there any areas where you would consider giving back some pricing to stimulate volume growth?

And for my second question, I'd like to go back to China. Would you be able to give us some insight on what has been happening on the ground there and whether or not you're having discussions with customers around the anti-involution policy? Any thoughts here would be appreciated.

Yes. Thank you very much for the question, Thea. Basically on pricing, what we're seeing, we're actually quite pleased with the results because if you look, year-to-date were largely flat or slightly up in pricing. And this is very much fully consistent with our strategy, which is all about the repositioning of the company towards more specialty chemicals. It's, for us, clearly value over volume. And what we see is that we are holding on to our pricing in an environment where actually competition is increasing.

There are some competitors that are out there that want to fill their plants with volumes, with more commodity-type business that's not our strategy. So what you see, and we're very pleased with it, is that we've actually been overall able to hold on to our pricing, and that's very consistent with our strategy.

On China, yes, this is an interesting policy which is happening, and it is actually going to be a net positive for us. So the Chinese government is not happy with the sort of excess levels of competition locally in some segments, including in chemicals, where there is an overcapacity, actually a significant overcapacity, particularly in petrochemicals and base chemicals.

So basically, the idea is that facilities that are not efficient that are aged, let's say, 20 or 30 years that they should actually close down at some point in time.

Now this is impacting our businesses in different ways. So if you look at it in terms of our business, Catalysts, who is very much sort of linked to the chemical industry in China. On PDH, we're not going to see such a big impact here because these are fairly new plants. But if you look at other segments like Polypropylene or Ethylene or Ammonia or Methanol, there are definitely a lot of older plants out there around -- and that actually means that some of these would be targeted for closure.

Now that is going to negatively impact our refill business, but positively impact our first fill business. So on balance, for us, it's more sort of a shift towards newer plants, which, in the end, always is good because we tend to be more represented in the premium segment.

The next question comes from Walter Bamert from Zürcher Kantonalbank.

I have one for Bill. I'm referring to Page 9. I was always very positively surprised on your separation between EBITDA and EBITDA before extraordinary items. But in the second quarter, you have also the underlying EBITDA, so a third metric, where you don't exclude the positive onetime effects and some liquid impact from the adjusted EBITDA. Why is that the case? And do we have expect such move going forward.

Did you have a second question? Or just you want me -- okay, I'll go straight into this one. Actually, Walter, we only have the two metrics. So we do like to talk about the EBITDA before exceptionals. We talk about the reported EBITDA, which is after exceptional. We only talk about those two because Clariant has historically had quite a lot of restructuring costs to reduce the cost base as we have become a smaller and more focused company.

The additional measures that you're talking about, for example, taking out biofuels; that is just to give an indication of the Catalyst business, some of the underlying performance of Catalysts alone. This is not something that we do for the other. So please rest assured that we only have the two before exceptionals and after exceptionals.

But you exclude in before exceptionals, the positive effect -- the negative effects, and you still include the positive effect. Before, I think you did it differently, you excluded both the positive and the negative effect. Is that correct?

No. I mean in the 3 years that I've been here, we've been remarkably consistent in how we've how we've shown this. So for example, if we happen to have an exceptional item that is positive in nature, it still gets reflected as an exceptional item, and we had that with some provision reversals last year. So no, we've been remarkably consistent.

But you didn't do it in Q2, in fact...

Well, we didn't have an exceptional item with a positive or negative impact to report on Catalyst. It was really just the onetime item. So onetime items for us are not necessarily exceptional.

But when you had in previous quarters, the reversal from some liquid provisions, you excluded that from the -- before [ extraordinary ] items.

Yes. Well, that's because the CHF 2 million that we saw this quarter was sort of ongoing operational impact. I mean we've shut things down there, but we still have some inventories that we have to store and deal with. So from that perspective, that would not get classified as an exceptional item from our version of accounting. It gets lumped in with the operational result.

No more questions on that one. Then a follow-up on the Catalyst business. So you mentioned what you could expect here in China. Do you also expect more new builds in the U.S. and in which areas?

New build in terms of...

Of clients -- I mean, [ plants ].

Yes. So plants, new plants. So basically, we still see some new plants coming on stream in China as well. It's just at a lower pace, just to clarify that. So if you look at the growth rates in China, high-level production volumes in China last year were high single digits. This year, they're definitely at a lower level, but there's still a very solid mid-single-digit growth level. So that does mean also new plants coming on stream. And there's actually quite a few plants already.

If you look at the U.S., yes, there is also some new build activity coming, and the U.S. still has obviously feedstock advantages, particularly on gas, cheap shale gas. For Europe, there's actually only one big plant that will come up onstream, one big investment in Ethylene next year. And I think we're in a very good position to basically win that, but we can't give any further comments on that at this point in time.

The next question comes from Christian Bell from UBS.

To ask a question. I only had one. So since you first provided your guidance, the midpoint of your sales guidance has gone from 4% to 2%, but you've managed to keep margins the same. So just curious, what were the main factors that have allowed you to keep those margins unchanged?

For example, has the margin improvement in Catalyst and Adsorbents and Additives has been better than what you've expected? And if that's true, what has led them to outperform relative to your initial expectations?

Sure. No, thank you for the question, Christian. First, on the revenue outlook, it is a marginal change because we said basically, we're going to be at the bottom end of the 3% to 5% local currency. We said that before. Now what we say is figuring in all the impacts of tariffs and continued uncertainty, we basically say it's going to be 1% to 3% local currency growth in the second half.

We have, indeed, been able to maintain the guide on profitability, the range between 17% and 18%. And this is very much reflecting the ability that we have to basically show a step-change improvement in profitability, even on flat to slightly positive revenue growth.

I think there's a few elements. If you first look at cost, we have finalized the CHF 175 million cost savings program that we were working on. And this is not something that obviously we did in recent months, this is something we've been working on in the recent years. But the numbers now sit fully in our P&L, and we finished that in the first half.

We also -- as Bill alluded to, the cost the new cost program where basically we commit to an additional CHF 80 million savings, we already got CHF 12 million savings in the P&L right now in the first half. So we're also well on track to deliver against that CHF 80 million savings target, and Bill mentioned the full-year run rate of CHF 80 million by the end of this year. But if you look at what sits in the P&L for this year, we're targeting at least half of that to be in the P&L. So that is actually very important as well.

Then second building block, really what we're very happy with is our pricing. So we sit in an environment where there is clearly an increased competition for volumes, and we've been very consistently able to hold our prices and in some segments, even slightly up. That definitely helps that margin management, I think, is really embedded in our strategy, but it's also really embedded in the capability of the company.

You cannot charge premium pricing to customers if you don't have the true differentiated technology, cannot charge premium pricing if you don't have the best-in-class OTIF levels and customer satisfaction level. So I think this is also actually based on capabilities that really are there right now.

Yes so -- and then finally, it's important also to note that in terms of the guide, we see the 1% to 3%, but there is actually some above-market growth baked in there. In the first half, we have a plus 1% on local currency growth. In the second half, we will see the effects of our new plant for Care Chemicals in China.

We will see the effect of the flame retardants business. We will see a recovery in Care Chemicals based on the pipeline, the innovation pipeline. And finally, a recovery is baked in also for biofuels and SAF, where we had some weakness in the first half in our Adsorbents business.

Just as a follow-up, I guess the I guess the question is more around given that, I guess, the cost initiatives and the ramp-up in certain projects in the second half were already in place when you first set your guidance. I'm guessing there's some other drivers that you might not have been expecting, have performed better.

For example, have you been able to save further costs than you initially thought you might have or has pricing held up better compared to when you first set your guidance?

Well, I think it's a fair question. So what was baked in already in the prior guidance was the full delivery of the CHF 175 million cost-out program. What we're very pleased with is actually the speed and the amount of savings coming in from the second program, the CHF 80 million savings program. That's actually internally -- that's actually ahead of plan. So that we're very pleased with.

The next question comes from James Hooper from Bernstein.

I've got a couple, please. The first is about Lucas Meyer and the inventory step-up you mentioned there. Can you tell us a little bit more about that, please? Is this just effectively an investment in future growth? And also some of the joint projects between Lucas Meyer and the other parts of Care Chemicals that you've talked about in the past, can you give us an update?

And then secondly, I guess, building on the previous question, can you give us a little bit of a steer on how the kind of absolute basis you expect Q3, Q4 EBITDA to progress? Obviously, it sounds like you're going to have more of a benefit in terms of cost savings in the second half, but also perhaps a little bit of a step-down in growth.

Thanks, James. I'll take a couple of these because they're more in my wheelhouse, and I'll leave the LMC update for Conrad.

Let's start with the inventory step-up. I mean that was an IFRS adjustment that we had to do to bring the acquired Lucas Meyer Cosmetics inventories to a fair value at the time of acquisition. So as you recall, that was a CHF 5 million step-up in Q2 and another CHF 5 million in Q3 of last year.

So you're correct that we do not have that expense this year. So I think the way to look at that is when you look at the total results of our consumer business, I mean it's really -- the upside that we were getting from Lucas Meyer Cosmetics is unfortunately offset by weakness in a couple of the other segments. I mean Oil is a very good profitability business for us, which is down in down in volumes this year. Base Chemicals is also down in volumes this year.

So I think when you look at the comparative EBITDA margins for Care Chemicals Q2 this year versus Q2 last year, we are still pleased with the fact that they've been able to hold a very healthy level of margin when there's been this weakness on some of the more industrial segments of the business.

If I look at our profitability in the second half of the year, I mean, let me just start by reiterating how excited I am by the performance that we've had in the first half of this year, I mean, 18.1% margin on EBITDA before exceptional basis. I mean if you think back where we've been, I mean, 14.6% in 2023, 16% last year, now we're talking in a range of 17% to 18% in 2025; I mean that's really, I think, an exceptional movement for us.

And as Conrad had mentioned, it flows nicely on the back of all of the cost savings programs that we've had. So when I look at the margin range that we have this year, even if we're expecting a little bit weaker top line growth, I mean, we are still then expecting growth in the second half of the year.

So we'll see a positive benefit of that, we expect to see Care Chemicals basically flat, I think, in terms of profitability second half and first half. Catalyst should be slightly improved in the second half of the year following their seasonality pattern and the operating leverage that we typically get in Q4.

And then on Additives and Adsorbents, it's a bit of a mixed bag. I mean, on one hand, we've got -- so unfavorable mix that will bring down the overall margin as the Adsorbents businesses are starting to do a little bit better. And as we get towards the end of the year, we will probably slow down production in some of the Additives areas to make sure that we're maximizing our inventory levels and cash flow for the end of the year.

But even with a reduced sales growth for this year of 1% to 3%, we're still extremely confident of being in that 17% to 18% range.

Okay. Thank you, Bill. Yes, then some more color on Lucas Meyer and cosmetics, maybe more broadly. So yes, what has been reported by particularly some of the big brands is actually some down trading. That is a direct impact of consumer confidence being weaker. But what equally has been reported and what we see in our own numbers is that the upper end of the premium segment still is fully intact.

So if you look at hair care products, skin care products in the premium segment, if you talk about anti-age creams that basically get your wrinkles away; there's an extremely loyal customer base. And there's basically no change there that we see in our numbers from a growth perspective. That upper segment is still solidly around a 10% growth year-on-year. So we're actually very, very pleased with that performance.

What you also see in Care Chemicals, specifically in cosmetics, is sort of broadly speaking, a shift where you see the indie brands, social media brands taking -- continuing to gain some share. We are very well positioned there actually through Lucas Meyer with our penetration.

So we have a very attractive offering for these indie brands because it's not only the active ingredients that work that we supply, but we also actually help them with the whole marketing narrative and the formulation of the cosmetics ingredients. And this is something the big brands can do themselves.

But actually, if you look at some of these Indie brands, they basically completely outsource the development of the formulation as well as the manufacturing of the formulation. And the combination of Lucas Meyer and our former cosmetics business is very well positioned to provide that service.

The next question comes from Georgina Fraser from Goldman Sachs.

Hello, Conrad, Bill. And again, Bill, we will miss you. Thank you for everything in the last couple of years, and good luck.

So two questions. One of them we kind of had already, but I wanted to dig a bit more into it. In Care Chemicals, in particular, I was very positively surprised for you to deliver the flat pricing. You mentioned that you're seeing some competitors go for more commodity areas and cut prices to fill their plants. Should we expect you to continue going for this value-over-volume strategy? And can you talk a bit about what the -- those real the trends look like in that business, particularly on the ag side after a very strong first half?

And then my second question is a bit of a tougher one, I'm afraid. What should we make of all of the ethylene cracker closure announcements in Europe and the pipeline network in terms of Clariant's raw material supply and the sustainability of that pipeline network for supplying your ethylene oxide derivatives going forward?

Yes. Georgina, thank you for these very insightful questions. Yes. So let me start with the strategy. So there is absolutely no change in the strategy, and it's been working out very well for us. Maybe just big picture, what we've seen now in the last 3 years is an EBITDA margin of 14.6% back in 2023, an EBITDA margin of 16% in 2024 for the full year. And this year, we are maintaining the 17% to 18% EBITDA margin guide.

So what you clearly see is a significant step-up in profitability for 3 consecutive years in a row in quite a challenging environment. And there's obviously a lot of levers underneath, but the core one is the repositioning of the company towards more specialty. We will continue to that trajectory.

I mean the recent action of the CHF 80 million includes some actions on our footprint. So the strategy is when there is actually a commodity business at a low margin, we're actually rationalizing our footprint rather than bringing in commodity volumes to keep our plants running.

So basically, that strategy has paid out very well for us. And I wouldn't have any concerns that we would deviate from that because this is really aligned with our Board, and we all appreciate very much the step-up in profitability that it is delivering to us.

Your second question on ag. If you look at ag solutions, I think you have seen that also with peers. We reported a strong double-digit growth. I could tell you it is very strong double-digit growth. So we are fully in line here with peers and even above some of the numbers that I saw out there.

Now to put it in perspective, this is very much against a very weak base last year because in -- last year in ag, we had significant destocking. So in the Q2, we are comparing here a number which now is truly reflecting underlying growth in ag, which is good and solid, but versus a quarter where there was really very, very modest revenue because it was a massive destocking in Q2 last year.

What I think is -- finally, to your second question on ethylene closures, this is a very important question. If you look at our Catalysts business, we have actually very well differentiated technology with our ethylene catalysts, we are very well positioned globally. I mentioned basically also in Europe, coming 1 big plant on stream next year. And we cannot comment specifically, but we're in very good position that every new plant anywhere in the world that we are the preferred supplier. And that is what we see.

So yes, there is a shift of ethylene capacity away from Europe, but where it shows up, we are in a very good position to pick up that position that business. So for Catalysts, we're not seeing a negative impact from it, but it is a shift in terms of regional shift.

Your other question, as far as the ethylene impact on our Care Chemicals business, where ethylene is obviously for us a very important raw material for our ethylene oxide derivative business; there's basically 2 plants in Europe, and we basically did this entire analysis that your question is alluding to.

We looked at the sustainability of supply of ethylene both from an availability as well as from a competitiveness. And the 2 plants, the 1 is in Gendorf, as you may know, the other one is in Tarragona, both plants actually have ethylene supply associated with this that is very competitive and that is -- that will be very available. So from our side, no concerns there, but it is a very relevant question.

The last question comes from [indiscernible] from [ Vontobel ].

I had a question about July. So we were talking about the second quarter. Could you tell us if something has changed in July in the first month of the third quarter? Are customers more holding back and other changes may be?

And my second question would be about the impairment of the CHF 30 million. You talked about footprint improvement. Could you give us more details about this impairment, please?

Do you want to start?

Yes, sure thing. So I can talk about the impairment for sure. So yes, we booked CHF 30 million of impairment, largely related to footprint initiatives. This was something that was indicated at the Investor Day in London last November that we were looking at this.

We have announced -- I mean, I think it's fair to say we've talked about a plant in France, plant in Argentina, a few other lines in other plants that will be sort of decommissioned. So that's what this CHF 30 million relates to, is just the impairment of those assets. So nothing more than that.

Do you want me to comment on July, you want to comment on July?

I can make some comment. So basically, what we see in July is for us, the numbers are coming in very much in line with our expectations, so -- and very much in line with our guide.

So to your question in terms of what is happening in terms of volumes and tariffs and how is this all impacted, we are seeing a weakening in demand. So actually, the consumer goods demand is affected by uncertainty on the one hand, by tariffs. On the other hand, tariffs drive up inflation. That will drive down demand. Ultimately, it's not good for business.

But what we see basically is we see this most pronounced in our Additives business where we deal with end markets like consumer electronics, automotive. We did see some prebuying at the end of Q1, at the beginning of Q2 for our Additives that go into, for instance, consumer electronics, automotive. There was some free buying also in automotive by customers. We did see a weakened -- rather weak finish of Q2 as a result of that.

But if you look at our guidance, the 1% to 3% guide for revenues, there's also here baked in above-market growth from the new plants that come up on stream in China for Care Chemicals and also for Additives. There's also baked in the pipeline and first commercial orders in Care Chemicals that we see a rebound. And finally, we see also a recovery for biodiesel and SAF towards the end of the year. So we feel still very confident about the guide on revenue.

This is Andreas speaking. Ladies and gentlemen, 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. Thank you once again for joining the call today, and goodbye.

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