Solvay Aktie

Good afternoon everyone, and welcome to Solvay's First Quarter 2026 Earnings Call. I'm Geoffroy d'Oultremont, Head of Investor Relations, and I'm joined today by our CEO, Philippe Kehren; and our CFO, Alexandre Blum.

This call is being recorded and will be accessible for replay on the Investor Relations section of Solvay's website later today. We'd like to remind you that the presentation includes forward-looking statements that are subject to risks and uncertainties and the slides presented in today's call are also available on our website.

Let's get started. Philippe, over to you.

Thank you, Geoffroy, and hello everyone. As you know, safety is at the core of our operations and we continue to work hard on the different programs we have in place in the organization and they are already delivering tangible results. A word also on our Solvay employees located in the Middle East. They are all safe and this is our top priority. We monitor the situation on a daily basis and we are ready to act swiftly to support them if necessary.

Turning now to the results on Slide 6. Our first quarter shows the resilience of Solvay in a macro environment that continues to be challenging. Overall, the situation in the Middle east had a limited impact on our results this quarter, although there are several effects that we are actively mitigating. The most direct impact concerns our Saudi Arabian HPPO peroxide business with production temporarily suspended since mid March. We follow the situation very closely and we will be ready to start up again as soon as the situation clarifies.

Then the conflict has a direct impact on our energy, raw materials and transportation costs. We are mitigating this with price increases, including the activation of pass through clauses in our energy intensive businesses and I will come back to this later in the call. Finally, indirect effects may materialize from disruptions in the value chain and further pressure on demand in some end markets. This could be partially offset by improved market conditions for the Coatis business, which by the way also benefits from lower tariffs between Brazil and the US.

Besides this, we haven't seen any major change in our main market dynamics. The demand environment remained overall soft and we continue to see some price pressure for our soda ash seaborne activities in Southeast Asia. The Coatis business remains down year-on-year, but it is showing clear signs of improvement on a sequential basis.

Alex, over to you for the details of the Q1 results.

Thank you, Philippe, and good morning. Good afternoon everyone. Our financial performance in Q1 highlighted again that most of our activities are resilient. Our free cash flow in the first quarter showed that the very strong performance of Q4 2025 was not realized at the expense of 2026. All of this allow us to continue executing our strategy and transformation, while maintaining a healthy balance sheet.

Let's now move to the detail and as usual I will comment on organic evolution, meaning at constant scope and currency unless otherwise stated. Moving to Slide 8. Underlying net sales in Q1 reached close to EUR1 billion, 9% lower compared to the first quarter of 2025. Overall, volumes proved resilient with only limited decline in certain product lines against a stronger comparative base. Pricing pressure was mainly concentrated again in the soda ash seaborne market and in Coatis, both of which started to soften in Q2 last year. ForEx remained a headwind as the start of the quarter, so weaker dollar against the euro.

Now moving to EBITDA. Looking at the year-on-year comparison, there are 2 important elements to consider. On the one side, the positive impact from the CO2 emission rights sales and on the other side the negative impact from the stranded cost. We delivered an EBITDA of EUR219 million during the first quarter, down 10%. The EBITDA margin remained steady at a solid 21.9%. Volume and mix was positive supported by the sales of CO2 emission rights, which generated EUR38 million in January. Excluding this, volumes would have decreased by EUR17 million versus a strong comparison base in Q1, 2025.

Net pricing decline was limited to minus EUR30 million with lower prices in some of our businesses being partly offset by reduction in variable cost. These were driven by cost saving initiatives and effective energy management. On fixed cost, our ongoing cost initiatives at both plant and corporate levels are allowing us to absorb inflation. The negative impact shown in the bridge mainly reflects the temporary stranded costs linked to the exit from the TSA with Syensqo. The expected negative year-on-year impact of the full 2026 is mostly concentrated in the first quarter.

Moving on to segment review, I'll start with basic chemicals on Slide 10. Soda ash and derivatives sales were down 7% year-on-year. Soda ash volumes for the quarter were overall flat, up slightly in the Seaborn market and marginally down in North America. In terms of production, we continue to shift some of the Seaborn volume from European plants to our Green river site in North America. Combined with lower energy costs, this allowed us to reduce variable costs and partially offset the impact of lower soda ash prices.

Our bicarbonate business on the other hand continued to be very resilient with volumes only marginally lower in flue gas treatment application and given a slower start of the year. Peroxide sales for the quarter decreased by 6% compared to Q1, 2025. The electronic grade business once again delivered double-digit growth in volumes driven by demand from the semiconductor industry. On the other hand, both volume and pricing were slightly down in the merchant market as well as in our HPPO and intermediate businesses compared to a high 2025 base. The segment EBITDA was down 17% reflecting primarily the impact of lower soda ash pricing, especially in the seaborne market, but also a slight negative mix across 2 business units.

Moving on to performance chemicals on Slide 11. Silica sales declined by 7% reflecting a lower tire volume compared to a stronger Q1 of last year, which had benefited from some customer restocking. In the Coatis business, sales were down 16% compared to Q1 2025, which was the last quarter before the announcement of the US tariff on Brazil.

Although still at a low level, business performance has improved sequentially each month so far this year. The improvement has been supported first by the reduction in US tariffs and by reduced pressure from China following Middle East related supply disruption. Finally, in our Special Chem business, sales declined by 11%. This is mainly due to lower volume on electronic rare earths, which also benefited from pre buying and restocking in the first quarter of last year. Although they remained marginal, we have started seeing the first contribution from volumes for permanent magnet applications. The overall segment EBITDA was down 8% with lower net pricing in Coatis as the primary type.

Before we move to the free cash flow, a quick word on corporate segment EBITDA. As it delivered a positive contribution of EUR6 million for Q1 2026. As explained earlier, this is due to the EUR38 million gain from further optimization of our portfolio of European CO2 emission rights, which more than offset the higher temporary stranded cost.

Turning now to to the free cash flow on Slide 12. I am pleased to highlight our resilient cash generation even with a particularly strong cash performance in 2025 in general and in Q4 in particular, we continue to deliver positive free cash flow quarter-after-quarter. Our CapEx spending remained very disciplined in Q1 with investment targeted mostly towards essential CapEx covering HSME, maintenance and ongoing energy transition projects. Working capital saw negative variation broadly in line with the usual Q1 seasonality despite a record low working capital position at year end.

As we had announced Provision cash out is progressively reducing but is still above our normalized level due to the transformation restructuring project. This is mainly linked to the TSA exit for -- to the TSA exit, to the Fluorine business footprint optimization and to some remaining cash out from the Dombasle Energy transition project.

Moving on to the net debt bridge on Slide 13. Underlying net debt increased by a limited EUR0.1 billion in Q1, mainly from the interim dividend payment in January. Our leverage ratio remained very healthy at two, As you know, maintaining a healthy balance sheet and preserving our investment grade rating is a cornerstone of Solvay's financial policy. In conclusion, our financial result proves that despite the pressure from the external factors, Solvay has the ability to continue generating solid free cash flow quarter-after-quarter.

Philippe, back to you for an update on Solvay energy management and 2026 outlook.

Thank you, Alex. I will now share how we manage our energy exposure at Solvay. We have a relatively sizable energy footprint and Europe is a large part of it. But we have a strong and highly experienced energy team with a clear mandate focusing on optimizing energy costs and delivering on our energy transition objectives. Even in the context of rising energy prices, we do not expect to see a material impact on our bottom line.

As we walk you through the figures, there are 2 key takeaways. First, our energy transition roadmap is successfully driving the decline of our exposure to fossil fuels year-after-year.

Second, we have contractual arrangements in most of our energy intensive businesses allowing us to limit the impact of energy cost fluctuations. This disciplined approach also applies to our raw materials. Solvay's energy consumption as disclosed in our annual report, amounts to around 18 terawatt hour per annum. This represents a total spend of just over EUR500 million per year. Over the past 2 years, our total energy costs have been reduced by approximately 30%, benefiting from the lower energy prices in Europe.

At the same time, we've been structurally reducing our overall exposure to fossil fuels, which are by definition more volatile as recent events have once again shown. We already shared our coal phase-out initiatives, notably in Green River, where coal has been replaced by locally sourced natural gas, and in Rheinberg, Germany, where it has been replaced by recycled biomass. Together, these projects have allowed for a one-third reduction in our coal consumption.

Let me also illustrate this transition from fossil fuels with a very recent example. Two months ago, our new electric furnace in Cologne, France, started to produce silicate using electricity, which in France is both competitive and low carbon. This replaces the fuel-based furnace and allows us to almost entirely eliminate the group's remaining oil exposure, which was already below 1% of the group consumption before.

Overall, these efforts are clearly reflected in the evolution of our energy consumption. Over the past 2 years, our fossil fuel consumption has declined by 10% in volume, while biomass consumption has increased by 60% and even up by 150% if we compare to 4 years ago.

Now moving to Slide 16. 18 of our 43 production sites are located in Europe, including some of our highly energy-intensive activities such as synthetic soda ash. As a result, Europe accounts for two-thirds of the total energy spent of Solvay today. This is the only region where we still use coal, which was historically the main source of energy for our soda ash plants.

In 2025, coal and coal products still represent half of the energy spent, while natural gas exposure in Europe is more limited, both will decline in the coming years as we move away from fossil fuel towards renewable alternatives. As I've shared with you, we act, and we take our energy transition as an opportunity to be more competitive and more independent from the short-term fluctuations on the global energy markets.

Moving on to Slide 17, where we illustrate our proactive approach to manage risks related to energy and also to raw materials costs. Being an energy-intensive company, Solvay has built core competencies in the energy domain together with a robust risk mitigating model. First, we act strategically to structurally reduce our exposure to the most volatile feedstocks. On the energy side, this is driven by our energy transition out of fossil fuels, which I've just illustrated. On raw materials, our exposure to oil and gas derived feedstocks is largely concentrated in one single business Coatis. Additionally, we benefit from a high degree of vertical integration across many of our activities, which significantly reduces our external exposure to raw materials fluctuations.

Second, the remaining exposure is primarily managed through commercial pass through mechanisms. Since 2022, energy clauses and protection mechanisms cover the majority of the group sales. Finally, for the residual energy exposure that cannot be passed through contractually, we make limited and targeted use of financial hedging. Taken together, all these mechanisms significantly reduce Solvay's exposure to energy and raw material price volatility and in that way effectively limiting the impact on our bottom line.

Now moving to the outlook. While the conflict in the Middle East is adding another layer of challenges and volatility, our guidance for the year 2026 remains unchanged. Underlying EBITDA between EUR770 million and EUR850 million. Free cash flow to Solvay shareholders from continuing operations to exceed EUR200 million with CapEx under EUR300 million.

In conclusion, our essential chemistry strategy is more relevant than ever in the current environment and we can see our efforts to transform the company are paying off. For example, our energy transition projects, especially in Europe, allow us to disconnect from the volatility in the market by using alternative energy sources. Our local-to-local model proves very relevant as well. We remain close to customers and we use local raw materials whenever possible.

We remain fully committed to our strategy and we are confident it will allow us to continue to navigate external uncertainty and to build a stronger, more resilient Solvay for the future. Next to that, we continue to protect our financial strength with a very clear focus on cash generation.

Thank you for listening. Now, we're happy to take your questions with Geoffroy.

Thank you, Philippe and Alexandre. Gaia, can you please open the line now for the questions?

(Operator Instructions). The first question is coming from Martin Roediger, from Kepler Cheuvreux.

Firstly, on the demand situation, many other chemical companies mentioned that their business in March was clearly better than January and February. I hope that is the same also for you. Please confirm that. Looking at the business in the last 5 weeks, i.e. April and the beginning of May, and also factoring in what you see in your order book for the upcoming weeks to come, do you have the impression that the demand right now stays on the same level as in March? That's my first question.

Second question is on the seaborne market for soda ash. Most of the Chinese producers use either the WHO [ph] process or the Solvay process to produce soda ash, which is a very energy intense process. Now, energy availability and energy costs become a topic in China. Do you see that, A, competition is easing in the seaborne market since the start of the Middle East conflict? B, do you see that pricing is sequentially improving in that region?

Thank you very much, Martin, for your questions. I will first maybe ask Alex to make an update on the situation of March and April regarding the demand on the different businesses. Then I will probably take the question on soda ash. Alex?

Yes. Hello, Martin. Yes, indeed, we have seen, yes, January, February were quite soft and we've seen some improvement. That's true. In basic chemical, I've mentioned merchant market, the bicarbonate. Since March and April and continuing in the in Q2, we see some improvement. Looking at the order book, yes, the order book is solid. We have not seen a complete change of pattern. It's solid, much better than the beginning of the year, but well in line with what we were expecting.

Thank you, Alex. Regarding your question on soda ash, well, first disclaimer, I would say that the WHO [ph] and Solvay process, Chinese producers, according to our estimations, were already negative, cash negative before the crisis, before the conflict. The conflict makes it even worse and probably even more unsustainable. Okay.

What we see today, 2 things I would say. First, we see a stabilization and potentially a slight recovery, even though it's not really obvious. I must say today, if you look at volumes and prices in China and in Southeast Asia, but certainly at least the stabilization.

Then there's a second element that I think is very important, is that we have a big plant in the US, SVM [ph] that has shut down and this will create a lack -- a decrease, I would say, of production. All-in-all, we expect indeed the situation to at worst stabilize, at best improve.

The next question is coming from Thomas Wrigglesworth from Morgan Stanley.

Just 2 questions on the energy exposure slides that you've put up. Firstly, can you help me understand what the implications are behind this for CO2 credits? If you're reducing your fossil fuels consumption by I said the 7% divided by two, let's call it 3% to 4% a year. Does that -- is that going to mean that in coming years, you'll have more surplus CO2 credits to sell back to the market?

Secondly kind of related of that energy saving, the total energy spent down 29% has 100% of that been passed back to customers? That's my energy exposure question.

Second question, following-up on Martin, around 2Q. Your underlying EBITDA in 1Q, if I strip out the litigation and the CO2 sale was 174, can we see a stronger than seasonality pick up based on the comments you've just made or should we just assume a modest 2Q improvement, more in the lines of EUR10 million to EUR15 million quarter-on-quarter?

Thank you, Tom, for your question. I will probably let Alex take the last one, for the first one. CO2 credit surplus as we explained I think already last time, what we're doing is we have a portfolio of different instruments that allow us to balance and manage our CO2 exposure. This portfolio comprises 3 quotas, also CO2 that we have in inventories and purchases in the past, forward purchases and of course, the energy transition project. Everything that we explain today is part of our analysis and assessment of the portfolio. I would say this is already somehow included. Of course, the more we execute the project, the more we derisk our trajectory. That allows us to indeed optimize the portfolio and valorize some of the CO2 instruments that we have in inventory and so on. This is what we did this year. We will reassess continuously the situation of this portfolio. We don't expect to have a major adjustment to make this year at this point.

Do we transfer the savings to the customers? I would say this is a general question that concerns energy savings as well as all the savings that we are generating. Of course, the tighter the markets are, the more we keep in terms of savings. Very clearly, in the current situation, in particular in soda ash market, we are giving a part of these savings to the customers. But that also reinforces our competitiveness. This is the way it works.

Maybe on the last question, Alex, if you can take it.

Sure. Thank you. In fact, what we don't want -- generally we do not give guidance by quarter. I think in the current environment, which is, as you know, extremely volatile, we have even more reason not to do so. But we are looking at the full-year and given everything we know, we have reconfirmed our full-year guidance for EBITDA and free cash flow.

What you have to keep in mind is there are certain elements which will progressively play more positively in the second part of the year. Especially as we mentioned, Coatis, which was really down for the past few quarters, is seeing some improvement and that will continue progressively for the year. Obviously, the stranded cost, progressively we are reducing this cost and quarter-after-quarter we'll see some improvement.

The next question is coming from Katie Richards from Barclays.

I had some questions on the energy pass through clauses, which you have spoken about. Thank you for the information on the slides. It's very useful. I'm just a bit confused because some of your peers have reported that they're seeing little to no price increases in Europe for soda ash, despite the higher cost energy environment that we're seeing. I guess the speculation that they were making was that this is potentially due to the fact that some players in Europe have decarbonized and now that the plants are running on biomass or waste rather than coal or gas, or maybe as a result of hedging.

I guess my question is for the plants which are now 100% biomass based, like Rheinberg, can you clarify how the pricing mechanism actually works here and whether it differs from the usual price mechanism that has existed historically? If you could specify as well what the threshold to pass through this surcharge is in Europe, please?

Yes. No. We have in all of our contracts those energy clauses. This is the case, since 2021, '22, when we had this big price surge in Europe. Indeed, we have thresholds that are, let's say, around EUR50 per megawatt hour of natural gas price. That's more or less the way it works. But this is in place, I would say, everywhere in our contracts.

Just one other admin question. For Q1, were you affected by the power supply outage and the weather disruption that some of the peers in Wyoming reported in the last quarter?

Where was that? In Wyoming?

There was a 20 hour power outage, I believe.

No, not significant for us. Yes.

Sorry, I didn't quite hear.

No, we've not been significantly impacted.

The next question is coming from Hannah Harms from BMP Paribas.

I just wanted to confirm that the improved March wasn't a reflection of any prebuy.

Then secondly, on the peroxide run rate for the year, should we be looking at the revenues you had in Q1 as the sequential run rate, besides obviously the possibility of a license coming in H2 '26, if that's still the case?

Yes. For peroxide, no, I think Q1 was, as Alex said earlier on, was a little bit softer than expected, in particular on the merchant market. We have no license in Q1 and we expect indeed to have this opportunity in the next couple of quarters or 2 quarters or 3 quarters. Did we see any prebuy? Difficult to say at this point. I don't think we've seen any specifically any prebuying in March.

No, it was more, I would say phasing. January, February, a little bit soft. Things picking up and continuing in Q2, but we don't see prebuying.

The next question is coming from Julia Winckelmann from Bank of America.

I have a follow-up one on paroxides. You said that 2025 was, it seemed like it was exceptionally strong. Could you give more color on the current trends, particularly in the HPPO and intermediaries business and whether the softness there is cyclical or is it more structural? Then also on HPPO specifically, how should we think about the downside risk to the take or pay contracts? Is there like a floor price that customers pay or how does it work?

Then my second question is on the energy transition project. The EUR17 million cash out at Dombasle in Q1. Can you provide a bit more detail on what's driving these continued cash outflows? Whether there is more to come from this particular project? Then for the next project, which was supposed to be the one in Spain, what's the financing structure there? Is it already finalized? Is there a similar risk on higher cost, like similar to what we've seen in Dombasle?

Okay. On HPPO, I would say what we see today is a relatively stable business, except of course, for our plant in Saudi Arabia, which is, as we said, currently stopped. What we can say is that this plant in Saudi Arabia, which is one of the 3 mega plants we have in our industrial chemical platform business, is in a big platform, right.

We're talking about a platform operated by Sadara, which is a JV between Aramco and Dow Chemicals. It represents $20 billion of assets. We are inside this platform operating as a JV with Sadara 50-50, an hydrogen peroxide plant, which is currently shut down. We don't expect this plant to restart before Q3, right. This has been taken into account when we reconfirmed our guidance. It's within our guidance.

On the energy projects, Dombasle Energie is a project that we are right now completing. We will still have some cash outs this year and part of next year. Everything has been provisioned, by the way, and so you will see gradually the cash outs coming. I remind you that this is a very specific project because we are doing the engineering, and this is why you see the provisions and the cash out that way.

For Spain, it's completely different. We're not doing the engineering. You won't have this type of impact and mechanisms. You want maybe to complement.

Yes, I think in Spain the technology is also more simple than what is done in France.

The next question is coming from James Hooper from Bernstein.

I've got 2, please. First is on the digital transformation. I saw recently that you've extended your agreement with IMI. Is this more of a continuation of the existing strategy, or is this an extension? Is this -- you've got more to go in terms of savings digitization beyond the plan?

Then secondly is an update on the European carbon proposals we've seen in the press recently. There's potential for increases in free allowances, perhaps. I don't know, if you could please give us an update on the -- on what you're seeing and what your preferred options would be in terms of European carbon prices?

Thank you. No digitization, we continue to run our program at this point -- and the plan is really to roll out and implement as many sensors, IoTs as possible in our plants. We are today at 5,000. I think at the end of this year, we will be at 9,000. We are roughly halfway. What we see is that really it delivers the savings and even more than, I think, what we expected, both in terms of fixed costs, so predictive maintenance in particular, and variable costs, so consumptions of energy and raw materials. We continue with the same dedication and ambition.

On the ETS, 2026 is an important year because it's the year where we will start working on the post-2030. This is very important because it's quite amazing to think that we still don't know what will happen after 2030. It's very important because what we need is to align the trajectory with the ambition that we have. The ambition that we have at Solvay, at a lot of different companies as well and at the European level is to be carbon neutral in 2050, not in 2039 or before. Today the ETS is designed such as there is no more free quotas in 2039.

What we're currently doing is to work with the European Commission to align this trajectory with the real objectives and also with the realistic trajectory that we can achieve. Basically, keep the ambition, but redesign the trajectory so that we avoid having big disruptions or step changes in terms of free allowances.

The next question is coming from Sebastian Bray from Berenberg.

Can I focus on Coatis? Is it going to be -- how good is it going to be in Q2, Q3? Because the commodity chemicals pricing in Brazil is sometimes a little difficult to track. But, if you look at what the business has done in April and the type of shortage economics that apply, could Q2 be a record quarter for the business? That's my first question. I'll pause there.

Well, yes, thank you. Sebastian, you want to take it, Alex?

Yes, I can take it. Again, what we are saying, it's commodity, which is -- it's a GBU, which is more closer to commodity type and which typically behave better when the international index for these kind of products, such as benzene and oil derivative are higher. Okay. It's more closer to a spread business. It's not necessarily the index in Brazil, but the general global index are higher and mechanically, it's better. It's the combination of that, plus the fact that some of our Brazilian customers had difficulties to sell to the US because of the 60% tariff that were put in place last year. There is a demand coming back, and finally Chinese pressure lowering. Okay.

The positive impact and the positive momentum will come progressively. It will allow us to get back closer to the mid cycle. We had some records a few years ago. I don't know yet, if we will get back there. But it's more going from below really being at the trough. It was a business which is always generating enough cash, which is not going into cash burn mode. But we were really at the trough. We are getting back to mid cycle progressively and we will see H2 being stronger than Q2.

My second one is on special chem. There are 2 parts here. The first is the settlement that was granted as a result of the litigation in autocatalysts. I think this litigation had been going on for a decade. Is there any more to come? Because a 10 year legal case for the EUR7 million payout, it's not huge, but I appreciate these things sometimes happen.

Separately, the segment had a bit of a softer quarter, as you said, because of the strong comparables. But electronics markets globally are booming. Why would this segment's electronics not do well for the next 2 years or 3 years, exposure-wise?

You want to comment the part on litigation on electronics? Very, very clearly. Yes, I mean, I agree. We should see good performance of this market and this is what we expect. Now that being said, it's not, of course, a major impact for the group, let's face it.

Alex, do you want to comment for the maybe...

Yes. On the litigation, indeed, this is the last part and we've settled everything that was part of the final settlement with this company on all the IP issues.

The last question is coming from Chetan Udeshi.

The first question was -- apologies for being direct here, but Alex, I heard you talk about resilient volumes. I'm sorry, your volumes are down 15%, 16% versus 2019 levels. I mean, I don't know how you can call these resilient. I mean, if I look at your EBITDA, probably down like 30% from that same point. I'm just curious, what makes you think this is a resilient performance, especially when you strip out the one-off CO2 sale and litigation cost.

The second question is just on your rare earths business, there is a huge M&A activity that is happening in the rare earth ecosystem, especially in the US. I'm a bit puzzled how Solvay is not seeing some of that come through. Maybe your positioning in the rare earth supply chain is no longer as strategic as used to be because you probably haven't invested in that business for many years. Why is it that you're -- not your customers but all of these ecosystem companies who are building these big mines for the future are not approaching Solvay to essentially sign up that supply for separation of this business. I would have thought by now people should be knocking at your doors quite aggressively.

All right. Shall we start with your challenge on our resilience? Thank you very much, by the way, Chetan, for those challenges that are of course extremely good questions. Then I will take the one on rare earth, maybe. But I think when, if you look at the cash that we've generated over the past years, that makes us think that indeed we have a resilient business.

Yes. Some of the volume, again, what we've said is we don't want to fight at any price on all volumes. Typically a large part of the decline you've seen is concentrated on seaborne. The fact that we are selling CO2 is also an arbitrage we are doing. Instead of selling at zero margin or even maybe at a loss, we'd rather monetize the CO2 credit.

We have foreseen -- we had purchased. Now again, it's something we have purchased in the past and we'd rather monetize. You will see a large part of the drop in volume is there. It's also a little bit in Coatis. That's for the reason we have explained. If you look at the rest of the business, it's been rather resilient. Of course, as Philippe mentioned, it's also our ability to adjust CapEx.

No, I mean, yes, I agree. Very clearly, it's -- look at the cash that we generate in Q1. Q1, we know that it's traditionally a low quarter in terms of cash. I'm not sure that you have a lot of companies that are positive in free cash flow in Q1. This also shows that we have not taken any specific measure end of last year to make it better in 2025. We're really resilient in that way. We are delivering cash quarter-after-quarter in a very consistent way, whatever the market is.

Now on rare earth, thank you very much for the challenge. Don't worry, we're working on it. We, by the way, have started production of NdPr last year. We have started production of samarium, yttrium, and gadolinium. We will start in the coming weeks production of DyTb. It will be the first time ever in Europe that someone is producing the DyTb. We are not inactive. We are doing things that have never been done outside of China in the past.

It's not because we're not communicating on permanently on this maybe as opposed to others. Then we are not acting. We're constantly reviewing our portfolio and ensure alignment with our long term strategy and capital allocation priorities all the time. Thank you, Chetan.

Can I follow-up on just second quarter, I know you don't want to give guidance specifically, but I was just trying to do some math. I mean, if I take your Q1, if I strip out all of the one-offs, you are probably at like EUR180 million run rate in Q1. If I just assume EUR180 million per quarter for the remainder of the year, you just get up to something like EUR760 million, which is pretty much the low end of your guidance.

I'm just curious to get to the midpoint, what are you assuming? I mean, should the next couple of quarters be better than EUR180 million because of seasonality and some other factors? Or how are you thinking about that phasing by quarter, basically.

Yes. No, I mean, well, as Alex said, I mean, of course, Q2 is difficult to say. We know that the net impact of the Middle East crisis conflict is probably slightly negative even with the positive impact on Coatis. But it's very difficult to give exactly a number. What we know however, is that H2 should be better than H1 for different reasons.

First, our stranded costs will decrease quarter-after-quarter. They will be lower in H2 versus H1. Then we are also working on a certain number of business opportunities as usual and in particular paroxide license, which should land probably somewhere in H2. That's why we reconfirm the guidance exactly as it was issued at the beginning of the year.

We have a follow-up question from Katie Richards from Barclays.

Just a few follow-ups. Firstly, on the rare earths comment you just made there. Do you think that the reason you're not getting some funding is actually due to your positioning in the value chain in the sense that Solvay is more in the purification end, if I understand correctly, rather than the mining, the extraction itself. I just wanted to check that assuming about a EUR10 million EBITDA annualized for the peroxides JV would be sensible for the year?

Okay. I will let Alex maybe comment on the peroxide -- I mean anyway. But for rare earth, I mean very clearly we are supported, I mean very clearly today we have the support of the French government to invest in the -- in our capacity expansion in France. By the way, the separation step is probably the one that is the most difficult to achieve and where you have really a strong differentiation in terms of process and technological know how.

No, what matters what is today the limiting factor I would say is the development of the whole value chain, right. It's not our step in particular is that from mining to the electric motor, you need to have a consistent valorization, I would say, to make all those projects happen. This is what we're doing when we talk to both the European and the American policymakers is we're trying -- and the Japanese by the way as well, they are all working in order to create the right profitability for the whole value chain in order to have those investments.

Now on peroxide.

Just to add also on rare earth, I mean it's not the funding which is a problem. I mean this funding, it's really the operating model which we don't want to invest ahead of demand without having certain form of certainty on the output. As I said today, I mean we have few customers, small one, this is why it's not moving the needle in our Q1 result. But there is a little bit of contribution also because we want to demonstrate our capability to produce these categories of rare earth that we are the only one, but we will not invest before we have a certain form of certainty.

Getting back to peroxide JV, again, sorry, but we cannot comment. You first have to understand the situation is extremely complex to manage. Philippe described how big and this is the biggest chemical complex in the world. We are just a small piece of that. How -- what -- the only thing we can say is that in our guidance, we reconfirm the full-year guidance, assuming the overall platform will remain closed, will remain shut down in Q2.

There are no more questions at this time, so I hand the conference back to the speakers for any closing remarks.

Thank you, Gaia. Thank you all for your participation today. If you have any questions, please feel free to reach out to the IR team. There are a few roadshows and conferences that are planned later in May and June. As always, you can find them on the financial calendar page on our website. Our Q2 earnings will be published on July 29. Thank you very much.

Good afternoon, everyone, and welcome to Solvay's Fourth Quarter and Full Year 2025 Earnings Call. I'm Geoffroy d'Oultremont, Head of Investor Relations. And with me today are our CEO, Philippe Kehren; and our CFO, Alexandre Blum.

This call is being recorded and will be accessible for replay on the Investor Relations section of Solvay's website later today. I would like to remind you that the presentation includes forward-looking statements that are subject to risks and uncertainties. The slides shared today are also available on the website.

We will first discuss our full year earnings and the outlook for 2026 and then take your questions. Philippe, over to you for the introduction.

Thank you, Geoffroy, and hello, everyone. In 2025, we delivered healthy margins and strong cash flow despite the challenging environment. In this context, we remain disciplined and act to secure our competitiveness, leveraging energy transition and footprint optimization.

Our strategy has proven to work and we continue to focus on being a leading essential chemical company with safety and sustainability at the heart of it.

Let me share more details on this, starting with safety. Safety remains our top priority and we continue working towards our zero-accident objective.

In 2025, we launched a major safety culture transformation program designed to improve safety performance across all our sites. While the reportable injuries increased slightly compared to last year, the severity of the incidents decreased overall.

This is a sign that our efforts are starting to pay off. We're not there yet, but we are fully committed to continuing our transformation in 2026.

Let me now share with you our progress on sustainability, implementing our 4 generations road map across the business, moving to Slide #6. We've progressed well on our greenhouse gas emissions targets. Our CO2 emissions, Scope 1 and 2 have decreased by 29% compared to 2021 and that's already close to our 2030 target of minus 30%.

The reduction was driven equally by decarbonization projects and also by lower activity levels. The largest structural contributors were the coal phaseout projects in our Soda Ash plants in the U.S. and in Germany, which were completed in 2024 and which delivered their full impact in 2025.

The next steps will be the new cogeneration unit in Dombasle, France, which will substitute coal with refuse-derived fuel and which is expected to be operational later this year. The new cogeneration project in Torrelavega in Spain announced in 2025 is expected to be operational in 2027.

One year ago, we also announced our new biodiversity commitment for the group. In 2025, we launched a pilot at our Dombasle site, testing the science-based framework provided by the IUCN, the International Union for the Conservation of Nature. This framework aims to develop a blueprint for effective biodiversity actions that can be replicated across global operations.

At the end of 2025, already 16% of our lands are under conservation or restoration. We'll continue working closely with the IUCN and the next step will be a second pilot at our Rosignano site in Italy, where we will further apply and refine the methodology.

We also moved forward on our better life KPIs. As mentioned earlier, safety improved slightly compared to last year and we are dedicated and focused on improving this even more. We've been steadily moving on our diversity target with 28.8% of women in mid and senior management.

Lastly, on living wage, we're very proud to have achieved our target already 1 year in advance with 100% of our own workforce throughout the world receiving a decent living wage.

Now turning to Slide #7. Before Alex takes you through the details of the results, let me leave you with 3 key messages for the year.

First, in 2025, we continue to deliver healthy margins and strong cash. The transformation of the company is progressing well and the operational excellence savings associated with it are supporting our performance.

In 2025, the overall environment remained very challenging and we had some transformation expenses generating cash outflows. These are expenses tied to the separation, including phasing out the transition service agreement and building a new simplified ERP as well as essential initiatives for the new Solvay, including the ongoing fluorine business restructuring.

At the same time, we generated EUR 350 million of free cash flow, thanks to our disciplined cash allocation framework and decisive working capital management throughout the year. This is a real achievement in such a difficult year.

2026 will be another challenging year. On the top line, the demand environment is not yet showing any sign of recovery and the bottom line will be impacted by the transformation expenses.

So in this context and this is my second key message, we continue taking actions to make sure we can emerge stronger. Strengthening our competitiveness is essential.

One key lever is accelerating our energy transition with a particular focus on phasing out coal across our European operations. Our decarbonization road map is progressing well.

But at the same time, we need to align the European climate policies, ETS and CBAM with industrial reality. We cannot force decarbonization decades ahead of the 2050 target without the right framework.

Extending free quotas until 2050 is a technical necessity to fund the transformation of historical sites instead of shutting them down. We need the support of the authorities for a competitive energy access. This is critical if we want to maintain competitive supply chains in Europe.

The other key lever is industrial footprint optimization to safeguard long-term competitiveness. We regularly assess each site to ensure we can remain competitive in the evolving environment.

When this is no longer the case, we act decisively. This has led to the restructuring of our fluorine operations in Germany to the closure of our Salindres site in France in 2025 and earlier decisions to close our peroxides plant in Warrington in the U.K. and in Povoa in Portugal.

Yesterday, we launched a consultation process to reduce our production capacity at the Torrelavega plant in Spain from 600,000 tonnes to 420,000 tonnes starting in Q3 2026.

This measure allows us to define a very clear industrial road map for the site, which will focus on local soda ash customers and competitive and low-carbon high-grade bicarbonate. All these measures strengthen the overall performance and agility of our European manufacturing base.

Together, our footprint optimization and energy transition initiatives enable us to maintain an asset base that is highly competitive in its markets.

So in summary, one, we deliver; two, we act to protect and reinforce our competitiveness. Third key message is that we remain focused on the deployment of our essential chemistry strategy.

We continue the long-term transformation, which is about simplification of our organization and digitalization of our plants. We are preparing the future and we invest where demand justifies it.

In 2025, we inaugurated our new rare earth workshop in La Rochelle for permanent magnets. And we doubled the capacity of our electronic grade of hydrogen peroxide plant in China.

In January 2026, we inaugurated our production line of BioSource silica in Livorno, Italy. It's the first of its kind in Europe. And we have more projects with a clear potential of additional developments in La Rochelle, for instance, where we will start separating heavy rare earths already this year.

So you see we're very committed to our strategy. At the same time, we act when necessary to make sure we will emerge stronger.

We carefully look at our portfolio and we assess if changes are needed, but we also continue to invest in selective areas where it makes sense to prepare for the future. All of this while being laser-focused on our financial policy, a stable growing dividend and an investment-grade rating.

Now over to you for the financials, Alex.

Thank you, Philippe, and good morning, good afternoon, everyone. Moving to the financial with 2 key messages. First, on cash generation.

In 2025, we were able to generate strong free cash flow by rapidly adapting to our environment. Second message is that our balance sheet is healthy and this fully support the execution of our strategy.

Moving to Slide 11. As usual, I remind you that my comments are based on organic evolution, meaning at constant scope and currency, unless otherwise stated.

Underlying net sales in 2025 reached EUR 4.3 billion, down 6% versus 2024. The decline was mostly driven by lower volumes, which were down 4% year-on-year, mainly in Soda Ash and Coatis business units. ForEx had a negative impact for the year from the strengthening of the euro against the U.S. dollar and the Brazilian reals.

In Q4, volumes were also down, mainly driven by Coatis and the Soda Ash export market and with a slightly more pronounced seasonality in the silica business. However, volumes in bicarbonate, peroxide and special chem remained very resilient throughout the year.

Let's now move to the EBITDA bridge on Slide 12, where you see that despite all the headwinds, we have retained a healthy EBITDA margin. Underlying EBITDA amounted to EUR 881 million in 2025, down 13% compared to 2024, but within our revised guidance range.

The EBITDA margin remained strong, close to 21%. Volumes and mix were mostly down due to Soda Ash and the absence of a peroxide license, but this was partly compensated by the positive impact of the optimization of our portfolio of European CO2 credits.

Net pricing decreased year-on-year, primarily driven by the seaborne Soda Ash market and Coatis. Margins in the other businesses remained extremely resilient.

For fixed cost and other, we can highlight 3 main moving parts. In fixed cost, minus EUR 23 million of negative impact from the temporary stranded costs related to the split. And then we have 2 nonrepeat elements from 2024 offsetting each other.

Last year, we had plus EUR 20 million linked to a one-off TSA reinvoice in fixed cost versus minus EUR 29 million from provision in order linked to our Dombasle Energy project.

Moving now to look at our structural cost saving on Slide 13. As expected, our structural cost saving program continued to deliver significantly in 2025 when we have achieved EUR 101 million of gross structural savings, bringing the cumulative amount since the start of the program to EUR 211 million and so exceeding our 2025 target.

We will continue to focus on what we can control and we expect cumulative savings to be around EUR 300 million by the end of 2026.

I now move to the segment review, mainly focusing on Q4 development and starting with basic chemical on Slide 14. Sales in the Soda Ash and derivative business unit were lower for the quarter by 13% with Soda Ash volumes and pricing steady in the domestic market, but showing a continued sharp decline in the seaborne market.

Bicarbonate volume and pricing, on the other hand, continued to be extremely resilient and are up year-on-year. In peroxide, our electronic grade for semiconductor industry continued to deliver double digit growth, supported by AI-related investment, while volumes remained broadly stable in the merchant market.

Overall, the segment EBITDA was down by 20% in Q4, mostly due to the lower volumes, including the non-repeat of peroxide license and lower pricing in Soda Ash exports. The EBITDA margin reached 25.1%, slightly lower compared to Q4 2024.

Moving now to Performance Chemicals on Slide 15. This segment has a certain degree of seasonality in Q4. Year-on-year, silica sales were impacted by slightly lower higher volumes, while the consumer and industrial good markets remained stable.

Coatis continued to struggle with volumes and prices down in all end markets due to the difficult environment caused by U.S. tariff and we will see if the recent changes can help the local industry to recover.

Special Chem, on the other hand, increased in Q4 with higher rare earth volume in electronics and medical applications, which offset slightly lower demand in autocatalysis and fluorine. Overall, the segment EBITDA was down 18%, while the EBITDA margin decreased to 14%.

I will now cover the Corporate segment. In 2025, the Corporate segment result was impacted by EUR 23 million of temporary stranded costs due to the TSA exit. They will continue to impact our performance in 2026, while OpEx related to the ERP will impact both 2026 and 2027.

As of 2028, our target operating model will be fully in place, generating a new wave of savings, allowing to reach a run rate below EUR 50 million for the Corporate segment. Overall, the full year 2025 EBITDA was minus EUR 40 million, including a positive impact of EUR 40 million from the CO2 emission rights optimization.

Moving to Slide 17 to look at our free cash flow, which, as you know, is at the top of our priorities. We delivered a strong free cash flow of EUR 350 million despite a weaker EBITDA generation.

First, we have limited our CapEx to a level below EUR 300 million as guided. The EUR 292 million includes around EUR 240 million of essential CapEx, of which EUR 26 million for energy transition project.

The rest, roughly EUR 50 million was dedicated to targeted investment in new capacity, including the completion of our new Soda Ash capacity in Green River, the doubling of our eH2O2 capacity in China and the BioSource silica unit in Italy. So even in a difficult year, we continue to invest to make Solvay future proof.

The other cash driver was working capital, whose positive contribution reflect a strong discipline, the low level of activity at year-end and the positive impact from the exit of TSA with Syensqo in our receivable.

As expected, provision cash out were high at EUR 260 million for the year. They include approximately EUR 130 million of what you could call normalized cash out for the provision linked to pension, environmental liabilities and some restructuring.

And on top, there was EUR 60 million related to Dombasle Energy project and EUR 70 million of additional restructuring and other expenses related to the transformation we have initiated since the spin-off.

As indicated, financing costs were higher in 2025 as it was the first year of full interest payment for the bond issued in April 2024.

Let's move to the Slide 18, where I guide you through the temporary cash impact on the free cash flow. Here, we have the main element behind the transformation expenses and how they will temporarily weigh on our cash generation.

First, the stranded cost, which mainly impact 2025 and 2026. In 2025, we stopped rendering services to Syensqo, but it will take 1 to 2 years to adjust our support functions.

Second, the cost related to the new ERP. With the split, it becomes a necessity to design and deploy IT system that are adapted to our new operating model.

Third, the restructuring cash. They mainly relate to the exit of the TSA partially compensated by Syensqo and the restructuring of our fluorine business. They were the highest in 2025 and gradually decreased starting in 2026.

To wrap up the 2025 financial, let me take a word on the debt on Slide 19. Underlying net debt was EUR 1.6 billion at the end of 2025, roughly stable compared to 2024.

The leverage ratio remained healthy at 1.8x. Regarding provision, in December 2025, we took an important step to derisk our balance sheet. We did a lift out.

This means that we transfer a portion of our U.S. pension plan to an insurance company, which is now solely responsible for managing the benefits and the underlying investments. The transaction resulted in a reduction of our liabilities of EUR 159 million and of our assets by EUR 155 million, hence generating a profit of approximately EUR 3 million in Q4.

Based on the free cash flow generation and in line with the dividend policy of the company, the Board of Directors has decided to propose to the shareholders a total gross dividend of EUR 2.43 per share, which includes the interim dividend paid in January.

Let me leave you with a final key message. Whatever the environment, our capital allocation framework drives all our decisions.

Our essential CapEx are the priority. Then we have an equally important and clear dividend policy. And then we have options to prepare for the future growth of the company.

The last bucket is more variable as it will be always sized based on merit and affordability. It will be mostly for organic investment and might be supported with inorganic opportunities if they become available, makes sense and meet our rigorous criteria.

With that, Philippe, back to you for the outlook.

Thank you, Alex, and let's move indeed to the outlook now. So as I said at the beginning of this call, we know that 2026 will be another challenging year, but we are acting decisively to protect our competitiveness and to focus on our long-term transformation.

We don't expect the situation in our Soda Ash or Coatis businesses to change rapidly. For Soda Ash, the overcapacity in China is a challenge for the Chinese and the Southeast Asian markets.

And it also creates some pressure outside of the region, for example, on the exports from the U.S. As for Coatis, it continues to suffer from the situation generated by the introduction of the tariffs. Our other businesses are much more resilient, but we remain cautious as we currently have little visibility.

So for 2026, we expect an underlying EBITDA between EUR 770 million and EUR 850 million. This already includes negative impact year-on-year of EUR 20 million from currencies, another EUR 40 million from the transformation expenses and a positive contribution similar to last year from the sale of EUA that we've done in January 2026.

Free cash flow to Solvay shareholders from continuing operations will exceed EUR 200 million and that is after covering EUR 90 million of transformation expenses. We ask the teams to remain very disciplined with investments and we will limit again our CapEx to under EUR 300 million for the foreseeable future until the environment improves.

Our strategy is solid and we are executing it in a disciplined way. We accelerate its deployment where it makes sense and we take actions to mitigate the environment in which we've been for the last 2 years. You can count on us to relentlessly keep our focus on costs and on cash.

So this concludes our prepared remarks. Thank you for listening and we're happy to take your questions. Now back to you, Geoffroy.

Thank you, Philippe and Alex. Gaia, you may now open the line for questions, please.

[Operator Instructions] The first question is coming from Martin Roediger from Kepler Cheuvreux.

First is on your EBITDA guidance. With a high comparison base in Q1 and also adverse FX effects in Q1 and partly in Q2, should we expect a different earnings trajectory in 2026 being more back-end loaded?

And linked to the EBITDA guidance to say with that, just to clarify, you did not factor in your guidance any sale from licenses, i.e., in hydrogen peroxide, but you factor in another sale of CO2 emission rights. Is that correct?

And then finally, sorry to come back to the Coatis business. Philippe, you said that the Coatis business will continue to suffer in 2026. Can you provide some background information? I heard that there are some hopes that the Brazilian government could interfere here and may support Brazilian players. Is that true?

Thank you, Martin, for your questions. And I will let -- I will start answering some of your questions and then let Alex complement.

So in terms of phasing, I mean, difficult to say at this point. You know that the business is relatively nonseasonal. So I would say the base load performance of the business, you should not expect too much of a phasing.

However, as we said, we sold -- because the market conditions were good, so we sold the CO2 quotas already. So you might expect a little bit of -- I mean, this impact in Q1. So it will be a little bit front-loaded, but we also have other elements in the course of the year.

So for Coatis maybe and then I will let Alex complement on the other elements of the EBITDA. I mean, a lot of parts are moving to be clear. I mean, we just heard -- you heard the decision from the Supreme Court on the tariffs.

And typically, Coatis and Brazil have been the area which have been the most impacted by the tariff because it has impacted very much our customers. And you remember that we have a 50% tariff on Brazilian export to the U.S.

This could, of course, be a game changer if this value would change. On top of this, you're right, there are currently discussions with the Brazilian authorities to implement, first, a mechanism that would support the Brazilian chemical industry.

And second, also some measures potentially being implemented to protect the Brazilian market from imports from China. So we're watching this very closely.

We didn't put anything in our outlook regarding this. So it could be potentially an upside. But frankly speaking, for the time being, I think it's too early to say anything. Now Alex, if you want to say a few words on the EBITDA elements.

Yes, so as Philippe explained, EBITDA, take it roughly equally spread during the year. You may have small variation, but it's roughly equally spread.

So your question is whether we have included license on the one side of CO2. If I take a step back, what just defined the range of EBITDA? Primarily, the range of EBITDA is driven by volumes.

That's one of the main uncertainty of the year. We are quite clear on the short term, but I mean, we know the situation can change. The single uncertainty factor are the few business opportunities we are considering.

And one of them, obviously, is licenses. We want to continue to do so, but we do it only if it's quality customers and if it generates some value. So it's part of the uncertainty factor. Third factor of uncertainty are more the margin, price of energy, the tariff impact, which is also an uncertainty factor.

And CO2, yes, we have included only one sale. We knew from the data, we always monitor our exposure to CO2 in Europe to make sure we are well covered until 2030, early 2026, we saw that volumes in Soda Ash in the short term should not see a very different change.

We saw favorable regulatory environment. We see things tends to improve, not deteriorate. And at the same time, the CO2 -- EUA prices at the beginning of the year in Europe are quite favorable. So we've decided to derisk this element.

The next question is coming from Tom Wrigglesworth from Morgan Stanley.

Two questions, if I may. The first question is just trying to understand the dynamics around these CO2 emissions rights sales. Hypothetically, if volumes were to recover to peak levels very quickly, again, let's call it, by the end of the year and you need to increase your utilization rate heavily in your European business, do you then have to go and buy these credits back from the market in order to produce those tonnes?

And is your assumption that you'd be able to pass on that cost if required, because the European market suddenly became tight? I'm just trying to think about what the sacrifice is on recovery here that you're making as you shut down assets in Europe and then sell the associated CO2 rights. That's my first question.

My second question, if I may, is just on the Soda Ash contract price that's embedded in your guide. I think CMA reported Europe down 3% year-over-year.

Can you confirm that's your price, broadly speaking? And associated with that, was there a very -- what was the kind of -- what was the thought process behind that if you try to support price but cut volumes and therefore, you'd expect to take a disproportionate volume hit this year in Soda Ash because you've tried to protect price? Just trying to understand the dynamics that took place in that contract.

Yes. Thank you, Tom. So first, on EUAs, clearly, I mean, if ever the volumes would recover at some point later this year, we are -- we have enough quotas, right? I mean, so until 2030, we are covered.

So there is no need to go back to the market at this point to hedge our CO2. And more broadly, you mentioned the capacity reduction and the fact that we would lose this capacity if ever the market would recover.

Well, it's very simple. The capacity that we have typically in Spain here, it's a capacity that was used to export out of Europe to the seaborne market. We consider that this capacity is not sustainable, right?

First, because we would have to invest massively to do the energy transition on this capacity and we would not be able to get the return on this investment on the seaborne market. And second, we have enough capacity in the U.S. to supply the seaborne market. So this is the right move to do for the long term, okay? So no regret. This is strategic and done on purpose.

Now on Soda Ash, obviously, we will not comment on the detailed price movements linked to the negotiations. What we can say is that basically, Europe has been resilient.

And there's a little bit of pressure on price, but which is very limited and we kept the volumes, so good resilience in Europe. The opposite on the seaborne and in particular in Southeast Asia, margins are at the trough with the overcapacity in China and the pressure put by this Chinese overcapacity.

So here, we signed very short-term contracts because we don't want to commit at this level of price. And we even produce a bit less. This is, by the way, why we also have some EUAs to valorize in Europe because we're not producing at full speed in order to sell in this very depressed market.

In the U.S., it's a little bit of a mix. In the U.S. -- sorry, in the U.S., it's strong pressure on export. And so this puts pressure on the U.S. production. So the situation is a little bit mixed in the U.S. But overall, I would say the domestic prices are relatively resilient.

The next question is coming from Hannah Harms from BNP Paribas.

I just wanted to clarify on your free cash flow guidance. So my understanding is obviously that includes this carbon credit sale. So what other levers do you have left if you're looking to cover the dividend for the year? And would you have an appetite to raise leverage?

Thank you, Hannah, for your question. I will let probably Alex complement my answer. So indeed, the free cash flow guidance includes the CO2 sales that we've done in Q1.

And this -- with this into -- taken into account, our guidance is to generate at least EUR 200 million of free cash flow despite, as we said, the EUR 90 million of temporary transformation costs.

So then what are the levers that we have? Maybe, Alex, you wanted to explain a little bit what we plan to do.

Yes. I think if you really try to compare 2025 to 2026, so EUA, it's quite comparable, okay? We had it last year. We had it this year, broadly same.

CapEx, same financing, tax, assume that more or less is stable. The big difference is the fact that last year in 2025, we could activate working capital, we've optimized it and we ended with quite a low level of activity.

That has generated EUR 170 million of working capital reduction while in 2026, we have assumed this to be broadly stable. That's the main source of variation.

Then we have all these transformation expenses, which are broadly flat, slightly higher. On the other side, we have provision cash out and especially Dombasle Energy project were quite high in 2025, will be lower in 2026, but it's not the same magnitude as our working capital variation.

The next question is coming from Geoff Haire from UBS.

A lot of my questions have been answered. I just have one left. Obviously, there's been speculation recently about changes to the European ETS scheme. If those changes that have been put in the press come to fruition, what does that mean for Solvay? Is that a positive or a negative?

Yes. Thank you, Geoff, for the question. No, it's positive, obviously, it's very positive. And I think it makes sense, right? Because it won't change anything until 2030.

I mean, until 2030, except the fact that we know that now that the CBAM will not take place. So we are comforted in the strategy that we presented, which is to be covered until 2030.

Now there were and there are still, to some extent, a little bit of uncertainties as to what will happen after 2030. We already cut our CO2 emissions by half since 2005 when the ETS was implemented.

And our commitment is to reach minus 30% in '23 versus 2021. We will do it. No doubt about that.

And then the other commitment is to do carbon neutral in 2050. So in 2050, not in 2030, not in 2039. And that's, by the way, in line with the target of the EU, which is to be carbon neutral by 2050.

So what we're saying is that we need to align the ETS to the 2050 target. So instead of having cliffs or disruptions in 2030, in 2033, in 2039, whenever, we want to align the trajectory to 2050. So this is good news because it will allow us to do in a good condition to finalize the energy transition and move to carbon neutrality.

The next question is coming from Katie Richards from Barclays.

Yes, I just had one follow-up on the ETS too. I mean, can you just clarify what you meant about with reference to CBAM there, the rules changing?

And also just try to understand what exactly -- if you could have your dream scenario here would be the best case for Solvay. Would it be for pushing back the free allowance date later? Would you rather the ETS costs move to EUR 30 to EUR 40 like [ Micron ] is pushing for? What would be your dream scenario?

And my second question would be on the energy costs. Could you please clarify the degree of the energy cost pass-through in the Soda Ash contracts and whether the current energy tailwinds would be retained in the unit margins or could decline further due to competitive pressure, please?

Okay. So my reference was to say there is an option to include Soda Ash and only Soda Ash in our portfolio into the CBAM. We know that this will not take place at least before 2030 and we are currently discussing and realizing that integrating Soda Ash to the CBAM would raise a lot of questions and concern.

That's why, by the way, also the European Commission is starting to say we could envisage to continue to give free allowances, in particular for volumes that are exported because obviously, if you don't give free allowances to exports, you would put those volumes under tremendous uncompetitive pressure.

Now we don't have dreams. We're talking about reasonable and efficient trajectories with the European Commission. And I would say that what would be the most efficient would be to have an extension of the ETS with a trajectory that would bring us to neutrality in 2050, right?

So something that is much more realistic than what is envisaged today and something that will also be in line with the fact that today, there is no competitive low-carbon energy available in Europe.

So you cannot ask the consumers like us to be carbon neutral if there is no carbon-neutral energy available on the market. So it's just to have a reasonable trajectory for the ETS going forward after 2030. And I think this is something that really is resonating more and more with the European policymakers.

Now on your question, I guess it was on the energy clause that we have in the Soda Ash contracts. So those energy clauses still exist, right? Because we've been through a period where energy prices went up and peaked in extremely strong movements.

And so we still have those protections, but they operate when really prices are extremely high. So in the current market situation, we don't expect those energy clauses to be operational and to have an impact to be activated.

The next question is coming from Tristan Lamotte from Deutsche Bank.

Firstly, just wondering on Q1. I'm trying to think about the underlying earnings power of the company this year, given you have some temporary impact on EBITDA in the guidance.

If you strip out the exceptional impact from the sale of CO2 credits, is the consensus for Q1 of around EUR 205 million a reasonable base level of earnings for this year's kind of run rate?

Or is it fair to say it would likely be lower than that given that the Q4 was EUR 170 million and given that you've talked about not seeing too much seasonality in the business in the past?

Yes. Thank you, Tristan. Well, clearly, I mean, it's difficult to give any guidance, of course, for Q1. From a business perspective, I would say that we -- what we see in Q1 so far is very in line with what we observed in the second semester of last year.

Q4 was softer, and that's known, right? We know that the end of the year is always softer in some of the businesses. We also had some accruals to take and so on.

So Q4 was not representative, I think, of the business performance over the year. So that being said, what you can take into account is that we're -- we have a guidance of EUR 770 million -- between EUR 770 million and EUR 850 million. And that we suppose business-wise that there is no significant phasing over the year.

Okay. Got it. And then secondly, sorry to come back on ETS, but I'm just wondering what the size of the risk is here in a kind of downside scenario. So I'm wondering in the absence of free allowances, is it fair to take your Scope 1 emissions, which I think were around about 6.8 million tonnes and multiply that out by the carbon price of EUR 70 to come to a theoretical cost that you would bear in the absence of free allowances?

Just to understand the size of that risk without free allowances as it stands.

No, no. I mean, it's not at all this number. I mean, the number that you mentioned is the total emissions globally and a big part of those emissions are not part of ETS, right?

You have emissions in the U.S., emissions in Brazil in a lot of areas. So it's not at all this number. And again, as we said, there is no scenario today, I think, where we would stop getting free allowances.

I mean, there's no one in Europe today saying that we should stop giving free allowances. On the contrary, the momentum today and I'm much more positive today than I would have been probably a few months ago is to say we need to continue and even to protect even more the European industry because what will happen is that we will shut down our industry and we will import the carbon content from outside. So it wouldn't make any sense.

The next question is coming from James Hooper from Bernstein.

First question is around working capital. You did a great job on that in the fourth quarter. To what extent the -- can you just take us through how you managed to make such a big improvement?

And then whether you'd expect -- how you'd expect to maintain working capital at that level? I mean, you mentioned in the SCF question that you're looking for working capital to be flat.

And then the second question is about the footprint because obviously, you're working and you have yesterday's announcement. If we stay in the current macro picture, is there further restructuring to come here kind of after the plans that we've got in 2026? Is the footprint -- if you're starting Solvay again tomorrow, would the footprint look like it is?

I will let Alex answer the question on the working capital, but I will take the one on footprint. So first, I mean, there is no further announcement planned clearly for this year.

We, of course, continuously optimize our industrial footprint. This is what we've done for 160-plus years. And we are operating on markets where all the players are doing that and are making sure that they always have on a given market, the best possible assets. So we will, of course, continue to do that, but we don't expect any big movement in terms of footprint.

Now would we build the same footprint? Probably not. I mean, every year, we would build it in a different way, but we have, of course, a footprint that is good and that is sustainable and we're making sure that it's the best one in the long run as well.

So no, that's why we have this very important discussion with the European Commission on the future of the ETS is to make sure that we have a footprint that will be able to operate in a fair competitive landscape, right?

Alex, if you want to comment on the working capital?

Sure. So on working capital, as we said, it's the combination of an internal program and the demand trend, you may remember, end of Q4 last year, it was before the tariff, there was -- the demand was quite good until the end of the year while this year it was quite slow.

We can see that in Solvay, but we could also see that in our customers and in our peers. So you have one driver which is different. But a large part of the improvement is a program we have on inventory, receivable, payable. As our products are quite bulky, it will be more on receivable and payable and we've looked at all the businesses, all the item and we've pushed it.

What it means is that if you look our working capital on sales at the end of the year, we are in the 10-plus percent, which is among the best-in-class in the chemical space. It's possible to maintain this level with the current level of activity.

If the activity picks up, we will have to -- it will be a good problem to have. We will have to rebuild a little bit of working capital just proportionally and maybe give a little bit more safety on different elements. But for the moment, as our guidance for 2026 assumes, it remains broadly flat.

Can I ask a quick follow-up actually just on the market? Just China, have you seen any rationalization or any evidence of capacity changes or demand improvements there in Soda Ash?

Not yet. Not yet. We know this will happen, right? Because I don't see why in the long term, plants would run and burn cash every month. It doesn't make any sense.

But at this point, we have not seen that happening yet. What we've seen linked to the [ MCL ] evolution, but on other -- in particular on other businesses is that China is now really looking very, very carefully at the new permits.

So before getting a new permit for a new capacity, you need really to demonstrate that it makes sense and that it's not an overcapacity that we are going to generate.

Not specifically on Soda Ash.

Not specifically on Soda Ash, on other types of businesses.

The next question is coming from Chetan Udeshi from JPMorgan.

My first question is on rare earth. It seems things have gone quiet. Since some excitement at some point last year, nothing seems to have happened. Maybe it's a wrong impression, but I was just curious if you can update us on what's happening.

Are you seeing more activity? Are you seeing more requests from European Union in terms of building the capacity because they have been talking about building the rare earths and other critical minerals value chain in Europe?

And the second question was just around this EU ETS thing. Can you remind us how much of your allowances or how much of your emissions rather are covered by free allowances today in Europe? Is it 100% because you're clearly not producing at full run rate?

Or in other words, how much are you buying from the market every year? What I'm trying to get to is if we have, let's say, 2% lower reduction of free allowances every year, is that meaningful for Solvay in terms of benefit? Or is that virtually no impact because you don't buy any of the free allowance -- sorry, any of the emissions from the market anyway?

Thank you, Chetan. So on rare earths -- well, Chetan, when things are quiet, it's not necessarily a bad news. So what I can say is that right now, we continue to have discussions with all the stakeholders, with the buyers because they are more and more interested, of course, to diversify their portfolio, their purchasing of those critical materials and also with the policymakers, both in Europe and in the U.S.

And there are currently discussions on what would be the best mechanism in order to secure the volumes and the prices in the long term. And there are in particular discussions about floor prices, both in the U.S. and in Europe. So I hope things will move very, very quickly now. But I can tell you that it's a bit more silent, but it's quite active.

On the ETS, no, we have a deficit very clearly. I mean, we are emitting more than the free allowances and that has been the case from the beginning from 2005 onwards. So what we do is we manage our emissions and we protect them with a portfolio of different instruments.

So we have, of course, the level of production, which is a key parameter. We have our energy transition project road map. And so the more we secure and derisk those projects, the more clarity we have on our future emissions.

We have the free allowances. We have some quotas that we have in inventory and that we purchased a long time ago. We started a long time ago. That's why the price today has nothing to do with the market price.

We also have forward positions. So we have a portfolio of things. And we reassess this position continuously. And this is why sometimes we say we can sell some quotas that we have in inventory, or we can unwind some of our forward positions and so on and so forth.

So we manage this very, very actively. So 2% is at the same time, not too much, but it is quite significant and it's an element that we take into account to make sure that we are covered.

Now what is really important is what will -- what happens when we have disruptions. This is why the post-2030 discussions are important because we know exactly what will happen until 2030.

The only uncertainty is, I would say, the level of production, our project in Dombasle, if it starts one or a few weeks later or a few weeks earlier, that can have a little bit of impact, okay? But everything is known until 2030.

What is not known is what will happen afterwards. CBAM with or without free allowances, what will be the new benchmark. This is why the discussions with the EU policymakers is important.

There are no more questions at this time. So I hand the conference back to Geoffroy for any closing remarks.

Thank you, Gaia, and thank you, all, for your participation today. And if you have any further questions, please feel free to reach out to the Investor Relations team.

We have a few events planned in March, roadshows and conferences. They are available on the financial calendar page on our website and we will publish our first quarter earnings on the 7th of May. Thank you very much.

Thank you.

Thanks for participating to today's call. You may now disconnect.

Good afternoon, everyone, and welcome to Solvay's Third Quarter and First 9 Months of 2025 earnings call. I'm Geoffroy d'Oultremont, Head of Investor Relations, and I'm joined here today on the call by our CEO, Philippe Kehren; our CFO, Alex Blum; and our COO, Lanny Duvall. This call is being recorded and will be accessible for replay on the Investor Relations section of Solvay's website later today.

I would like to remind you that the presentation includes forward-looking statements that are subject to risks and uncertainties. The slides presented in today's call are also available on our website. We'll further discuss our third quarter earnings, then give an update on the operational excellence program and come back also on some recent developments Solvay before taking your questions. Philippe, please go ahead.

Thank you very much, Geoffroy and hello, everyone. As usual, I will start with a word on safety. While the number of injuries is stabilizing at lower rates since the beginning of the year, the few accidents we saw in our operations remind us that we need to continue to work hard on the transformation of our safety culture. Changing the mindset and the behaviors is our main focus. Safety will always remain our #1 priority. Slide 6, please. So Alex will go through the earnings in detail, but I would like to give you a few messages first.

So first, the overall environment remains difficult. We didn't see any improvement in the general macroeconomic indicators and the geopolitical and trade environment remains volatile. Our Coatis business continues to see very difficult market conditions related to the direct and indirect impact of the increased tariffs for Brazilian imports to the U.S. Our soda business also continues to be under pressure, specifically in our seaborne export markets due to Chinese overcapacity. Our analysis of the situation is confirmed by the recent anti involution regulation announced by the Chinese government and its intention to restructure industries where there is overcapacity. If and when they will target the older synthetic soda ash industry in China, we estimate that the market will rebalance and rapidly improve.

But as long as demand remains subdued and supply remains as such, we expect to see continued price pressure in the Southeast Asian region. We continue to think that this situation is unsustainable for the region with many players seemingly selling below their cash costs. In this context, we have reduced the quantities produced in our European soda ash exporting plants. The upside to this downside is we were able to save some CO2 emission rights consumption. And since we've been building our CO2 emission rights portfolio for quite some time at Solvay and as how coal phaseout is more and more secured, we decided to sell part of our CO2 emission rights inventory in Q3, and that generated EUR 40 million EBITDA and EUR 5 million cash gain.

So allow me to be very clear about this. This is definitely not a one-off, but it is a business decision that we may repeat in the future should these market conditions persist. Now before we move to financial, I would also like to spend a few minutes on the good work that we've done related to our transformation. Slide 8, please. So earlier this year, we shared with you our essential for generation strategy to establish Solvay as the leader in essential chemistry. Operational excellence is the first lever of the strategy and will allow us to accelerate the transformation of the company. We've been updating you regularly on the progress of our cost savings program with the commitment to generate EUR 350 million of cost savings by 2028. Today, we have invited Lanny Duvall, our Chief Operations Officer; to this call to give you a deeper understanding of what we do and how we achieve real results on the ground.

Lanny, the floor is yours.

Thank you very much, Philippe. My job is to translate this strategic commitment into hard numbers across the company. Today, I will zoom in on our industrial sites and describe how we approach the sustained improvements. Our savings targets are the results of 2 main programs. First, we may be a 163-year-old company, but we are becoming a digital-first company. Over the last 18 months, we've invested significantly in both infrastructure and in capability. We've created a world-class data structure where all key operational data resides, and we can leverage our scale to quickly deploy across the organization. Second, we're implementing what we call our Star factory program, where all plants have a road map for improvement in really all dimensions needed to operate our plants. All the examples that we are going to discuss are or will be implemented across all regions and all clients.

Slide 10, please. Our maintenance strategy is important for our fixed cost and the reliability of our assets. This transformation in our operational performance comes from moving away from a time-based maintenance to condition-based monitoring or what we call CBM. We utilize real-time data analysis to predict equipment failure and determine the optimal moment for intervention. By utilizing sensors to major and asset status, CBM enables the collection of critical data such as temperature, vibration or sound. This data allows us to spot trends predict potential failures and determine the remaining lifetime of the equipment. This allows us to reduce the cost of the repair and plan for the interventions.

This shifts our entire operation from being reactive to being proactive. This isn't a hypothetical pilot. We've deployed this on a global scale. We've gone from a couple of hundred sensors in 2023 to over 4,500 sensors today and 9,000 by 2027. Creating a more resilient, reliable and cost-effective industrial footprint. This is a good example of the value we are creating with our digital and data strategy, and demonstrates our ability to quickly scale across the company in all regions. Vibration monitoring is not new or novel. But the deployment strategy at scale is a best-in-class practice. As an example, at the Dombasle site helped to detect abnormal vibration on a fan and a malfunctioning of a lubrication valve. Thanks to the alerts generated by the IoT sensors -- this could be quickly corrected, and we saved a potential EUR 100,000 repair cost. These highlights -- these examples highlight the effectiveness of the CBM in preventing failures before they escalate into more serious and costly issues.

Again, the secret is how we have invested in our data platform, and we are now perfectly set up for using advanced AI tools to further our impact. Another example, we are redefining how we manage material and energy performance across our industrial operations. This isn't just about efficiency. It's about unlocking EUR 37 million of potential plant variable costs by 2027, which represents roughly 2% reduction compared to 2023. It's about building a smarter, safer and more sustainable future. At the heart of this transformation is digitization. We are rolling out standard real-time dashboards giving operations and engineers instant access to the metrics that they need. The helicopter view, as we call it, which is the standard in all of our control room includes everything our employees need, such as safety indicators to ensure our people and processes are protected, real-time production levels to track throughput and performance or material and energy consumption metrics to drive efficiency. This is not a technical upgrade. This is a cultural shift. It's about embedding performance thinking into every layer of the organization, starting with the shop floor. It's about making sustainability and efficiency inseparable from operational excellence.

Next slide, please. Continuously optimizing our industrial footprint is a core part of our strategy to enhance performance. Let me give you 3 examples. First, we've aligned our regional footprint with demand. In our peroxide business, we've taken decisive action in Povaoa, in Portugal and Warrington in the U.K. and reduced our capacity in the European merchant markets. Second, we recently announced different measures in our special chem operations in Germany to secure our long-term competitiveness. In practice, this means we will consolidate our special can German production sites to improve efficiency by relocating the Knockalla tech Center and production operations from Garbsen to Bad Wimpfen. We will consolidate expertise into one location. We will establish Bad Wimpfen as a global hub for production, innovation and customer applications, reinforcing Solvay's position as a worldwide leader in automotive brazing. Third, our energy transition, which is key to our long-term competitiveness. At our Torrelavega soda ash plant in Spain, we could not ensure competitive production costs after a full coal phase out. Hence, we will supply Latin American customers from our Green River plant with a very cost-efficient alternative.

We decided to decrease the Torrelavega production by 1/3. We will allow -- this will allow for reduced fixed cost and CapEx at the site while making the energy transition project possible for the remaining capacity. Indeed, earlier this year, we announced moving forward with the biomass cogeneration unit that will reduce the CO2 emissions by half in 2027. These actions are taken to ensure our operations are lean, competitive and ready for the future. The last example, our spin review challenge. This is a 5-step process that brings together a multidisciplinary team to challenge traditional ways of working and create value. The team analyzed spending at a site level and covered all of the site-related purchasing categories, operations, procurement and leadership all need to work closely together to create value for each site. This is an ongoing process. We started with the industrial categories, and we've expanded to include facilities, R&D services and goods, on-site logistics and packaging.

The SRC has the potential to return EUR 15 million to EUR 20 million annually, primarily in fixed costs. In 2025, we have challenged EUR 330 million in spending across 21 sites and identified EUR 11.3 million in savings opportunities, but we're not stopping there. We plan to complete 9 additional sites until the end of the year, aiming for a 5% savings on the addressable spend. An interesting case from our Qingdao site in China, where we redesigned the plastic pallets to reduce the rate by 18% and allowing for EUR 230,000 in annual savings. So this change is better for our bottom line, more efficient for us and our customers' operations and better for the environment. We are currently investigating how to scale this initiative to other sites.

Slide 12, please. We feel confident we will deliver the $350 million in gross annual savings by 2028. Because we have invested in our digital transformation, have an execution at scale strategy, all while improving safety performance and providing a platform that is future-proof. The early results are speaking for themselves. We achieved $110 million in 2024 and are on our way to exceed $200 million by the end of 2025. At the core of our transformation is digitization, by embedding digital tools and building a common data infrastructure, we are ensuring that our operations are future-proof and AI ready. We are already rolling out machine learning and exploring options for GenAI and Agentic AI in operations.

To conclude, I want to leave this -- I want to leave you with this, we are not just cutting costs. We are fundamentally improving how Solvay operates for the next generation. And this is how we contribute to the long-term financial resilience of Solvay.

With that, I'll hand it over to Alex to walk us through the Q3 results.

Thank you, Lanny, and good morning, good afternoon, everyone. Moving to the financial I'll remind you that my comments are based on organic evolution, meaning at constant scope and currency, unless otherwise stated. Moving to Slide 14. In the context of subdued demand underlying net sales in Q3 2025 reached [ EUR 1.04 billion ], down minus 7% versus Q3 2024. volumes, we are down minus 4% year-on-year, mainly driven by weaker performance in the Coatis business and in the soda ash seaborne market, while volumes for peroxide, Bicar, Silica and special chem were steady year-on-year. Pricing was overall resilient, although we continue to see strong pressure on seaborne market and in our Coatis business. As already highlighted by Philippe.

Slide 15, please. Underlying EBITDA amounted to EUR 232 million in Q3 2025, down minus 7% compared to last year. However, EBITDA margin remained solid, up 22%. Volume mix was up thanks to the positive impact of the optimization of our portfolio of CO2 addition rights. Excluding this one-off, of course, the volume and mix was down mainly due to soda ash export volumes. Net pricing decreased year-on-year, again, primarily driven by the seaborne soda ash market in Coatis. Net pricing in the other businesses remained very resiliant. With regard to fixed costs, the year-on-year variation this quarter was negative EUR 9 million. But this is exclusively coming from the 10 million temporaries credit costs related to the separation from Syensqo as our selling program continued to exceed inflation. Looking sequentially, we have stabilized our manufacturing cost base and despite still low production, we have been able to keep our maintenance cost below open.

Moving to the segment review, starting with Basic Chemicals. Sales in the soda ash and derivatives business unit were lower for the quarter by 8% soda ash volumes were down mostly from the seaborne market, were unsustainable pricing pressure persist due to the overcapacity as built in China. On the other hand, the bicarbonate volumes are steady year-on-year. [ Coxide ] remains resilient with stable volumes in the merchant market. benefiting from the growing demand in the electronic grade H2O2 for the semiconductor [indiscernible] . The segment was down minus 15% compared to Q3 2024, while the EBITDA margin remained slightly -- only slightly decrease of 23%, still a very healthy figure in such a challenging environment. Performance Chemical, moving to Slide 17. Silica sales remained more or less stable with some slight volume slowdown in the tire market.

In line with last quarter, Coatis saw the largest decline with sales of minus 26%. Volumes we have done in all end markets impacted by strong competition from Asian players. And the overall weak demand further aggravated by the U.S. tariff from Brazilian imports currently reaching 50% or more. Special Chem, sales for the quarter, were sorry, Special Chem nent sales for the quarter were flat with slightly higher volumes in [indiscernible] in [ rare earth ] and electronics. Offsetting lower [indiscernible] . As explained earlier by Lanny, this drove us to take strategic decisions in Germany to ensure the long-term competitiveness of the Fluorine business line. The segment EBITDA was down minus 21% due to the negative volume of the different business units and negative net pricing of Coatis. The EBITDA margin decreased year-on-year to Slide 18, Corporate segment results. The EBITDA contribution of the Corporate segment in this the third quarter was a positive confirmation of EUR 22 million. As explained by Philippe, this includes a EUR 40 million gain from optimizing our portfolio of CO2 emission rights. Generally speaking, to manage our EUA deficit we use a mix of CO2 emission rights, free allowances, EUA, inventory, energy transition projects and financial hedging instruments. Thanks to the progress made on the energy transition project and given the current low production level in Europe we've decided to optimize our portfolio of CO2 emission rights in Q3. I said in part of our inventory without changing our overall risk profile.

As a consequence, the full year EBITDA for the corporate segment is now expected to be between minus EUR 40 million and minus EUR 50 million which is in regard to the previous guidance of minus EUR 80 million to EUR 90 million, excluding the positive EUR 40 million I just mentioned. This brings us to the free cash flow to shareholders from continuing operations. We generated EUR 117 million of free cash flow in the third quarter. Bringing the total for the first 9 months to EUR 214 million. This result was supported by a contribution of EUR 50 million from the optimization of the portfolio of CO2 emission rates. CapEx reached EUR 81 million for the quarter and EUR 240 million for the first 9 months of the year. This is well in line with our objective to stay within EUR 300 million. The cash flow -- the cash outflow year-to-date from provision are in line with expectation and include EUR 37 million related to the energy transition project in. So to wrap up the financial, I would like to end with a word on net debt. Net debt has come down a bit since the end of June. And this is in line with our expectation of approximately EUR 1.7 billion at the end of the year. Our leverage ratio remained healthy at 1.8x.

And with that, Philippe, back to you for the recent development in the outlook.

Absolutely. Thank you very much, Alex. But before we move to the outlook, I'd like to remind you of some recent developments at Solvay. You might have seen the expansion of capacity of our electronic grade H2O2 in China. The announcement and our willingness to accelerate the development of circular Silica. And the changes we announced in Germany, as explained earlier by Lanny. While we stay focused on the transformation of the company through structural adjustments, we were also able to ensure the future long-term value creation of our businesses through disciplined investments in high-growth areas. Rare earth is another example. Earlier in the year, we inaugurated our rare use production line for [indiscernible] at Laroche in France. And given the recent developments around this industry, we will take the opportunity of this call to provide a bit more details about Solvay's current activities and the future prospects in the rare earth industry.

At Solvay, we've been rare earth experts for quite some time. Our La Rochelle side has been processing them since its opening in 1948, right after World War II. Today, our position in value chain is focused on separation, purification and formulation. High-value chemical rare at oxides are formulated in 3 industrial units. So in addition La Rochelle in France, we have one site in Japan and another site in China, and they're all serving several advanced applications such as emission-controlled cars. Chemical polishing for semiconductors and precision optics, green energy or medical contrast agents in MRI procedures or centiliter [indiscernible] . This global footprint and the modularity of our 3 plants allow us to ensure business continuity for our customers in these different industries, even at times of supply chain disruptions as it has happened earlier this year. So let's now have a look at our projects in La Rochelle and the new high potential opportunities in rare earth separation and purification that we want to capture. Next slide, please. So we proudly inaugurated our new production line in La Rochelle in April this year. And since April, we've been producing NDPR oxide that's neodynum azotemia upsides for the government magnets end markets. This is what we call the light rares for dominant magnets. And I'm excited to share that we've made the decision to start separation and purification of 3 more rare elements. [indiscernible] has already started in the second half of 2025. And [ DYTVs ], so this podium and terbium, which we call the haves, this will be done by 2026 and they are all essential for permanent magnets as well. And Solvay will be the first in Europe to do that.

Moving forward, we have the ambition to grow this capacity as the demand for permanent magnet is expected to increase significantly in the next few years especially thanks to growing needs related to energy transition, as you can see on the slide. When looking at the production of magnets in Europe, today, it's very limited. But it could represent up to 40,000 tonnes by 2030, which is equivalent to 15,000 tons of light and heavy rare earth of sites. And we can capture up to 30% of that European market with our existing assets in La Rochelle quite easily. We will need to invest to reach that level, and we can do this in different stages. And thanks to our process innovation and our operational leadership, our team is continuously improving the product cost and value creation. And the total investment to bring these assets at full capacity is now expected to be between EUR 50 million and EUR 100 million versus the more than EUR 100 million we announced earlier.

But to do this, we are first aligning all stakeholders of the value chain. We are discussing with potential partners and customers in Europe, but also in other regions, including North America. Regarding sourcing, we are partnering with recyclers and miners for the development of a secure and sustainable supply chain that would not lead to rely solely on Chinese materials. This is concrete. This is happening now. Additionally, and beyond permanent magnet, we're considering also supplying other essential rare like gasoline or or Intrum, which are critical for aeronautics, medical and other high-end applications. To conclude on this, we can say that our solution offers the greatest potential within the rare earth value chain. We already operate as Europe's largest rare earth producer of or if automotive catalysts and electronics industry, and our strength lies in our proven ability and unique expertise to separate purify and formulate every main rare earth element. I'm confident that based on the current geopolitical situation that these supply chains will be developed and we're the artist partner to do it. Now moving to the outlook now. As shared at the beginning of this call, the environment remains difficult, and we do not see any short-term improvement. However, the overall stabilization of activity levels that we've seen in Q3 and the positive impact in the actions that we've taken support our results. This is why we confirm our full year guidance for 2025. We expect the underlying EBITDA to be between EUR 880 million and EUR 930 million. And we confirm that the free cash flow from continuing operations to solve shareholders is expected to be around EUR 300 million with CapEx at maximum EUR 300 million. And this will more than cover the dividend payment.

This, I think, concludes our introduction. Which was quite extensive. And thank you very much, and back to you, for the Q&A session.

Thank you, Philippe, Lanny and Alex. We move now to the Q&A session. We have until [indiscernible] so that you can join the next call after. And Gaya, please you can now open the line for questions.

[Operator Instructions] The first question comes from Wim Hoste from KBC Security.

Wim Hoste KBC Securities. I have a couple of questions around soda ash, if I can. Can you maybe elaborate on the production footprint? How fast do you intend to ramp up the Green River capacity expansion? And to what extent will that then reduce the European capacities I think there was an example from the Spanish plant, but I would like to have a bit more guarantee on the whole European footprint in soda ash. And then also, can you maybe elaborate on how much of the clearance European production is exported outside of Europe to give an idea of that? And then any thoughts on that the last question and tough on the pricing for 2026 contracts given the state of the soda ash market?

That would also be interesting. Thank you very much for your questions. So first, the production footprint Clearly, today, as we said, there is enough capacity. So we don't plan to -- in the very short term, obviously, to increase our production. So what we will do is, as you said, arbitrate in order to use the most competitive assets to supply in the different markets. And this is also one of the reasons why we can adjust our portfolio of Q2 instruments because indeed -- and we mentioned several times, Latin America. It is today more competitive to supply Latin America and from the U.S. than from Europe. And this is freeing up a little bit of CO2 quota's that we can valorize on the market. So you see that this is really very much related to the business, you see when we say the sale of CO2 is not a one-off. This is the perfect illustration. It's the way we manage our industrial footprint. Then how much of the production is still exported.

We are still exporting soda ash from Europe to the seaborne market and in particular, to the Southeast Asian market. And this is also where -- and that's done mainly from Bulgaria -- so we use our assets in Bulgaria to export to Middle East, to Africa and to Southeast Asia. And today, given the situation on the Southeast Asian market and the volumes that are sold and the level of the margins in this area, we decided to reduce our production in Bulgaria. And this is also why we can revisit our portfolio strategy on our CO2 instruments. 2026, I think it's too early to say very clearly, the dynamic is still the same. Keep in mind that we see a certain good resilience in Europe and in North America. And more volatility on the seaborne market still and in Latin in Southeast Asia, volatility and low level of margins.

The next question comes from Hannah Harms from BNP Paribas.

I was wondering more broadly, if you're expecting any improvement in the underlying trend through 2026. And if not, what additional levers can you pull to ensure that you're able to cover the dividend for next year as well?

So I think, again, I think it's early to talk about 2026 from a business standpoint. We don't see any big changes, but we continue to work on what we control. We will continue to deliver the cost savings. We will continue to have the payback of the different restructuring actions that we take both on our industrial footprint and on the operating model of the group. And beyond that, we will also have, I think, a lower level of cash out next year from the provisions because this year, we had a high level. This is, I would say what we can say at this one.

The next question comes from Katie Richards from Barclays.

I think my question would just be why now? My understanding is that the C02 certificates have the potential to rise sharply going forward. So why have you chosen to monetize these certificates now -- was it purely just the cash optimization? Or are you confident that your future needs will be structurally lower? And also just a question on your priorities on sort of growth CapEx versus protecting the dividend. So you mentioned that La Rochelle needs another potentially EUR 100 million CapEx to scale up further. Would you be willing to sell more CO2 certificates, for example, in order to fund further expansion of this site?

Thank you. I mean if we sell CO2 credit is not to fund anything, it's because it is the the result of the assessment of our portfolio at this moment. Maybe I will let Alex explain a little bit one now. And that's, I think, a good question. And then I would probably give you the answer regarding the priorities in terms of capital allocation.

Yes. Thank you, Philippe. Yes, it's a good question what you have to keep in mind is because, as we said, we have several in products, we have the energy transition project. We have the EUA forward, we have the EUA stock and so on. And there are plenty of parameters. You have the regulation and you have the level of production. So why now is also because we are the consumption of 2 things. We are derisking and are progressing on our coal phaseout in Europe. We have mentioned that we have not exceeded coal in Germany, which was -- it's a quite large plant of soda ash and we've talked several times about our our Dombasle project for which we had to record, as you may remember, a provision last year, but we are no less than 1 year from start-up. So this part is quite derisked so it means we are confident to be able to exceed coal from France next year. So when you have the consumption of less demand for UAs and at the same time, a production level, which is slightly more, yes, we are to take the positive part of the negative the business contract. So that's why we decided. But again, we will do that only if we think we are fairly covered until 2017.

And on your question regarding the prioritization of CapEx, I mean, let me just first remind you how we see the capital allocation main principles. First, we will dedicate between EUR 250 million and EUR 300 million for our essential CapEx. This is, I would say, #1, obviously. And -- we're working landing and testify as hard as we can to optimize this bucket, right? And this year, even if we have also a little bit of discretionary CapEx, we will be at a maximum of EUR 300 million. Number two, payment of the dividend. So that's EUR 250 million, [ EUR 260 million ], more or less -- that's the net allocation of capital. Number three, it's discretionary allocation of capital to create additional value. First comment is obviously, in the current market environment. We don't need big investments in a new soda ash plant, in a new Dombasle plant and so on. So this question is addressed. But we want to continue to invest in small targeted investments in order in markets that are growing fast.

And I mentioned that is electronic grade H2O2 because artificial intelligence requires a lot of processors, and this requires more [indiscernible] grade 2. I mentioned secular Silica and we also talked a little bit about rares. Those are investments that are, I think, important because we have a real differentiation in these different businesses, but there are a lot of big ticket items, right? So -- and we will do these investments only if we have secured offtake of the products that will be produced through these investments. So we will do them. We will do them if the conditions are here to get the right level of comfort and the profitability.

The next question is coming from Matthew Yates from Bank of America.

Had a question relating to the carbon trading you did in the quarter. I acknowledge this trading is possible to the extent you've got excess permits relative to the lower rates of production. And so it was pretty clear in the introduction there, that is definitely not a one-off, but it is made incredibly difficult for us from the outside to understand the size and recurring nature of this and the level of disclosure from the company is so limited around this carbon position. So maybe for Alex. Alex, what can you tell us today to help us better understand what that CO2 position of the group looks like as it stands. And in light of sort of the proposed changes in regulatory phase outs, your decarbonization projects and our potential production shutdowns. How do you think that evolves over the coming years so we can think a bit more intelligently about such trading opportunities going forward?

Okay. I think what we meant by saying I think it's not a one-off. I mean it's significant. We will not get 40 million every quarter, and that's key. What we meant is that it cannot be looked in isolation from the rest of the business situation. That's really what we mean. If the plant were saturated, everything was running high, we wouldn't have this flexibility. There, okay, from disclosure I cannot give you a lot of detail. What I can tell you gather many parameters that will be the benchmark, what will be the volume of action. But I mean, when we look at the overall picture, even if we do this transaction, we consider we are fairly hedged, we are fairly covered until 2030. So it means whatever we are no longer exposed to variation of the price of the CO2 in Europe. That's the main element I can give you. And it should the quicker we do our -- the best protection we have are our energy transition project because -- when you move to -- from gold to biomass or to recycled waste, -- then I mean you significantly reduce your exposure and you have the opportunity to release some CO2.

Okay. But when I think about your level of disclosure compared to other carbon-intensive businesses, whether that's a are in fertilizers or a utility company it still seems to be on the rather limited side. So why are you not able to be more forthcoming in quantifying the position of the group?

Well, I think we can probably check this, but we have -- we provisioned our annual report a certain number of elements, I guess, such as the inventory and hedges and so on. Our energy transition projects are public. I will communicate on them. And every time I think we say how many thousands of tons of CO2 emission reduction we expect. So I think there is nothing in what we say our level of production, our level of emissions, our energy transition projects, what we have in inventory, what we take in terms of forward hedges everything is more or less defined. And as Alex said, the guiding the guiding principle for us is really to be covered until 2030. I mean obviously, we are currently discussing what could be post 2030, but it's really to be covered by 2030.

Yes, you can follow up with invertor relations we can follow up with Investor Relations if there are certain questions that you think we could answer better. Overall, we don't think until 2030, you will have a big change in regulation or we consider ETS will still apply the benchmark. The allowance will positively reduced. This is why we need to have this stock and for one, and this is why we need also to do the energy transition project. But we don't foresee by 20 change. Is that clear on a Matthew.

Yes, yes, we can follow up offline. .

The next question is coming from Thomas Wrigglesworth from Morgan Stanley. Please go ahead.

I did have a question on the carbon credits, but I -- I think we're kind of getting there. I mean, it just looks like a very big number, right? Because ultimately, EUR 40 million of profit on selling carbon credits I mean, if I assume that you bought at [ EUR 30 million ] and you sold at [ EUR 70 million ], which kind of stacks up with the kind of communication you've made in the past, that's 1 million tonnes of CO2, which is equivalent to 1 million tonnes of soda ash exports when the Europe exports 2 million tonnes a year. So in soda ash export equivalent, you've sold half a year's worth of all the European exports. And that's, I think, why we're getting a bit stuck on the order of magnitude of the size of the credit sale.

So any -- but I think what you're saying is that there's energy energy savings as well, not just soda ash production savings that are going on top of that. So anything to clarify that kind of thought process would be helpful. Second question is just clarification. So if I understood correctly, the -- previously, you've been thinking on the rare earth business that I think you said, and forgive me if my understanding is wrong, that you wouldn't do this project of itself the economics didn't stack up to compete with China and you needed to have customers provide long-term offtake agreements to deliver to approve the project. Have you now got those long-term offtake agreements if that's what's changed between the first half and now such that you're now willing to commit the capital?

Okay. So first question on the order magnitude. So clearly, I mean, as Alex said, we will not have this type of impact every quarter. This represents, I would say, more or less to give you at a yearly impact, right? And I think the numbers that you mentioned are wave overestimated because if you look at the CO2 price that we have today on the market, you don't come with this type of quantities. Now that being said, I mean, we are the only sodas exporter in Europe, I think, today. So it's true that we are impacting significantly. If we decide to cut the exports from Europe to the Southeast Asia, it has a significant impact because we are the only 1 to do it, right? So that's, I think, the element. I don't know if I missed anything, Alex?

No, no, Philippe you're right. It's the combination of ETP again, we are relying also sort from production, you're right, is one element of the equation that we take into account when we set our portfolio. And then the other important element is the progress that we make on the coal phaseout in Europe. Now Rene just to avoid any misunderstanding, we don't say that we will invest today between EUR 50 million and EUR 100 million, what we're saying is that what we did this year, investing a few millions to start production of NdPr, so the light warehouse of Magnus, we will do the same for the hedges. So we're talking about a few million of investment. It's nothing big. It's just to show, we don't have to do it. We can do it super fast, and we want to work with the customers to check that it works. Now if you ask me today, do you have offtake contracts to move to the real stuff, so the big investment of EUR 50 million to EUR 100 million.

I say not yet. We are progressing. It's true that the current context is supporting this type of discussions, but we are not ready today to move to the big investment. The -- what has changed, I would say, over the past days and weeks is that it seems to move forward in the U.S. There is -- there are some potential mechanisms that are implemented with low prices. And we could envisage to contribute to this mechanism. Even from La Rochelle we can produce, so this is the only thing that has changed. But we are -- we continue to discuss to the -- with the different potential customers and with the policymakers, both in Europe and in North America.

Just a follow-up on that, Philippe. What do you think the hesitation? Is it that customers are trying to figure out if this is a 1-year problem or a 10-year problem you kind of need, let's say, a multiyear offtake agreement and they're trying to figure out, well, do I want to commit to your multiyear offtake and commit to this whereas on the other hand, we don't -- it's very difficult to understand any of this trade development and how it's going to out and therefore, we don't know if rare is a 1-year problem or a 10-year problem, right, in terms of supply chains? Is that -- do you think that's what the customers are struggling with?

Well, it's true that when you have a problem and then it's sold, you have a tendency to think that you don't need any more to move into long-term agreements. But I think sundamentally fundamentally, both in Europe and in North America. Customers, they want to derisk their sourcing. So they're just trying to figure out what is the best -- how is the best way to do it. And they're probably also waiting for some indications from the policies. Gara, we will take 2 more questions, please.

Okay. The next question is coming from Mr. Udeshi from JPMorgan.

The first one was a bit weird one. I simply or actually it was weak element, solutions brought fluorocarbon gases company, ESC for 12x EBITDA. And I think you are the ones who are supplying to them the the fluorine-based gases and chemicals used in the semiconductor market. I'm just curious if somebody is buying a distributor of your business for 12x EBITDA. Why would you not consider monetizing this business within Solvay? Doesn't seem most of us care about this business anyway. So what is stopping you from monetizing this business? And the second question is, in your Performance Chemicals business, what exactly happened in Q3? Because your EBITDA seems to have collapsed from [ EUR 100 million ] to [ EUR 60 million ], I understand there was a EUR 20 million one-off, but even then, it seems like a big collapse even when the sales aren't really that different from Q2 to Q3. So can you help us understand what happened in that business?

Thank you very much, Jean. I will probably let Alex comment on the evolution of the Performance Chemicals between Q2 and Q3, I think that's your question. I'm [indiscernible], you noticed that we're in a process of really restructuring this business and making sure that we concentrate our resources, efforts, capital on what will make the future of this business. So this is why basically we stopped our production in France. We also stopped our production of HF and organic fluorine in Germany. And we will concentrate on the aluminum bracing business. And also, we'll continue to produce some flue gas as this is indeed still a good business today. Then, I mean, again, there is absolutely no -- nothing is excluded at this point, but we're really focused on making sure that we have a sound and profitable business, and then we'll see.

Alex, I don't know if we -- if you wanted to take the bridge on Performance Chemicals?

Would love to. Yes. So nothing major in Q3, just to remind that what we've mentioned in the past, we have mentioned that in Q1, we have successfully added litigation with one company that helped us to get paid and invoice some royalties for the past. We had the termination close of the contract -- and we think, in general, this segment is probably the one which has the less -- the more the variability from quarter, there was nothing really special in Q3. It's true that all business has to be a little bit soft. I mean, you see the tire market, what we said about Coatis and in term of fluorine, I mean we are taking measures to improve the profitability of the business, but you don't see it yet. So nothing mature to signal, and we are taking measure to improve sequentially.

The next question and the final question comes from Tristan Lamotte from Deutsche Bank.

Just one last, please. I was just wondering in the existing rare business, was the actual rare earth you're using in that? And how does that differ to the new ones that you'll be using with the new business and develop that?

Well, today, on the auto catalysis business on the electronics business and medical applications, we're not using the NdPr and [ DYTB ]. So the [indiscernible] [indiscernible] this case on terbium are really specific from the permanent magnet business. So we're not using them in our current businesses. It's more based on serum and all this type of material that we're working. And long-term as well.

Thank you, Tristan. Thank you, Gaya, and thank you all for your participation today. So if you have any further questions, please feel free to reach out to the Investor Relations team. We have a few events planned in November and December. They are available in the financial calendar on our website. And we'll publish our Q4 and full year earnings on February 24. Thank you very much.

Thank you for joining today's call. You may now disconnect.

Hello, and welcome to the Solvay Half Year 2025 Results Conference. My name is George, I'll be coordinator for today's event. Please note, this conference is being recorded. [Operator Instructions]

I would like to hand the call over to your host today, Mr. Geoffroy d'Oultremont, Head of Investor Relations, to begin today's conference. Please go ahead, sir.

Thank you, George. Good afternoon, everyone, and welcome to Solvay's Second Quarter and First Half 2025 Earnings Call. I'm Geoffroy d'Oultremont, Head of Investor Relations, and I'm joined here today on the call by our CEO, Philippe Kehren; and our CFO, Alexandre Blum. This call is being recorded and will be accessible for replay on the Investor Relations section of Solvay's website later today.

I would like to remind you that the presentation includes forward-looking statements that are subject to risks and uncertainties. The slides presented in today's call are available on our website. We will first discuss the second quarter earnings and then the outlook for 2025, and then we will take your questions.

Philippe, the floor is yours.

Thank you, Geoffroy, and hello, everyone. As usual, we will start with a word on safety. We continue to work hard on the transformation of the safety culture. The task force that we put in place last year, supported by external advisers is visiting our sites and taking actions to improve the safety of our people.

The number of reportables is stable, but the number of high potential incidents is decreasing, and that's encouraging. So let's continue our efforts be disciplined and work on our mindsets and behaviors and it will pay off. Safety will always be our #1 priority. Slide 6, please.

As usual, Alex will go through the earnings in detail, but I will first comment on the environment over the last few months. As indicated in our communication 2 weeks ago when we updated our 2025 guidance, we continued to see a soft market environment in the second quarter, impacted by the ongoing global tariff discussions, the foreign exchange movements and the heightened geopolitical tensions.

All of this led to a progressive reduction of demand and a slowdown in order books. That's particularly visible in some soda ash end markets and in the Coatis business unit. In soda ash, more particularly, we continue to see different and volatile market conditions. In Europe and in the U.S., the market demand has been soft for the past 2 years already.

In the seaborne market and more specifically in Southeast Asia, we have seen a decrease in demand in second half of last year. And as this continued in the first and second quarter of this year, the pricing pressure has naturally increased. Coatis, our Brazilian business unit active in phenol and solvent is producing and generating most of its sales in Latin America.

The second quarter was difficult for Coatis, impacted by increased competition in the region, in particular, from Asia. And the renewed tensions around tariffs are adding pressure on the business and on our customers there. We are monitoring the situation closely and taking measures to improve the business.

Aside from Coatis and soda ash, it's important to keep in mind that our other businesses are delivering in line with our expectations even if they feel some pressure from the current environment. One example is rare earth, where Chinese rare earth export control is putting pressure on the whole value chain.

This situation reinforces the need for rare earth production capacity outside of China, and we can confirm that we have seen growing interest from customers in our newly opened La Rochelle production line dedicated to rare earth production for permanent magnets in France.

The capacity we have now is very limited, but if we can embark all stakeholders in this project, we could grow our capacity further and quickly. Clearly, this is not what we expected at the beginning of the year. But we are taking all the necessary actions to navigate this environment and to make sure that we deliver on our commitments. I will come back to that when I will discuss the outlook.

Now Alex, can you please walk us through the Q2 results?

Sure. Thank you, Philippe, and good morning, good afternoon, everyone. Moving to the financials. I'll remind you that my comments are based on organic evolution, meaning a constant scope and currency unless otherwise stated. Moving to Slide 8.

Underlying net sales in Q2 2025 reached EUR 1.1 billion or minus 4% versus Q2 2024. On volumes, we benefited from a one-off revenue of around EUR 20 million related to the termination of a customer contract in special care. Excluding this impact, we observed a year-on-year decline of minus 4%, primarily driven by the weaker performance in the Coatis business and in the soda ash seaborne market.

Volumes for bicarb and peroxide were steady and special care suffered from a strong comparison base in Q2 2024. Prices were overall resilient but we saw a decrease in the soda ash seaborne market, while the price remains stable in the other businesses. Moving to Slide 9.

Underlying EBITDA amounted to EUR 230 million in Q2 2025, down minus 12% compared to Q2, which was the strongest quarter of last year. Overall, the EBITDA margin remains healthy, close to 21%. Volume and mix impact was slightly down when excluding the one-off, as already explained in the third bridge.

Net pricing, which reflects the evolution of our unit margins decreased year-on-year, primarily driven by soda ash and Coatis. This decline was due to pricing pressure, but also to higher variable costs resulting from the inefficiencies of our low production rate.

As far as fixed costs are concerned, selling programs continue to exceed inflation, but year-on-year variation this quarter was negatively impacted by 2 elements. First one, temporaries credit costs, which really started in Q2 of this year as Syensqo progressively exited most of the transition service agreement. And also higher fixed cost in our basic chemical plants from operational issues. Finally, the other bucket of the bridge reflects the non-repeat of the Q2 2024 accrual of minus EUR 18 million for the Dombasle Energie transition project.

Moving to an update on our cost saving programs. Structural cost-saving initiatives delivered EUR 29 million in the second quarter, bringing the 2025 savings to EUR 55 million and EUR 165 million in total since the beginning of 2024. We continue to accelerate savings where we can and we expect to exceed our intermediary target of EUR 200 million by the end of 2025. One of the key drivers remain the digitalization of our plant.

We are leveraging the use of devices such as IoT captures or drone in our site, supporting savings, both in variable and fixed costs. For example, by reducing the time for maintenance inspection by extending the life of equipment or by optimizing our energy concerns. Moving to the segment review and starting with Basic Chemicals.

Let me start on with the peroxide business. With sales year-on-year down 2%, volumes remained resilient. Mining and water treatment end markets were more robust, which compensated for lower demand from the chemical applications. The electronic grade saw higher demand in semiconductors, which have offset lower volumes of the solar panel industry. Now let me elaborate on the soda ash and Derivatives business unit, where sales were down minus 4%. Bicarbonate demand continue to be robust, driven by food and feed and flu gas treatment.

As a reminder, and based on 2024 figure, this business now represents more than 30% of the GDU sales and 12% of the sales at group level. Soda ash volumes were lower year-on-year due to the continued sluggish demand in our domestic market in Europe and North America as well as from an increasing pricing pressure on the seaborne market, especially in Southeast Asia.

During the quarter, the business unit also had higher unit variable cost resulting from less efficient low production rate. The soda ash unit also faced some operational issues, which negatively impacted fixed cost this quarter and which we are currently addressing. Consequently, the segment EBITDA was minus 25% compared to Q2 2024. Overall, the EBITDA margin rate decreased to 21% this quarter.

Moving to Performance Chemicals on Slide 12. Silica sales continue to be very resilient with volumes only slightly down compared to a rather strong Q2 2024. Coatis saw the largest decline with minus 19%. Volumes and pricing were negatively impacting by strong competition from Asian players on the whole value chain, while at the same time, high tension around tariffs are impacting demand. In Special Chem, sales were up plus 6%.

This includes the positive one-off of circa EUR 20 million highlighted previously, and this is linked to the termination of a customer's contract. Volume in rare earths auto catalysis business were lower compared to the strong performance of Q2 2024 when we had opportunistic sales captured in Asia.

Chinese rare earths control, export control implemented in April also explained to a lesser extent, the lower volume in auto cat. While there are alternative sources for the light rare earths, heavy rare earths oxide are still mainly sourced from China. So far, the impact on Solvay has been quite limited as we have been able to get licenses to export most of our products or as we have found other solutions for our customers, such as alternative supplies, reformulation or some inventories abroad.

All in all, in Q2 2025, thanks to the one-off gain, the Performance Chemicals segment EBITDA was up 9% compared to an already strong Q2 2024, and the EBITDA margin increased year-on-year to 24%. Slide 13, corporate segment results. Solvay has been delivering support and function -- support function and IT services to Syensqo since the spin-off. A large majority of these services were terminated progressively during Q2 2025.

We consequently started to adjust our cost base, but a full offset will take some time, and hence, we started to see temporary stranded costs this quarter. The corporate segment EBITDA for the quarter ended at minus EUR 15 million, sequentially lower than in Q1 due to these temporary stranded costs. Regarding the full year, we expect corporate costs to be between EUR 80 million and minus EUR 90 million with the peak of the stranded costs being obviously H2 2025.

Regarding the upcoming years, our projection remains consistent with what we presented during last year Q3 earnings. In 2026, our corporate net costs are anticipated to temporarily increase from the loss of CSA revenue and from operational expenditure associated with our ERP implementation.

Then we anticipate the full offset of the temporary stranded costs and the delivery of the structural savings from the targeting operating model in year 2027 and '25, along with the ERP rollout. Overall, this will bring the corporate segment to a normalized level around this year. This brings us to the free cash flow to shareholders from continuing operation, which amounted to EUR 54 million in Q2 2025, reaching EUR 97 million for H1 2025.

This is in line with our previous indication to generate approximately 1/3 of the annual free cash flow in the first half of the year and 2/3 in the second half. You will note the working capital seasonal cash out for H1 of EUR 56 million. All of it can be attributable to the variable remuneration cash out we are doing in Q2.

For the full year, we are committed to reach our free cash flow target of around EUR 300 million. We will come back to this in the outlook section. I will end this financial review with a word on net debt. As indicated during our previous earnings call, net debt increased in H1, primarily due to the dividend payment and to additional lease on our balance sheet in relation to the launch of the wastefed boiler in Rheinberg, Germany. We expect net debt to come back to a level of approximately EUR 1.7 billion by the end of the year. Our leverage ratio remained healthy at 1.9 at the end of this quarter.

Philippe, back to you for the outlook.

Thank you, Alex. So moving to the outlook now. As you know, we revised our outlook for 2025 2 weeks ago to adapt it to the new reality of our markets. I will not repeat what I said at the beginning of this call, but we are currently facing very unique circumstances. There's limited visibility.

But one element is clear, the second half of the year will continue to present significant challenges. While we recognize the current macroeconomic and geopolitical environment is not supportive, we are taking the necessary measures to deliver on our commitments, and we stay firm on our strategic priorities. More specifically, we continue and accelerate where and whenever possible, the transformation of Solvay to make it stronger for the future. Now let me repeat the guidance for 2025. We expect the underlying EBITDA to be between EUR 880 million and EUR 930 million, assuming current foreign exchange levels for the second half of the year.

I can also confirm the third quarter is expected to be sequentially down versus the second quarter. Our underlying demand continues to be negatively impacted by the tariffs latest announcements, especially for our Coatis customers in Brazil.

As said, our cost savings initiatives are well on track, and we now expect to exceed the indication of EUR 200 million cumulated savings by the end of 2025. Finally, on cash, we confirm that the free cash flow from continuing operations to Solvay shareholders will be around EUR 300 million. This is really the way we operate.

And to anticipate some of your questions, Alex will now give you some additional elements on how we can reach EUR 300 million of free cash flow in this new context.

Sure. On Slide 18, we provide you with a schematic bridge for 2025 going from EBITDA to free cash flow. You know the EBITDA range already. Considering the evolution of the business context, we have decided to limit CapEx to a maximum of EUR 300 million in 2025. Cash out for provision is expected to be around EUR 250 million this year, and that includes approximately EUR 100 million for pension and environmental liabilities together as well as EUR 60 million related to the energy transition project in Dombasle.

The rest is mostly for restructuring and some litigation. 2025 is exceptionally high on cash out for provision, and we see our baseline cash out to be around EUR 130 million per year, so about half of what we're going to see in 2025. Financing expenses should be around EUR 80 million and tax and other probably around the same amount. This leaves us with the working capital, which is where we expect a positive contribution in 2025.

I will mention 3 elements. The first relate to the TSA exit we discussed before. All in all, we will have less working capital at the end of the year, which should contribute for a good EUR 25 million. Second element, in such a lower demand environment, we will see some natural improvement from our working capital. And thirdly, and more generally, we are looking at each component of the working capital, be it in inventory, receivable or payable, and we will look at what we can do in such a depressed environment.

Thank you, Alex. So now maybe let me conclude this first part. So we're navigating a period where our focus is very much on the short term. This is essential, particularly as we anticipate a lower EBITDA in 2025. However, we have the organization, the model and the flexibility to meet our cash commitment.

Cash is the key enabler of our capital allocation and our dividend policy, and it will remain at the forefront of my attention. This short-term focus doesn't mean that we're losing sight of our long-term strategic priorities. We continue to engage closely with our customers and leverage our local footprint to support them in this challenging environment.

We are actively involved in the transformation of our industry. For example, I'm personally engaging with many stakeholders on the EU chemicals industry action plan to sustain the competitiveness of the European industry for which decarbonization is an imperative. At our level, the energy transition continues to be well underway and will enable us to further reduce our greenhouse gas emissions by 10% in 2025 versus 2024. Finally, we accelerate the transformation of Solvay, and we will stay agile and disciplined in the future, ready to seize new opportunities or adapt our footprint depending on the evolutions of the market.

Thank you. Back to you, Geoffroy.

Thank you, Philippe and Alex. This closes our prepared remarks, and we will now take your questions. George, now you may open the line.

[Operator Instructions] Our very first question is coming from Katie Richards of Barclays.

Two, please, one on soda ash and then one on Coatis. So on soda ash, can you give us some more color, please? In the pre-release, you mentioned a progressive reduction of demand in soda ash market. But in the release today, you said volumes have improved sequentially versus Q1.

So it sounded like a little bit of a shift in tone. Can you help reconcile this? And in Coatis, sales were obviously down quite significantly this quarter. Can you elaborate on the factors behind this and specifically to what extent the competition from Asian producers intensified and which product chains are mostly affected by this and if you see potential for further deterioration?

Okay. Thank you. So maybe I will start with Coatis. I think the situation there is probably where -- I mean, the changes are the most important during Q2 for different reasons, and I think mainly two, and they are not completely unrelated. There is today a strong pressure coming from the potential future tariffs between Brazil and the U.S. We're talking about 50%.

And this is supposed to be implemented as of 1st of August. And this changes completely the behavior and the strategy of the Brazilian -- our Brazilian customers that are exporting some of their products to the U.S. And so they clearly reduced their orders based on this uncertainty. The second element, which is an indirect effect of the tariffs between China and the U.S. is that there is a lot of very aggressive competition in Latin America coming from China on the products manufactured by Coatis.

So the situation really changed very much between Q1 and Q2 for Coatis. So again, Coatis is not the biggest of our businesses, but the impact is quite significant. What will be the future of evolution? It's very difficult to say. We're getting organized to face any potential scenario, including adjusting the way we operate our assets and reduce our cost basis.

But we will see. I mean it will also very much depend on what Brazil will do versus those new tariffs and so on. So it's very difficult to say at this point.

Regarding soda ash, maybe Alex, you want to address the question?

Sure. I can give you an element and you feel free to complement. But I think you're -- what you were mentioning is that it's true the volumes in tons are slightly higher in Q2 versus Q1, but still below last year. I think fundamentally, nothing has changed between Q1 and Q2, even we could say the tariff are progressively increasing the pressure.

But what happened in Q1 is that volumes were particularly low. As you may remember or maybe I don't know if you joined the call at the time, but in Q4 last year, we have seen quite strong volume as some people were probably anticipating some purchase and some production in Q4 before the tariff, before the churn, and that has impacted temporarily Q1. So I would say fundamental trend, if you look on the kind of rolling average, no change. And in Q2, we saw a little bit of catchup.

We'll now move to Thomas Wrigglesworth of Morgan Stanley.

My question is just kind of a bit of a follow-on, on the soda ash because the margin is down 300 basis points quarter-on-quarter. Normally, I mean from my outside-in type of model, it looks like you've managed to lose price in base chemicals at the same time has experienced a cost increase which is normally quite unusual. So is it that you've lost really high-value tonnes in -- or there's something else or that there's -- you've got some high-cost inventory I didn't quite catch in your pre-prepared comments what you were saying around fixed cost absorption.

And if it is fixed cost absorption, how temporary is that I mean, obviously, your guidance suggests it's going to -- it's not. So something seems to have more meaningfully changed in margins in base chemicals in 2Q? And I guess the question is, is that resetting the base for '26 now? Or is there a basis to think that, that might normalize back up. That's my first question.

My second question is just as a follow-up on Coatis. I mean, obviously, you built this plant originally because Brazil is a net importer do you think that's now structurally changed? And or do you think that this is just because of those tariffs and once tariffs abate, we'll see that material redirect, i.e., is there a strong disincentive for the Chinese logistically to sell to Brazil versus ship to the U.S.

Okay. So first, on soda ash margins, you're right. I mean it's not -- I mean there is a decrease in price, not in Europe, not in North America, but in Southeast Asia because we've seen between Q1 and Q2 additional pressure in Southeast Asia, and we continue to see -- even though the volume exported from China are relatively stable and probably close to their maximum already. We see some players selling really at extremely low prices and most probably not even covering their variable costs.

But the big impact comes from our costs and not from prices. And you are right, we had in Q2, several elements A lot of them are nonstructural. We had unplanned maintenance and also scheduled maintenance but that were phased in and that you don't see when you compare to Q2 last year or to the previous quarter, very clearly. So we have additional costs that will not repeat. And we also have additional costs that are a little bit more structural because we run at lower rates, right? So our plans are optimized to run let's say, at 80%, 85% utilization rate.

Today, we are slightly below that. We've been running like that for a few quarters already. And so we see a little bit the effect of this lower rate on our specific consumptions and yields. So I would say this will reset somehow at some point. I'm not talking about the market at this point because we don't see any recovery in our order book visible at this point. But there are a certain number of elements in our costs that will not repeat.

So this should not be completed the basis for '26 in terms of costs, at least. And so of course, in terms of impact on the margins. Regarding your question on Coatis, I mean this is intrinsically a good business. It's -- we have the only phenol production unit in Latin America. We have two value chains that are important on polyamide and on solvent.

And I would even say on solvent, we are exporting from Brazil. So I think now we have a nonstructural pressure coming from a lot of uncertainties as long as there is no clear visibility on what will be the tariffs between Brazil and the U.S. And until we are in a more stable situation, I would say.

As long as we will be in this uncertain environment, it will be very difficult for all the players in the value chain to get organized once this stabilizes, I'm pretty convinced that the business will find its balance and it's a way to upgrade because it's legitimate, it has competitiveness, and it has a market.

We will now move to Wim Hoste of KBCS.

I also have a couple of questions. The first one is on the tariff impact. I think you mentioned clearly the impact or the uncertainty around Brazil. But can you maybe elaborate on the other regions, the 15%, for example, that has been agreed recently between Europe and the U.S., what kind of impacts that might create for some of your businesses? .

Second question is on the outlook for the peroxides business, and specifically, I'm interested in the semiconductors and solar panels market segments. Is there some restocking in semicon, for example, that has helped you is the solid panel weakness temporary? Or is it also tied to tariff impacts?

If you can just elaborate a little bit on that, that would also be helpful. And then the third and last question would be on the rare earth business of Special Chem. Can you maybe elaborate on how close are you or what is the current thinking about potential timing of expansion projects in that business? You said you see some interest -- does that mean that, yes, expansion in Europe of that business might come rapidly a bit of clarification on that would also be helpful.

Thank you, Win, for your questions. So first, tariffs. So indeed, what we said is that we are not so much directly impacted by tariffs because we are -- we have a lot of close that are local to local, but we are always, of course, indirectly impacted because those tariffs had an impact on the inflation and so on demand. That's the same for the new tariffs announced between EU and the U.S. We don't have flows between EU and U.S., very limited flows on rare earth, for example, but that's really small and nonsubstitutable.

So it's -- those taxes will have to pay anyway by the customers. So it can have an impact on demand, of course, but not on our margins. So we won't be impacted directly. But indirectly, today, it's very difficult. It's too probably too early to say what will be the impact of those new tariffs.

A lot of people say it's good. Some people say it's not good. So I mean, who knows, right, how this will evolve, where we see the highest level of impact today is really in Brazil, to be clear, because of 2 elements.

I mean there is a lot of business -- I mean, Brazil is selling a lot to the U.S. And so all our customers, all the Brazilian industry is currently potentially impacted if it's confirmed that the U.S. will put 50% of our tariff on these flows. And also because Asia is redirecting some of its flows from the U.S. to Latin America.

So Brazil is very much potentially impacted I have absolutely no doubt that they will take measures. They will take measures to protect their markets. I'm pretty sure on that. This is what they did in the past. It was already in place and they can do it to a larger extent. Peroxide. Peroxide, so electronic grade electronic markets doing good.

Of course, there's high level of volatility, I would say, in this market right now. But all in all, a good level of demand and good performance of the business. When we talk about the other grids that are for the solar panels here, the market is still down, I would say, but it will recover. I mean, we will need solar panels in the future to do the transition. But for the time being, we still see a level of demand that is set.

I don't know if you wanted to complement Alex?

Sure, I think the a little bit an adjustment. I mean if you look again beyond 1 quarter and are conducting market are it shows the fundamental demand in electronic in the Electronics segment, especially sustained by artificial intelligence, where there is a need for a lot of chips where our productivity is largely outperforming the photovoltaic. So even if you ask you flattish for anti- the demand will be positive for our acuity grade.

Thank you, Alex. And then you had a question on rare earth. So clearly, there's an interest in this business that is bigger and bigger. We see our customers coming to us and asking for new options. In particular, with what's happening in terms of export control from China on some heavy rare earth materials. And so we started producing light rare earth oxides for carbon and magnets in arose earlier this year. For the time being, as we said, the volumes are relatively small.

Today, we have not yet decided to go further and we're waiting for our customers and for the policymakers to give us the right level of comfort to invest again. As I said earlier, we are extremely strict on cash management in these circumstances, probably even more than we are normally and we are normally already very, very strict.

So we will not invest if we are not secured on the revenues that we will get from this unit. We will wait to secure our sales before investing, and that's even more true in the current circumstance. Did I miss something?

Next question will be coming from Hannah Harms of BNP Paribas Exxane.

I just wanted to have a little bit of clarification on the corporate costs as possible. My understanding was effort it was suggested we'd have a range of EUR 70 million to EUR 90 million and now we're obviously at the upper end of that. I was just wondering what the reason for that was or whether it's a pull forward from next year? And secondly, just going back to soda ash, if I may. I know that Tata Chemicals mentioned that there's increased inventory levels in soda ash across the board at the moment, which kind of implies that you might see more pricing pressure -- is that something that you think you might see for the rest of this year and indeed into 2026.

Thank you very much, Hannah. And I will take your -- maybe your question on soda ash but first, I will give the floor to Alex on the corporate costs.

Sure. And yes, you pointed to the corporate cost. Indeed, we had about EUR 10 million more than what we indicated in Q3 last year. The main driver here is the fact that Syensqo exited the TSA very quickly, and that makes sense. At the end, that does not change fundamentally anything. I mean we can address the cost the cost earlier. But just to give you an order of magnitude, I mean, every day in the TSA, we were invoicing EUR 1 million.

So just 1 or 2 weeks of TSA duration can create this difference. So no fundamental difference. It's just the difference between what we thought would be the average exit date and what was the actual exiting. But sure, we confirm. I mean nothing changed for 2027, '28 we will get back to a normalized -- to a normalized level.

Thank you, Alex. Regarding soda ash, what we see is a high level of inventory in China, not in the other regions, nothing unusual. But in China, we are at a high level. I think it's 1.5 million tonnes of soda ash currently. This has been seen in the past, but probably not for such a long period of time. So this is obviously creating some pressure at least in the Southeast Asian region and might have a little bit of ripple effect on some of other seaborne markets. So this is something that, obviously, we're monitoring. The level of export is at a run rate of around, I think, 2 million tonnes per year.

So again, high points, not unheard of. We've seen that in the past as well. But the combination of this export and inventory for a longer period of time, usually is a little bit unusual. So we still think that the Chinese soda ash industry will restructure and I think we're comforted by also the latest announcements made by the Chinese government in what they call the anti-involution low where they're looking at assets that are more than 20 year old. And if they are more than 20 years old, they need to check if it can be -- they can be upgraded or otherwise, they will be shut down.

And I think there's also a reference to more than 30-year-old assets that would most probably be shut down. So that represents a significant portion of the soda ash assets in China. So this could be the start of the process that we expected. But let's see. I mean this is obviously something that will not happen overnight either.

We'll now move to Sebastian Bray of Berenberg.

I have 2, please. The first is on environmental adjustments and provisions. I think that Solvay previously has indicated that annual cash out should be around EUR 60 million or so to service environmental provisions. If I add up what has been booked in adjustments under the litigation stroke remediation line over the last 3 quarters, it's pretty close to EUR 100 million already.

And the current adjustment in Q2 of about EUR 60 million seems to refer to a single project -- what is going on with the adjustments? Because at some stage, one would assume that the provisions and the cash effective amounts normalized to the level of each have they should equal over but it seems what's running through the P&L at the moment is higher than cash. Is there one project that is particularly occupying your thoughts?

My second question is on Performance Chemicals even allowing for the one-off tailwind of EUR 20 million EBITDA in Special Chem. Actually, the underlying margins in this business ex Coatis seem to have held up quite well. what is going right there? Is it something elsewhere in special chem, hybrid vehicles, something happening in silica? Any color is welcome.

Thank you very much. So I will give the floor to Alex for the question on the cash out from provisions.

Yes. Thank you for the question, Sebastian. Indeed, we would some additional provision -- environmental provision in Q2, and we indicated in our financial report that this was mostly linked to 1 remediation activity. Overall, as you know, this kind of provision are based on the cash flow estimated for at least 2 decades.

So the cash impact of this specific provision we had to book is quite back-ended. So it doesn't change our estimate for the normalized cash out from provision. And as I was explaining to give you the vision for 2025. We estimate about EUR 100 million for pension and environment, that number is still the same we've been giving for 1 year and even changed by these recent positions. Performance Chemical you want me to comment?

Yes, sure. Go ahead. Sorry.

Okay. Yes, Performance Chemical indeed, there are very different dynamics between the business. Definitely, Coatis, it's not a large business, which have seen a complete change in the dynamic. The rest of the business are quite resilient and silica in particular, and you probably saw the announcement of the big tire manufacturer, which have been quite resilient. So we are seeing that, and it's one -- it's the largest business between -- within Performance Chemicals. And even if last year was quite good.

We saw last year some destocking in the good start of the year. This year is still quite good. And in Performance Chemicals, I mean, there is electronic activities there, both in rare earths and in fluorine. And this type of business has also been quite resilient. Generally, the electronic application continue to see a sustained sustainment. So that explains -- you're right, beyond the one time we wanted to make a clarity on quite a resilient -- the beauty of the [indiscernible]

Next question will be coming from James Hooper of Bernstein.

The first question is about working capital in the bridge as you're trying to manage that down. What do you think the sustainable level of working capital is without affecting service levels for the business in either percentage of sales or DIOs how big is the opportunity here? Because will this be management in 2025? And then what will change in 2026. And then my second question is about Green River. Has the plans to ramp this up for later in the year or early 2026 change given the demand environment in soda ash.

James. So I will give the first question to Alex and I will probably take the second one on soda ash.

Sure. As we indicated, clearly, the part which is linked to the TSA, it's here to say it's represented EUR 25 million. Generally, I don't have the exact number in mind, but I think our working capital sale, if you look on the moving average is around 13%, which is quite good in the industry. But again, as the sales have been going down, there will be a mechanical effect.

And we think within the EUR 100 million that they are probably few tens of million euros, we can structurally gain in our working capital? So that's Again, that's what makes us confident in our ability to reach the EUR 300 million of free cash flow this year despite the lower [indiscernible].

And for '26.

Yes, '26. Yes, we are 12% today, 12%, 13% at the total working capital on sales is the right order of magnitude, and that puts us again in the probably first quartile of the chemical industry.

But we will continue to work on. We will continue to work reducing cost again, the overdues, the terms, this is really...

Yes, typically inventories, okay, in a context like it is now, you can probably be a little bit more aggressive on inventories, then you could be more tight in a more price environment.

Thank you. Second question. So on soda ash expansion in Green River, 2 elements. And the first one is we will complete the project -- so as we said earlier on that we are going to strictly monitor our CapEx and be extremely mindful about launching new discretionary CapEx.

This one is almost complete, right? So we will complete it. It's almost done. We will start up in the second part of this year and ramp up this new capacity until the end of the year. Number two, if those tons are not needed by the market, we will use this capacity because it's the most competitive, and we will reduce the production in another asset.

That's what we will do. And just by doing this, we will generate better margins, right? But as long as the capacity is not needed, we will not increase the global level of production of our industrial footprint very.

We'll now move to Chetan Udeshi of JPMorgan.

I just wanted to clarify your third quarter comment. When you said Philippe, that Q3 will be below Q2, is that including the one-off in Q2 or even without the one-off you expect Q2 -- sorry, Q3 to be below Q2?

Well, that -- Frankly speaking, we don't see today any improvement in terms of market. So it's clear that we have the one-off in Q2 that will not repeat in Q3. I would say both the positives and negatives. Now we said also that we had a little bit of negative one-off coming from soda ash in terms of cost. But all in all, I think it's -- you need to neutralize the positive one-offs that we had in to take your new reference. We also have a little bit of higher stranded costs in Q3 versus Q2. I would say why Q3 will probably be a soft, a low point.

So below EUR 200 million, basically slightly perhaps?

That's not what we're saying. We don't give numbers. I mean, I thought No, we don't give numbers. Just take the reference, taking out the one-offs, and this is basically where you are.

Okay, fine. Okay. The second question was, I saw MP Materials, which is in the rare earth value chain. They've got a huge sort of check from the U.S. government. I'm just curious, is MP Materials a competitor to Solvay? Is that a partner because I think at some point, you were the only ones or Solvay was the only one who had the capability to separate out the rare earths from the concentrates. So how is the dynamics?

Where are you now in that value chain on the rare earths outside China? I know you talked about the magnet, but -- to get to the magnet, you perhaps first need to do the separation of the rare earth concentrates. And I'm just curious how does that MP Materials deal, which was quite big -- does that have any implications on Solvay?

Yes. Thanks, Chetan. The -- we're still the only one to have at this point to have one plant that is able indeed to take any source of material and produce any type of rare earth elements. MP Materials has a project at this point, and which is linked to a mine.

So it's a little bit different I mean, our assets in La Rochelle can take any product from any type of mine or even recycled material and so on and adjust its process to produce all sorts of rare earth elements. What I understand, again, but of course, you will have to ask to -- directly to MP Material is that their project is really linked to a mine. And at this point, it's a project.

However, what I've seen -- so it doesn't change really the landscape and the value chain. But what I saw that is very interesting is a mechanism in which, in fact, they would have a sort of guaranteed price because you know that today, in the rare earth segment, there are a lot of different projects. but none of them is profitable because the rare earth that are set by China are too low, right?

And so I think the Department of Defense or the U.S. administration is proposing to set a floor price and to compensate the operator, if the market price is below the floor price. I think this is probably something that we should look at as well in other regions, and in particular, in Europe, if we want to develop new projects in La Rochelle. This is what is missing...

Will you be adopting the same strategy that you would require an upfront deposit from your customers and these guaranteed minimum prices for you to invest if you have to invest a lot of money in setting up this capacity?

Yes. We need to have a sort of security if we want to invest, absolutely. So I don't know if it's upfront payment in detail, it's possible to adjust. But yes, I think we need to have a certain level of commitment, both in terms of volume and prices.

Absolutely. So either directly from the customers. or like in the U.S., but again, let's see, I would work just for the time being, I think, an indication, but sort of mechanism that will compensate if the market price is too low. It's a little bit like the development of renewable energies when it was -- when the electricity price was too low, people that developed solar panels or wind mills, they were compensated in order to have a decent return.

Next question will be coming from Tristan Lamotte of Deutsche Bank.

I've got three questions, please. The first is I was wondering if you could comment on roughly what proportion of your soda ash prices you currently sell at are above the spot price in the relevant region due to lags in your contracts? The second one is there are some capacities that I think are expected to come back online in China in soda ash in H2. .

To what extent do you see impact from that? And also to what extent is Baron's production getting out to the market now? And then the third one, I'm just interested in the kind of monthly sequential trends that you saw through the quarter and the visibility you have now in August and September.

Sorry, your first question, can Tristan...

The share of spot price.

The share of spot price. Good question. I think do we have this information? 20% more.

Mostly seaborne.

So yes I mean the -- it's not really spot price, it's more quarterly prices and quarterly prices, let's say, short-term prices are mostly in seaborne, mostly in Southeast Asia, and it's around 20%. Is that correct, 20%? 20%, Tristan.

For the capacity in China, I think Baron is in the market already. I don't know if they have an additional -- I mean, there are new capacities coming online in the future, but I think the capacity of the one is more or less in the market today. And again, as I said, we are in a situation where I think inventories are up 1.7 million tonnes and the export at 2 million tonnes, so high levels, but nothing beyond the historical records.

And I would say one of the reasons we provided the updated outlook on EBITDA is because we think that we don't see find that it could recover in H2. And so we think that they're only there. They are high inventories, the fundamental, and I think the new law we saw in China is going in the right direction. But for the moment, we need to we need to take. We consider that the environment will not improve. And we need to work on our site, on our cost,to make sure we adjust to this reality.

Ladies and gentlemen, due to time constraints, we have time for only one more question, and this question will be coming from Mr. Martin Roediger of Kepler Cheuvreux.

Okay. First is on Special Chem. I understood that one customer has dissolved the contract. So you were compensated by gaining EUR 20 million EBITDA. This means this customer will be missing as of Q3 and beyond, which means sequentially lower demand, is the effect for upcoming absence in sales and earnings in Special Chem meaningful? And the second one is on -- in the context of Coatis, you talked about the redirection of Chinese products to Brazil instead of the U.S. on the back of the upcoming tariffs. Is there any risk that the problems you have in Coatis in Brazil i.e., this massive increase by Chinese competition, that this could happen in Europe as well, i.e., in other activities such as for some silica or in the fluorine business in Special Chem.

To your first question, indeed, we had a customer that terminated in a contract, and this is the reason why we have this one-off element, Obviously, this means that we will have lower revenues in the future. And this has been clearly taken into account into the guidance and outlook that we've given for the '25 very clearly.

And it shows also that we try when we have a significant customer to have good contracts. So that -- I mean, when market dynamics are changing, we can get a compensation. So no sizable impact in 2025, and we are looking at what is necessary for the future.

Then your question on what we see in Brazil, can it happen in other places? In theory, yes, of course. But if you take soda ash or even silica, those are bulky products that cost much less to produce than what Coatis is producing -- and so we don't see today and we don't expect to see in the future Chinese soda ash lending in Europe, obviously, this would not be competitive.

Now that being said, we've discussed extensively about the situation in China where the inventory level is high and they are exporting to Southeast Asia. This has not a direct impact on Europe, but it has a global effect that is creating this sort of trough today in the soda ash market.

But I think on Coatis, it was -- the situation is particular -- it's quite particular where you have this supply 50% tariff, nobody was expecting. Brazil is a net importer from U.S. So suddenly, the activity in Brazil is reduced. You have very low transport cost, freight cost from Asia to Latin America and suddenly some Chinese product, which had to find a place to be sourced. So somehow, I don't say it's the perfect storm, but almost -- so what is happening in Latin America.

And as Philippe said, I mean, we know we are quite a large player there. We know the authorities are working on putting some limitation to avoid product dumping. The transport costs are increasing. So okay, we are analyzing, we are adjusting, we are taking measures, but it was and it will be at least for the coming few weeks and months, quite a complex situation to be very specific, I would say... .

Thank you very much for your participation today. If you have any questions, please feel free to reach out to the theme preferably by using the [email protected] email address, given the summer break in the coming weeks. In September, we'll be present in a few events and cities, and the calendar is available on our financial calendar page on our website. Q3 will be published on November 6. Thank you very much.

Thank you.

Thank you.

Thank you very much, sir. Ladies and gentlemen, that will conclude today's conference. Thank you for your attendance. You may now disconnect. Have a good day, and goodbye.