BASF SE (BAS.DE) Earnings Call Transcript & Summary

Good morning, everybody. Welcome to our Capital Market Update. It's a pleasure to have you join us here in Antwerp as well as online. We are streaming this first part of today's event, the keynote and the subsequent Q&A live, from our Verbund site in Belgium. The other parts of the program will not be live streamed. However, PDFs of all presentations will be available shortly before they begin. And later today, you will find replays on our Investor Relations website. Please let me begin with a few organizational remarks. Today's presentations contain forward-looking statements that may not prove to be accurate. We do not assume any obligation to update these forward-looking statements above and beyond the legal requirements. Please be aware that we will only take questions from analysts and investors in the room today. Please just raise your hand if you would like to ask a question later in the Q&A sessions. In the unlikely event of an emergency alarm, the manager of the conference center will inform us what to do and where to go. Now moving on to today's presentations. Markus Kamieth, Chairman of the Board of Executive Directors, will kick off our Capital Market Update with the keynote, which also includes a section that will be presented by Dirk Elvermann, Chief Financial Officer. Later today, the 4 presidents of the relevant divisions will present on the polyurethanes and ethylene oxide value chains in 2 separate sessions. Now let's get started with a keynote. Markus, the floor is yours.

Yes. Thank you, Stefie. And also welcome from my side here in Antwerp. Somebody's phone is ringing. I hope that's good news. So let me -- first, a few introductory comments. First, you have seen a small video to kick us off today. You might -- some of you might remember the words that were said in the video. This was also the video we kicked off our Capital Markets Day with last year, roughly 1 year ago. However, this time, we underlaid it with some pictures of our event from last year where we had our kickoff event with our executive team in Copenhagen last year. And the voices were also real BASF managers, underlining again what the essence of our strategy was, and this was this creating a winning spirit, our winning ways going forward. So I thought it's a nice kickoff today. And of course, we are here to give you an update 1 year into the new strategy where we are. And we also today want to distinctively take a closer look at our core businesses because since last year, since we differentiate in our portfolio steering between stand-alone and core businesses, we've spent a lot of time talking about the direction of travel for our stand-alone businesses, and I will also give you an update on this today. But of course, we want to today focus on the core businesses and what better place to do this than in Antwerp. Antwerp is, as you have seen, maybe on the one or the other side, a very proud site. It has a motto that I will not try to pronounce this in Flemish, but it is something like, [Foreign Language], something like this. And this translated means something like the coolest site in chemicals. And you will see today that this has some merit to it. It's really a very cool site and a very successful site. So why are we in Antwerp today has a lot of good reasons for it. First of all, it's, of course, a strategic relevance of Antwerp, not only for the chemical industry, but particularly, of course, for BASF. It is the second largest Verbund site of BASF Group in the world. And it is a site that really symbolizes the concept of integration at Verbund very well. For example, it's one of the highest integration -- has one of the highest degrees of energy integration of any chemical site in the world. And I think at least in some parts of the year when the temperature is not too extreme, the site, for example, is energy neutral. So you don't have to have any steam production here on site because the energy integration is so well. And you will see this later on. It is, of course, a strong footprint for our core businesses. All our 8 core business units or operating divisions are present here in the Antwerp site and the 4 divisions that are going to be highlighted today along the 2 major value chains that we will discuss today are, of course, big asset owners here in Antwerp. And the site was built 60 years ago and 40 -- roughly 35 years ago, roughly, we started up the steam cracker here in Antwerp. And it's still until today, Europe's largest steam cracker and will also stay Europe's largest steam cracker for quite some time, I would guess. We have, as I said today, the opportunity to take a look at 2 of our major value chains here in Antwerp, the polyurethane and the EO value chain, just to show you a little bit how we think about our value chains, their value, their characteristics and why this matters so much to us. And of course, Antwerp in itself has, of course, a lot of advantages. For example, being close to one of Europe's most, let's say, capable, most powerful. I don't know whether it's the biggest, but certainly for chemicals, one of the most important ports and has an excellent location. And what you can also see here in Antwerp is sustainability in action. As I said, high energy integration and a lot of ideas how to drive the green transformation, which is so important to us and our industry along the lines that we have described in the strategy here, you can all see this in action. So this is why we're in Antwerp today, and you can experience later also in the site tour, the coolest site in chemicals. So as I said, Winning Ways strategy, we have launched this last year, roughly 1 year ago. And I think it's fair to say that we set a new course for BASF to get BASF on its winning ways for the future, and we focus predominantly on the topics of portfolio steering, capital allocation and also establishing what we call a performance culture or winning culture in BASF. So that was the start a year ago. And I think when you reflect or when we reflect 1 year back, first of all, I have to say also with all the things that happened over the last 12 months, and it has not been the most steady time in the world, as you know, we still, from today's perspective, think we have picked exactly the right topics to transform, to initiate change and to focus on in the course of the strategy. So despite all the macroeconomic developments that we have seen, we stay very convinced that we have picked the right strategy and also the areas that we picked as focus areas are the right ones. And we will show you today that we are making significant progress also on implementing our strategic initiatives for the strategy implementation despite all the headwinds that we are seeing currently in our markets. And we are just increasing our appetite to focus even more on self-help measures, and we will talk about this later that in the current environment in the chemical industry, this is absolutely key. So just a quick reminder what our strategy was all about. This was the, let's say, narrative structure around our strategy that we presented a year ago, always starting from our ambition to be the preferred chemical company to enable our customers' green transformation. And we have structured our strategy implementation around these 4 levers, focus. So this is a lot about what is the portfolio we're going to strive towards in the future, how do we create and unlock value out of our broad portfolio in BASF, how do we improve capital allocation, internal capital allocation for our businesses. Accelerate is a lot of internal transformation, making BASF leaner, making BASF more streamlined, a faster and at the end of the day, also a much more productive company. And also bringing AI as a new enabler and as a new muscle, if you want, into the organization to really bring BASF to the next performance level. Transform was all about how to shift focus in the green transformation away from a target-driven transformation to a market-driven transformation, lowering our risk profile and making our green transformation pathways more adaptable to the quite volatile way that green transformation happens in our customer industries and also to the unpredictability that we are seeing in the regulatory environment. So I think we made great strides here. And of course, it was about making our European sites more competitive. And this means a lot of focus was put over the last year on getting our costs down in Ludwigshafen in particular, but also in other sites around the world, and we'll give you an update on this as well. Last but not least, we said our pillar win is all about culture, driving a performance culture in BASF top to bottom. So from the boardroom all the way to the shop floor. It has a lot to do with how we deal with each other, which kind of behaviors we're trying to promote in the company. Here, I have to say this is a very -- topic that I'm very passionate about. And we're making great progress. And if you talk to BASF people, many of them will tell you that over the last year, the conversations in the company have changed a lot when it comes to culture, when it comes to performance orientation, output orientation and also speed, for example, of how we make decisions and how we move the company forward. And we have also introduced quite a number of, let's say, more hardwired things in this win column, for example, we've changed the entire performance management system in the group now also for all employees. So for all more than 100,000 employees worldwide, we changed from a very monolithic performance management, how, let's say, annual bonuses, for example, were paid to a very, let's say, agile and also more targeted performance management system where each individual is at the end of the day, rewarded based on the performance of his or her respective division. So overall, that was the canvas, so to say. That's a solution suite for our strategy implementation. As I said, from our perspective, we're on a great way, and we will try to convince you that you see it the same way after today. So let's start with portfolio. Last year, we've introduced the concept of separating BASF's portfolio into what we call core businesses and stand-alone businesses. You can see this on this slide, our 4 segments: Chemicals, Materials, Industrial Solutions and Nutrition & Care, along with the 8 operating divisions that compose these segments are what we call our core business. And you can see that we have laid out clear financial ambitions for the year 2028 to take it from EUR 5.4 billion EBITDA, the core businesses to EUR 7.9 billion (sic) [ EUR 7 billion to EUR 9 billion ] over the next years. And on the other hand side, we have what we call stand-alone businesses. These are the businesses where we do not have a strong connection to the core. They are not integrated in our value chains, and they are also competing in the market typically with companies that are, let's say, doing nothing else than this one. So a much different business environment, a different competitive environment and also different success factors. And we've also said that we want to look for ways to unlock the value that we have in the stand-alone businesses that often where there's quite a number of times a situation where these businesses could command a clear premium over the valuation they have as part of a chemical company, and we will update you in the next slides on where we are with all these stand-alone businesses. But the main focus then later on will be on the core, and we will talk a lot today about the value chains, about the Antwerp side and about 4 of the divisions that are part of the core, and that's the focus today. So let's start with an update on the directions of travel, as we call it, for our 4 stand-alone businesses. And let's start with our -- we call it ECMS business, so our automotive catalyst and precious metal services -- business (sic) [ Environmental Catalyst and Metal Solutions ] business. As you know, we have already started the carve-out, the internal carve-out of this business quite a while back. I think we started in 2022, if I remember correctly. And I have to say, in hindsight, this internal carve-out and the repositioning of this business towards a, let's say, low growth, maybe eventually even a declining market in automotive catalyst has been a real success story. The team has done an outstanding job in reinventing themselves in creating new structures, more targeted fit-for-purpose structures and also, of course, significantly reduced the capital requirements. And we are now putting this business really in a mode where we have the optimum setup to extract quite attractive cash flows from this business for quite some time. In the market, I have to say the -- even over the last year, the expectation for the length or the market development for the automotive catalyst market or for the internal combustion engine also has changed quite a bit. I think today, many people would subscribe to what I also said at the last Capital Market Day in September, where I said if this is a sunset business, it will be a very long sunset. And I think the statement holds now more true than it was even 12 months ago. So we believe this business has a bright future. It has still a long future. And with the setup that we have chosen, we also gave it the right environment to be a very successful business in BASF. As you can see here, we are expecting from 2024 to 2030, a cumulative cash flow contribution from this business to the group of roughly EUR 4 billion. So it's a very significant cash contributor to the group based on the new operating model. And this also means that BASF is a very good owner for this business because, of course, we can value the cash flows typically higher than any other company would do at this point in time. So we believe that this business is set up stronger for longer and also will maintain -- will remain part of BASF Group for quite some time in this more stand-alone and independent fashion. Short update on batteries. Here, the market situation has turned out to be as challenging as we described it also last year, especially outside of China. A lot of developments in the market have been very volatile in the battery market, both with cell manufacturers, but also with battery materials manufacturers. So I think also here, our path that we have chosen last year proved to be exactly right. We have reduced significantly our fixed cost and basically ramped down our capital spend to 0, basically derisking our pathway at least for the next year significantly because of the volatile market environment that we have, especially in Europe right now around battery manufacturing. So I think this was the prudent thing to do, and the team has done an outstanding job of restructuring this business based on this market volatilities and headwinds. We have worked very hard on delivering on this idea to create partnerships along the value chain that help us to enter then the phase of profitable growth once the market comes back. And you've seen maybe also that we have announced one of these collaborations with the market leader in battery cell manufacturing, the company, CATL from China, and we have agreed to form a strategic supply relationship here with CATL. And we are very confident that we will now, over the next years, fill our existing assets. We have 190,000 tons of capacity for cathode active materials, so we can grow a long way without having to build new capacities in this business. So overall, I would say, in a tough market environment for everybody, I think, in the chemical -- in the battery value chain, I think we've chosen exactly the right path. Short update on Coatings. You know that we have approached this portfolio journey or the direction of travel in 2 separate steps. The one actually we have concluded last night. You might have seen this. We have -- it was published last night that we have actually successfully closed the divestment of our decorative paints business in Brazil, the so-called Suvinil business. This has been divested to Sherwin-Williams for an overall purchase price of USD 1.15 billion, and this transaction was closed last night. And this means that from announcement to closing, we have done this in 1 year, which also plays a little bit into our strategy theme of speed. And I think this was a very successful transaction. The rest of the Coatings business, roughly EUR 3.8 billion in sales. We've also announced that we are looking for ways to unlock the value out of this business in either forming a joint venture or a divestiture. And we have started the process in the second quarter, went to the market, got a lot of interest both from the financial sponsor side as well as from strategic investors, and we are currently in discussion with, I would say, highly motivated parties to come to a conclusion here, and we expect that there is a decision then going to be published in the fourth quarter. So we are in the middle of it and stay confident that we have chosen actually the right approach. And also, we are happy with the response that we got from the market. Last but not least, the fourth stand-alone business, of course, our most valuable business, so to say, if you want. And this is our Agricultural Solutions business, quite a lot of noise in the Agricultural Solutions space over the last days, I would say. We have decided to also here pursue this pathway of carving this business out internally, setting it up in own legal entity structures and giving it also the right process and IT environment to operate as a stand-alone entity. And then prepare this business for an IPO, and we target IPO readiness by 2027, then to take a partial IPO then as a next step. I have to say I'm very impressed by how the team has taken this and then how far we are already in this process, extremely diligent and professional. And so we're very confident that this IPO preparation phase, so to say, will be on time and according to our expectations. And so overall, we can report here good progress and that we stay on course for this direction of travel that we have published. And let me also -- based on the recent news that you have seen, let me also again say that we are very firm and we are very convinced that our strategic model, so to say, of having an integrated business model between crop protection and seeds is exactly the right one with a strong focus on crop systems and our key drive countries as we have it. So with a focused approach when it comes to crop systems and target markets that this is exactly the right one, and we believe that this is the winning model at least for BASF also going forward. And with this, I would just briefly introduce this and then would ask Dirk to join me here on stage to go through the financials. And I would just wanted to reconfirm that for 2028, we had announced the financial targets in a way that we have said EUR 10 billion to EUR 12 billion of EBITDA before special items. A free cash flow cumulative of EUR 12 billion over the period 2025 to 2028 and a targeted ROCE by 2028 of larger than 10%. And today, despite the fact that certainly 2025 for the chemical industry in general has turned out to be much more challenging, we want to confirm the targets and stay focused on self-help measures and everything that is in our control to execute what we have under our wings to stay on course to deliver those targets. And with this, Dirk, I would ask you to take it over from here.

Yes. Thanks, Markus. We confirm, ladies and gentlemen, our midterm financial targets. Markus, you just said that. We are also confirming the shareholder distributions that we have announced last year. So we will stick to the dividend policy that we have announced last year with the strategy, saying that at least EUR 2.25 per share, we will pay out to our shareholders each and every year, plus share buybacks, which should bring the overall shareholder distribution in the period between '25 and '28 to at least EUR 12 billion. So with this confirmation of both the corporate financial targets and also the distribution policy comes a new capital allocation framework that we have already introduced last year to you. And I would like to present an update on this one, giving quite specific examples also what we have done in the meantime in order to reinforce our capital allocation framework. Basically, it is about 3 things. First of all, maintain our financial strength, which will require that we are protecting our balance sheet, will require that we are deleveraging the current debt level of the company. Secondly, grow with high capital efficiency, which will require that we are using our capacity reserves that we have in the system. You might remember last year, we gave you one data point saying each and every percentage point of additional utilization that we are getting from our machine park will bring us around about an EBITDA contribution of EUR 300 million-plus. And so you will see where the value pockets within BASF are sitting. Thirdly, we are sharpening our portfolio. We already alluded to this one, and this will allow us to channel the funds that we have available in the company to those activities that are moving the needle for us and avoid funding it to things that are rather distracting us. Now let me give you some more substantial information, also some examples about our capital management that we have started since launching the strategy. First of all, we will bring down our CapEx in this period until 2028 significantly. With the completion of the Zhanjiang Verbund site with the completion next year of the MDI plant in the U.S., we are considering ourselves as a very well-invested company. So the big things, the big program that we had is then done, and we are well invested. And this means for us that we can live with the machine park that we have for quite a while, and it allows us even to further reduce the CapEx amount that we have announced last year. Last year at the strategy launch, we told you that we'll probably, until 2028, spend CapEx of EUR 17 billion. In the meantime, we are very comfortable to say it will be at most EUR 16 billion. We drive the asset utilization, which I already alluded to. And going forward, also very importantly, we are directing more of the CapEx, the majority of the CapEx to growth regions and growth businesses, which also tells you a little bit how we are thinking about our capital allocation going forward, being more selective. On this slide here, you see on the photo a very recent image of our new Verbund site in Zhanjiang. And I'm sharing here with you 3 examples of how we are spending or not spending CapEx going forward. Let's start with Zhanjiang. This project has been executed according to schedule. We are very confident that until end of the year, the site is up and running. And it has been delivered significantly below budget. We are alluding to this since quite a number of quarters, but now I have a number for you. We are completing the project with a lower CapEx of EUR 1.3 billion. So the EUR 10 billion project that we have announced is basically an EUR 8.7 billion project. And that is thanks to very disciplined management approach that the team was taking. It's thanks to some rescoping, but not in the portfolio field, but rather in the field of technical setup, which helped us to save some money here. And it's thanks to a very smart procurement approach, which also was leveraging on the tight and intense conditions on the engineering market during COVID and after COVID, so that we can now safely say with procurement savings, with some rescoping, we are achieving this project at EUR 8.7 billion, which I think is also news for you. Second example, we are also not shy to not do certain things if situation is changing, if environment is changing, and we have the feeling that deploying capital right now is not the best use of our money for a certain project. And this was the case for the joint low-carbon ammonia project that we evaluated with our partner, Yara, where both partners came to the conclusion, this is actually, at that point in time, not the best use of capital. So we stopped that for good and rather said, let's -- for the ammonia demand that we have, let's go to the market and source it and let's look into other possibilities. So we stopped this project. And the third one is a, I would say, smart investment into our integrated site in Ludwigshafen, where we have announced already the investment into a semiconductor-grade sulfuric acid plant. And this plant will come on stream in 2027, which nicely coincides with the demand that our partners have because they are also expanding capacity for their semiconductor business up into 2027. So that's an investment that is planned exactly for the demand that we already see coming for us. So we are doing things cheaper. We are not doing certain things, and we are smartly investing incremental capacity in those businesses, which are yielding good profits. This picture you are probably very familiar with, and you hear me repeating that we are on very good track with our cost-saving programs. I say it again, but then also would like to give you some good examples for that. We are indeed accelerating our cost-saving program. We have a current program of EUR 2.1 billion, as you know, which is basically addressing 10% of the overall fixed cost of the BASF Group. If you look into the addressable fixed cost of the group, you would even say it's 13%, 14%. So it's quite a big program, I have to say. We have accelerated this and are confident that we will achieve savings of EUR 1.6 billion as a run rate already by the end of this year and the remaining EUR 500 million by the end of last year, so fully on track. We are now also gradually seeing the effects of this cost saving in the P&L because apparently, the onetime cost to achieve in delta to the run rate that we are achieving now, the gap is getting wider, and we are seeing the effects that we wanted to see. So this is in full swing. It is accelerated and it will be delivered as planned. Notably, once we have ended the project, and this is one of the questions we always get, are you then done? So we, as a Board, but also as a management team say under certain -- the current conditions, we are never done, but the cost savings will continue. We go into a continuous improvement, continuous productivity improvement mindset. So we will deliver the EUR 2.1 billion, and then we move forward. Let me also here be a bit more specific. On the page here, you see the site in Ludwigshafen. And we are addressing the Ludwigshafen site specifically with a program, which is part of the EUR 2.1 billion, of EUR 1 billion. So what are we doing there? We have a number of project groups to achieve these savings, and I would like to give you 3 concrete examples what we are currently tackling. A, is the further streamlining of our asset park. We have already announced a couple of plant closures after we have looked meticulously into each and every plant to see whether this is competitive under hard current conditions. We have already announced the closure of the adipic acid plant, of the CDon plant, of the CPon plant. And now we take the next step and have also announced the closure of the hydrosulfite plant in Ludwigshafen, which is a plant that is not contributing to the earnings of the site anymore, which is not per se critical for the Verbund itself. So we have a clear case to close this plant also. So we are going to do that. Big saving potential we do have in the non-operations part, including all the services, all the site services. And here, we have just taken one measure to consolidate all the central maintenances into one unit in Ludwigshafen. Sounds a little bit trivial. It was so far scattered in various units. We are consolidating that. By that, reducing a lot of interfaces, by that also achieving a significant headcount reduction, which is exactly the way to go. And the third example is in site procurement. We are not solely addressing the fixed cost side, but we are also addressing variable costs. And with a new procurement approach using vigorously not only AI, but also game theory, we are currently in the position to significantly lower our spendings in Ludwigshafen. Another aspect is the working capital. As you know, we have, together with our strategy, also set a very clear and distinct cash target. So it's not only about earnings, it's also very much about cash. We are setting cash flow targets for the units and each and every unit in the meantime is laser focused, I'd say, on the working capital levels. And we have already proven that we can reduce our working capital between mid of 2023 and mid of 2025, we have taken roughly EUR 3 billion of cash out of the system by simply reducing the working capital. This trend will continue. There is, of course, some offsetting now when we are ramping up Zhanjiang. We have to fill the plants. This will lead to new inventory levels, but the overall trend, bringing down the inventories, bringing down the DSOs on the accounts receivable side, this is to be continued. And this will lead to what we see on this page, namely the inflection point, I would call it, for the cash performance. Going forward, we are now assessing an operating cash flow until end of '28 of around about EUR 29 billion. We have reduced our CapEx plan, as I've already said, to EUR 16 billion, which will then enable us to reach the at least EUR 12 billion cumulated free cash flow by the end of 2028. And with that, I would like to conclude my part with a little bit of a longer slide on the cash contributions and cash allocations, including some good news that partly already heard also from Markus. So let's go first to the left-hand side to the cash contributions. We have executed the sale of our food and health performance ingredients businesses on September 30. We have agreed with our partner that we are not disclosing the purchase price in the commercial terms, alone the fact that you find it on the slide tells you that it is for us a meaningful thing. So it's positive news. Second, Markus, you said it, the Brazilian deco paints business is now successfully closed and sold to Sherwin-Williams. This happened last night. We are also making good progress on the further monetization of our oil and gas assets. In terms of our participation in Harbour Energy, we have -- you may have seen this recently participated in the share buyback program that the company has set up. We are receiving our base dividends. And together, probably this year, we'll get a cash inflow from Harbour Energy in the order of magnitude of EUR 200 million. On top of that, the federal investment guarantee that is sitting in Wintershall Dea is making good progress. I know I also say this since quite some time, but now I can confirm that it is really concretizing. We see first smaller money inflows via dividends out of the federal investment guarantee from Wintershall Dea, and there's a bigger payment made to Wintershall Dea still sitting in Wintershall Dea for booking reasons. But what I can say is we are trending there in the right direction. I am reasonably optimistic that within the year 2025/'26, we will be able to resolve the majority of this topic. Then, of course, on the cash contribution side, if there is a successful coatings transaction, this would lead to meaningful cash inflows and the same goes apparently for the potential IPO of the minority shares in the Ag business, where we confirm that we are targeting IPO readiness by mid-2027. Going to the right-hand side, what are we going to do with the money that we are expecting? First of all, and I come back to my first slide, we are confirming the ordinary dividend on the level of at least EUR 2.25 per share annually. Secondly, we want to delever and support our balance sheet, and we want to maintain the current single A rating that we have with all 3 agencies that are rating us with a stable outlook. We want to maintain this. So it's also a commitment of the management team. Thirdly, we are focused on the share buyback programs that we have already announced. And you know we have said the latest beginning of '27 and at least EUR 4 billion until the end of '28, we want to deliver under the current circumstances and depending on a successful closing of a coatings transaction, we may consider to accelerate that and to start even earlier with a share buyback program then by the beginning of 2027. Acquisitions. Here, we would say large acquisitions are currently not in our focus. Small or midsized acquisitions, and with midsize, we mean up to and around EUR 2 billion. This is always a possibility. There, the firepower of the company is always there to do this without distracting us too much. So this is a possibility. But also here, do not expect something imminently. This is a possibility that we would not rule out going forward. And for CapEx, I think I said my part, we are invested now. We have to make use of the invested assets that we have, and we will certainly invest for the next couple of years until end of '28 below depreciation level, which is probably on a level of EUR 4.5 billion. So that's the depreciation level annually. So we will certainly stay below that. Markus?

Yes. Thanks, Dirk. This is very clear. And let me now switch back to the topic of the day is our core portfolio. So we're taking decisive steps to increase the earnings in our core businesses. As you've seen, we have ambitious targets to drive earnings growth in our core businesses. And we, of course, already described the strength of our core business, we go much deeper today, but we've described it already last year. Some of the characteristics of the core, I think it's worthwhile to spend some time on. We're building on very strong key value chains. And I'm going to show you some examples of this and how relevant this is. And also, I think this becomes clear then why we believe this core is actually fundamentally a good portfolio to have and to run and why this also belongs together. As Dirk said, we are focused very much on filling existing capacities now. We are coming out of a wave of high investment or years of high investments. We have capacity to grow, partly by design because we've invested, partly also because the last year, certainly in terms of volume growth in all markets have been below expectations. So we have ample opportunities to grow. And we're doing this based on very strong market positions. In our core business, 75% of all our businesses have a top 3 market position in their respective markets. So we are often operating from a position of strength. And of course, also, as you will see later in quite some detail, also in a position of good competitiveness. And last but not least, the core is and remains the innovation engine also for BASF. And you will see that over proportionately, this part of the portfolio, the core contributes to profitable growth coming from innovation. But let's start with one project that Dirk already announced. He showed a nice picture of our new investment in Zhanjiang. And here, again, I just want to reconfirm we are on track to start the site up in late 2025. That's the current plan. Dirk has already alluded to the CapEx budget, EUR 8.7 billion. This is all in. So everything we spent from 2019 all the way to 2028. And as we also discussed in length, I think, over the last months or in many individual discussions and in many calls, of course, the site now starts up in a Chinese market that is very different than what we thought when we made the decision for the plant. It's much longer. A lot more capacities came on stream that were not necessarily all anticipated. And the Chinese market growth has been at least during the COVID years, somewhat lower than expected. So overall, we see much longer markets in most value chains. But that also means that in these markets, the players who have competitive capacities are in the low end of the cash cost curve have, let's say, a strong right to run at high utilizations, and that's actually the expectation we have also for our Zhanjiang site. Most of our plants will be in very favorable cost positions also in the Chinese market, and we expect a fast ramp-up of our capacities as basically given by our technical capabilities. However, due to the fact that we currently see very low margins in most of the commodity markets in China, we will have a slower-than-anticipated ramp-up of the overall profitability, but we still expect most markets and value chains to rebalance in China over the next years towards the end of the decade so that we confirm our overall outlook of the site profitability of EUR 1 billion to EUR 1.2 billion EBITDA before special items. But if you want to ramp up towards this time will certainly be more challenging, and we're also looking next year at a lower than originally expected EBITDA contribution, which might be either slightly positive or even negative, depending also on the ramp-up costs that we have to incur and also, of course, of the market development. But overall, we stay confident on the site, its cost position, its competitiveness in the Chinese market, and we stay overall also very confident of the rebalancing of the Chinese market in most value chains based on strong demand growth, which we continue to see in China even today and also some of the measures that were also prominently discussed over the last months in the public space, for example, the anti-involution measures as they are now called. And some of these will certainly be concretized in the upcoming 5-year plan. So overall, this is the outlook for the Zhanjiang side. And as you can imagine, with a tougher market environment that we already see, we have, before even starting up the site already initiated now efficiency programs to make sure we're reaching benchmark cost positions also in the nonproduction areas, so services overhead and contracting, for example, much earlier than originally anticipated. So the pressure certainly is on, and we will deliver a great project in a tough market with a strong earnings outlook midterm. I have already talked about the core portfolio is the engine of innovation for BASF. And here, you can see also some numbers, products that were launched in the last 5 years or products that were introduced new to the market make up 15% of the sales in core businesses. The number is EUR 6 billion. So this is a very sizable part of the portfolio we crank out of our R&D machine every 5 years. And the projection is that this number even goes up now over the next year. So the big driver in the core business and the innovation is the trend towards sustainability, the green transformation. And all of the divisional presentations that you will see later will have examples also that you can see really what we're spending on -- how we are spending our R&D money, how we're driving the green transformation and how that leads to a relative improvement of the competitive position of BASF and how we really make this -- transform this into profitable growth for us. So we're very confident about our capabilities to make a difference through R&D, through innovation in the core. And I say this so prominently because sometimes over the last year, I got the feeling that the perception is that our core is a very commodity-heavy portfolio, which it is not. If you look at really the composition of the core, this by far is still the largest specialty chemicals entity in the world and has, of course, a certain base chemicals, commodity chemicals character because of the upstream divisions, but there's also a good reason for it. And that's what I want to introduce today because today, we will talk a lot about value chains, and why this matters so much to BASF. And I brought one value chain as an example that will be discussed in much more detail later with Mary and Thomas, which is the EO value chain. And I just want to go through the general logic and our thinking so that you also see why we are making such a big deal about value chains and why if you look at, for example, the current restructuring of the chemical industry in Europe, we are not so much alike other chemical companies that have made announcements, for example, when it comes to cracker restructuring or asset rationalization. So this is a very rough and very high-level depiction of our EO value chain. Thomas and Mary will show you this in much more detail. So we start with ethylene. And typically, when BASF makes ethylene, we make it with a steam cracker. So we have mixed feed steam crackers in all regions of the world, and we make ethylene. But we are not making ethylene to make predominantly market products based on ethylene plus 1. So we're not in this ethylene market to make MEG or to make polyethylene. This is not our business. Our business is to make magic with ethylene and to make many, many different products out of ethylene, partly with a value add that increases then 10x and even higher over the course of this value chain. You see the outlets that we have for ethylene oxide here on this chart. It goes all the way from still relatively commoditized products where you're talking, for example, about commodity surfactants, ethanolamines, stuff like that, all the way to specialties in the agricultural formulation or even in the pharma excipient space, where the molecule of ethylene experiences a huge value add. And this is basically what we talk about when we talk about Verbund. I know we have abused the word Verbund for many things in the past, but this is really what the core of the Verbund is. And you can see the value add over a molecule of ethylene for us looks very different from somebody who has a nonintegrated business and runs a steam cracker, maybe even an ethane steam cracker makes polyethylene out of it and then is merchant with polyethylene. This is a completely different exposure to an ethylene cycle and so forth. We are exposed to the ethylene cycle as well because it's a key raw material for us. But of course, we have a very different perspective on why we, for example, also run a cracker than other companies. So very important to understand this, and this will be the core theme of our presentations when we look at the polyurethane and the EO value chain in the course of the day. And here are 4 examples of our -- 4 of our key value chains that we have in BASF, the ethylene oxide and the polyurethane value chains we will discuss today, but we have other examples like the C3, acrylics value chain or the C4, isobutene value chain. These 4 value chains represent roughly 50% of the entire core business. So 80% of the core business overall is linked to one of our value chains, and these 4 represent 50%. So these are very meaningful parts of the core portfolio, which means also that it is for us not a very straightforward idea that sometimes floating around in capital markets to say, shouldn't BASF split up the core any further? For us, this is a very strange thought because we believe the value destruction potential of splitting up these very powerful and very well-positioned and competitive value chains has a lot of potential to destroy value. So this is why this topic is so important to us. And if you look at isobutene, for example, it's always a fascinating example to me. Isobutene is if you want -- now sorry for some petrochemicals experts, but let's say, isobutene is a bit of a byproduct in a cracker. Most people actually in the world, probably 2/3 of all isobutene gets made into MTBE or rubber. We make sophisticated stuff out of isobutene because in the last decades, BASF chemists have invented great technologies to upgrade this isobutene molecule into really fancy things, like, for example, fuel additives, like vitamins, like fragrances. Our entire fragrance portfolio is built on isobutene. So this is what we do with chemistry. This is what the Verbund is all about, and this is why we are different despite the fact that we have an upstream business, we run crackers, but we are not a, let's say, cracker-centered company. Thomas might see this a little bit differently from his perspective, but we run crackers to make magic with chemistry along our value chain. So this is what I wanted to say with regards to this setting up the presentations later. Last, I also will address that we have issues in the core portfolio. We have what I call construction sites. And in the portfolio of our core, we also have pruning opportunities. We said this also last year. And you've seen, for example, yesterday or the day before, we have announced that we are looking now for strategic options of our feed enzymes portfolio, for example. But we also have a lot of businesses where we feel the gap towards target profitability is still substantial. But our attitude here is really to look very carefully what can we fix, what do we have in our control and where can we focus on improving profitability. And here, we want to be quite open with 4 construction sites that we have where current profitability levels are not according to our expectations. This is partly due to significant global overcapacities like in the case of butanediol or I would say, partly also upstream polyamide value chains. And partly, this is due to, for example, increased competition like in plastic additives, where a lot of Asian competition has emerged over the last 10 years or even asset-related issues like in our vitamins value chain. As you know, we had also issues with our own production assets. So we are very much focusing on this also as an executive team because these construction sites, if we fix our issues, so to say, and we put ourselves in the position to have the steering wheel here in our hands, we can actually lift the profitability of the core quite a bit. And these 4 construction sites alone, and we as a Board have spent quite some time really deep diving into these. And you can see some of the measures, which are quite assertive, often include asset restructurings here as well, will deliver an earnings lift of EUR 400 million by 2028 by addressing the obvious pain points here. So there's a lot of self-help that we also have in the portfolio when you look at parts of the core portfolio that are not performing according to expectations. We also put pressure on the organization to get leaner, to accelerate. This was the topic of accelerate in our strategy. And of course, the current headwinds in the macroeconomic environment are a strong trigger to accelerate this -- making the company leaner and overall, let's say, creating a more fit-for-purpose setup for the core also means that we can accelerate here. And here, just 2 numbers and what we have seen so that you really also see there's a lot happening in BASF also on this side. Dirk always talks about these savings, the EUR 2.1 billion savings. But if you look at what is really happening in BASF, it's quite remarkable. Over the last year, we have announced this also last year, we have dissolved the regional organization in BASF, and we have taken an entire access, so to say, out of our 3-dimensional matrix organization. And we have, of course, focused a lot on restructuring existing organizations, for example, in Europe, in Ludwigshafen and Dirk has given you some examples. And that led to the fact that since last year, we've reduced 10% of all our senior executive positions in BASF Group. And we have reduced the number of employees by 3,000 since 2024. And that is before the buildup of Zhanjiang. Of course, in Zhanjiang, we have to add now operators to run the site. But if you take Zhanjiang out, we've reduced 3,000 positions. So it means a lot is happening in BASF. There's a lot of, let's say, self-help that we really focus on now. And it is also partly planned, but partly also accelerated based on the currently difficult market environment. So overall, our core businesses, we feel have a very strong setup, strong leading market positions, strong technology positions. You will see this also. We have the ability to run the business now for quite some time, as Dirk said, at lower CapEx levels. The core businesses will roughly out of the EUR 16 billion over 4 years that you've shown will roughly have a run rate of EUR 3 billion or less per year for the core businesses. We will continue to build our strength based on these deep and long high value-add value chains that we run across our portfolio. And of course, we are preparing our core more and more, and you will also see some examples of this later for enabling the green transformation of our customers, increasing our offer for sustainable solutions when it comes to low carbon footprint, high circularity or bio-based materials where the Verbund and the value chains that we run are the perfect setup to drive this green transformation with a low risk profile. So this is the program for the core businesses. You will deep dive later, and I will close with a chart that I've also shown as a first slide in the Capital Markets Day a year ago. And this is what we want to leave behind as a current Executive Board. We want to leave behind a path for BASF that is focused on value creation, value creation for our shareholders, in particular, and we want to leave behind a winning culture. And especially in tough times like we have right now for the chemical industry in general, execution is the #1, the #2 and the #3 priority for us. So thank you very much.

Thank you, Markus and Dirk. So we are now open to answer your questions. [Operator Instructions] And then we begin with Laurent Favre, BNP Paribas Exane.

Can I ask a question about Slide 16? So that's the one where you show operating cash flow, CapEx and SCF. And I mean, without the magic ruler, it looks like you see 2026 operating cash flow in line with 2024, which implies about EUR 1 billion of improvement compared to this year. So I'm just wondering, can you talk about the different buckets of EBITDA, working capital and other to get to that number? And does that include the federal guarantees, which I assume it does?

Yes, Laurent, let me take this question. It includes 2 assumptions. First of all, a certain push apparently also from the earnings power that we have in the company with all the self-help that we also have explained. And then also dividends from equity reported companies, which once cash inflow is happening, would also be reported as free cash flow. So this is a contributor as well. Yes, I confirm that.

And the federal guarantees?

Yes, that would be part of it because once we are receiving money, so Wintershall Dea as a net equity reported company, they have to book it and then distribute it via dividend and then it would flow in as equity result from the franchise.

So we now move on to Christian Faitz, Kepler Cheuvreux, and then I have noted Chris Counihan.

Yes. Two questions, please. First of all, can you give us a specific example of the scope reevaluation you're talking about in Zhanjiang? And then the second question is, I mean, if you won EUR 10 billion in the lottery or generated through on cash flow or asset sales, which region would you invest this in, in the current geo situation? I mean we are in overregulated Europe, unpredictable U.S. and an oversupplied China.

First of all, we're not playing the lottery just for the record. We try to stay away from this. We have better ideas what to do with our money than playing the lottery. But first question on Zhanjiang. We had originally planned, when we designed the project between 2018 and 2020, we had designed even the project in several phases. And we have also still ideas today on paper where we could say we could extend some of the value chains even further downstream. Given the current market environment, this is not something we have a strong appetite for. I think we are focusing on rounding out the Verbund as we have it in what we originally at one point in time, we call it Phase 1. We added a few minor assets to where it was smart to actually do this. And we are approaching now every asset decision that we would build in Zhanjiang basically in front of the current market environment and with a strong make or buy focus as well. So we have actually decided, for example, to source certain materials in the Chinese market for quite some time because the market is long, it's available, and that seems to be advantageous right now. That is not a stop for investments in Zhanjiang, but I would say the time of that this project gets any kind of air cover because it's a new Verbund site is over. So every investment project now that when divisions have an idea to put a new asset into Zhanjiang, it has to fulfill our overall profitability expectation. And right now, we would say, for the time being, in Zhanjiang, we're done. If we would have, let's say, if we have a focus area for further investments, I mean, we have been very outspoken also in the strategy about our capital allocation when it comes to regions. From my perspective, it is very prudent to look at Asia and continue to look at Asia as the market for growth. In the next 10 years, more than 80% of all growth of the chemical industry will happen in Asia, will happen in 7 countries in Asia, China, India, 5 ASEAN countries. Today, 2025, more than 100% of chemical market growth globally is in China. The rest of the world is shrinking. So China continues to be the growth engine of the chemical industry. And we are well invested in China. China has become a more cyclical and more competitive place. So we are, of course, now changing our focus very much to South India -- to South Asia, meaning India, but also Southeast Asia, ASEAN as the next, let's say, opportunities for us to invest. Challenge is these markets are significantly smaller than China, but they offer opportunities because you will see strong growth of the domestic manufacturing and domestic chemical industry in these markets. And this would be -- if I could make a wish, this would be my next areas for hopefully, very profitable organic investments for BASF.

Okay. So we move on to Chris Counihan, Jefferies and then Tony Jones after that.

And I found the China ramp-up slide very interesting, showing the overhang in start-up costs, but also the limited earnings contribution or still loss-making, as you said, in 2026. And so while I'm not trying to draw you on a 2026 guidance, it appears you're implicitly saying upstream markets globally remain under pressure, not just in China. So what are the implications of this across the broader BASF upstream portfolio into 2026 and beyond? And how should we be thinking about that path to 2030 towards the EUR 1 billion to EUR 1.2 billion and how the market balances over time?

Yes. I mean I start, maybe you can complement if I forget something. But you are right. Our current view into 2026 for most markets is actually not that we are sitting here and expect end-to-end markets and/or, let's say, chemical markets to change significantly in momentum in 2026 versus 2025. We are seeing now since April 2, quite, let's say, difficult end market development, very little volume growth in most end-use markets and a continued challenging environment in especially upstream commodity markets with low margins across the Board discussed many times. I don't think this scenario will fundamentally change next year. We might see some improvements. We have some, let's say, positive triggers certainly next year, things like in Europe, for example, which is still our biggest market, the stimulus package of the German government, generally, the appetite to invest more in defense and other sectors will certainly be a bit of a tailwind, but it's not going to change the picture fundamentally. So that's why we have not gone through the exercise now with all our divisions of doing operational planning for 2026. But our guidance is don't plan with too much growth next year unless you have a particular situation, you're starting up a very competitive capacity, you have locked-in contracts, you have certain market segments where you launch a new thing. But in general, don't expect too much from the market and focus on self-help measures. And we have a big machine, both in terms of cost and in terms of assets where there's a lot of self-help. And then it's always the question, how fast can you execute this, to actually drive your profitability. And that's where we put a lot of effort, focus and pressure also on to be as quick as possible because I don't expect a lot of tailwinds for 2026, particularly not in upstream.

And maybe -- I couldn't agree more, maybe just one more data point. If you look into our volume performance year-to-date, and that goes upstream to downstream, we're holding up in terms of volumes. It's rather prices that are the challenge and even more so FX. But I think FX most of it. But I think it's fair to say that the company is holding up quite nicely in the volume development. And as we said earlier, we are in a position now to use our reserve capacities, I would call it. So there is room, I think, on the basis of the self-help that we do to push more into the market. So I think this is one lever that we will also pull in the next years.

So also, as I said, I mean, right now, if you look at the picture that I just showed you -- that I just described, China is growing as a market -- chemical market now. Rest of the world rather contracting, probably slightly negative numbers for 2025. Last number I've seen is year-to-date, we are still volume positive year-to-date versus last year. And you know that we are rather small in China. Our footprint in China is not big, only 13% of our sales in China. So that shows you that we're holding up volume-wise also fairly well in this difficult environment, and that shows the strength of our businesses. But it's a tough market and it will stay probably challenging for 2026 would be my guidance.

So now we move on to Tony Jones, Rothschild & Co. And after that, Tom Wrigglesworth.

I've got 2. So firstly, if we see more China production volumes exported to Europe and then less to the U.S., how do you see the BASF and market response if margins stay low for longer? And then on the Verbund, years ago, you used to talk about roughly EUR 1 billion of savings from the Verbund model. I don't think you've disclosed that anymore. But with the portfolio changes and then the new China complex, could you update us about what the savings could be to the group?

Yes. I start with the second one. I know the EUR 1 billion, we have communicated this in the past. This was probably based on a lot of questions. Can you somehow put a number to this Verbund advantage? For me, this is -- it's a bit of a theoretical thing. Think about the value chain, the EO value chain that I've shown you. You can, of course, now do calculations, transport cost of not transporting stuff between sites. You can come up with inventory that you don't need because you have this all in one site or in one company. But I think this is, at the end of the day, a bit theoretical. I don't know whether this EUR 1 billion has ever been really tangible. What at the end of the day, you have to realize is if you have this value chain and you are competitive on all steps, and that's always the prerequisite, right? A long value chain does not help you if you are uncompetitive at certain steps. You have to make sure both on your upstream side as well as on your late last downstream asset, you are competitive against your respective peers. The true value comes, of course, from resilience because, of course, upstream and downstream markets have very different price volatilities. And it's, of course, supply security and it's, let's say, value transfer and steering opportunities that you have. That's the true value. And if you would split this up into, let's say, 10 -- if you split our EO value chain up in 10 companies, and they all have to negotiate with each other every quarter for pricing, for volumes, for green attributes, for how to share value, you can already sort of sense that this is probably not going to be over the cycle a very profitable setup versus ours. Of course, if you have situations where upstream markets are long and everything is available and commodity prices are down, you could get away with a nonintegrated downstream business and be really happy with it. But over the cycle, I think this long value chain setup, if you have it competitive on each step is a really strong, robust segment and setup, and that's why we are pretty happy with it. Your second question was?

It was on the inflow from China on the imports to Europe.

By the way, just one thing, and we talked about it with Thomas a few weeks ago, it's -- right now, if you look at the imports into Europe, it's not only China, it's also U.S., of course, right? Because in the U.S., especially C2 value chain built at the U.S. Gulf Coast based on ethane crackers, based on low input cost, low feedstock cost, that was all built for China. And so this material is now not going so much into China. So there's also a lot of stuff coming into Europe. So -- but this is predominantly, again, cracker, cracker plus 1 products. And from China, it's more, let's say, C3 downstream products. This is more what we see in our portfolio coming from China. So again, you have to be very careful with making these assumptions. China is flooding the European chemical market with chemicals. You have to look at value chain by value chain, but the pressure is certainly increasing. You can ask also later the 4 division presidents. I think in all their divisions, they're struggling also now with more import volumes from opportunistic exporters from China, but also, I would say, especially in Thomas' case, from the U.S. now. Think about the tariffs also went away when it was 6.5%, now it's 0%. That also brings tailwind for U.S. competitors. So it's -- Europe is a more vulnerable place, I would say. But that only means that in Europe, you have to be competitive against imports. And of course, you are never insured and insulated against, let's say, not so value-oriented behavior of competitors that dump products that are very opportunistic in export businesses. But there's also an increasing number of antidumping cases now in the EU. So that extreme end of the spectrum, I think, can be handled. If we will be faster, they will be better. But in general, what only helps is you have to have competitive assets in Europe. And we told you last year, and we stick to this, that most of our assets that we run in Europe are competitive also against imports from China, from Middle East or from the U.S. And so we feel we have a good setup. But of course, if there's overcapacity in China, China is half of the market, a little overcapacity in China is a big overcapacity for the rest of the market. So it will only finally go away when China rebalances, and that will take a few years. So we brace ourselves for stronger competition also in Europe. Here and there, certainly, we will also address this via measures like antidumping cases where they're justified. But at the end of the day, there's no golden bullet other than run competitive assets. And we believe that not everybody in Europe will be set up as robust as BASF. We will show you later as well.

So now Tom Wrigglesworth, Morgan Stanley. And we will move then, I think, Matthew Yates also and then Chetan.

Kind of 2 maybe follow-on questions. I guess what we're talking about here is, to some extent, pricing power or the balance of pricing power. So you have cost-saving programs to keep you competitive. But at the moment, what we've seen is we don't see any effect on the P&L. Maybe that's unfair. But in essence, you kind of give away your cost savings because of the competitive nature in the market. So how do you strike that balance? And when we look at the core, how much of that business is taking those molecules as far downstream as they need to versus being sold as a [ C+2 ] or a cracker plus 2 step. So that's the first question. Second question, if I may, is, again, around this, clearly, the coatings business has a lot of value. What assurances can you give shareholders today about value realization there that you'll be able to really extract the medium-term prospects in a challenging market for that business?

First question, I think you will see some data around the degree of integration also at least for the 2 big value chains that we will discuss today later, we will have even some numbers also how integrated this is. So I think we are -- the value chain never is perfectly set up because typically, what you have is you build upstream assets as big as possible because you have to be competitive. So you need scale. And then you never have the perfect downstream integration. So you always have outlets that you also need upstream to be in the merchant market to play. And so this is why this is never a fully closed value chain. We have -- because of the fact that we run these long value chains, we have a significant merchant exposure with upstream commodities, which in good times is a wonderful thing. In bad times, it can be challenging. So that's just the cyclicality of the upstream portfolio. There's not much you can do about it. On your dynamic of the P&L, the way you describe it, it's, I think, a little bit backwards. At the end of the day, for most of the cyclical, more commoditized chemicals, there is -- these are -- yes, these are commodities by nature. Everybody in the market is a price taker. So you get the price that the market gives you. And the cost efforts we take in the company is, of course, to compensate some of the margin losses that we expect in low price environments as we see it today for many chemicals. But these are almost not -- you don't do this one because there's the other. Because the cost savings and becoming more competitive, becoming more productive, making your assets -- getting your asset effectiveness up, these are all non-regret move. We would do this even if there's -- if the margins would be better. So it's not a reactive move as it is a, let's say, move to become mid, long term as competitive as we can be in an environment that will no longer allow us to be -- to have any kind of fat. So -- but short term, the margin level that we achieve or that you achieve in commodity markets is not something that you can influence. The only thing you can really influence is, as I said, your cost position and your competitive position and how, let's say, high your utilization is. And if you're the marginal player, you have a tough time these days because then you cannot run your assets and you will not be able to place your volumes. And that's what we see. We see quite a big gap in utilization rates. And I always quote the example in China because it is out there. I've said it many times. In China, the average cracker utilization is 70%. By the way, in Europe, it's not much higher. In Europe, it's also 75% cracker utilization and cracker utilization in the U.S. also in this area. But we run our Nanjing cracker at 95-plus percent. We run it as hard as we can because we are at a very low point in the cash cost curve, we can still create value out of the ethylene and the propylene that comes out of the cracker when a lot of other players in China who don't have that downstream integration can no longer do it and they have to shut down. And that's why you see the shutdown and start-up mentality of many of our competitors because they don't have the cost position and the integration. This is really the key. That's what you can influence. This is why I'm always preaching so much about we have to have competitive assets in Europe. And then despite the fact that the weather is bad in Europe, we will still be able to win our races.

Coatings?

Coatings?

Value realization.

I can give it a start. I think, Tom, you are spot on. So we have to capture the value from this business, and this is what we will do. This is also why we said we are not disposing the asset because we are in urgent need of cash or so. But what we want to do is to unlock the value of the business. And if there is a transaction, we still say there might be different kinds of transaction, whether Markus, you said it is a joint venture or is a straight sale. At the end, we will only decide on a transaction if we have confidence that the full value of the business is also reflected in this transaction. This is why we gave us the time to do it with all the speed attributes that, of course, are important for us. And also why we said we are a little bit agnostic what a transaction structure would look like because we have to make sure that the value is unfolded and that we are with our share participating in the full value of this business.

And that's why I, for example, never like when I read that this is a disposal process. It's a value -- for us, it's really an unlocking value exercise. And that's the lens to which we look at this. That's why we are agnostic. We are open, I think, also towards different ways on how to do it. And we're fully aware that there's a lot of value you can leave on the table if you do it wrong. So the assurance I can give you is only that we take this part of that consideration very seriously, and you have to somehow trust us that we're not eager to throw value away.

Okay. We move on to Matthew Yates, Bank of America.

Maybe just a follow up on Coatings. I'm trying to understand the accelerated share buyback as to what is different today versus a year ago? Because I wouldn't necessarily think the balance sheet is stronger than you would have thought a year ago. So is the delta that a cash transaction in Coatings is now more likely than a JV or some other structure? Or is there any other reason why you feel you're in a position to accelerate the buyback?

Maybe let me take this, Matthew.

I hope you take this one.

I'm more than happy to do it. So let's maybe move away a little bit from a specific transaction. I think if there were a transaction, then it is obviously a valuable one. It's a rich, it's a big one. The fundamental thinking is we are now carving out the stand-alone businesses and have various forms of transactions for them. And the core business is, for the time being, at least is getting a bit smaller. So we also have to address apparently then also the capital structure, starting with reducing the debt levels, which will also allow us from a position of strength also to do the shareholder distribution that we have promised. And currently, our confidence level is as such that we say if there is a coatings transaction coming, then we are in a position that we can do, a, upholding our promise on the dividend. That's very clear. Secondly, can do meaningful deleveraging with a clear goal to maintain our single A rating and c, also accelerate share buybacks.

Let me just add. I mean, the question of share buybacks is also dependent on -- we believe the company today is significantly undervalued. So timing is not bad for share buybacks right now because the value of the company is low, is attractive. It's an attractive buy for us. It's my simplistic view on this.

Markus, I have a separate question about this idea of value chains. And I'm sure by the end of the day, we will have learned a lot more about it. Do you think the value of that is the same as it was 5 or 10 years ago? Because it strikes me that there's more capacity, there's more competition in multiple parts of these value chains. And if we think forward 5 to 10 years from now, will the value of that integrated strategy still be the same?

My answer would be yes, but your hypothesis is still true because all of the businesses in my little iconic chart there with the EO value chain with all these outlets, in all of these businesses, they have all commoditized. They have all more competitors now than they had 10 years ago. So the value capture, so to say, in each of these outlets has been under pressure more than it was 10 years ago. That's true. But generally, the delta between running this integrated or nonintegrated has stayed the same. So it just both has been, let's say, it's more difficult right now to capture high value adds and, let's say, overall competitive pressure is there. And that's what we are seeing in the chemical industry now for, let's say, quite a number of years and decades that there is this sliding commoditization of most products. And we are working against this with our big R&D machine cranking out new products. But overall, there is this trend. And I still believe the relative advantage of running this in an integrated fashion has stayed the same.

So we move on to Chetan Udeshi now, JPMorgan.

You're not taking questions from audience on the webcast. I'm getting a lot of questions on 1 common question, which is we heard you provide some trading update last evening. Maybe for broader audience, if you can just provide a bit more granular update on how you see things. And for me, the most striking thing was not that margins are under pressure in your Chemical business, but was more the comments on Ag starting to come under pressure. So maybe if you can provide that -- some granularity on third quarter, helpful. The second question -- sorry, I've noted down a few questions. Second was German insurance payment. Can you remind us the magnitude at some point, it was EUR 2 billion, EUR 2.5 billion. Is that the magnitude we are still looking for from a BASF perspective? The third question I had was actually on cost savings. It feels like cost savings are just neutralizing the fixed cost inflation, at least from what I can see. Will that change next year? Are you expecting cost savings to actually more than offset the inflation, so you have a net contribution? And last question on Zhanjiang. Will the EBIT loss be worse next year than this year because you also will have a big step-up in D&A, I suppose. So if EBITDA is not improving, can the EBIT loss be higher than what you have this year? Sorry for 4 questions.

Four questions -- CFO heavy, I would say.

Yes, I'll start with the first 3 maybe and then -- good, so let me start with the FIG. So we are still not disclosing the exact amount, have never done this. There's a lot of speculation how much it is, but the rules of the game are to stick to confidentiality here. I think I gave you a couple of data points today where you see we are making concrete progress. More, unfortunately, is not possible. It's not reflected in our books, though. So whatever we are collecting is an upside to the current investment case, I would argue. On the cost side, for sure, inflation is the biggest counter effect to our ongoing cost-saving measures. I showed you the one slide where the cost to achieve. Apparently, for the program, they are stopping by the end of the year. So this will be helpful because the run rate delta versus cost to achieve is getting bigger and bigger. So that's helpful. And secondly, we also have to be very clear. We have to address the inflation bucket and see which parts of inflation as part of the self-help you can influence and do that. And thirdly, there will have to be one point where pricing power will have to come back in order to sustain the model. That's also very clear. So you cannot just do it on cost saving each year alone. But for the time being, we feel in this trough situation where we have to come out, cost saving is the way to go. Current trading, yes, you -- I'm building on what we said at Q2. And Q3 is trending, I would say, in the same direction. So we are holding up volumes quite nicely. Prices, I would say, a little bit subdued, but also not significantly. The big thing for euro-denominated companies, obviously, is also then the FX effect. But overall, don't expect a significant shortfall, but also don't expect at this point in time, recovery. What we also said yesterday was there are some pockets where we really have nice results. The semiconductor supply was already mentioned yesterday evening, where we have a strongly growing business, admittedly on a smaller basis. The auto business with a particular emphasis on China is holding up quite nicely, which I think is also better for BASF than for other companies with auto exposure. And especially to the Ag business, as you asked, we are very confident that the Ag business in a not easier environment is delivering on what was planned at the beginning of the year.

On Zhanjiang, I will not give you now a '26 detailed breakdown of the P&L. We probably will get a little bit more precise when we get closer to it and also do our planning for next year. But roughly, since you also mentioned depreciation, I mean, we gave you the CapEx number, EUR 8.7 billion. We depreciate over 15 years. So no rocket science. We will be facing roughly EUR 500 million roughly depreciation. Order of magnitude, I don't know whether it's a real right number. So don't crucify me if it turns out to be a bit different, but that's my back of an envelope calculation. We have start-up costs this year. The start-up costs will still be significant next year. So we will have a spillover. Technically, we will start up the plants at the end of the year, but you know when you run a big assets, there's quite a lot of hangover of real start-up costs of additional people you need to make this stable. So it's a bit of a dynamic picture. So that's why I cannot be as precise and I would like to be to give you a guidance on what the net EBIT impact will be from Zhanjiang next year. We'll do our best to do this maybe in one of the next calls to give you a bit of an impact there. But right now, I don't want to pull this number out of my pocket, but that depreciation number gives you one element that can help you bridge that -- these numbers maybe a little bit.

[Operator Instructions] We have the next analyst is Alex from Santander, and we will then have James Hooper.

My question is about the decision to keep the Environmental Catalyst division, the rationale on that, if you tackle the market and you thought the valuations -- potential valuations were not attractive enough, you can elaborate on that process.

Yes, it's relatively simple. It's as you have said it. I mean we have, of course, when we carved out this business, we have received a lot of interest also. People were asking what is the future of this business. We prepared do the internal carve-out actually already a potential strategic option, as we said, even in the original announcement said we are willing to look at strategic options. But what it shows is that a business that has this sunset character, I call it now, because eventually, probably we will see a declining market, has, of course, by most people that would be interested in taking over such a business, they assign a very low terminal value to this business. And that leads to a valuation that at the end of the day, gives you potential EBITDA multiples, let's stay in that very easy, easy part that is lower than what BASF Group has. And so with a business that I feel is doing operationally very well, we are gaining market share in this business. So we are doing operationally very well. We are in the right markets with the right technologies. I have ample opportunities to the carve-out to rebase my cost structure. And I have, of course, now a time where I have to spend only very little CapEx. I can extract quite a number -- quite a good cash flow out of this business. And I gave you a number today, which is also an updated number. So that is roughly a run rate of EUR 500 million cash to the group every year. You can compare this also to other people in this industry of similar size. That's a very attractive cash flow. And I believe that given my valuation as BASF Group, my investors can value these cash flows higher than a potential person who buys this business from me. And that's why I say not only am I a good operational owner of this business because I'm showing I can run it really well or my team runs it very well. I don't run anything. But I'm also a good financial owner of this business if I maintain this cash flow strength. And I believe personally, it will last even beyond 2030 for quite some time.

Okay. So now we move on, James Hooper, Bernstein.

I just want to ask about the CapEx cut from EUR 17 billion to EUR 16 billion. What were the key drivers of this? Is this the Zhanjiang saving? Or is this higher hurdle rates? And also, does this leave you flexibility for other kind of growth investments? You mentioned Southeast Asia, India in your presentation. Obviously, the German government is doing a very large infrastructure defense program that probably will need help from the chemical industry.

Yes, true. Starting from the end, you're right. I mean the stimulus package in Europe is an upside. There's also other upsides. I think there's pent-up demand in infrastructure in many economies in the -- at least Western world, particularly in Europe. The infrastructure spend or the bucket of EUR 500 billion now is a clearly compartmentalized bag of money that will come. It will not come as fast as some people think. I think it will take some time. German bureaucracy, planning processes, permits and so forth. But we will see this probably towards the latter half of 2026. It will make a difference. Still, I would say today, looking at the asset setup that we have in Europe and most other chemical companies have in Europe, this will not trigger investments in capacities in Europe. Let's also keep things in perspective. It's EUR 500 billion over, I think, 10 years. So it's not going to now put Europe into space in terms of growth rates. But it's a tailwind for sure. And we will capture this. We are very strong, by the way, also in all things that go into especially the construction sector because don't forget, for every building, for every school that's been built, it's not only the cement and the construction material. You need to insulate the building, you need to put carpet in, you need to put paint on the wall, you need to put plugs and cables in these buildings. This is what drives chemical demand. Building, like no other chemical -- like no other industry drives chemical demand. So there is this upside. Now is there room for additional CapEx? For sure. However, we will, over the next years, run a tight ship in CapEx, and that's basically the answer to your first question, coming from EUR 17 billion to EUR 16 billion, there is no, let's say, strategic guideline we give out. This is going through all projects and challenging every project to say, what can we move out? Given the latest and greatest market outlook that we have, what can take a year longer, what can we postpone and what can we maybe also put on the waiting list? So this is not a very strategic discussion, very operational. It's very execution driven. And you can ask over lunch also the division presidents, CapEx is a tough discussion right now in the company. So Dirk is running a really tight ship here, and I think it's appropriate. However, we have ideas. And Dirk also mentioned this on one of the slides, we want to allocate, of course, from our growth CapEx. We want to allocate this to the markets that will eventually grow. And we are very committed to doing all of these smart investments in areas where markets will grow. But we're talking always about a time frame '25 to '28. Even if we would decide today, let's say, we do make a big project in Vietnam or in India, the spending would come towards the end of that period. So it's not going to make a big dent in it. So I think we have to reassess this also over this course of the next years. But for the time being, the direction is clear. We will stay very disciplined on capital.

And just one small addition. So the reduction in CapEx is not financial engineering. It's real.

Being mindful of the time, I would like to close this Q&A. And with that, we are at the end of the live stream. We thank you very much for joining us online. Replays of the keynote and the Q&A as well as the 2 further presentations will be available later today.

Thank you.

So we will now take a short break and resume the program with the presentation on the polyurethanes value chain at 11:00 a.m. So please feel free to refresh yourself and have a drink, et cetera. [Break]

Welcome back, ladies and gentlemen. With me on stage are Ramkumar Dhruva and Martin Jung. Ram has been responsible for the Monomers division since 2019. He joined BASF in 1996. Yes. After earning a doctorate in Organic Synthesis, Photo and Electro Chemistry from the Indian Institute of Technology, Madras. He has managed businesses in various industries across different regions, driving innovation, sustainability and operational excellence. Martin has been responsible for the Performance Materials division since 2019. He joined BASF in 2000 after receiving a PhD in polymer chemistry from Eindhoven University of Technologies in the Netherlands. He has managed businesses across different regions and sectors and has had a particular focus on the automotive industry for the last decade. So with that, Ram and Martin, the floor is yours.

Thank you, Stefanie. Ladies and gentlemen, it's a great pleasure for Martin and I to present to you our polyurethane value chain in BASF. We chose this picture on the title side for a few reasons. This was taken a couple of weeks back close to New Orleans Port. And this depicts one of the modules of our MDI expansion in Geismar. And as you see, this is in the final stages of implementation, and this also shows that we are investing in the future. We are also doing things in a new ways. As you can see, this is the first modular MDI plant of BASF, and we are reinventing ourselves. By doing so, we would like to keep the project in time and on budget. As we ship BASF as we are, we are also on the move, and we are making progress. Yes, perfect picture to start our presentation on polyurethane value chain in BASF. In the next slide, you will see the segments of BASF, the four segments of core of BASF. And within that, when today's presentation for us in terms of polyurethane, our polyurethane value chain is divided among the two operating divisions, Monomers and Performance Materials. Together, this comprises of Materials segment. For us, in Monomers, our focus is on having broad portfolio of basic monomers and polymers. Within the polyurethane value chain, we would like to focus on big volume isocyanates with a clear emphasis on cost competitiveness and sustainability. Martin?

Yes, ladies and gentlemen, in the Performance Materials division, we offer 6,500 mostly tailor-made products along the product lines of polyurethane systems, our topic today, thermoplastic polyurethanes, engineering plastics and a couple of specialty products. Now our customers, they expect from us that, first of all, we understand the application that we can help them solving their issues and certainly always offering a competitive price. So for instance, if we develop a crash absorber with one of our customers in the automotive industry, they expect from us that we give consultancy in the material choice but also in the processing choice, testing, simulation and eventually, the crash absorber has to work in a car, and we all rely on the functioning crash absorber. So it is rather a big know-how that we have to bring to our customers. The business is know-how heavy, people heavy. And therefore, half of our 7,700 people are working actually in the front end. That means in sales, technical sales, marketing, tech development and R&D. So pretty heavy on people and know-how. Sustainability is a big topic for both of us as it is in the entire plastics industry. And we will talk about this in more detail for the polyurethane value chain because it is a complicated thing in sustainability in the polyurethane value chain. And I think we have good examples how we tackle it, both from the energy product carbon footprint side as well as from the circularity side. As Markus has shown this morning, the Materials segment is rather substantial for the core. It is 30% of the core. Last year, EUR 13.5 billion of sales, half-on-half between our divisions. And actually, the lifeblood between our divisions, that's the polyurethane value chain that makes up 50%, 50% of both our divisions. So you see how Markus phrased it yesterday, both our divisions are connected at the hip, especially through this polyurethane value chain. Both of us command pretty good market positions in this. You see here on the right-hand side on the Performance Materials side, our main franchises and the market shares on the left-hand side, Monomers. You see for us in polyurethanes, this is 26% in sales of the entire segment. And we have worldwide a #1 market position in polyurethane systems. Mainly in the Western markets, higher market shares above the 20s in Europe as well as in U.S. and then lower market shares in the countries outside of China and lower again in China, which is a very big, big and competitive market. If you look at the competitors, you will see those are the same names that you will also find in the Monomer scene, the same names, but the market is a different one. If you look at the systems market, it is around about 60% that is commanded by the big 5, whereas still there is 40% and mainly this 40% happen in Asia of a market that is also penetrated by a lot of smaller system houses that buy a lot of these raw materials in the market and then formulate for their customers. So while you find the same competitors, it is a different market. Ram, how does it look like in the Monomers?

So yes, as Martin alluded to, we have both in Monomers division and Performance Materials market leadership in our respective individual market segments. When you look at one of the big segments of our Monomers division, which is isocyanates, with 29% of our sales derived out of this segment, we have a leading market position in MDI being global #2. And in terms of TDI, we have top 3 positions. It's not only on isocyanates. When you look at a broad portfolio of Monomers, when you move to polyamide 6 or in organics, we have a leading market position in the respective markets we serve. When you look at the global footprint of our materials segment, for Monomers division, key essentials are in terms of back integration, economy of scale, competitive utilities and site structures is very critical. But it's also not that, but it's also to be close to our customers in their respective regions is very important for a robust, reliable supply chain, low logistics costs and at the same time, our ability to react to market changes and customer demands quite fast. With that, monomers operates its isocyanate assets in most of the key regions and integrated sites. For example, here, in North America, we operate our isocyanate plants in Geismar. In Europe, we operate our isocyanate polyurethane assets in Ludwigshafen and in Antwerp. In Asia, in China, we have our isocyanate assets in Shanghai and in Chongqing and in rest of Asia, in Yeosu, Korea. With this, we are the global player among all isocyanate producers, where we have all assets in all key regions, even in Asia, inside China, outside of China. With this global presence as well as we would say, Martin, we have a reasonable in terms of sales structure across all regions.

Indeed, like you see that the biggest sales for both of us is Asia. So that is a little bit also unusual if you compare that to an entire scheme of BASF. We have 40% of the value chain is in Asia, followed by a strong position in Europe and obviously, North America, then South America is by far a smaller market with this 3% here for us. Now compared to the Monomer setup, we follow obviously the supply, but our asset structure is a totally different one. We have 26 system houses worldwide. And for us, the proximity to the customer centers, to the manufacturing centers of our customer is the most vital thing. Therefore, you see so many. Then you would say 26, goodness me, is that operational excellence? Yes, yes, it is. Because for us, it is always a kind of a consideration between supply chain, being close to the customer, at the same time, having scale and efficiency in our system houses. And that is a balance that we have to strike every day. This is why we have also closed four system houses in the last couple of years in Russia, Middle East, also two in Europe. And that is an exercise that is also ongoing. We're challenging our setup wherever it is every day to strike the balance between operational excellence and supply chain proximity to customers. But it is not only the supply, it is also the know-how that you have to bring to the customers. Therefore, you see here also R&D centers as well as, we call it, creation centers. Those are cooperation centers where we interact with designers and many people from our customers. So it's not only the assets and the material, but also to have the people, the know-how and the right technical service at place in order to win projects and in order to convince customers and bind customers. So perhaps if you look in the future, as we also talked about CapEx and asset development, we would also say that we have enough assets in place, 26 sizable number. And going forward, we can actually accompany any growth in the market by, number one, just putting people in the plant. That is what you do in these downstream plants or you just incrementally increase the capacity of our plants. So both is possible, and both is actually rather low budget. And actually, both of it will be in the next couple of years, definitely below the depreciation that Dirk and Markus have shown this morning. So we are prepared for the future. But perhaps let's dive a little bit deeper into the chemistry that you will also later today see in the real assets. Ram, it starts with basic chemistry.

Yes, as was looked at this morning, Markus showed us different value chains. Within Monomers division, we start with our basic chemistry. We have nitrogen, sulfur and chlorine, and we start building our value chain. When you look at the polyurethane value chain for our downstream customers as well as third-party customers, we are the key raw material supplier with MDI, TDI and also PO. We run our -- as I said, we run our key isocyanate assets in all the integrated sites globally. And with these value chains, we build our polyurethane downstream products for internal as well as external customers. Out of this, 25% of our sales is derived from transfers to the downstream division, which is Performance Materials. But we have also a significant portion of our third-party sales, 75% of Monomers sales is derived from third-party customers globally across all regions. And our focus to be successful for both internal customers as well as for our third-party customer is to have a cost competitive asset and also having high asset utilization and effectiveness and with a focus on sustainability. Martin?

Yes, building on these building blocks and molecules, we start to formulate our formulations. So the main raw materials are the isocyanates, MDI. It is also propylene oxide that ends up in Polyols. And it is also adipic acid, not on this chart, different value chain, adipic acid that goes into polyesters and then later on also into systems. So 50% of the raw materials in our polyurethanes value chain, 50%, we take from our brothers in the upstream division and then start to formulate. Polyols is the differentiating factor in the polyurethanes system. So we have around about more than 100 Polyols that we build on propylene oxide, then also polyesters, then we start to formulate and bring the polyurethanes systems to the market. Also, thermoplastic polyurethane is built on the same kind of chemistry, a little bit of different processing. And also Cellasto, one of the specialties I will talk about a little bit more in detail later on, is also building on the same kind of chemistry. So again, for us, it's about the application know-how. It is about the differentiation, understanding the application and being ready to formulate exactly for that. Now perhaps let's have a bit of a deeper look in what MDI is all about.

Thanks, Martin. So ladies and gentlemen, in the next few slides, we will dig a little bit deeper on the key value chains of the building block of polyurethanes. Let's start with MDI. MDI, methylene diisocyanate is a versatile product, and it is growing. When you look at the applications, it is in wide applications with people's lives where it touches. It's in the construction industry, it is in the automotive industry. It's also in consumer industry, whether it is in the textiles or in footwear or in appliances. The market is generally growing across all regions, specifically in China in the last years, and this market continues to grow above GDP. When you look at in 2024, the global market of MDI grew close to 300,000 tonnes. And in the last 5 years, the market grew more than 18% in total. When you look at this MDI market globally can absorb one world-scale capacity every year as long as this continues to grow. And when you look at the main growth, as I indicated, is in Asia, specifically in China, but we expect Europe as well as North America, as was highlighted by Markus and Dirk, with the investments coming up in the infrastructure and construction industry, it is expected to come back to growth of MDI market in Western world. When you look at our performance in the market of MDI in the last years, BASF has significantly grown in the last years with volume and capacity expansions. But it's not only on the volume side, we have also ensured that we have significant in terms of value creation for the group as well as for our Materials segment. When you look at the future growth fields of this MDI, we are investing and doing capacity expansion, as I was showing in the first slide, with the expansion in North America, in Geismar, MDI, we would like to double our capacity close to 600,000 tonnes expected to start up in the second half of 2026. At the same time, we are also doing a smart debottlenecking in our Asian plants, particularly in China, both in Shanghai as well as in Chongqing. It's not only the capacity addition, we are also coming back with new innovations in terms of sustainable products and also finding new applications, which I will touch a little later. When you look at -- in terms of our story of MDI, it all started here in Antwerp. 50 years back as in 1975, the first MDI plant was started here in this location. It's the best to have the Capital Markets Day here today with all of you. We started the first plant with about 15,000 tonne capacity. Slowly, we expanded step-by-step, both in capacity and regional footprint, first going towards North America, then moving to Asia and then starting with Yeosu, then expanding into China. And today, we have a global capacity for MDI close to 2 million tonnes. And that's not the end. We are coming with expansion, as I highlighted, in Geismar, and we are also planning, again, smart debottlenecking further to expand our capacity in China. As Martin alluded, innovation and sustainability are key to the success of our value chains. Here in MDI, we focus on innovations with the specifics on sustainable solutions for our customers. Here, we have examples -- a few examples I have shared. One is B2Last. It's a new application of our aromatic isocyanate additive in the bitumen application. This improves the quality of roads, durability of roads at the same time, allowing lower emissions. It's not only that this is -- this enables for recirculation of old asphalt back into circulation. With this, we are able to launch new application for our MDI grades in the last years. It's not only on MDI application for -- in the road paving, but also BASF has been the first to launch a net zero Lupranat MDI in the market a couple of years back. It's not only in terms of application, but also on the net zero, we also look for circularity. In terms of circularity for soft foam recycling, BASF has developed a process and together working with customers to launch them. If you have a chance to stay at our Renewable Hotel in Ludwigshafen, you will enjoy sleeping over our mattresses, which are made out of recycled Polyols out of these old foams. We continuously focus on process optimization to improve our cash cost position, but at the same time, also reduce our CO2 footprint and to ensure highest level of energy integration. With these, we are positioned with many more innovations, sustainable solutions for MDI, but also other value chains within polyurethane segment. It's not only that we are a market leader in the global presence in the global capacities of MDI. We also believe we are one of the benchmark in terms of product carbon footprint and sustainability solutions for MDI. Here, this slide gives you an example where we have best-in-class product carbon footprint in all the regions where we operate. It's not only in terms of having lowest PCF grade for our standard grades, we also bring low PCF products, even net zero product, as I highlighted with Lupranat Net Zero, which we launched a couple of years back. With this, we have quite a differentiation both for our internal customers as well as external customers. Our objective is to nurture our MDI value chain further to ensure that we are growing with the capacity additions at respectable rates so that we can keep up our market leadership in terms of MDI in all regions where we operate. Next, I would like to give you another important value chain of the PU, which is TDI. TDI, which is toluene diisocyanate, is mainly used in the flexible foams. Particularly in mattresses, in furniture, in automotive seats, in case applications, whether it is coatings, adhesives, sealants and elastomers. When you look at TDI market, it is a very difficult market in terms of -- for various reasons. One is in the last years, the growth of TDI has slowed down. So it has been a slower growth compared to the past on the TDI market. It's globally. On top of it, there has been significant capacity additions on the TDI market, particularly and especially in China. This had put additional pressure on the TDI value chain. What we see is that is a reason -- main reason in terms of the supply-demand balance. It will -- because of the long market of the supply and demand balance of TDI, it will take a couple of years to absorb all the additional capacity. With these reasons, not only on the capacity additions and supply-demand balance, but also on the energy cost high in Europe, we have taken a decision on the optimization of TDI value chain in the last years. We announced the shutdown of our TDI plant in Ludwigshafen in 2023. And this was the right decision to have made. And with that decision, we have shown we have improved significantly our global asset effectiveness, keeping our market share globally at a lower cost base. With that, we are able to make an EBITDA positive as well as cash positive in a very long market in 2024. With the same setup, we expect to deliver similar results as well in 2025. Our objective to go forward for TDI is to keep our costs under check keep our cost competitiveness in all the assets where we operate, make sure that it is breakeven in terms of EBITDA and cash for the years until we could recover from the long market. With that, I would also hand over back to Martin to see how we are able to create value out of this quite a lot of number of molecules.

Indeed. So if you come back to the world of systems, this is where, as Markus phrased it this morning, the magic starts, the chemistry comes into play. And you see this myriad of applications of polyurethane systems, which had made a success of that molecule actually. So you can formulate a very, very rigid insulation foam that you find in construction or in a fridge in appliances, to transportation foams that you find in all kind of applications in your car, in headliners, in trim, in seatings and wherever. And then you find it in footwear and as also you find it in so-called case application, which is coatings, adhesives, sealants and elastomers. So these are semi-rigid materials. You see the entire span of applications that is possible. We're playing most or less in all of them, and that has obviously also implications. It has the implication that we have to mimic and understand all the processes that come with it. Like a double band line, a pilot line that we have to limit further to simulate our customers in the construction industry as well as rotating plate machine that we have in order to simulate the applications of our footwear industry. So this is rather than intense in R&D. Therefore, we have an R&D intensity typically between 2% to 3%, and we have a vitality index of 20%, 20-plus percent. So we turn over 1/5 of our portfolio every 5 years. And if you look at it, innovation areas are obviously seen in the electromobility arena in, for instance, battery potting, I have an example here where the cylindric cells of a huge battery, these kind of things are as big or bigger as a mattress and the voids between these cells are filled with so-called battery potting. So a massive amount of polyurethane system, rigid stuff going into this one. These are very, very complicated applications because you can imagine the amount of testing that is done on this one, runaway situations and so forth. So typically, this is a kind of a multiyear project that we do with customers. But then on the other hand, you have footwear customers where you have to formulate within a couple of weeks for the new series of an Adidas shoe, for instance. So there's a huge spectrum. And that means in the end, this business is all about complexity management. Complexity in assets, complexity in customers, complexity in formulations, complexity in raw materials, insights and so forth. And that is what you have to manage every day in order to come to the best cost position. So again, I mentioned before, we have a stable market position, 16%, good positions worldwide, the strongest one in Asia. And perhaps also interesting in terms of customers, this business is rather unique because you have nearly as many products as customers and only 50% of our sales is made up with 100 customers. For the rest of the 50%, you need around about 3,500 customers. So again, customer management and small customer management is key. And as these formulations are very unique to the customers, you don't find a lot of distribution in this market, which is also pretty unique for polyurethane systems. Now you've also seen about growth rates, perhaps an interesting observation here. Typically, the systems market is growing lower than the monomers market for the simple reason that huge customers start to formulate themselves. And that is exactly also the separation that we have between our divisions. I've been asked yesterday, how do you separate your customers? It's very easy. It comes from the customer buying behavior. As long as customers want to have formulation, that means technical service, technical advice, it's with us. If they want to buy molecules, they ring a phone at run. So this is very simple, and we constantly look at our portfolio and reshuffle customers back and forth dependent on their behavior. Another very interesting and really exciting product line that we have in the polyurethanes is our so-called Cellasto business. I guess not a lot talked about here. It's a several hundred million business for us, and it's really a tier business to the industry. And what we do is we build so-called chance bumpers and top mount elements for suspension systems for car. You see one of them here, Monster. So this is part of a suspension system for Volkswagen MQB, so the big platform running on nearly all the midsized Volkswagen cars. And what we manufacture are these chance bumpers that are the ultimate dampening element in a suspension system or top mounts, which you see embedded here. And we deliver this kind of stuff, even including the aluminum casting with our tollers really as a tier business to the automotive industry with a lot of success. We're doing this since 60 years and more than 400 platforms that we are serving and have a market share of more than 50%. Now this business as the entire automotive industry is growing obviously fastest in Asia. And therefore, we also put our headquarter for this business to Shanghai, and that is also one of the winning factors, I would say, for that business that had been now growing above market because we could enter into Chinese OEM platforms. And also we could serve new needs in electromobility where the noise level and frequency level is a totally different one. Now let's talk a bit perhaps about the sustainability side of it. Ram also alluded to this one. Everybody talks about plastics, microplastics, sustainability of plastics. I always put it in two parts. It's -- on the one hand side, it is the energy side of plastics that can be sometimes intense. A polyurethane system has around about 3 kg of product carbon footprint. Polyamide 66 has much more than that. So it's an important factor. So first of all, we try to bring down the product carbon footprint of our products and systems. And the way we do it is we buy from our upstream suppliers and Ram showed that he can produce the best PCF position in the market. Lupranat ZERO is one example. So we are able to trim down the product carbon footprint for our systems if we want and if customers are willing to pay for that. The other part is the important part of circularity. And again, this has two aspects. It is, first of all, the recyclability, the recyclability of your material. If something today is not recyclable, then many of our customers, particularly in automotive industry, would start to discard the material because design for recycling is not possible and design for recycling becomes an important prerequisite in markets, predominantly in the European markets, but also the Asian OEMs are thinking in this way. So recyclability is, I would say, a ticket to play also for polyurethanes. Therefore, we spent a lot of time in the last years to demonstrate as Ram showed for the mattresses, but also for all our materials that polyurethane systems and materials are definitely recyclable, which is not chemically not so trivial. So I show you two examples here. One is one example that we did with our customer, Vitra, iconic furniture maker, Southern Germany. And many of you might have this fantastic in chair and design icon. And what we did is we used their post-industrial waste, so out of their manufacturing, use this waste, remelted it in the extruder process and brought it back in the system. So what you see here and what Vitra is using is recycled foam. It looks like this. It's a little bit gray and the soft forms, which they use and they brought an entire line, you can see it on their homepage, where they also market this feature of recycled foam in their furniture. So it's very important for them. And therefore, we are very happy to show this. A second one, which is perhaps also not so intuitive is what we did with our customer for fridges, Liebherr. Liebherr, again, a German fridge maker, a little bit niche. They make -- they are leaders in wine coolers, whoever is interested in wine coolers to the theme of last night. They are the leaders make very nice fridges, and they wanted to have recycled content in their fridges. So what we did with them is we went to scrap yards, looked at the fridges that are collected. They have to be collected actually in Europe and took out post-consumer -- post-consumer waste from the scrap yard and reformulated it as a kind of glycolysis procedure and brought it back as Polyol back to the fridge here. So we showed in principle, it's possible. It's a matter also of cost. It's a matter of engagement in the value chain that is important. Nobody of us can do this alone. So it requires that you involve with people that are in waste, people that are in sorting, people are in collection and so forth and that you establish entire value chains. If you want to learn more about this, this will be our big theme on our K fair. Next week is a big plastic fair starting on Wednesday in Düsseldorf. We will have super examples not only on the polyurethane value chain, but also a lot on plastics that we worked on in the last couple of months, and you also find some already on LinkedIn. So far on sustainability of plastics, let's perhaps come back to the future of growth. As we've been talking about smart growth and low asset growth, I think here, we see a couple of examples that we still selectively invest in things that are really, really growing. Two of them, we invest in a new Cellasto line for this kind of business currently in India as well as in China to support our customers there. Very much wanted local content from our customers. And we also opened last year a technical center in Mumbai for our Indian formulation customers because it's important to have the know-how on ground. Coming back to our Verbund site in South China. We opened our thermoplastic polyurethane line in '24. And just in line what Dirk and Markus said this morning, this start-up was extremely smooth, perfect, perfect execution, and now we started it up and get into the market. But also in Monomers, you continue to invest in our growth market Asia.

Of course, I need to be in line with your growth as well as third-party market growth across all regions. So as I hinted earlier, we continue to have a smart debottlenecking of our assets in Asia, particularly in China, which is -- continues to grow in the isocyanate market. We are implementing similar measures in the next years to bring up and debottleneck our capacities in Shanghai and Chongqing. And with that, we are in line to supply our internal demand as well as external customer growth. Ladies and gentlemen, as you know, in terms of our polyurethane value chain, it's not only a global presence. We are proud of sustainability and innovation, but also it has to be a value creation. So as Markus alluded to it, two important themes of our new strategy is winning behavior and value creation. Every -- not only -- every quarter, we look at our performance and benchmark ourselves with our peers in the market, how are we performing? Even though it cannot be a one-to-one comparison directly, but it gives you a benchmark where we are positioned as a PU value chain within the market segments we operate. Here is a comparison of some of the peers who operate in the PU value chain globally. And I would say from this, we are in a good track to say not only we deliver significant value, but we also continue to improve our performance over the years. Our objective is to keep our balance of upstream as well as downstream, focus on asset effectiveness, cost competitiveness and also focus on sustainability on the downstream, close to customer locations, improve on new innovations and specialty solutions for our customers with this balance we would like to grow our business and also make it profitable and value creation for us within the company also for our investors. It's also not only just value creation, and I would like to reiterate the contribution of Materials segment to the growth of BASF and our commitment in 2028. As was highlighted already by our Board and by our head in the last year, we reiterate our commitment of our delivery of EBITDA margin in 2028. So we expect to increase from 2023 until to 2028, additional EUR 750 million to EUR 850 million from the Material segment so that we can grow our business profitably and also sustainably. With this, we conclude our presentation. We are open for our discussions, any questions, and thank you for your kind attention.

Welcome back, ladies and gentlemen. With me on stage are now Mary Kurian and Thomas Kloster. Let me briefly introduce them. Mary has been responsible for the Care Chemicals division since April 2023. She joined BASF in 2020 after holding various leadership positions in Air Products and Chemicals in the United States. Mary studied polymer engineering at the University of Pune in India and earned a PhD in Materials Science and Engineering from the University of Delaware in 2004. Thomas has been responsible for the Petrochemicals division since January 2025. Before -- between 2021 and 2024, he has been the President of our Performance Chemicals division. He joined BASF in 2001 after working for the management consultancy McKinsey & Company. In 2002, Thomas received a PhD from the Faculty of Business Administration of Mannheim University. Now the stage is yours, Mary, Thomas.

Thank you, Stefanie. Welcome back after lunch. I have the honor to get this session started. And I need to address a few comments I received yesterday night over dinner and also need to avoid some misunderstanding after Markus talking about petrochemicals here today. So number one, I voluntarily signed up for that job. I had different options. Number two, my cracker business is profitable. Number three, and that I can fully echo, it's all about cost competitiveness. And we'll talk today about the EO value chain, which is a value chain that crosses several divisions. We love to talk about core businesses and EO, the EO value chain is hard core. This value chain, the EO value chain crosses several segments of BASF. Today, the Chemicals and the Nutrition & Care segment are here to present our part of that value chain. In petrochemicals, we are the heart of the Verbund. This is where many value chains in BASF start. We provide all the key building blocks, several key building blocks and Monomers to our downstream divisions, including Care Chemicals.

And along with our sister division, Care Chemicals is part of the Nutrition & Care segment. And as Thomas mentioned here, we are part of a key value chain. We play two roles. Internally, within the core, we convert large quantities of upstream raw materials into valuable products and the EO value chain is a prime example of such a value chain, and we'll show you exactly what we mean by that. In addition, both the Nutrition & Care businesses here are facing extremely attractive customer markets. And we will talk about the attractiveness of these markets and the ability to basically combine the value chain steering with differentiation to serve these attractive markets.

The EO value chain is highly relevant. to the core business as a whole, but especially to our two divisions and the two segments we are representing. You see here that our two segments account for more than 40% of the sales of core. And within this business, the ethylene oxide value chain accounts for around 20% of sales in this combined business. So it's one of our key value chains, I would say, even slightly more important than the polyurethanes value chain, but we will not continue that dialogue. Let's start with a brief overview of the Petrochemicals division. And similar to Ram's presentation, today, we have two roles. We are supplying our internal customers in BASF with cost competitive Monomers building blocks for their businesses. But we also have a relevant merchant business. In our case, it is 70% external sales and 30% internal sales to internal customers. The external sales are either because we have leading market positions and attractive end-user markets we serve or it's because we need in order to achieve economies of scale in all our assets, also certain outlets for some monomers in order to keep that leading cost position.

The Care Chemicals division primarily serves three market segments that are shown on this slide, Personal care, home care, industrial and institutional cleaning and the industrial formulators business. So for this afternoon's discussion, we will focus on the Home Care I&I and the Industrial Formulators business because these are the key outlets for what we will describe the products that come out of the EO value chain. And you can see that we, as Care Chemicals are the leaders globally when we look at these sectors, whether we look at personal care, whether we look at home care or going down to the industrial formulators where we enable applications in many industrial environments. Several factors I want to point out on this slide, just coming back also the diversity of the products and the customers that we have in Care Chemicals. So our ingredients from Care Chemicals span a whole spectrum. starting with UV filters and sunscreen, going into the surfactants into laundry detergents and then being the key ingredients, for example, in metal surface treatment or agrochemicals. So you can just see the diversity that we have within this division. Also evident from the pictures here, we are very close to end consumers. So when we look at our customer base, about 80% of our portfolio serves an end customer. And this brings particularly two aspects to Care Chemicals, which we will also highlight in this presentation. First and foremost, the importance of innovation. This is a huge differentiator, and I think Martin showed some excellent examples, and we will also try to show here. Innovation is a true differentiator and continues to help us maintain that portfolio quality when we think about Care Chemicals. Second, we play an even more fundamental role when we think of BASF's ambition to enable the green transformation of our customers. Being close to end consumer industries, these industries are leading in terms of the transformation, in terms of sustainability requirements. And we as Care Chemicals serve as the channel to market and also in terms of translating this customer pull into real products. And again, we will show you examples of what that means. We are well invested for growth. And here, we show you a picture that just shows the distribution, specifically of the petrochemicals and care chemicals value chain relative to EO and a couple of points that I'd like to point out. First and foremost, that we have a good distribution. We are well represented in all the important geographies in the world. And we also reinforce here similar to what you saw on the first -- in the first presentation, it supports our local-for-local strategy. So more than 80%, 90% of our products serve the local market. And both Thomas and I are excited about two things. First and foremost, we're sitting at the site of one of our most recent expansions we are very proud of, and we have colleagues who are going to show us around. And this will show you why we think we can compete. And then importantly, we look forward to the onstream of our Zhanjiang Verbund site. For the petrochemicals as well as for the Care Chemicals division, while it looks like a significant step up, it just enables us to have a better representation in the fastest-growing market in the world. And so with this, I want to now hand over to Thomas, who's going to talk about the integration itself and why do we believe that this is a competitive setup to win in each of these markets.

And I can build on the slide that Markus shared earlier today, shared this morning about the different steps of the EO value chain. And we zoom in now into the responsibility of petrochemicals and Care Chemicals in a minute. So we start with crackers, with mixed feed crackers that we have in all regions. We get out of them the key building blocks, ethylene, propylene and butene. And yes, iso butenes are highly valuable olefins, Markus. And we can develop a lot of chemistry out of that. So while we, as a petrochemicals division, we really focus on the commodity part of the value chain with usually a handful products. This tree, this chemistry allows us to branch out into the 4,000, 5,000 products that contain an EO molecule. One of the prime targets is to really support our high-value downstream businesses like the Care Chemicals business with high-value products, for example, the alkoxylates here displayed in green. And we've also displayed you here the market shares here for the European markets on the different steps of the value chain. We are in ethylene, not to be in ethylene, but to have access to cost competitive ethylene here in Antwerp, but also in Ludwigshafen. But we don't fight for higher share in ethylene. The value levers for this value chain is on the EO step, on the purified ethylene oxide step as well as on high-value downstream products like the alkoxylates. Yes, we also supply commodities like ethylene glycol in order to have really economies of scale in all our assets, but our target is really to keep the highest share, the highest market share in the high-value pockets of those value chains. And even though we show you here the European shares, this ratio is pretty much the same around the globe that the EO step, the market share is about 3 to 4x the market share we have on the ethylene step, which is, for sure, the bigger commodity. Now let's dig deeper into the topic of cost competitiveness, and let's really share with you some facts and figures here. This is our cash cost curve on ethylene, and we've displayed you here our position in Antwerp. If I had given that presentation about 6 or 7 years ago, our position would have been right in the middle. This was before we started the feed flex project and enabled our cracker here in Antwerp to also use propane as a feedstock. And this also shows you what you can do in an existing asset footprint based on changing dynamics in the feedstock market in order to move you back into the first quartile of that cash cost curve. As I have said, we are not in ethylene for the sake of being in ethylene. What is the most important cash cost curve for us today is the EO step. So we now take the ethylene we get from Antwerp plus our setup here where we have the economies of scale in Europe, where we have the leading technology, where we have the highest integration in all the European assets, and that clearly gives us the leading cost position on the EO step here in Western Europe. That is also competitive for sure, against imports, leaving aside that EO is not a molecule that travels easily. This chart also shows you there are several players still producing EO in Europe, and we expect consolidation to happen and to continue. We are not leaning back on this cost position because this is a race. Our competitors will try to imitate, will try to catch up. And therefore, it is a program for both our divisions to continuously year-by-year look for opportunities to reduce the energy consumption to increase the yield, to reduce waste. And we have shown you here two examples that we have recently implemented in Antwerp and Ludwigshafen, pretty old, pretty established assets. And year-by-year, you come up with ideas, another EUR 3 million here, another EUR 4 million there. And this type of continuous improvement is the current game because it doesn't eat a lot of CapEx, and it immediately puts you back or defends the leading cost position that we have.

And indeed, this cost competitiveness coming from the back integration is a fundamental factor for us for our success. In addition, Care Chemicals has other integration within the Verbund. So when we talk about the EO value chain and the relevance for Care Chemicals, we are primarily focusing on the alkoxylation platform. And very simply described, we are taking the ethylene oxide, we are reacting or making new products using alcohols together with ethylene oxide. And we have capability not just on the ethylene oxide, but also important integration on the alcohols, technology that's very specific to some specific types of alcohols and hence, the ability to have differentiated asset bases. So what you will see here are the large-scale alkoxylation plants. We also have differentiated products that are produced in smaller assets. Like Martin said, we have thousands of products going to thousands of customers. And so this is where we combine this cost competitiveness that is fundamental for us for our standard portfolio and then build on that with the specialization that we bring, whether it's through technology or whether it's through innovation. And so within Care Chemicals, we have a large diversification. We have standard products, very similar, some remarks you heard also in the earlier presentation, going all the way down the value chain to the super specialties. And our challenge and our focus is on continuing to outpace the competition in the differentiated products. And we have some great examples that we would like to show you. And first and foremost, it begins with our innovation prowess, as I would put it, versus the competition and primarily driven by what is required by the customer. We have a globally distributed capability. So we have R&D centers. We have application support as well as technical service in all the growing markets. We are very particular about being close to the customer because specific customer industries, particularly for applications technology need to be specialized and tailor-made for the region. When you look at our product -- patent portfolio, it's a healthy one. We add about 100 patents per year. Many of them also encompassing the applications area. And then when you look at the vitality index, particularly with our industry-leading innovation partnerships, we're looking at 35%. So a very high refresh rate of our new products generated in a 5-year cycle. One point I would like to make here is that in addition to innovation and the cost competitiveness that we must bring in order to win, being close to consumers and being in products that are in our homes or products that we put on our body, the regulatory aspect is extremely important. And here, BASF brings this capacity, expertise and capability, not only in the forefront of anticipating the innovation requirements to meet these regulatory trends, but also working with our customers as well as industry associations on the advocacy efforts that are critical in terms of life cycle management and portfolio development in this space. And of course, we like to say we are good. It's even better when our customers recognize us and award us with industry-leading awards. And one thing that I would reflect on is that what is not new is that in the past decade, we have always been at the top in terms of innovation awards. What has changed in the past 5 years is the importance of sustainability. So when you talk to customers, it's about performance and sustainability. And particularly when you look at the leading global brands who are represented on this slide, whether it's Procter & Gamble, Henkel, Unilever, it's always about performance and sustainability. And this is also reflected in the work that we do with our customers. And we definitely aim for more than just a traditional supplier relationship. And we're extremely happy that one of our most important global customers also agrees and in Carsten's own words, we go beyond the traditional relationship, and we find ways to collaborate across the entire supply chain. And here, again, you see that combination of performance and sustainability, particularly pioneering in the industry, some lighthouse projects, whether it's biomass balance, whether it's circularity of feedstocks. So great that we tell you this, but even better that our customers can give us a testimonial that's even more powerful. So with that, let's look a little bit at the products, and we won't go into the deep chemistry of it, but we're talking about the alkoxylation platform. We're happy to have cost competitive, the best position on EO in Europe, and we combine this with alcohols of different types or amines and come up with a full portfolio of products and only a partial group are represented here. When Care Chemicals has a discussion with a customer, the customer often starts with the job to be done. And there are four jobs to be done that are represented on this slide. So if you look on the left-hand side, the job to be done might be to remove the toughest stains on your laundry. If you go to the second example, you might be a restaurant owner and you need 100 dishes cleaned in under 10 minutes at perfect cleanliness so that your customer feels safe and comfortable eating in your restaurant. Or you could be a cement in the construction industry where you want to pour concrete, but you want to do it faster without sacrificing performance. And last but not the least, we have a pretty significant piece of business focused on the agro segment. And particularly, what do we do here? We bring the surfactancy and our understanding of applications knowledge to improve the efficacy of crop treatment systems, for example. So just a small section or cross-section of what we have exciting things going on in our portfolio. And I talked about the vitality index and the importance of innovation. And so just to say a little bit more about two examples that are recent and also highly relevant for the product portfolio. On the left-hand side, you see the Sokalan EcoBoost series. These are non-ionic surfactants. And for every one of us who are consumers of laundry detergents, we know the push towards shorter wash cycles, energy-efficient machines where you want to do cold water wash or low temperature wash, and you don't want to sacrifice performance, but rather you want biodegradable products. So Sokalan EcoBoost meets these requirements and is found in the leading laundry detergents worldwide and was introduced in 2024. On the right-hand side is a critically important product. This is also to give you a flavor for -- we know that we have this Zhanjiang Verbund site coming on stream. And we've done not only premarketing and relationship building with our customers, we also innovate in new products that are highly relevant for that market. And here, we have the floor effect series of non-ionic surfactants, and they're slated for introduction right as we bring this facility on stream next year. And here, you can see the industrial cleaning example. So you want high performance, low foam. One thing I learned when I came into Care Chemicals was that foam was only for -- to make you feel nice. The cleaning happens without the foam. So if you are a restaurateur, you don't want the foam in your dishwashing liquids. So here, again, the strategic launch that is timed with the Zhanjiang Verbund site is exciting for us. And so what I hope I have shown you is that the importance of the intersection of performance with sustainability. And here, we believe we have another distinguishing factor that sets us way apart from others that we compete with. And this is the ability to take what a customer wants. When we think about consumer industries, there is a push towards not just bio-based products, but low product carbon footprint. And on the right-hand side, you see that our major customers have ambitious goals to reduce carbon footprint -- CO2 footprint and then approach their net zero goals. And what we truly believe is that there is a transition pathway and part of that transition pathway is leveraging the strength of our interconnectedness to bring in feedstock flexibility. And so here, I want to hand it to Thomas to explain this a little better.

And to build on your customers' needs, whatever they ask you to deliver, it's up to us in the Petrochemicals division to find the best cost option, the lowest cost option to make it work. We start from an excellent starting point when we talk about greenhouse gas emissions. You see here the comparison of Antwerp to a European average and to a Chinese average. Our Zhanjiang Verbund site will be slightly below or slightly above Antwerp. There's a healthy competition between the two teams who can run the two plants even more effective, but it should also underline our ambition to enable our customers' green transformation in Europe, in Asia and all around the world. And depending on what your customers need, Mary, is it more renewable carbon? Is it more green energy? Is it more low PCF feedstock? The opportunities in our machine park, in our assets in the Verbund to source either at a bio naphtha step or along the value chains are our opportunities to smartly decarbonize or reduce our carbon footprint and increase our green attributes without major investments. And I'm very happy, Mary, that you shared so many innovative examples. I can assure you we have all the EO molecules you need. And we have the opportunity, of course, to divert our EO molecules to the most valuable pieces of our portfolio, and that's the benefit and the opportunity of an integrated setup. And here in the EO value chain, we even speak of a physical integration, best setup on one place, on one site or an integration via pipeline. And that brings us to our closing slide, which is from the numbers, not a surprise to what Markus, Dirk, Ram and Martin have presented today. And we confirm our targets that we have published about a year ago. And even though that might surprise the one or the other, I can clearly say if I compare where we stand today compared to 1 year ago, on all the things we have in our own hands, I'm more comfortable and more confident to achieve that for two reasons. Next Tuesday, we will publish mechanical completion of all our assets in Zhanjiang. This is in time, below budget. We have already started our first plant that was in spec within 12 hours. We now come to the peak time every week, we'll start a new plant. But I hope you sense we are extremely optimistic and extremely proud of what our teams have achieved to keep a project of that size in time and below budget. So one key pillar of that Chemicals segment EBITDA increase is really on track. But also the second part with the topic of cost reduction, efficiency program. Also here, Dirk shared some examples today. I can clearly state for my division we are much clearer now from a certain ambition level that we had, how we will do that. We have also communicated in several sites in several teams, how we will implement also that cost-saving program. And with that, I'm also more confident today that we'll achieve it, and we make it visible in the P&L.

And likewise, Thomas, thank you for that introduction and conclusion here. In the Nutrition & Care segment, along with our sister division, we are well invested in growth. And so the focus for us is loading and growing from these assets. We showed you in some glimpses of what we're doing already for Zhanjiang. And so it's a focus on execution. We have addressed competitiveness topics. So here, continuing to push on improving our competitiveness while also pulling innovation progress and strength to differentiate as we keep moving forward. So we confirm here the increase in EBITDA before special items between $800 million and $900 million by 2028. And with that, we thank you for your attention, and we look forward to your questions.