BASF SE (BAS) Earnings Call Transcript & Summary

Good morning, and welcome to our press conference, and thank you that you have dialed in. Today, we are going to present and explain the financial figures of BASF Group for the third quarter 2025. You will be talking to Markus Kamieth, Chairman of the Board of Executive Directors; and Dirk Elvermann, CFO. And before we begin, let me give you a few points of housekeeping. The conference language is German with a simultaneous interpretation into English, and that's a Teams meeting. So in the Teams meeting, you see all the charts in German. If you want to see the charts in English, you will find the link in the chat or you will also find it as a download on the BASF website under Quarterly Statement Q3. That's it for introduction, and I give the floor to you.

Thank you, Nina. Good morning, everyone. Dirk Elvermann and I welcome you to this press conference from Ludwigshafen, and we will present and explain our third quarter figures. The third quarter of 2025 continued to be challenging market dynamics wise. Margins for Basic Chemicals were still under pressure. Customer buying behavior in almost all industries and regions remain cautious. Even in this demanding market environment, however, BASF's earnings came in slightly above market expectations and only slightly below the level of the prior year quarter. I'll start by looking at the sales performance of BASF Group compared with the prior year quarter as usual. Overall, sales declined slightly on account of continued strong currency headwinds and lower prices. We were, however, able to achieve slightly higher volumes, thanks to growth in the Surface Technologies, Chemicals and Materials segments. From a regional perspective, we recorded 12% volume growth in China, slight volume growth in South America and fairly stable volume development in Europe. In North America, volumes were slightly down. Compared with the prior year quarter, prices declined in 4 of our 6 segments, particularly in the Chemicals segment. And Nutrition & Care segments, we managed to achieve price increases. Currency effects dampened sales in all divisions and were mainly related to the strong depreciation of the U.S. dollar, the Chinese renminbi and the Indian rupee. Reflecting this underlying sales development, EBITDA before special items came in at over EUR 1.5 billion compared with EUR 1.6 billion in the prior year quarter. Here, we provide you with an overview of how the markets and our segments' volumes and specific margins developed in the third quarter of 2025. Due to a continued imbalance between supply and demand and the resulting pressure on margins, the business environment in our upstream segments remain challenging. Nevertheless, BASF achieved solid volume growth in both divisions of the Chemicals segment. However, the segment faced significantly lower prices, so margins declined sharply. In the Materials segment, despite the difficult market environment, BASF recorded slightly higher volumes due to increased volumes in the Monomers division and stable volume development in the Performance Materials division. Prices declined in both divisions. Overall, margins in the Materials segment were lower, owing mainly to developments in the Monomers division. The Industrial Solutions segment operated in a subdued market environment. Volumes slightly declined in both divisions. Specific margins decreased considerably, particularly in the Performance Chemicals division. The market environment for the Nutrition & Care segment became considerably more challenging in the third quarter of 2025. BASF recorded lower volumes in both divisions, but was able to achieve slightly higher prices in this segment. The specific margins in the Nutrition & Care segment declined. Lower fixed costs and improved margins in the Nutrition & Health division were more than offset by lower margins in the Care Chemicals division. Moving on to the Surface Technologies segment and its main customer industry, automotive. According to the latest data, global light vehicle production in the third quarter of 2025 increased by around 4% compared with the prior year quarter, mainly because of considerable growth in China. For the full year 2025, we expect global automotive production to increase by around 2% compared with 2024. In this environment, the Surface Technologies segment recorded volume growth, mainly in the Environmental Catalyst & Metal Solutions, ECMS division and overall prices were up considerably. Specific margins in the Surface Technologies segment also increased slightly. Finally, in the segment overview, let's look at the Agricultural Solutions segment. Crop commodity prices remained below historical averages. Farmers still faced elevated financing costs, resulting in unchanged and challenging economics for them. In this market environment, the Agricultural Solutions segment recorded slightly lower volumes and prices compared with the prior year quarter. By contrast, the segment achieved considerably higher specific margins in a seasonally low quarter -- in a seasonally slow quarter. Let's now look at EBITDA before special items by segment in the third quarter of 2025. Considerable earnings growth in the Surface Technologies and Agricultural Solutions segments as well as improved earnings in Other were offset by lower earnings in the core businesses. Compared with the prior year quarter, EBITDA before special items in the Surface Technologies segment increased significantly due to the ECMS division. The earnings increase at ECMS was driven by significantly lower fixed costs, a strong precious metal trading business and volume growth. Lower fixed costs resulted from continuous cost improvement measures and U.S. government grants for which ECMS is eligible as a leasing -- leading recycler of platinum group metals. As we communicated at the capital market update in Antwerp at the beginning of the month, after the successful carve-out, ECMS has a stronger setup and we will keep the business as part of BASF Group for longer. We expect to benefit from strong cash contributions from ECMS amounting to a cumulative cash flow of roughly EUR 4 billion from 2024 to 2030. This brings us to the Agricultural Solutions segment. Earnings in this segment rose considerably, mainly due to improved margins. The successful market launch of glufosinate p-ammonium and lower manufacturing costs, both contributed to this development. We continue to expect that a slight increase in full year earnings is achievable. The core businesses recorded lower earnings, mainly due to the previously mentioned lower margins, which were partly offset by lower fixed costs. As the deviations from average analyst expectations were largest in the Nutrition & Care segment, I will give you a few more details. Compared with the third quarter of 2024, we generated considerably lower earnings in the Nutrition & Care segment. The Nutrition & Health division increased earnings primarily thanks to lower fixed costs. The Care Chemicals division, on the other hand, recorded a decline in earnings. The main reason for this was continued margin pressure, which was particularly pronounced in the Personal Care applications businesses. I will now give a brief update on our new Verbund site in South China. We will complete this mega project with capital expenditures around EUR 1.3 billion lower than originally planned. We achieved this significant CapEx reduction through tight budgetary discipline, scope changes and excellence in procurement. As a result of the currently long markets in China, the ramp-up of earnings contributions will be slower than originally anticipated. In the years to come, we expect most markets and value chains to rebalance. We, therefore, confirm the targeted EBITDA before special items of EUR 1 billion to EUR 1.2 billion by 2030. This slide illustrates the impressive progress that Zhanjiang team has achieved since May. This includes the successful mechanical completion of the steam cracker and downstream petrochemical plants. The infrastructure and utility plants are already in steady operation. Additionally, we have safely and successfully started up various downstream plants, including butyl acrylate, 2 ethylhexyl acrylate from aldehyde, neopentyl glycol and glacial acrylic acid with more starts to come. We are thus transitioning the project from construction to operational readiness. Full operational start-up for the site is expected as of the end of 2025. Let's now move on to the binding transaction agreement on BASF's Coatings business, which we announced on 10th of October. This agreement with Carlyle marks an important milestone in focusing our portfolio and unlocking the value of our Coatings business. It demonstrates our strong commitment to swiftly execute BASF's winning way strategy and create a leading Coatings company under Carlyle's operational leadership. The enterprise value of this transaction amounts to EUR 7.7 billion. If we achieve regulatory approvals within the typical time frames, which we anticipate, the transaction is expected to close in the second quarter of 2026. At closing, BASF will remain invested in the coatings entity with a 40% stake and will receive pretax cash proceeds of approximately EUR 5.8 billion. We believe in the future value creation and potential of the Coatings business and want to continue to participate in its success. Together with the divestiture of BASF's Decorative Paints business to Sherwin-Williams, which closed on October 1, BASF's entire Coatings division is valued at an enterprise value of EUR 8.7 billion. The implied 2024 EV EBITDA multiple before special items of approximately 13, clearly demonstrates that we are unlocking the value of the Coatings division. With that, I will now hand over to Dirk.

Yes. Well, thank you, Markus, and good morning, ladies and gentlemen. What are the implications of the Coatings transaction agreed with Carlyle in terms of BASF's financial information being presented today? As of September 30, 2025, and until closing of the transaction, we will report coatings in the P&L as discontinued operations. Therefore, sales and earnings of the business are no longer included in sales, EBITDA and EBIT of BASF's group with retroactive effect as of January 1, 2025. The prior year figures have been restated accordingly. The results of this business are presented as income after taxes from discontinued operations. Between September 30, 2025, and closing of the transaction, there is no impact of or change on BASF's statement of cash flow. The business will be considered as before in the respective line items of BASF's cash flow statement. As of closing, BASF's minority stake of 40% will be accounted for as a financial investment using the equity method and will be reported in EBITDA and EBIT before special items of Other. The cash inflow from the transaction will be reported in cash flows from investing activities in the line item payments received from divestitures. After closing of the transaction, dividend payments from the business to BASF Group will be reported in BASF's cash flows from operating activities. This table provides a comprehensive overview of major changes in BASF's reporting following the classification of the automotive OEM coatings, automotive refinish coatings and surface treatment businesses as discontinued operations. In the quarterly statement published today, for ease of comparison, we provide all relevant financial figures on both a pro forma basis, meaning with Coatings still fully included in the segment result of Surface Technologies as well as excluding the discontinued Coatings operations. The Decorative Paints business sold to Sherwin-Williams is not affected by the retroactive restatement. It remained part of the Surface Technologies segment until its divestment on October 1, 2025. This means that the figures for the Coatings division in the third quarter segment reporting refer exclusively to the Decorative Paints business, which was already classified as a disposal group in the first quarter of this year. Now I would like to explain the capital allocation framework and how BASF will use the considerable cash proceeds from the portfolio measures that have already been completed or will be completed. As you know, we closed the sale of BASF's Food and Health Performance Ingredients business to Louis Dreyfus Company on September 30, 2025. This is reflected in the quarterly statement for the third quarter of 2025. The sale of BASF's Brazilian Decorative Paints business to Sherwin-Williams was closed on October 1, 2025. The purchase price amounted to $1.15 billion on a cash and debt-free basis. For our Coatings transaction with Carlyle, which is expected to close in the second quarter of 2026, we will receive pretax cash proceeds of around EUR 5.8 billion. At maximum, we assume taxes to be in a mid-triple-digit million euro range. We also are also making further progress with the monetization of our oil and gas assets. In 2025, we will receive around EUR 200 million from our participation in Harbour Energy from dividends and Harbour Energy's ongoing share buyback program. I would like to stress yet again, we consider our participation in Harbour Energy to be a financial investment, and our strategy remains to exit at the right time to realize the value of this participation. There is also good momentum in the topic of federal investment guarantees. Wintershall Dea received a first installment from the German federal government in the third quarter, and we expect a final decision soon. Proceeds will be distributed by Wintershall Dea via dividends and will contribute to BASF's Group's operating cash flow in 2025 and 2026. As we previously announced and recently confirmed, we are targeting IPO readiness of BASF's Agricultural Solutions division by 2027 with the potential listing of a minority share as the next step. In other words, cash proceeds from this event would be beyond the 2025, 2026 window. Now let's move on to the use of cash with a focus on the rest of this year and next year. We are clearly committed to paying an annual dividend of at least EUR 2.25 per share, subject to approval by the Annual Shareholders Meeting. Furthermore, we will use a substantial part of cash proceeds to deleverage the balance sheet and secure our financial strength. The maturity profile of outstanding bonds will allow us considerable deleveraging in 2026. As announced yesterday, we will start buying back shares as of November 2025. This is a considerable acceleration compared with our initial plan to buy back shares from 2027 onwards. More details on that in a minute. Larger acquisitions are currently not in focus, while smaller to midsized acquisitions remain possible and capital expenditures will be significantly reduced in 2026 and beyond. They will consistently stay below depreciation level until at least 2028. Ladies and gentlemen, we are swiftly delivering on our Winning Way strategy, and we are fully committed to attract shareholder distributions. Therefore, and in view of quick progress on the portfolio side, we have announced that we will start a share buyback program with a volume of up to EUR 1.5 billion in November that is scheduled to be executed by the end of June 2026. This is part of the share buyback announced in September 2024, with a total volume of EUR 4 billion until the end of 2028. The earlier start of the program demonstrates management's confidence in the underlying financial strength and true value of our company, which, in our view, is not fully reflected in the current share price. Now is the right time to return capital to our shareholders and reduce the number of shares while bringing down debt. Let's now take a look at the financial details of BASF Group for the first 9 month of 2025 compared with the same period of last year. All these figures still include the discontinued operations. At EUR 5.9 billion, EBITDA before special items declined slightly compared with the first 9 months of 2024, the EBITDA margin before special items, excluding metals, remained almost stable at 13.6%. EBIT before special items reached EUR 3.1 billion compared with EUR 3.4 billion in the same period last year. Special charges resulted primarily from restructuring measures as well as the sale of BASF's share in the Nordlicht 1 and 2 wind farms back to Vattenfall in the first quarter of 2025. Special income from the sale of BASF's Food and Health performance Ingredients business had a partially compensating effect. Net income declined by EUR 1 billion and amounted to EUR 1.1 billion. In the prior year period, net income from shareholdings included special income in connection with the transfer of Wintershall Dea asset to Harbour Energy. Cash flows from operating activities amounted to EUR 2 billion compared with EUR 3.5 billion in the same period last year. The decline was primarily driven by changes in other operating assets, lower net income and higher cash outflows from changes in net working capital. Compared with the first 9 months of 2024, payments for property, plant and equipment and intangible assets decreased by EUR 1.1 billion to EUR 2.8 billion. This clearly indicates that we have passed the peak investment phase for our South China Verbund site. Free cash flow was minus EUR 868 million in the first 9 months of '25. Here, you can see some more details on our cash flow. I will focus on the development in the third quarter, shown on the right-hand side. In the third quarter of 2025, cash flows from operating activities came in at EUR 1.4 billion. The decline compared with the prior year quarter was mainly due to changes in other operating assets. Payments made for property, plant and equipment and intangible assets decreased by EUR 510 million compared with the third quarter of 2024. Free cash flow amounted to around EUR 400 million. And with that, back to you, Markus.

Thank you, Dirk. Our assumptions regarding the global economic environment in 2025 remain unchanged. Likewise, our outlook for 2025 remains unchanged content-wise. As a result of the reclassification of the automotive OEM coatings, automotive refinishing coatings and surface treatment business as mentioned by Dirk, we have made a necessary technical adjustment to our outlook. The adjusted outlook range for EBITDA before special items is now between EUR 6.7 billion and EUR 7.1 billion, and the difference compared with the previous outlook range of between EUR 7.3 billion and EUR 7.7 billion reflects the expected full year contribution of the Coatings business that are part of the transaction with Carlyle. This business is retroactively reported as discontinued operations as of January 1, 2025. The forecast for free cash flow and for CO2 emissions are unaffected by the restatement and thus remain unchanged, and now we'll be happy to answer your questions.

[Operator Instructions] The first question comes from Mr. Fröndhoff from Handelsblatt.

One question to both of you, maybe more to Mr. Kamieth. If we look at the earnings figures, you have grown in the carved-out businesses and the core business, which represents the future, here, figures declined. And looking at the earnings contribution of coatings, well, this year, there will be no more contributions. That is a high figure with a high return. So the question here is, does BASF really bet on the right part of the business because you seem to keep the declining businesses.

Okay, that was your question already. Thank you very much, Mr. Fröndhoff for your question. Our strategy was announced very clearly last year, and we started to restructure our portfolio with that. From my point of view, it's a little simplified to say we will get rid of our stand-alone businesses. This is not true. We already announced that the ECMS business will be kept in the group and in recent -- in the years to come, we will generate cash contributions, and it will remain part of the BASF Group. But obviously, as a stand-alone business, it will be managed differently from our core businesses. The Ag Solutions business, a significant earnings contribution business will also, after the IPO, remain a fully consolidated business of the BASF Group and contribute to our earnings figures. And the business we are discussing now is the Coatings business, as you mentioned, and of course, if you look at BASF Group's figures, well, this business will no longer be part of this because we are deconsolidating, and we have a share now in this business. But the true importance of this transaction, I think, was described clearly. For our shareholders, we can show the value of the business with an EBITDA multiple of 13, which is much better, a very good evaluation and this means an immediate offset and compensation, and it means that funds are coming in immediately. I think this is a good strategy. And the success story in the core is being continued because even in a difficult market environment, our core businesses are doing reasonably good, and we bet on our innovative strength, our cost advantages and the core businesses, of course, do have a justified future with profitable growth. So our portfolio strategy from our point of view is the right one and the high earnings contributions and the high evaluation of coatings, I think, confirms our strategy. I don't know whether Dirk, you want to add something.

Mr. Fröndhoff, from the financial point of view, I described that the business is being reclassified, but it fully contributes to our 2025 earnings figures in cash flow also. And only from an accounting point of view, it is shown in a different way. And also when it comes to the future, we are selling 60%, which gives us a cash share of EUR 5.8 billion before taxes for the 60%, we will have a 40% stake. And our stake, I tried to show this to you, will be reflected in the EBIT in the future. As soon as the closing is complete, the performance of this joint business under operational leadership by Carlyle will be shown in BASF's EBIT. So it doesn't disappear, but we still have a minority share.

And if you look at the profitability of coatings over several years, then looking at the strength in earnings, looking at return on capital, it is not much different from our downstream businesses in the core business. So your hypothesis that this is less profitable is not true.

Andrew, your question, please.

Can you hear me okay?

Yes, we can hear you.

Yes.

I've got 3, and I'll try to keep them brief. The first one is on -- you've mentioned I mean small to medium M&A. Sorry, I'm getting a terrible echo. I don't know how to get rid of it, but I'll continue. You've mentioned small to medium M&A. Given the focus on the Verbund and getting everything inside the tent, so to speak, what would that look like? Are you referring to sort of the stray commodity assets in Europe, for instance, because it's hard to picture how you would buy anything given your retrenchment around Verbund. That's the first. I take your point on ECMS and Ag and how they are good stand-alone businesses. But given you've sold coatings, you sold food and health, I'm struggling to sort of work out how something like Cognis fits in. It's got a ton of SKUs. It's cosmetic actives, anti-aging, palm oil, natural ingredients. So it feels like less of an overlap with coatings. So are there more businesses that could come out like that? And I've forgotten the other. Yes. I'll leave it there. You only get 2. And Nina, good luck with your next role in Roche.

Thank you, Andrew.

Do we answer in English or in German?

In English.

In English. Okay. Thanks, Andrew. Thanks for the question. I'll take a stab at them. First of all, M&A, I mean, the notion that we say we consider small- to medium-sized M&A or acquisitions is at the end of the day, also a financial statement, so to say, that we put in the context of our financial use of cash, so to say, right? So we wanted to make sure that we are not now sitting here and targeting major transformational M&A as a group, at least for the time being. I would say your statement that everything has to fit under one tent is a little bit black and white from my perspective. Of course, we are focusing a lot on our strength in our Verbund sites. And we have also said recently that about 80% of what we do in the Verbund is linked to 1 of our value chains. But that also leaves a lot of room for attractive, high-growth, high-profit businesses that we run that are not necessarily always linked to a value chain and are not present at our Verbund side. So I don't think this is an exclusive view so much. And the business, in particular, that you mentioned in your second part of your question, we consider as one of our strong downstream businesses. We have also a very integrated business, by the way, in the personal care space, starting from fatty alcohols all the way to a large amount of personal care ingredients. And we are going to market with one of the broadest and I would say, most powerful portfolios into an industry that, of course, also benefits a lot from other products that come out of the Verbund in Ludwigshafen, the EO value chain, for example. So overall, we like the Personal Care business a lot. We have shown that we can run this operationally very well. We are one of the market leaders, and it shows also an over-average profitability for us. So we don't discard anything just but it's not in Ludwigshafen or just because it's not linked to a Verbund value chain, but we look at it case by case, and we see what businesses fit to us and where are we the best owner? And this is also, I would say, the lens we put on potential small- to medium-sized acquisitions. And this is not a super high priority for us right now, but we wanted to indicate that we have the capabilities to do so.

Yes. I remember the last one, just super quick. In 2024, you announced a deal with International Process Plants to sell some of the ammonia, methanol and melamine plants in Ludwigshafen. Did that -- did they get relocated and shipped off? Or has it been written off? Was it a positive experiment that you could do again or...

Andrew, to be honest, I really don't know the answer to this question. I think -- some of the media -- some of the attention this got in the media was, from my perspective, blown a little bit out of proportion. There's an active market for people who are looking for distressed plant and pieces of equipment. Like you have scrap yards in automotive, you have people that are looking for these types of equipment pieces. It's not a big deal. It's not strategic, certainly not on the radar screen of the BASF Board.

And then we switch to Mr. Reitz from SWR.

I would like to ask about 2 aspects. Firstly, the site in South China, you were always talking about EUR 10 billion. So now you assume approximately EUR 9 billion investment there. And if you then operate the site with all the overcapacities, is it too big maybe now even if it is more cost efficient? And then maybe a word on the site in Ludwigshafen, you are talking with the Works Council on the site agreement? And can we expect a solution soon?

Well, let me start with China, if that's okay. You are right. At the beginning of October, on the Capital Markets Day, we gave you a new figure, a more accurate figure rather because with such a major project, you have to wait and see until everything is really approximately finalized. And now we drew a line and said, okay, EUR 8.7 billion is the figure, not the EUR 10 billion that we said at the beginning. But we wanted to see really. It's like when you build a house, you remain cautious until everybody left -- the last craftsman left the site. So EUR 8.7 billion is the figure. Your question whether it's too big, whether the site is too big? No. Because on the one hand, we have longer markets in China. What does that mean? That means that there is slight overcapacities on the market in China, the entire chemical industry has this situation, but size and scale, of course, is the point that makes us competitive starting with upstream, the steam cracker. You can't build it half as big because then it's too expensive, and then you can forget it in China. You have to be big here, think big, then it is competitive. Then you have competitive downstream assets, which you integrate as well as possible. And that's what BASF and that's what we believe is able to do compared to many Chinese competitors. Maybe we are better here. And so the site is big. But in a cost curve in China, it is at a very favorable position, and that allows us to really, well, go and fight on this tough market in China and to confront the Chinese competitors successfully. So yes, it's big, but it has to be big in order to be cost efficient, and this is the game that we have here with commodity materials. Okay. Yes, site agreement. Second question, no news here. There's talks going on between employee representation and under Katja Scharpwinkel, she's a Labor Director here in Ludwigshafen and her team. And you might imagine that in these times, these are difficult and intensive talks. I'm not personally involved here, but I learn that this is on good track and both sides make constructive contributions even if it is hard work to find a solution. But I'm quite confident because I said so time and again, I think a site agreement was always good for us. It regulates like in a coalition agreement for politicians, it regulates a certain period of time, and it's good to have such a document. You can rely on it, and we just rely on it to be a solution for us, for the Board, but also for employee representatives and employees for the transformation that we're faced with.

A question from Jakob Weizman from Politico.

Can you hear me okay?

Yes.

Yes, we can hear you fine.

My question is regarding the Verbund site in South China. As BASF's largest investment to date is now progressing with lower cost than originally planned. I wanted to ask more for a new policymaking level, given Europe's ongoing struggle with the chemicals industry with high energy costs, tight regulation and less demand. Does the growing investment footprint in China signal crucial shift away from Europe's chemical base as you see many plants go across Europe with Dow, LyondellBasell and Covestro and especially with Sir Jim Ratcliffe mentioning the stress calls for the decline of Europe's chemical industry. I wanted to ask, from a Brussels perspective, what can the EU policymakers do to stop the industrialization and keep production innovation at home, especially with Europe's fight to decarbonize as well across the Green Deal transition.

Yes. Thanks, Jakob. I mean, of course, especially the last part of your question would be enough to fill an entire hour or 2 on debate about EU policy. But let me come back to your first part -- to the first part of your question. I think the picture of things shifting from Europe to China is fundamentally flawed because China is a growing market for chemicals. It's a growing market in general for many industries. And Europe is a stagnating to right now, even slightly shrinking market for chemicals and also customer industries of the chemical industry. So you have 2 very different dynamics. And if you are a global company, you have to accommodate for both of these trends because you have assets and you have ambition to be profitable and to have market-leading positions in both of these regions, which is true for other regions as well. That means you have to have in China a smart growth strategy, investing into competitive assets that allows you to grow with the market to continue to deal with your customers in China and also to compete successfully against local competition. And at the same time, you have to have an appropriate strategy in Europe to deal with a high cost environment with lack of growth in most of our end markets, and with a continued denser regulatory environment that is often guided by the thought of leading and regulating a green transformation. Very different market environments, and we have to have appropriate strategies in both regions. Like we do, have to have a successful strategy for North America. So I'm always speaking back against a little bit of the notion that something is shifting. We are just executing a game plan in China, and we're executing a game plan in Europe. But in Europe, the game plan is about rationalization. The chemical industry has significant overcapacities in Europe for the European market. And this is, I would say, significantly also influenced by a denser and partially destructive regulatory framework that we are facing here in Europe. And this is also what you hear other people pointing out very clearly. And if we talk to politicians in Brussels, we very much mention, first of all, the high level of regulation that is not necessarily helping with the competitiveness of the European industry and the high degree of bureaucracy that has emerged, especially over the last years, which is also partially toxic for an investment climate. The second thing is, of course, the increase in cost for CO2 in Europe, which fundamentally, I think when it all started with the ETS system and the idea to establish a CBAM system might have been a good idea, but it shows that, a, it is becoming very, very difficult for the industry in Europe to deal with the rigidness of this system and the incredibly increasing CO2 cost that we might have in the next decade, if we don't change it. And the other -- on the other hand, the matter of fact that the rest of the world is not playing along. So CO2 prices in the rest of the world are not increasing. And that, of course, sets back the chemical industry in Europe. And thirdly, I would say that in general, the European commission or people in Brussels still have to do a much better effort to focus on industrial competitiveness by, for example, really committing to the recommendations that were in the Drage report. And I just mentioned the full commitment to creating a single market in Europe because I think that's the only chance of making Europe strong enough to, at the end of the day, compete with the U.S. and with China on an eye-to-eye level because we have the theoretical potential to do it. But in real life, I think we shoot ourselves in the foot way too often.