Clariant AG (CLN) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. A warm welcome to Clariant's 2021 Capital Markets Day. I'm excited and inspired to be your host today. Unfortunately, we are not able to meet in person as we all continue facing the ongoing challenges of the COVID-19 pandemic around the globe. Today's event is fully compliant with the current COVID regulations. Therefore, we are streaming our presentations and will afterwards have an interactive virtual Q&A session to engage in the best way possible under these circumstances. Let me start with some housekeeping items. I would like to remind all participants that the presentation includes forward-looking statements, which are subject to risks and uncertainties. Participants are therefore encouraged to refer to the disclaimer at the end of today's presentation. This morning, we published a press release and just recently also the Capital Markets Day presentation. A recording of this event will be available shortly after the conclusion and all materials can be found in the Capital Markets Day section of Clariant's Investor Relations website. Please note that all figures discussed refer to continuing operations unless specifically noted otherwise. To conclude my opening remarks, let me express a big thank you to all the real people of Clariant involved in the preparation, support and execution of today's Capital Markets Day. Let's go straight into the agenda. I'm honored to introduce the Clariant Executive Committee members who will be presenting today. We will start the presentations with Conrad Keijzer, who will introduce the purpose-led strategy leading sustainability positioning of our specialty portfolio and the new 2025 targets for the group. Hans Bohnen will begin the case studies with a catalyst success story and we'll later focus on the opportunities from our retail range of surfactants and ethylene oxide derivatives closely linked to the Indian joint venture. Bernd Högemann will talk about a strongly growing sustainable flame retardants business and the corresponding capacity expansion in China as well as the sunliquid technology for second-generation bioethanol. Last but not least, Stephan Lynen will take a closer look at our 2025 targets from a financial perspective prior to a wrap-up of the presentations by Conrad before we head into the Q&A session. Ladies and gentlemen, let's kick off the 2021 Capital Markets Day now, greater chemistry between people and planet. Clariant's new purpose, the purpose-led strategy in all its facets. Conrad, the stage is yours.

Thank you, Andreas. Good afternoon, everyone. Thank you for joining us today at our virtual Capital Markets Day. We would like to cover 5 topics today. First, we are unveiling our new purpose statement. Clariant is at the forefront of sustainability focused innovation. We are putting our customers, our employees, and our planet at the center of everything we do. Greater chemistry between people and planet. We are a leader in sustainability ourselves, and we support our customers with their sustainability transitions. This year, we defined new climate targets that set out ambitious absolute reductions for Scope 1, 2 and 3 greenhouse gas emissions by 2030. These targets are science-based and go beyond supporting the Paris target of a less than 2-degree temperature rise by 2050. Clariant has an attractive innovation pipeline strongly linked to customer-driven sustainability requirements. This enables us to grow our business consistently above GDP. Our growth will be supported by strategic investments and enhanced footprint in China and selective M&A to close any product, market and technology gaps. We will follow a differentiated growth strategy, and invest in our most attractive businesses and market segments. We will further expand our cost programs in business with lower value creation to further enhance our profitability. We are committed to achieve top quartile growth, profitability, sustainability and people performance versus our specialty chemicals peers. This is reflected in our new midterm financial and nonfinancial targets, which we will introduce today. In the recent months, our leadership team has worked together with colleagues from all over the world and with key customers to clearly define our unique role and contribution as a company, our purpose. Over the past year with the company, I have experienced firsthand our strong innovation capability. I noticed from the breadth of our innovation programs and from my exciting visits to our labs. Even more reassuring, I hear this every day from our customers who are truly enthusiastic about our innovations. The world is changing quickly. Climate change and carbon footprint are becoming a big priority for all of us. The chemical industry is only responsible for about 8% of global CO2 emissions. However, our industry touches more than 90% of all the products we use in our daily lives. Think about food, healthcare, cosmetics. Think about the many products that make our lives more pleasant like mobile phones or electric vehicles. At Clariant, we have the unique opportunity and responsibility to create a truly meaningful impact. Our innovation power, customer proximity and our uniquely talented and experienced people enable us to deliver products with an outstanding technical performance and with an outstanding sustainability performance. All of this is captured in our new purpose statement, greater chemistry between people and planet. Greater chemistry stands for innovation. It stands for unique solutions that redefine what conventional wisdom considers to be possible. Greater chemistry between people stands for the beauty of interactions between people. Greater chemistry in our relationships with customers allow us to go beyond a transactional relationship. Greater chemistry between people also describes our company culture, a culture that actively promotes diversity, inclusiveness, mutual appreciation and empowerment. Greater chemistry describes an environment where everyone can contribute and can develop their talents to their fullest potential. Finally, greater chemistry between people and planet means sustainability. It is the greater chemistry that serves a greater purpose. It expresses our ambition to enable the transition to more sustainable living. Our new purpose comes to life in our new purpose-led strategy. Our increased customer centricity, our innovative products, driven by sustainability and our focus on people all will be reflected in our new midterm targets, both in our financial and in our nonfinancial targets. Clariant is 1 of the few focused specialty chemicals players of scale in the world. We have simplified and focused ourselves in 3 business areas. We operate 80 production and R&D sites globally. We have a diverse workforce of 11,500 employees, representing 95 different nationalities. We are proud of our safety track record with a lost time injury accident rate of 0.16. This is a leading performance amongst chemical companies. Needless to say, it is our commitment to achieve an injury-free workplace for all of our employees. In the last 12 months trading, we generated sales of almost CHF 4.2 billion with an EBITDA margin of 16.3%. Since 2019, Clariant has divested its healthcare packaging and Masterbatches its business, and we expect to close our Pigments divestment early next year. Our refocused portfolio is truly a specialty chemicals portfolio with strong market positions in Care Chemicals, Catalysis and Natural Resources. We have become a company with a higher quality business with better margins, a better sustainability profile and an ability to deliver stronger growth. The shift in our portfolio resulted in a higher EBITDA margin from 13% to 15.7% in 2019. Our focused specialty portfolio showed its resilience during the pandemic. Revenues were down 12% in Swiss francs, but only 5% in local currency in a challenging global environment. Our EBITDA margins declined by only 70 basis points to 15% in 2020. In the last 12 months trading, our EBITDA margin increased to 16.3%. This shows not only a strong recovery from the pandemic, these numbers demonstrate our ability to improve our margins in an inflationary raw material environment as well as the initial results from our new focus to bring our core businesses to their full potential. We've set new midterm targets that reflect our ambition to achieve top quartile results in specialty chemicals in terms of growth, profitability, sustainability and people. We are targeting to grow our topline by 4% to 6% on average per year and to increase our EBITDA margins from this year's guidance of 16% to 17%, to 19% to 21% by 2025. We are also introducing a cash conversion target for the first time. We're planning to reach a free cash flow conversion of around 40% by 2025, defined as operating cash flow minus CapEx divided by EBITDA. In addition to our new financial targets, our nonfinancial targets reflect our purpose-driven strategy and our commitment to people and planet. We are targeting a reduction of 40% for our Scope 1 and 2 emissions and 14% for our Scope 3 emissions. We are further targeting to become a top quartile company in terms of employee satisfaction as a key measurement for our ambition to be the employer of choice in our industry. Based on the opportunities we see for Clariant today, we are confident in our ability to deliver on these targets. Next, I would like to give you a brief overview of our 3 business areas. Our business area Care Chemicals, generated CHF 1.6 billion sales with a 20.9% EBITDA margin, in the last 12 months trading. This makes it our largest business area in terms of EBITDA contribution. Consumer end markets, such as personal care, healthcare, home care, account for roughly 2/3 of our sales. We are holding a top 3 position in about 40% of our portfolio, in markets which are still consolidating. We will specifically invest in personal care through further expansion into natural products and products based on renewable feedstocks. This shift to higher-value products will help us to increase our profitability in Care Chemicals. Organic growth through innovations is complemented by our recent acquisitions. Our Beraca acquisition serves the growing customer demand for bio-based and natural products, in this case, oils and clays that are used as ingredients for cosmetics. Our newly formed joint venture with Indian Glycols brings ethylene oxide derivatives that are based on green bioethanol. Our range of VITA surfactants are fully based on biorenewable feedstock, which are fully segregated. We will expand our position in health care to areas adjacent to our personal care technology platforms. We already have a strong position in pharma grade polyethylene glycol, used as a laxative and as a carrier for drugs. Our digital formulation capability allows for rapid responses to our paints and coatings customers, to help them with optimizing their paint formulations. In summary, our portfolio will grow above GDP as a result of prioritizing growth in our consumer-facing segments. These segments require ingredients and technologies that are addressing the increasing consumer demand for more sustainable products. Our business area Catalysis generated sales of CHF 900 million with an EBITDA margin of 18% in the last 12 months trading. The recent EBITDA margins have been below the levels that we achieved previously, mainly due to product mix effects and costs associated with the start-up of our new sunliquid plant in Romania. These effects are starting to normalize, and we are confident in our ability to deliver higher EBITDA margins in this business. In Catalysis, we have a strong top 2 position in most of our segments. Our catalysts enabled the reduction of the carbon footprint of our customers' current processes. We also enable future low CO2 or even CO2-free chemical value chains, such as Power-to-X or the new hydrogen economy. In Petrochemicals, we serve the ethylene and propylene value chains. The key building blocks of the petrochemical industry. We are leading in catalysts for the strongly growing market for on-purpose propylene production. Our CATOFIN business benefits from the natural oversupply of ethylene versus propylene, since the arrival of Syngas. Projections are for continued strong demand for propylene versus ethylene. Therefore, our propane to propylene business, through propane dehydrogenation, will continue to see strong growth over the next years. The polypropylene market will continue to grow significantly above GDP. And is a strong growth driver for our catalysts business. Our Specialty Catalysts business includes hydrogenation and oxidation catalysts required to produce important chemical intermediates, such as maleic anhydride and formaldehyde as well as emission control catalysts and products for fuel upgrading. Our Syngas business includes catalysts for the production of ammonia, methanol and hydrogen. Our Syngas activities are key to the energy transition and for enabling the future hydrogen economy, especially in the conversion of hydrogen to chemicals that would allow transportation of hydrogen, such as ammonia or other liquids organic hydrogen carriers. An important growth driver for Catalysis is our biofuels and derivatives business. We are starting off the first industrial unit for second-generation bioethanol using biocatalysts, enzymes to convert agricultural waste into bioethanol. In general, many of our activities are geared towards supporting our customers in becoming more energy efficient and more sustainable. This is the key mission for our catalyst business. which will deliver consistent growth above GDP. Our business area, Natural Resources, generated sales of CHF 1.7 billion with an EBITDA margin of 16.5% in the last 12 months trading. We have a top 3 position in over half of the Natural Resources businesses, which includes Oil and Mining Services, Functional Minerals and Additives. Our Natural Resources businesses will benefit from sustainability trends like e-mobility, renewable fuels and plastics recycling. We enabled e-mobility with our halogen-free flame retardants. These protects plastic battery housings, cables and connectors from fire. We enabled chemical recycling through our purification technology for pyrolysis oil, and we support renewable fuels with our absorbents for the purification of biodiesel. Finally, in our Oil and Mining Services business, we are developing products for more sustainable mining. These solutions offer better dewatering and/or separation in mines, with environmentally, friendly flotation chemicals. In Natural Resources, we do have many niche products and capabilities that will benefit from sustainability trends. These will drive above-market growth in this segment. In summary, we are positioned in attractive end markets with a strong demand for innovation and sustainable products. In 2020, we generated 40% of our sales in consumer-facing end markets such as home and personal care, coatings and adhesives and agriculture. Home and personal care is our single largest end market, accounting for about 20% of our sales. Our share in consumer-facing markets will further increase through our recent acquisition of Beraca and our joint venture with India Glycols. Clariant is starting from a position of strength when it comes to carbon emissions. Comparing the greenhouse gas emission intensity by unit of sales, Clariant is among the leading specialty companies, both in Scope 1 and 2 as well as for our Scope 3 emissions. This year, we announced science-based targets. We are planning to reduce our Scope 1 and 2 emissions with 40% and our Scope 3 emissions with 14% by 2030. With our new 2030 targets, we are well positioned to maintain our leadership position. We see potential legislation aimed at reducing greenhouse gas emissions as a net opportunity for our company. Our ambitious reduction targets are underpinned with clear roadmaps and milestones for achievement. Our key initiatives include operations digitization, process optimization and selective equipment upgrades. To support the energy transition, the share of green electricity will reach 2/3 of our global demand by 2030, up from 40% today. Reducing the carbon footprint of our raw materials will be based on 3 levers: Increased use of sustainable bio-based raw materials; recycled raw materials; and working with suppliers, which are reducing their emissions. We expect to spend up to CHF 30 million CapEx per year to implement these sustainability initiatives. We play an important role to help our customers with their sustainability transitions in 3 key areas: Bio-based products, decarbonization and circularity. And these are not pipe dreams. All of these areas already contribute substantially to our sales today and are strongly contributing to our growth ambitions. Bio-based products. Our range of VITA surfactants provides an identical performance in comparison to their synthetic equivalents and they have 100% renewable carbon index. Our sunliquid, second-generation bioethanol technology, saves 95% of greenhouse gas emissions through conversion of agricultural waste into bioethanol. Our natural ingredients portfolio offer extracts from plants, for example, to promote revitalization of your skin used in anti-age creams. Enabling decarbonization. In a collaboration with Technip Energies, we achieved a breakthrough change in both catalysts and reactor design for hydrogen production that offers our customers 10% lower CO2 emissions, while increasing production output by 20% at the same time. Clariant catalysts enable future CO2 emission-free chemical value chains, such as Power-to-X or the green hydrogen economy. We are currently engaged in more than 40 projects to develop future conversion, storage and transportation of green hydrogen. Enabling circularity. In mechanical recycling of plastics, maintaining the quality and properties of recycled material versus their virgin equivalent is a challenge. Our antioxidants and our compatibilizers give a better quality level for mechanical recycling. In chemical recycling of plastics, it is important to remove contaminations from the pyrolysis oil before feeding it to the cracker. Our absorbents provides unique purification to pyrolysis oil and remove impurities, such as chlorine or metals. These are a few of the many applications we have in our portfolio that will drive growth and profitability, all from customer-driven sustainability. China is our most important growth region. Already today, China accounts for 35% of the global Specialty Chemicals market, and it accounts for more than 50% of the global growth for Specialty Chemicals demand in the next 5 years. We will further invest to expand our footprint in China with more than 1/3 of our growth CapEx allocated to China. We are investing CHF 80 million in a new CATOFIN catalyst plant in Dushan that will ramp up in the first half of 2022. Hence, we are investing CHF 60 million to build a new DEPAL flame retardant plant in Daya Bay with construction starting this quarter. These are investments with an excellent return profile as we can leverage our experience from running similar plants in Europe and North America. We see an increasing demand for products that help our Chinese customers with their sustainability transitions. Earlier this year, we opened our One Clariant Campus in Shanghai, representing an investment of CHF 45 million. We currently have around 960 employees in China overall. And on the campus, we will have 350 employees, of which 50 are scientists focused on R&D and local technology development. Through these investments, we will increase our share of local production in China from around 35% today to more than 50% by 2025. Increasing our share of local production is important as this improves both our service levels to customers and our cost position. We will drive local product development based on local needs and locally available raw materials. China has been one of the fastest-growing regions for Clariant, and we expect this to continue in the future. In 2020, China accounted for around 10% of our sales. By 2025, we expect this to increase to 14%. In recent years, Clariant has been very disciplined in divesting its noncore businesses. Now we will strengthen our core businesses through targeted M&A. Our M&A strategy will be focused on value-creating bolt-ons that will support our growth, focused on complementary technologies and regions. The segments that we see as most attractive for M&A are consumer care, catalysis, additives and purification products. We will follow a disciplined approach and will achieve the required returns against our cost of capital. This year, Clariant announced and closed 2 transactions, a joint venture with India Glycols and the acquisition of the remaining 70% of the shares in Beraca, our naturals and botanicals business in Brazil. Both transactions have brought new technologies, product line extensions and presence in new regions for our customer-facing business segments in Care Chemicals. These 2 transactions will increase both our growth rates and our profitability in our existing segments. Until 2025, we are planning to profitably grow the business at 4% to 6% on average per year. This is supported by multiple growth levers that can be grouped into 4 categories. We expect 2.5% market growth based on our current geo exposure in our existing segments. We expect another 1% above market growth to come from sustainability-driven innovation. This will be in bio-based, in decarbonization and in circularity enabling products. We will target an additional 1% of growth from regional expansion focused on China. And lastly, the 2 acquisitions that we made this year are expected to contribute 0.75% of growth by 2025. All of these growth drivers will enable us to grow in total at a rate of 4% to 6% per year on average, reaching CHF 5.1 billion sales by 2025 at the midpoint of the range. We are confident in our ability to further increase our EBITDA margin from our guidance of 16% to 17% in 2021, to 19% to 21% by 2025. We expect the growth initiatives, I just described, to contribute 2/3 of the margin step-up through the addition of higher margin revenues from our sustainability-driven innovation, regional expansion as well as increasing operating leverage. Despite our focus on growth, we will remain disciplined and stringent on cost. Last year, we announced 2 performance programs: A rightsizing program with the goal to avoid stranded costs following the sale of our noncore businesses; and the BU efficiency program to realize annual savings of CHF 50 million. In recent months, we have identified additional savings potential. Therefore, we are announcing today that we are increasing our savings target by CHF 60 million. We now expect our performance programs to generate CHF 110 million annual savings in total by 2025. These additional savings will account for the remaining 1/3 of our margin step-up. In our next breakout session, Hans Bohnen and Bernd Högemann, will talk more in depth about 4 of our most important strategic investment projects in terms of growth and profitability. Hans will speak about our new CATOFIN plant in China, representing an investment of CHF 80 million and about our growth opportunity with our bio-based VITA surfactants. Bernd will speak about our new sunliquid plant in Romania, representing an investment of CHF 240 million and about our new DEPAL flame retardants plant in China, representing an investment of CHF 60 million. Our CFO, Stephan Lynen will explain in more detail how our strategy will deliver our new financial targets and how we think about capital allocation and returns. But first, I'm pleased to hand over to my colleague, Hans Bohnen and Bernd Högemann.

Ladies and gentlemen, I'm very glad to welcome you today. I will be taking you through 2 growth projects to provide you with some examples of the businesses, which we expect to accelerate our organic growth going forward. First, I'd like to discuss the exciting growth project for Clariant, our CATOFIN success story. To give you a clearer picture of why CATOFIN is so successful, I would like to explain the value chain and the current market dynamics that set the stage for our path forward. Clariant's CATOFIN catalysts are used to make propylene by a fast-growing on-purpose production method called propane dehydrogenation, PDH. Our partner, Lummus technology is Clariant's sole partner to provide all planned technology and process design for CATOFIN catalysts. The global demand for propylene outpaced the supply and is primarily driven by the high demand for polypropylene, a versatile polymer used in products like car bumpers, food packaging and medical applications. Polypropylene is not only recyclable, but it's also light and durable, resistant to many chemicals and cost efficient. This makes the perfect solution for metal replacement in cars to improve fuel efficiency with lightweight plastics and to produce efficient recyclable packaging. Because traditional technologies like steam crackers only produce propylene as a byproduct, they, therefore, have clear limitations. Together with the higher demand of polypropylene, this leaves a major supply gap in a growing market. Historically, commercial on propylene production technologies have only accounted for less than 5% of total worldwide propylene production. However, by 2030, all purpose technology projects will account for over 30% of new propylene capacity coming onstream in the next 3 years, which gives a CAGR of over 20%. Thanks to higher yields with CATOFIN as much as 110% of design capacity and simple and reliable operations with an onstream factor of 98%, CATOFIN results in an increased overall profitability for propylene producers. These benefits are the key reason why CATOFIN technology and Catalysts have won 32 new project awards since 2017, over 75% of which are located in China. These new awards represent over 22 million tons of propylene capacity. We have a success story in winning new customers, thanks to our high-performance technology. Clariant has a long and intense 50-year history in China. To meet the very high demand in the region and to be able to quickly react to customer needs, Clariant has invested CHF 80 million in our new CATOFIN manufacturing facility in Dushan, China. Construction of the plant was concluded at the end of 2021 in only 16 months and the ramp-up is expected to take place in the first half of 2022. Although the first phase will be focused on the CATOFIN propane dehydrogenation catalyst, this facility was constructed with the potential to expand to more catalyst production in the future. Once completed, it will be Clariant's third catalysts production site in China and is an ideal example of how we continue to support China's petrochemical industry growth as we expand our presence in the region. CATOFIN is another excellent example of how Clariant sustainability-driven innovation as well as our regional expansion into China will enable us to achieve our 2025 targets. I would like to hand over to Bernd Högemann, who will enlighten you regarding the attractive outlook for our Exolit OP flame retardants.

Ladies and gentlemen, I would also like to extend a warm welcome to you. I will be taking you through 2 of Clariant's key sustainability-driven growth projects to more clearly portray where we expect to see solid organic expansion supported by significant CapEx investments. Clariant Additives portfolio addresses the most significant megatrends of our global economy, such as transportation, e-mobility, connectivity, digitization and urbanization, among others. The first growth project I have the pleasure to present to you relates to halogen-free flame retardants, a core Clariant Additive offering that addresses many of the aforementioned megatrends. What is the core function of flame retardants? Flame retardants help to save life. Flame retardants are used in anything ranging from phones and curtains to car seats and buildings. Should a fire start, flame retardants might be able to stop it completely or slow it down, most importantly, reduce toxicity and density of smoke, thereby providing a substantial contribution to safety in our everyday life. Clariant's phosphor-based frame retardants sold into our markets under the brand name Exolit, have an excellent sustainability profile. Besides being halogen-free, a basic requirement for sustainability focusing solutions, our Exolit products are manufactured using 100% green electricity. They are recyclable and their fossil-based ethylene content is substitutable by biomass-based ethylene following mass-balancing principles. Third-party assessments have confirmed Exolit advantages and environmental health profile. Exolit, therefore, carries our ECOTAIN label. We have pursued a very comprehensive patent strategy in order to protect this outstanding technology for Clariant and its customers. The current portfolio of 50 active patent families covering products, processes and applications, form a long-lasting global network of IP rights, which has already shown a high degree of enforceability. Our Exolit portfolio enjoys participation in significant growth markets, mostly driven by electrification and innovation and connectivity and mobility industries. For flame retardants, e-mobility presents the greatest opportunity for growth. The total number of e-vehicles has already reached approximately 10 million units in 2020 and is forecasted to exceed approximately 100 million units by 2030. Flame retardants applications are spread across the entire car. For example, in battery housing and connectors, and also in the rapidly growing charging infrastructure. Our excellent outstanding flame retardant performance makes thermoplastics and thermosets, like polyamide, polyester, epoxy resins, perfectly fitting materials for a broad range of e-vehicle specific applications. Exolit frame retardants are also well positioned in strongly growing consumer electronic applications including smartphones, tablets and personal computers. We expect to have an even stronger presence in the Internet of Things and 5G equipment. Because of the high efficiency, Exolit flame retardants can be utilized in thin and small parts and therefore, support the ongoing miniaturization trend. With key growth markets development in Asia, we have decided to invest approximately CHF 60 million in a significant capacity buildup in China. We expect our Daya Bay plant in Southern China to expand our footprint in the region, particularly with its ability to put fast-growing application, including e-mobility, transportation, 5G equipment and consumer electronic applications. We expect this plant to ramp up production in the first half of 2023 and to expand at a double-digit CAGR. Exolit OP is a second prime example of how Clariant invests into sustainability-driven growth supported by capacity expansion in China. Let me now walk you through yet another key growth project of Clariant. Clariant sunliquid process. The almost energy self-sufficient sunliquid process is an excellent example of a circular economy solution. Instead of being discarded or burned in the field, agricultural residues are utilized without any environmental risk to produce second-generation bioethanol. Second-generation bioethanol addresses key challenges such as emission-free mobility in car or even air traffic and enables the production of downstream industrial and consumer products comprised of renewable feedstock. I'd like to begin by providing you with the following quick overview of our fully integrated nearly energy self-sufficient process. The sunliquid process starts with agricultural residues such as cereal straw, corn stover, sugarcane bagasse or woody biomass originating from renewable resources. Our completely integrated process can be divided into the following 4 major technological steps: In the first step, the straw is shredded and thermally pretreated to open the stable lignocellulosic structure. This makes it easier for the enzymes added in the second production step to address the sugarcane. Our pretreatment process has been optimized so that the need for any chemicals could be eliminated. In the second step, enzymes are added to the pretreated straw to liquefy and split its cellulosic and hemicellulosic components into different sugar types. Enzymes act as biocatalyst to break up the long cellulose change into fermentable C5 and C6 sugars. The insoluble woody component of this straw, lignin is separated to generate energy, which is used to operate the plant. At our Podari plant in Romania, for example, our partner GETEC Group will use this residue lignin to supply the plant with CO2-neutral stream and electricity. In the third step, the C5 and C6 sugars are simultaneously fermented into ethanol in a one-pot reaction. Our proprietary yeast strain is specifically modified and adapted to these conditions, leading to a 50% higher ethanol yield compared to standard yeast. In the final step, a highly optimized purification process removes the water to yield pure ethanol. The remaining byproduct left over is the vinasse, which can be processed into biogas for energy production or used as an organic fertilizer and returned to the field. Clariant has invested approximately CHF 240 million in our newly constructed plant in Podari, Romania. It is the first commercial Sunliquid cellulosic ethanol plant in the world. The plant will begin producing the enzymes utilized by the production process in November of this year, and the production ramp-up of the bioethanol is anticipated in the first half of 2022. Once it is fully operational, the plant will process 250,000 tons of straw per year, producing 50,000 tons of cellulosic ethanol annually. What to 50,000 tons of feedstock translate into? As on liquid plant with an output of 50,000 tons of ethanol per year, like Clariant' plant in Romania, can help avoid around 120,000 tons of CO2 emissions per year, equivalent to the annual CO2 emissions of approximately 35,000 cars. The feedstock for the startup has been secured by contracting more than 300 local farmers under a multiyear agreement. Podari is well positioned to source the feedstock locally within a 50 to 100-kilometer radius to ensure the sustainability of advanced biofuels. Globally, the targeted share of advanced biofuel is increasing. In Europe alone, the Renewable Energy Directive III, will increase the advanced biofuel demand in the EU to 10 million to 11 million tons in 2030, of which 2 million to 3 million tons are expected to come from cellulosic ethanol. Our Podari plant was built to demonstrate the scalability and commercial viability of our production process to enhance the sale of licenses for our Sunliquid technology worldwide. Clariant targets 3 different revenue streams. The first Sunliquid revenue stream comprises the sale of the Podari plant production. The offtake of the entire annual production output of this plant is contracted to a major global oil and gas cooperation under a multiyear agreement. The second revenue stream includes licensing revenues, linked in part to our customers' progress in completing their construction projects. We expect the lighthouse production facility in Podari to drive license business growth once the plant becomes fully operational. Because the start of enzyme cultures, which are required for the production of bioethanol are consumed during the production process. The third revenue stream consists of the recurring revenue from the sales of these starter cultures. Next is serving as advanced biofuel bioethanol has the potential to be used as the building block for the future production of bio-based chemicals as feedstock for a variety of downstream products in industrial and consumer markets. Sunliquid is a pioneering technology, not only in Europe, but also globally. We believe that this technology will significantly support the global efforts to reduce CO2 emissions and to fight climate change. It will, therefore, be a key driver of Clariant's business and a cornerstone of our future growth. I would now like to hand it over to my colleague Hans Bohnen, who will provide you with a brief overview of the chemistry behind the transformation of biomass into bioethylene and derivatives.

Thank you, Bernd. As you know, our Sunliquid production process begins with cellulosic sugar, one from biomass, which are converted into bioethanol. Following along the process chain, bioethanol can be converted into bioethylene, which is the basis of the next key growth projects, which I would like to discuss. The Vita range of bio-based and fully segregated surfactants and ethylene oxide derivatives. I would like to explain how our Vita brand helps reduce total carbon and allows our customers to enhance their move to green carbon surfactants. Via our joint venture with India Glycols Limited, we have formed Clariant Indian Glycols specialty chemicals called CISC. This business strengthens our core portfolio and Clariant, 1 of the leaders in green ethylene oxide derivatives by combining India Glycols, renewable bioethylene oxide derivatives business with Clariant's local industrial and consumer specialty business in India, Sri Lanka, Bangladesh and Nepal. The goal of our CISC business is to be a leading supplier of these renewable materials to consumer care markets worldwide. Thanks to this business, we can provide our customers access to 100% bio-based EO derivatives. By offering a separated supply chain, our customers will benefit from truly sustainable raw materials that considerably reduce the CO2 impact of their products, thus helping them to achieve their environmental goals. There's a high demand for ethylene oxide derivatives for rapidly growing Consumer Care market in India. It's neighboring countries, mainly driven by increased consumption and the general sophistication of Consumer Care formulations. Outside of South Asia, the growth drivers are different, but also very important. There's a high demand for bio-based ingredients in Europe and the U.S., driven by the Consumer Care market pursuing high renewable carbon content formulations. Also specifically in Europe, driven by Scope 3 CO2 reduction initiatives from customers, we see an opportunity for our joint venture product portfolio, which has a lower carbon footprint versus fossil-based ingredients. Vita range products are natural, 100% bio-based on green carbon bioethanol from plants such as sugarcane and straw. Our Vita technology, therefore, sets new standards in green production. Also of vital importance to our customers is Clariant's ability to supply from a segregated green value chain, from the respective plant to the Vita range of surfactants. Clariant has guaranteed that 100% of the Vita products are derived from renewable sources. With Vita, only one aspect of the product actually changes, and that is a green content or renewable carbon index of the surfactants. In the case of the example product provided here on the slide, Genapol LA 070, it's RCI for fossil-based ethylene oxide of 47% increases significantly to 100% RCI for our Vita range-based products. It is important to note that the chemistry itself remains exactly the same. The use of current Vita range surfactants also maximizes the green carbon content of the customers' end product, thereby improving it's RCI. Using the example of a laundry detergent formulation, the RCI of final product can be increased from 32% to 98% and by using Vita range surfactants with the same proven product effectiveness. The use of Vita range surfactants generates not only environmental benefits, but also allows our customers to differentiate themselves. By promoting these products as environmental friendly, green and eco-labeled attributes, price means can be achieved based on these additional ethical facets. An additional positive attribute of Vita range surfactants is the fact that they are low carbon due to the carbon negative biogenetic building blocks. By fossil-based, ethylene oxide increases CO2 emissions, bio-based ethylene oxide actually reduces carbon emissions due to the biogenetic carbon uptake. By not using fossil-based ethylene oxide, our Vita range surfactants eliminate from the value chain approximately 3,000 equivalent barrels of crude oil per 1,000 tons of surfactants applied by the customer, with each ton of vita range surfactants used, a considerable amount of fossil resources are replaced. Ladies and gentlemen, Clariant India Glycol Specialty Chemicals will provide a sustainable range of surfactants and ethylene oxide derivatives. High double-digit kilotons of green ethylene oxide derivatives will be made available by CISC in the first quarter of 2022. We expect CISC to become 1 of the leaders in green ethylene oxide derivatives and be a leading supplier of these renewable materials to the rapidly growing Consumer Care market in India, neighboring countries and worldwide. The Vita range will focus on high-growth Care chemicals end markets and early adopters. We are currently investigating the possibilities of supplying the Vita range of surfactants from additional sites via mass-balance or fully segregated approaches. An R&D review of our entire surfactants portfolio is underway with respect to the viability of converting it from a petrochemical platform to a green platform. We are convinced that this sustainability-driven innovation will support the global efforts to reduce CO2 emissions and to fight climate change. We have shared these 4 key sustainability-driven innovations with you to provide you with tangible examples of Clariant's ongoing developments, products, and projects, which are driving Clariant's organic growth and will enable us to meet the targets we have set for 2025. Let me now hand over to our CFO, Stephan Lynen, who will put our growth initiatives and investments into a financial perspective.

Ladies and gentlemen, good afternoon. Building on the growth stories of my colleagues, I will now provide you with some financial insights into Clariant's path of profitable growth and capital discipline. At Clariant's, we are committed to increase value for our shareholders. Greater chemistry between people and planet translates into our strategy. Focus on our customers, deliver innovative chemistry, expand our leading position in sustainability, and engage our people. The execution of our strategy will enable us to meet our new financial targets, a compound annual growth rate of 4% to 6%; an EBITDA margin range of 19% to 21%; and a free cash flow conversion ratio of around 40% by 2025. Despite a challenging environment, we will successfully improve our margin levels to a range between 16% to 17% EBITDA for the group by the end of '21. Our ambition is to take this corridor to the next level to an EBITDA group margin range of 19% to 21% by 2025. This new target represents an upgrade to the previously provided implied group EBITDA margin guidance of 18% to 20%, which was based on our previous midterm business area EBITDA margin ambitions. We will reach these previous business area profitability targets within the '25 time horizon. We will drive the margin improvement into the 19% to 21% range by utilizing the following 2 levers: growth will leverage by around 2/3; while efficiency improvements will contribute by approximately 1/3. Let me first elaborate on the anticipated growth contribution. As Conrad mentioned, Clariant's previously announced portfolio transformation is approaching option with the upcoming closing of the Pigments divestment at the beginning of '22. Our core portfolio has proven its specialty DNA by the strong performance improvement in the last 12 months with sales of approximately CHF 4.2 billion and an EBITDA margin of 16.3%. Our high-quality portfolio operates across diverse growing end markets, and as a consequence, it's more resilient and less volatile compared to our pre-transformation portfolio. With around 40% of sales in consumer-facing applications, 23% of sales in chemical processes, primarily our catalysts; and around 37% of sales in specialty industrial applications as of 2020, we are well set to grow our business in excess of the 2.5% market growth and to increase our operating leverage. Our growth will be amplified by the use of differentiated steering and via our focused allocation of capital and resources. Sustainability-driven innovation supports the average annual growth by approximately 1%. We have a focus on bio-based products, enabling decarbonization and circularity. With reference to the Exolit flame retardants case study, I'd like to provide some additional insights into our EcoTain products. These are products that provide a market-leading sustainability performance. Almost 200 products are currently labeled EcoTain after having undergone a systematic in-depth screening process along 36 criteria. This number has tripled since we first introduced the designation in 2015. The current revenue contribution from EcoTain label products of around CHF 300 million is expected to grow at a compound annual growth rate in excess of 10%. Another important growth driver is the regional expansion, in particularly in China as the main growth region, contributing around 1% to the average annual sales growth. By allocating approximately 35% of growth CapEx to China, we expect the sales share for the Group to grow to around 14% by '25 versus the current 10% contribution. Clariant's focus on organic value creation will continue to be augmented by our preparedness to execute potential bolt-on M&A transactions. The 2 previously announced transaction in Care Chemicals, CISC, our joint venture in India and Beraca in Brazil will positively impact the top line, with a combined sales contribution of 0.75% average annual growth. After substantiating the growth contribution, let me now lay out the efficiency contribution. We are currently executing one of Clariant's largest, most comprehensive performance programs in its history. In total, we are targeting eliminating costs of approximately CHF 0.25 billion, of which around CHF 100 million are focused on remnant cost elimination, around CHF 30 million affect discontinued operations, and CHF 110 million accrete to the core. Regarding the latter, today, we are upgrading our saving ambition by a substantial additional CHF 60 million until '25 compared to our initial CHF 50 million savings plan. Let me break this down. The rightsizing program was primarily focused on the elimination of remnant costs of around CHF 100 million post the expiration of transitory service agreements for the Masterbatches and Pigments divestment. The extended rightsizing program now also encompasses the reduction of complexity, the drive for automation, and the leveraging of shared service centers. These additional activities are expected to accrete CHF 30 million savings to the core. The remnant cost elimination and the accretion include the reduction and transfer of approximately 1,200 positions and indirect spend reduction. The previously announced efficiency programs in the core business to refocus SG&A and R&D will generate cost savings of CHF 50 million by '22 as announced in 2020. During the implementation, we have been able to expand the efficiency programs, cost saving by an additional CHF 30 million from production, process, and supply chain optimization. The total efficiency savings of CHF 80 million includes the reduction of more than 600 positions and lower indirect spend. The 3 components comprise our current performance programs, which will generate the total expected cost elimination of approximately CHF 240 million, of which, CHF 60 million will benefit the core between '22 and '25. The additional cost for the program will not significantly exceed the provisions already made. We expect to increase the return on invested capital to exceed the cost of capital as early as '21, [ trailing a path ] to the cost of capital already by midyear '21. This achievement is anchored by Clariant's return to revenue growth, the corresponding higher operating margin, lower nonoperating costs, and improving capital turns. We, as a management team, are committed to value creation by further increasing our return on invested capital profile. We expect CapEx of approximately CHF 350 million by '21 due to the 2 major ongoing growth investment projects. The second-generation bioethanol Sunliquid plant in Romania and the construction of the propane dehydrogenation CATOFIN plant in China. CapEx in '22 is likely to remain high due to the phasing of existing projects and capturing new growth opportunities from higher customer demand like [ DuPont ]. Going forward, towards '25, we expect CapEx to normalize in the range of CHF 280 million to CHF 320 million. This includes more than 50% growth CapEx and stepping up investment to average CHF 30 million annually for sustainability measures focusing on greenhouse gas emission reduction. As a result of our profitable growth, together with our capital discipline, we expect to report sustainably improved cash conversion in the midterm. We are strongly committed to capital and cost discipline and expect free cash flow conversion around 40% towards '25. In terms of deploying capital to generate growth, we will continue to focus on investments in Clariant's most attractive businesses, such as Care Chemicals, Catalysis and Additives and regions like China. We will prioritize our ROIC-accreting projects. Following higher CapEx levels in '21 and '22, we expect to return to a normalized run rate range of CHF 280 million to CHF 320 million towards '25. The focus of our inorganic growth targets is dedicated to value-creating bolt-on acquisitions to complement existing segments and technologies, and expand our differentiated offering, while generating a positive sustainability impact. The recent bolt-ons in India and Brazil reflect our successful adherence to these criteria. We will ensure the disciplined execution of any potential transaction to enable value creation, by which, we mean realizing especially revenue synergies and accreting our return on invested capital. M&A will be part of our growth strategy going forward and will be clearly dedicated to strengthening Clariant's core and value creation for all our shareholders. Clariant will continue to provide superior capital returns in the form of reliable, sustainably growing dividends. Capital will be deployed, including potential M&A in such a way that Clariant Group can achieve and defend a solid investment-grade rating. Our commitment to profitable growth and capital discipline would not be complete without our dedication to sustainably sharing our success and value creation with our shareholders. Clariant has consistently increased its dividend by approximately 7% per annum from 2015 to 2019. The 2020 capital distribution for the full year 2019 was earmarked by uncertainties surrounding the COVID-19 pandemic. This caused us to focus on the extraordinary cash distribution of CHF 3 per share paid out in 2020. With the completion of the Masterbatches divestment and the anticipated divestment of Pigments. The payments of the ordinary dividend for 2020 was postponed. In '21, a total cash amount of PLN 0.70 per share was distributed. A combination of PLN 0.55 and PLN 0.15 for 2020. While the divestments of approximately 1/3 of the company's sales have led to a recalibration in absolute amount of the dividends. Clariant's dividend policy remains unchanged. Clariant is committed to increasing the absolute dividend in Swiss francs on the back of profitable growth while maintaining an attractive payout ratio. Ladies and gentlemen, today, we shared our ambitious financial targets until '25 with the capital markets. I am convinced that our specialty portfolio with attractive end market positions. Our sustainability and innovation part support our customers across the planet and our committed dedicated people will assure the successful execution to reach these targets. I look forward to reporting on our progress on a continuous basis and hand back to Conrad for his final remarks.

This brings us to the end of our presentations. I hope we were able to give you a good understanding of our purpose-led growth strategy, and our financial ambitions to increase shareholder value. To conclude, I would like to reiterate the key points of our presentations. Our purpose, greater chemistry between people and planet is at the core of everything we do. Clariant is already a leader in sustainability today. And our new targets make sure we will continue to be a leader tomorrow. Our growth will be driven by customer-centric sustainability-driven innovation by growth investments in China, and by focused and value-creating bolt-on M&A. We are committed to deliver top quartile performance in terms of growth, profitability, people, and sustainability. And this is reflected in our new 2025 midterm targets. I would like to end this presentation by first thanking all of our people for the great performance I've seen in the company this year. The growth and success of our business, the development of sustainable and innovative products, and our emphasis on customer centricity, all have 1 key aspect in common, putting people at the core of Clariant's purpose and building a culture of possibilities. As a business leader, I'm strongly convinced that we can only achieve and exceed our goals by intently putting emphasis on our people, shaping a high-performance and entrepreneurial culture, engaging a diverse, engaged and talented workforce. And finally, creating an inclusive environment where all feel valued and empowers to contribute. And where we all can develop our talents to the maximum potential. With that, I would like to end our presentation. Thank you for your attention. And I would now like to open it up for your questions.

Thank you, Conrad, and thank you to the entire executive team. Ladies and gentlemen, that brings us to the Q&A session. We have established a Microsoft Teams platform that allow analysts and investors to ask questions. Those on the platform are kindly asked to turn on the cameras when asking a question and mute their microphones once the answer is given. Please use the raise hand and the chat function if you would like to ask a question. We will call on you individually and kindly ask you to ensure that the camera is on and then the microphone is unmuted. Before we open the line, let me kindly request to limit the number of questions to 2, thus providing more participants opportunity to raise questions. Thank you for your understanding. And feel free to sign up for follow-up questions. Let's get started. So open the line. And the first question comes from Christian Faitz.

Thank you, Andreas. Two questions, please. First, a question for Conrad. Conrad now that you are with the company for about a year, what have you discovered at Clariant that you were not thereof before you started your position, obviously, on the positive side, but if you want to share with us a negative, that would also be appreciated? And then second of all, I'm known for asking questions outside of the context. So outside of the context of [ CMD ]. Mindful that your Q3 results call was not too long ago, but could you give us an update of the current environment, particularly pertaining to raw materials and logistical challenges. Do you have a view when these challenges will ease into 2022?

Yes, Christian, thank you for kicking off our Q&A with these 2 questions. First, all my observations in the company in the last year, I have been very impressed with the depth of innovation in the company. I've been very impressed with the link between innovation and sustainability. I was aware of this good reputation, strong reputation that Clariant has in this area. But if you really look at it from the inside, if you talk to our colleagues day in, day out, talking to clients, they're actually all very enthusiastic about the true innovative products that Clariant actually has to offer. On your second question, as far as the trading update. As you are aware, we're not giving a trading updates during the third quarter results call, we gave an outlook for the year where we basically stepped up our revenue guidance from 7% to 9%, 9% to 11% for this year as well as a continued outlook of EBITDA margins between 16% and 17%. I have no reason to say anything different than at the time of the Q3 call, we're confirming this outlook basically.

Thank you, Christian. And we have the next question from Andrew Stott.

Yes. So thanks for taking my 2 questions, and thank you for the presentation today. The first one is on sustainability. So you said that in 2020, your revenues had 20% from bio-based chemicals. Can you share a target for 2025? And sort of within that, when I think about Romania and the ramp, do I think you start seeing meaningful contributions from Romania in the second half of '22? It just sounded like it the way it was communicated on the ramp-up during the first half. So just a clarification of that. And then the second question was a bit of an education for me on the catalysts business. So when I think about the ammonia and methanol business and the energy transition. How do I think about the revenue potential for Clariant? Do you make more money out of ethanol? Or do you make more money out of the green ammonia process?

Sure. Thank you, Andrew, for those questions. Well, first, I'm going to make a few comments about our bio-renewable solutions and their contributions to our current sales as well as to our future sales, then I'll pass to Hans the question you had on catalysts and in particular, the role Syngas plays also towards the future with developments like green ammonia. For us, today, if you look at our revenue, 20% of it already represents products that basically are either bio-based or bio-renewable, where this is most important is actually in our Care Chemicals business. Just as a reminder, large clients like Unilever in Personal Care, have made public statements to basically want to shift away from fossil-based feedstock to completely bio-renewable feedstock by 2030. Clariant is very well positioned for this development. We do have products that are fully plant-based already. Think of the Beraca acquisition where we use, for example, [ clays ] oils from the Amazon as ingredients for cosmetics. We also have products that are based on renewable feedstock. What is, a very important factor here is our recent joint venture within the India Glycols where we have access now to 100% bio-renewable based bioethanol, in this case, ethylene oxide. It allows us actually to convert all the [ ethoxylated ] surfactants to bio-renewable. Today, roughly 20% of our revenue, we do expect this to increase towards 2025, the numbers, but we're not giving specific guidance on how big the increase will be. Hans, to you for the Catalyst question.

Yes. On the ammonia, there are 2 aspects to this. Gray ammonia, of course, for us is and will continue to be a growth business. And we invest into the technology for a good reason because the ammonia production is the biggest emitting technology for CO2 in the field of catalysts. So what we can do today to increase efficiency helps immediately to reduce CO2 emission. So that is a focus and focal point of us today. Going forward, of course, green ammonia plays an important role, first of all, of course, also to reduce CO2. But second, it's also [ vehicle ] to transport hydrogen, green hydrogen. So both aspects for us beyond 2025, growth opportunity, and we invest here into innovation in order to be able to deliver on these technologies going forward.

And there is still the question on Romania?

Yes, in terms of Romania, there is a revenue stream, which basically has 3 components. The first is our revenue from the production of bioethanol, then we have a revenue stream from license income. And finally, we have a revenue stream from enzymes for startup cultures. We haven't given a breakdown between the 3 of them. But as to your question, what to expect next year, let's be aware that we're commissioning the plant that actually this will take into the first half of next year to really get the plants up and running to produce the second-generation bioethanol. This is the first of its kind. We're very confident about the ramp-up. But yes, for next year, you should basically not expect too much revenue yet in the first half of the year from Romania.

And we open up the line now for Markus Mayer.

I have 2 questions. The first 1 is on your midterm targets. And the second 1 is on your Vita brand. Regarding your midterm targets, should we expect this growth to be back-end loaded as 2 percentage points coming on, basically from the new innovative products, but the 1 from the regional expansion, I guess, the CapEx investments will need some time until we see these effects there? That's my first question on this, if the growth is back-end loaded. The second question is on your Vita brand. Where is the cost curve of this product versus bio-based products. Do you need a green premium for this product? Or is this already at a level where we basically compete can compete with the existing technology?

The question around Vita brand, the 100% bio-based effect and I'll leave that to Hans to comment. I will try to answer your question on growth and how to see the phasing over the years up to 2025. On balance, it is about a steady linear buildup, but there is different factors that play a role into this. First, for next year, into next year, we still see a corona recovery. So we see a continuation of the strong growth that we are experiencing this year. After next year, we should expect underlying markets to come back to their sort of historic CAGR. And then actually, you will see the ramp up -- further ramp up, I should say, of sustainability-based products that we introduced on the 1 hand, also of plants coming up on stream and running new CapEx plans that are in the plan. The most significant 1 is our CATOFIN plant that we will start up early next year in China, that will be a strong contributor then actually towards the back end of the planning horizon, you'll see a contribution as well from our new flame retardant plant, again, in China. Hans to you on the Vita surfactants.

Yes, Markus, I'll give you 2 answers on this. First of all, on the, let's say, standard products we have and we serve our joint venture in India, the joint venture is in the market since decades. So they are very competitive compared to fossil-based EO and EO derivatives in the Indian market. When it comes to now a transformation of the portfolio more towards Personal Care products, of course, here, we also expect because of the innovation we have to put into this that these products will go into the market with a certain premium because also it's you, it's a kind of first of its kind product portfolio we are offering and this also should go with the premium. So both is true and relevant. First, we are competitive compared to fossil-based EO derivatives. Second, because of the innovation we will put into this, there we expect that the market is prepared to take a premium.

May I ask the an add-on question?

Yes, sure. Yes, go ahead, Markus.

On this premium, if you compare your product with products which, for example, based on palm oil, which marketed cream, but definitely the [ almond cream ]. Can you shed some light on this a kind of premium? Is it similar to those kind of products? Or is it ahead of this kind of price point of palm oil price?

Yes. I mean as you have seen in my presentation, what we have in the combination of the bio-based EO plus then certified palm oil. The combination of this gives you renewables surfactants, which is unique. And therefore, I think it justifies also that we can ask for a premium as we offer this solely to the market.

And the line is now open for Nicola Tang.

Thanks for the presentation. I wanted to ask 2 questions. The first, you've mentioned CapEx related to your sustainability targets, the CHF 30 million per annum. I was wondering if you could give a little bit more detail as to what that is or examples of where that would be spent? And the second question, actually following on from Markus' questions around the bioethylene oxide derivatives. Could you put that high double-digit kilotons in the context of your overall capacity? And you mentioned you're looking at ways to switch some of your other sites into using green chemistry. Could you talk about the kind of key hurdles, I'm thinking in terms of the required investment but also in terms of the barriers to entry?

I'll ask Stephan to comment on CapEx. I'll make a few comments on bio-renewable and particularly the capacity for ethylene oxide derivatives, green ethylene oxide derivatives. The interesting thing is that through the acquisition of our share in Indian Glycols, their EO Derivatives business, we have direct access to capacity for ethylene oxide derivatives. We will use this capacity to actually basically supply these products also in Europe where there is a strong demand for those products. If you look longer term, what we have as a big opportunity is to convert the existing ethylene oxide derivative plants that we have in Europe in Gendorf, to convert that to a feedstock which is basically fully bio-renewable based. So we do have the opportunity to convert without additional CapEx an existing line who is now fossil-based completely to renewable-based feedstock. We have the advantage that we have 2 EO lines running in parallel there, and we can actually gradually move into this new market. So it is an interesting opportunity from a CapEx point of view. Stephan to you further on the sustainability CapEx and some of the components.

Sure, Conrad. As you know, we've been guiding for an run rate or future CapEx around CHF 280 million to CHF 320 million. And we've added CHF 30 million for what we call sustainability CapEx, but purely focusing on greenhouse gas emission reduction. So we have obviously more CapEx in that range, which we spend for sustainability as, for example, Sunliquid is heavily improving the handprint on our customers and many, many other investments are. But we have really framed that CHF 30 million because it comes in addition to the former guidance, and it focuses on the greenhouse gas and mention reduction in our direct Scope 1 and 2 to contribute, as Conrad mentioned in his speech to our commitment to stop the climate change.

Would you have any specific examples of what that CapEx might be?

Yes, sure. It is CapEx, which is used for lowering the emission in our plants and our production, it is improving the yield in processes, the energy efficiency, et cetera. So it is really in our infrastructure in-house to lower the emission greenhouse gas emission.

And we open up the line now for -- to Andreas Heine.

Thanks for having the opportunity to ask a question. Can you see me now? A little bit slow on my screen. But I would like to ask this first on the dividend. If I look on the chart, then it looks like that the dividend will be lower going forward. So an attractive payout ratio but lower than what we used to, as you can comment on this? And secondly, on CapEx. The CapEx of CHF 280 million to CHF 350 million you have said this year, it will be higher next year, it will be higher. Is it then something that you might in 1 year 2025 and will be higher before and higher later then? Or how do we have to think about this target? And if it comes to investments, these CapEx by segments. It was very much CapEx dedicated to the Catalyst business, which probably is the most capital intensive. Will that be still a focus on CapEx going forward, so after this CATOFIN investment is done, is the next big investment to be planned for the period '23 to '25?

Yes, Andreas, thanks for the 2 questions. I'll let Stephan comment on the dividend and also provide some further detail on CapEx. Be aware on CapEx that we currently are above the CHF 280 million, CHF 320 million per annum that we're guiding for because of large projects this year, and particularly our new bioethanol plant, our CATOFIN plant that comes up on stream early next year as well as actually the flame retardant plant that we're building in China. Flame retardants CHF 60 million; CATOFIN, CHF 80 million; bioethanol, a total of CHF 240 million. Stephan to you for dividend and perhaps some further detail on phasing for CapEx?

Sure. Let me first build on what you just said about the CapEx because it is the phasing of the projects. Initially, we guided also for higher CapEx in '21, but there is a bit of a phasing into '22. And we are in the position that there is actually stronger demand to our portfolio than we can actually complete. And therefore, we have investments like [ DuPont ] to come, which play a role also in 2022. But let me reassure you, and thank you really for the question that the CHF 280 million to CHF 320 million is not a onetime event. But it's a development to that run rate, which you've seen also in the past. We have really some more CapEx-intensive years with the projects which Conrad just summarized in 2021 and '22, but then he will see us gradually moving into that range not just for a single year. It plays a vital role also to our capital discipline and to our free cash flow conversion commitment, which we newly gave today with 40%. Then let me talk about the dividend. I mean, at the end, free cash flow conversion is exactly what we are committing to, to generate the headroom for us to share the success sustainably with our shareholders, but also to create the headroom for us to operate in organic and inorganic investments. And here, you see, of course, that if you look at the 2020 paid dividends that these were actually accumulated for 2 years. For 2019 and 2020, we both paid these dividends in 2021. Now there is a recalibration on the total dividend also after having paid the extraordinary dividend in 2020 by just the fact that we have divested or are divesting 1/3 of our sales and turnover and that has recalibration to the size of the dividend in the years to come. However, we are confirming a very attractive measurable payout ratio and an increasing dividend for the future as well based on an improved free cash flow conversion.

If I might add to this, I was not referring to last 2 years, which were indeed exceptional if it comes to the dividend. But to the past before, so the last, let's say, reference point would be the [ 55 reference ]. Is that something we can look at? Or will it be considerably lower and then starting from a lower level to catch up in line with your free cash flow conversion increasement?

Yes, that is not so much related to the ability of free cash flow conversion because that will increase over time with the transformed portfolio now. But again, if you look at the [ 55 ] for up and paid out in 2019. You will notice that at this time, we were looking at a turnover of CHF 6.5 billion, and we have divested 1/3 of this business. So there is obviously a recalibration of the size of the dividend. But the Board will make the right suggestions for the coming AGM for the dividends, again, with future rising potential and also with a very attractive payout ratio, as you have seen any time in the past.

Thank you, Andreas. And we are opening up to the line now for Peter Clark.

Yes. Thank you. It's a question about SABIC. At the time of the deal aside from the collapsed, High-Performance Materials venture, there was quite a big fanfare about potential synergies, both gross synergies, some cost synergies, raw materials, et cetera. I'm just wondering if anything did come of that. I know you had a difficult period, but it seems to have settled. So there were a lot of initiatives going on just seeing if there's any benefit of that coming through in your expectations. And then I guess the second question is, I think you alluded to the fact that the margin target by segment is pretty much aligned with what you had before. I'm just making sure there's nothing material on the disposal side because you made it quite clear, you're quite happy with the portfolio, but just making sure that there isn't any sort of material disposals that are in your thinking.

Yes. Thank you, Peter, for those 2 questions. First, on SABIC. At the time, there was indeed an evaluation where the companies were looking at merging the businesses. And in this case, this was the high-performance polymers business within SABIC. That actually did not transpire. So the synergies that were talked about, automatically also did not materialize. However, I will say SABIC for us, for our Catalyst business remains a very important client. As far as targets by segment and as far as the scope and the portfolio that we have right now. After divesting the more, let's say, commodity type businesses like pigments, like Masterbatches. We're very pleased with the current portfolio. These are core businesses for us, and there's no material divestments that we're working on right now. Thank you.

Okay. Just to clarify that, it was aside from the high-performance materials venture that I was thinking. There's still quite a bit of fanfare about potential initiatives and benefits from that. So I gather from what you're saying, there isn't really anything dramatic.

Yes. We value, obviously, SABIC as a strong anchor shareholder in the company. We value SABIC as a client, an important client for our catalyst business. Beyond that, there are no projects that we're working on. No. Thank you.

Thank you, Peter, for your question. The next question comes from Chetan Udeshi.

A few questions from my side. Just following up on the previous question, can I confirm that the previous segment targets are still the same. So there is no change to the previous segment targets that were given previously. Second related question was this year, we've seen the catalysis margin, much weaker than in the past because of mix. How are you thinking about next year, especially given the startup of the some liquids land, will that have any implication on the margin and the mix for the catalyst business in 2022? The third question was more around the definition of free cash flow conversion. Can I confirm that it's not including the net interest costs and cash leases, which I understand are sitting in the cash flow for financing line? And it would be useful if you can just quantify how much is the current run rate of those interest and lease costs now post the divestment of of the Masterbatches and the planned divestment of the pigments business. I think I'll stop here and maybe I have a follow-up, I'll raise them.

That's a handful of questions. Let me make a few comments. So first, on overall target setting, and I'll let Stephan comment on segment specific targets. But if you look at the overall target setting for the company, previously, we did announce midterm targets, a range in EBITDA margin of 18% to 20%. Today, what we're announcing is a step-up a range between 19% and 21%. If you look overall for the company, previously, we announced a CAGR, if you add up the individual segments at the time of roughly 6% per annum, but that did include M&A and acquisitions. Today, we're announcing a 4% to 6% overall revenue target which is basically organic growth, the only 2 acquisitions that are included our Indian glycols in [indiscernible], which effectively are representing organic growth in the plan period. I think, Stephan, I would appreciate a few comment a bit on the target specifically more by segment and also on the free cash flow conversion definition as well as the question as it related to Masterbatches. And then Hans, maybe you could take the question on Catalyst.

Sure. Let me first build on what Conrad just said. I mean it really is important to repeat that. This is a growth a target of 4% to 6% outperforming GDP. And you see the exact bridge how we get there under our influence and our management. You've seen an EBITDA margin improvement by this 100 basis points from 18% to 20% back in '19, if you weighted with the corporate cost at the time to 19% to 21%. So it's a step-up. We've decided to do this by going also to an aggregate group level of target setting because that gives us the more precise follow-up and communication with you on the future buildup and execution towards these targets. We do not disclose the business area targets. That doesn't mean that they don't exist at that they are not changed. They always are a little bit changed from certain aspects, et cetera. But holistically, it's a significant upgrade. And third, very important, is that we have now come up with a completely new target and given the right for critique in the past about our ability to create free cash flow, which is the 40% free cash flow conversion. And let me say, first of all, again, how we build that. First of all, we do this by growth, expanding also absolute EBITDA through growth. We do this by the saving program, which we stepped up today, again, expanding absolute EBITDA. We will have better net working capital turns by our own steering, but as well by the divestments because businesses like pigments have been dilutive to our capital turns in terms of net working capital and to our new capital discipline, which you saw on the run rate of the CapEx number. The definition of this free cash flow conversion is the cash flow from operations in our definition, minus the CapEx as a percentage of that combination towards the EBITDA. And you're right, this does not include the financial part of the of the equation, the financing cash flow, which is the interest part paid and received and the leasing part, which each is around CHF 50 million annually at these times.

Yes. Thank you, Stephan. Let me talk about, I think, the catalyst business a little bit going forward into 2022, Chetan, as you know, the catalyst business is quite volatile when it comes to market development. So the mix topic is always something you need to predict. And looking now into 2022, we see a favorable development, especially in our petrochemical segment. I mean, you have seen in my presentation along the C3 value chain, so from propane to propylene, to polypropylene where we do significant investments where we expect that this will be accretive then in 2022. That's 1 aspect to the business area catalyst. But your question was also referring to some liquids and what we can expect. So let me hand over the question to Bernd to talk a little bit about sunliquid and what we can expect in 2022 in this area.

Yes. Thanks a lot, Hans. As already mentioned by Conrad, we are in the process of ramping up production. Actually, that will start in the first months of the coming years and then continuously be ongoing until the end of the year. We have mentioned earlier that all the volume produced has been contracted to a global oil company. And then for 2023, we really expect the full revenue stream kick in. And out of the CHF 100 million by 2025, there was a significant share coming from bioethanol production.

Thank you, Chetan. And we have a follow-up question from Markus Mayer.

Maybe first add on question on sunliquid. You basically said that you have 3 revenue streams: one, of course, then the sale of the product. The second one this -- the license -- potential license, the third on the enzymes business. Maybe I guess from the target you gave for the guidance we gave previously on the direct product sales of CHF 100 million that is still in place. But can you give us also some flavor on the 2 other parts the potential license, what do you expect over the next years or expect in your guidance and also the Enzyme sales. That would be helpful. And the second question basically is on the CHF 60 million additional cost savings. Can you split it up a little bit more? You said CHF 30 million are coming from the reduction of complexity, driving automation and also levering shared services. Is it 1/3, 1/3, 1/3? Or how is it stood up and also the other CHF 30 million savings from further full-time jobs and also intact spend reduction is this half- half or what kind of split should we expect here?

Yes, Markus, I'll make a brief comment about sunliquid as well as about the CHF 60 million additional cost-saving targets. Just to repeat, we're not giving detailed breakdowns between the revenue streams coming from bioethanol licensees as well as the sales from the enzymes. Bernd mentioned -- gave some guidance on the CHF 100 million and bioethanol being a significant part of it. But Bernd, maybe you could share a bit about how your view on the licenses, new licenses coming in and the potential for the business. As far as the cost saving target, the new cost saving target, the CHF 60 million is a new and additional target. And I would appreciate Stephan if you could fill out some detail on the breakdown.

Good. Thanks, Conrad. Let me start with sunliquid. As said, the CHF 100 million is in total. So it comprises of all 3 revenue streams. The interest that we see in the licensing business is just amazing. Of course, there is a strong desire to see our Podari plant seeing up and running. But we have really lined up significant interest once the plant is fully operational that we will pursue further. So with the years, the degree of licensing income and enzymes income will decrease proportionately to the bioethanol production. And most importantly, all 3 streams, revenue streams are accretive in terms of EBITDA to the business area catalysts. And therewith, I hand it over to Stephan.

Thanks, Bernd. Yes, let me give you the frame and then the details to the savings program because I think it's important that you understand Markus. So first of all, we're looking here at the total dimensioning of a program, which is almost CHF 0.25 billion, to be precise, CHF 240 million. And there are 3 components in it. The first component is the rightsizing. And this deals with, of course, divesting 1/3 of the company turnover and the simplification thereafter. We execute that after closing a sale of a business and [indiscernible] service agreement which we still have to fulfill as long as they run after the closing of the business. The remnant cost reduction piece, which we've already communicated back at the end of 2020, which we will address has a dimensioning of a bit above CHF 100 million. But of course, it's neutral because it just avoids the risk of stranded costs from the discontinuing business to come back to the continued business. We are fully eliminating that and it has a bill of around CHF 100 million. On top of that now, and this is the new part on the rightsizing, we have gone through the simplification even more. And you're right, there are levers about automation of processes, simplification of structures and taking more advantage of our shared service centers in Poland, India and China for labor arbitrage on which we then are able to ramp up this CHF 100 million revenant cost elimination to another CHF 30 million in addition, accretion to the core. So this is the first part. So the CHF [ 130 ] million from the rightsizing program has a news today of adding additional CHF 30 million to the call. The second piece is the efficiency program. And there, we actually go back to the beginning of 2020 when we launched the CHF 50 million saving program in the continuing business for efficiency improvement. Again, once we've gone through the execution of the program, we have seen additional areas more into the back office part of the business is supply chain, production processes, et cetera, where we've seen additional saving potential of around CHF 30 million. So ramping up the CHF 50 million to CHF 80 million. And this CHF 30 million is again used today. So the CHF 30 million in the rightsizing and the CHF 30 million in the efficiency program, make up that CHF 60 million additional savings, which will accrete in the coming years. And finally, but not at least, we have another CHF 30 million saving program in the pigment business or in the discontinued business to improve, of course, the value which we get for this business. And that makes up this total CHF 240 million saving program.

Good. So thank you very much, Markus. And now we have the first question from an investor. Pleasure to welcome Andy [ Schneider ] on the line.

We have 2 questions. First, also on sunliquid. As you know, many in the industry are quite skeptical about the success of the technology of the plant. And I don't really have a clue. So I would be very interested in some progress reports you can share. So what kind of reports can we expect from you over the coming months regarding the plan and how it's working. And related to that, what kind of prove to your clients, the ones that already have bought some license, what kind of proof do they need until they start their projects?

Sure, Andy. Thanks for your 2 important questions. I'll make some high-level comments, and then I'll pass it on to Bernd for some additional detail. If you look at the plants, let's be aware, this is the first of its kind. However, we feel confident about startup because we have actually run a pilot plant in [ struggling ] for many years, even that's even running on the same feedstock that we actually have in our plants in Romania. I would like to pass it on to you, Bernd for some additional details, perhaps the confidence levels around what will transpire in the coming months as well as questions we're getting from our licensee holders.

Absolutely, my pleasure, Conrad. So mechanical completion has happened that was reported to the press a couple of weeks ago. The start of the pretreatment is in process as we speak. And we expect indeed the first production of bioethanol to happen in the coming months. The exact milestones I'm not able to share because that will depend on various factors. But we are very confident we will get there in the next month. From today's perspective, there's really no reason to assume anything different. The questions that we are getting from our prospects is, when does it start, when do we see it, and how do we get it to see. However, based on a huge degree of confidence there is as I've been mentioning in my previous answer the super strong interest it can be in dialogue with us to kind of shape up the plans going forward. And therefore, we are very confident for the needs to come that will sell significant additional licenses on top of the already sold 5 licensees. Maybe there with back to Conrad unless you have a follow-up question.

He has a follow-up.

Yes. How does that work that does this plant has to run an entire year, an entire season for the clients to really see it that it is indeed working? Or is 1 or 2 months enough and then everybody knows, okay, it's really working that technology?

Yes. As you maybe saw from my presentation, it's an integrated production comprising out of 4 steps. I guess it's fair to say that our prospect is going to see every of these 4 steps being in full motion. But it wouldn't take for them an entire year to be confident that the first of its kind plant as Conrad has been saying, runs and is fully reliable.

Okay. Perfect. And then I would have the second question, so with so many products in your portfolio and so many end markets served, there's always a business, a market that is not really performing. In the past, this was always one of the major reasons why the previous targets have not been reached. So how do you think about that or probably as the other way around, but what has to happen what are your underlying market assumptions for you to reach these 19% the lower end? And probably also what has to happen for you to reach the 21%?

Yes, Andy, thanks for the question, an important question. We're actually very pleased with the performance of our business right now. What you saw in our third quarter results is basically a broad demand recovery across all of the businesses and across all of the regions. The only one where we ourselves were slightly disappointed with was the performance of Catalyst. But as Hans explained, this is very much a project business. And actually, there can be fluctuations from quarter-to-quarter. So basically referring back to your question, we're very pleased right now with the performance of the overall performance of the portfolio. The one that has been lagging a bit during corona, obviously, was our oil services business. But even in the third quarter, we showed double-digit recovery in the oil services business as well. Thank you.

But I mean, maybe if I can ask an add on question on that. When we think about '23, '24, '25, then you will try to reach this 19%. Do all the major end markets have to be in good shape at that point? Or does the mix -- or have you baked in a certain security margin that even one or the other business like, for example, right now is still the oil business or the Catalyst mix cannot be in perfect shape and you can still reach to 19%, what kind of safety margins have you baked in?

Sure, Andy. Well, the way we build up the plan and where we came up with the 4% to 6% CAGR on average until 2025, it was basically a bottom-up projection based on underlying projects from an innovation point of view, from a new CapEx point of view. And it basically was a bottom-up provided by the BUs. I will share with you that the bottom-up calculation came out higher than the 4% to 6% range. So as management, we did take a risk adjustment over the initial inputs that we got from BUs. So we are actually confident that this is a realistic target setting, the 4% to 6% CAGR on average until 2025.

Thank you. And maybe to remind the analysts on that one, that does not mean that you fill your spreadsheet is now above the that range going forward, please. As Conrad mentioned. So just as a side remark, as IR. So the next question and is a follow-up question from Christian Faitz.

Yes. Thanks, Andreas. Again, sorry to come back on sunliquid and maybe a naive question. But in terms of feedstock, you said you have around what was it 300 contracted pharmas, et how do you or your licensees deal with crop rotation patterns from year-to-year that alter the feedstock mix? And what happens to utilization rates if feedstock has limited availability due to adverse weather conditions, for example?

Yes, it's an important question, Christian. I think Bernd will fill in on some details. but the availability of feedstock is obviously critical. The good news is there is an abundance of, yes, if you call it, waste from agricultural production. Just as a reminder, for the second-generation bioethanol production, we're using the waste of agricultural production. So not the crop itself, but basically the leaves and everything, what have you around it. There is an abundance of availability there. Just in -- for our plant in Romania, there is about 250,000 tons of straw available for this plant. Bernd, if you want to add details there, you're welcome.

Thanks, Conrad. Yes. Maybe just to give some numbers, let's just take the U.S. we have 400 million tons of agricultural residues available. In Europe, it's roughly 225 million tons of agricultural residues. We have done a mapping of all the European countries and it's not a coincidence that we chose Romania because in particular in Romania, there is abundance of feedstock. So even if there were variances in terms of availability of our agriculture residues, we would be able to adjust. On top, we do have a certain safety stock and our technology is able to adjust to different feedstock qualities. So if there was really a shortage to come, which is very unlikely to happen, we would be able to adjust to these changes in feedstock quality based upon the technology that sunliquid offers. So in this respect, we are not concerned.

Thank you, Christian. [Operator Instructions] The next follow-up question comes from Andreas Heine.

Yes. Two questions I have. One is on the cost savings and efficiency program. Usually, you said that the charges -- the regular charges on an ongoing basis, roughly 0.5% of sales. Is that still valid? Or will that be a higher number in line with high ambitions on the savings? And then secondly, I've seen on the slide that the investment for sunliquid is CHF 240 million. I had a smaller number in mind. Is that the gross number and then you had received subsidies which have put it down or all the CHF 240 million, what will come as assets on your balance sheet with this plan being done?

Sure, Andreas. Thanks for the question. As far as the cost savings, I think the short answer is yes. It is still valid, the 0.5%, but I'll let Stephan fill out a bit more of details here. As far as the investment is concerned, the CHF 240 million investment, that actually included some scope changes, it included some learnings. So that is not to say that future plants should actually come in at a lower CapEx. There was a subsidy indeed, which is CHF 35 million roughly, which we got for this investment. Stephan, to you for the sort of breakdown of the additional cost savings program and how that will hit in terms of adjustments?

Sure. So first of all, as you know, in the beginning of 2020 and at the end of 2020, we've done big provisions for the rightsizing program and for the efficiency program. Now with the expansion, of course, there might hear and there be additional need while we continue the execution of the programs. Some of that is also not immediately providable because it goes hand in hand with transferring people and having maybe parallel workforces when you do the shared service and et cetera. But you're totally right, the 0.5 percentage points, 50 basis points are the best guidance also going forward. This is our cost discipline commitment that these exceptional items are absolutely sufficient to maneuver the implementation of the savings program. And as you know, also with our EBITDA margin commitment and the 100 basis point improvement to the prior targets, we are always speaking about reported EBITDA. So all of this is included.

So thank you very much. And we have got the next follow-up question again from Markus.

Yes. Two add on questions. Coming back to the dividend, sorry again for asking this thing. But if you would say on the one hand side is the argument stable to rising dividends. And the other side would be then a certain dividend payout ratio. What is stronger for you in the future? Is it more than stable to rising dividend argument or the payout ratio? And secondly, again, to your midterm targets, can you share, is there any kind of change in the management incentivization to these targets as there are higher variable part now which is linked to these targets?

Sure, Markus. The dividend question, I'll let Stephan comment on it. As far as management compensation, if you look at our LTIP, our Long-Term Incentive Program, currently, today, this is half based on our TSR, our performance versus peers in terms of our share price and our dividends, the TSR versus peers. The other half is based on economic profit. Moving forward, we will align our LTIP, our Long-Term Incentive Program with our new midterm targets. This obviously is not my decision, it's a board decision, but we can expect alignment here with our new midterm targets. Stephan, to you on dividends.

Sure, Conrad. So Markus, you asked me about the priority between an attractive payout ratio and a rising dividend. And my answer is starting with neither of the 2 because I tell you, it's a performance improvement. That's the priority. It's growing to be GDP with the 4% to 6%, stepping up margin levels into the 19% to 21% and bringing it at home with a 40% cash flow generation, then anything else follows, because this is a step-up in the headroom, which I mentioned. And if you do that as we've shown you also how we do that individually for all of these 3 parameters, then giving or keeping an attractive payout ratio is automatically leading to rising dividends. So that would be my answer to your question, Markus.

I'm sorry to ask again on this issue. So -- but nevertheless, it's for you, then there will be there a certain dividend floor that you say, when we pay out the dividend, this is a standard floor for the next one or there will be cycles and there will be earnings fluctuations. So how should we think on your dividend policy? Is it -- is there a list floor dividend? Or what's kind of, how do we want to see that the market sees Clariant sort of become a dividend paying company, a real dividend field story is this too early as you're just now looking to improve the free cash flow.

No, absolutely. We will be and stay a dividend sharing success sharing company. We have a strong commitment to share the success with our shareholders. And again, if you look at the past, we have seen steadily rising dividends, but that was sometimes also not when we had the free cash flow to do so. So we definitely look at payout ratio first, but again, if you see our track record now over the last 2 years, we have done also resilience in 2020, a significant step-up in 2021. We've paid dividends for also the covered year. Then the attractive payout ratio with the performance improvement potential towards the 25 targets solves both of the pieces of the puzzle. But the payout ratio is, of course, defining the dividend. We will not make anything which is not based on the earnings which we create, but we have all in hand to increase the earnings year-by-year.

Okay. Thank you, Markus. And it's now my pleasure to welcome someone new into the line. So the next question comes from [ Siebel Wiseberg ].

I have a question about India glycol. So what I understand of the joint venture that uses bioethanol of the first generation meaning it's corn produced in the U.S. and then shipped to India. So my question here is to improve the sustainability of this India glycol is, are there any plans to move to a second generation of bioethanol or so and to produce -- to produce the bioethanol in India that there is a transport or transport is not needed anymore?

Yes. So Siebel, thanks for this great question. What India glycol allows us to do is to actually supply surfactants that are 100% bio-based and renewable in terms of their feedstock. This actually is a first step in the overall sustainability journey. And indeed, we have this opportunity I would say, a unique opportunity as Clariant because we are the owners of the second-generation bioethanol technology to, indeed, at some point in the future, convert our ethoxylated products to second-generation bioethanol. The good thing is this will technically be a drop in. So it wouldn't require clients to reformulate products. It is actually a rather smooth transition. But again, this is a phased process, and we're first very happy that we can offer the 100% renewable surfactants, which is already a big step up from the traditional fossil-based surfactants.

Maybe to build on that what we can do as well, is to apply the sunliquid technology to a 1G production unit and convert them the residuals you have on that production unit with our sunliquid technology into second-generation ethanol already. So that's especially for Indian glycol, but also for example, the U.S. market where you have primarily first-generation ethanol producers a very good opportunity for our sunliquid technology besides what we have in greenfield operations.

Good. Thank you, Siebel. And where we kicked it off with Christian, so we close it with Christian. So the last question comes from Christian Faitz.

Two questions, please. First of all, one key cost savings generator in the chemical industry is the concentration of assets at a few sites as possible, even in Specialty Chemicals. By divesting some of your assets in the past, you gave up this cost advantage partly taking off your hook side, for example. I'm not expecting Clariant to become another mini BASF, but are you looking at asset concentration as well in your new strategy? And then second, last year, you made a rather unusual move by going into emission reduction catalysts for 2-wheelers in India. How is that business going at present? And is that activity being rolled out into other markets as well?

Sure. Thank you, Christian. The first question I'd like to answer myself also not to cause any unnecessary anxiety within the company. No, there are no plans for site closures and there's also, at the moment, actually there are no -- there's no duplication in our footprint. So it's not a lever right now for the company. We're actually very pleased with the footprint that we have. We're even adding to it, particularly in gross regions like China. As far as the India business for two-wheelers, Hans, if you want to add some detail?

Yes. Let me also add something to your first question, for our growth ambition and also our cost ambition we have, of course, we want to leverage our footprint, and we do so. Part of the growth which you have seen is coming from clearly find debottlenecking activities we have on our sites, which is one contributor to our growth. And the other is, if you think about now, for example, China, as I have given you an example on our Catalyst greenfield site now for CATOFIN. This will be the foundation of further Catalyst production units. We want to then add to this production site in the future, it's not going to be a BASF, but it's catered dedicated Catalyst production site where we can capture then all the synergies, so same we have in mind when we think about our operations in China and the [indiscernible] then give the example on [indiscernible] which is next to our surfactants plans, so here really we get the economy of scale through leverages for cross advantages and also for then our future growth opportunities, so that's on our operational footprint. On the 2-wheeler business, this is for us a very nice opportunistic business, which came across -- Two years ago about and is contributing to our growth we have, especially in our joint venture and in India. We will see how long this will last from a business opportunity point of view. As I said, it's an opportunistic business. Our core business still of the joint venture is the Catalyst business into Syngas into petrochemicals. That's where we build also on our accretive growth out of the India joint venture in Catalysis.

Okay. Thank you, Christian, and thank you to all the participants. We have no further questions. So therefore, we conclude the Clariant's 2021 Capital Markets Day. We look forward to continuing the dialogue with you in the upcoming conferences and roadshows in the coming weeks. And feel free to reach out, obviously, to the Investor Relations team in case of any additional or further questions that come up. Thanks again to the executive team for presenting today and all the other Clariant colleagues that were involved in the preparation and execution of today's event. We look forward to talking to you. We thank you for joining virtually. Unfortunately, we couldn't have this in person. But next year, we will have, hopefully, a lively discussion in person and have a good evening and for most important, stay healthy. And thank you again for your participation.